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Email, with reports from Anthony Watts regarding fracking
Sweeney Kathleen From: Anthony fawatts@itworks.com] Sent: Saturday, August 09, 2014 11:57 AM To: Sweeney, Kathleen Subject: request to distribute to board members Importance: High Hello Ms. Sweeny, I have uploaded my report to the Butte Supervisors to my website. I don't feel comfortable speaking in chambers. I've emailed members individually, but I don't trust email delivery these days with spam filters and other issues. Just click on this link to view it as a PDF or print it. https //wattsupwiththat files wordpress com/2014/08/the--racking-issuel.pdf Inside the PDF are links to other reports. I would HIGHLY RECOMMEND PRINTING THIS ONE: http•//www cps org uk/files/reports/or iinal/131202135150- W hyEverySeriousEnvironmenta listshou Id Favo urFracking.pdf It is from the UC Berkeley Professor I spoke of, Dr. Richard Muller. This one, from Dr. Matt Ridley in the UK is also worth looking at. The foreword in it is from Freeman Dyson, known as the "Einstein of our time' and is quite extraordinary. http://www.thegwpf.orglimages/storiesZgwpf-reports/`Shale-Gas 4 May 11.pdf I will be out of town next week, but will be checking email. An acknowledgement of receipt of this email is requested. Anthony Watts KPAY V . ( 6Sot The Fracking Issue: A report to the Butte County Board of Supervisors Prepared by Anthony Watts August 8th, 2014 DISCLOSURE: I have no interests, employment, ownership, business arrangements, or any connection of any kind to any activist or political group, nor any industry that relies on oil or gas exploration, drilling, or production. I produced this report of my own volition, simply to help educate you on the issues as I have done for myself over the past few years. The outcome of your vote will not affect me in any way, personally or financially. The opinions expressed are my own, the facts expressed stand on their own merit and are referenced by source. Items highlighted in blue are links to papers and sources, click them to view them. Introduction As many of you know, I was once a candidate for county Supervisor myself, so I can relate to the position many of you find yourself in with this issue. I had considered speaking before you, but in the emotionally charged venue of your chambers it is often difficult for a rational voice to be heard without being shouted down. Therefore I thought I'd prepare a document for you. My intent here is to help you make the most enlightened decision possible, by sorting through the hyperbole, political agendas, and emotions which have presented themselves in this debate by providing a factual guide that is based on reality, and not on any viewpoint from any vested interest. The history of hydraulic fracturing aka "fracking" Modern hydraulic fracturing technologies started on April 25th, 1865, when Civil War veteran Col. Edward A. L. Roberts received the first of many patents for an "exploding torpedo." Nitroglycerine, and later Dynamite was used back then to provide the fracturing force. Roberts was awarded U.S. Patent (No. 59,936) in November 1866 for what would become known as the Roberts Torpedo. The new technology would revolutionize the young oil and natural gas industry by vastly increasing production from individual wells. On March 17, 1949, a team of petroleum production experts tried a new technique on an oil well about 12 miles east of Duncan, Oklahoma —to perform the first commercial application of hydraulic fracturing. This began the modernized process that is still in use today. Since 1949, hydraulic fracturing has done more to increase recoverable reserves than any other technique. In the more than 60 years following those first treatments, more than two million fracking treatments have been drilled and pumped with not a single documented case of any fracking treatment polluting an aquifer. Reference: American Oil and Gas Historical Society RELEVANCE: Hydraulic fracking is not a "new" technique. History of use shows it has not polluted groundwater/aquifers. How does "fracking" actually work? Fracking is simply a technique use to increase the collection surface area of a drilled well. By having an enlarged surface area of cracks, crevices, and seam splits, more oil or natural gas can be recovered. It improves the production of a new well or an existing well. In virtually every case, the shale seams are far below the water table, as seen in this cross section below showing how shale is fractured to increase surface area to retrieve more natural gas. The gas is pulled from the ground through a process called hydraulic fracturing, or fracking, in which large volumes of water, plus sand and chemicals, are injected deep underground to break shale apart and free the gas. Figure 1: Cross section of a fracked shale gas well Source: US. Dept. of Energy RELEVANCE: most fracking is conducted far below the water table. What is in fracking fluid? Water, sand, and, some common chemicals. Water accounts for about 90 percent of the fracturing mixture and sand accounts for about 9.5 percent. Chemicals account for the remaining one half of one percent of the mixture. This graphic illustrates the breakdown. Understanding 0 0 Firm g�unimgol IRUN tend COMMON HOUSEHOLD ITEMS The fluid f,.,, the hydraulic fracturing process is rearly % SODIUM CHLORIDE 99.5% WATER 0 & SAND.memicni ETHYLENE GLYCOL 7Us /o A 1A/ Tllt- R V V k- i 6M BORATE SALTS SODIUM/POTASSIUM CARBONATE GUAR GUM ISOPROPANOL — I I V L RELEVANCE: Traditional fracking fluid is mostly water & sand, with 0.5% common household chemicals. There are no large amounts of "highly toxic" chemicals as some activists claim. Why the worry over fracking water? Many people worried about what chemicals are used in fracking cite the potential danger of a hypothetical scenario where (racking fluids leaking into the groundwater as the primary reason for their concern. However, there are many misconceptions about how fracking water is collected and disposed of after it has been pumped into the shale to release natural gas trapped inside. Once the fracturing process is completed, the water rises back to the surface, forced upward by the geologic formation's natural pressure. Then, the fluids are stored in pits or tanks to be treated — if the water is to be discharged into surface water — or is injected deep underground. Spent or used fracturing fluids are normally recovered at the initial stage of well production and recycled in a closed system for future use or disposed of under regulation, either by surface discharge where authorized under the Clean Water Act or by injection into Class II wells as authorized under the Safe Drinking Water Act. Regulation may also allow recovered fracturing fluids to be disposed of at appropriate commercial facilities. Not all fracturing fluid returns to the surface. Over the life of the well, some is left behind and confined by thousands of feet of rock layers. Treatment of (racking water is highly regulated by EPA rules, and many states are working to revise or create their own laws overseeing gas drilling operations in their areas. So, there is a huge financial incentive for drilling companies to do it right, otherwise they are faced with fines, and possible shutdowns. A 2004 study from the EPA investigating the environmental impact of disposing what chemicals are used in (racking into coal bed methane production wells found no confirmed cases of drinking water wells' quality being compromised as a result. The study noted that: "Where fluids are injected, EPA believes that groundwater production, combined with mitigating effects of dilution and dispersion, absorption, and biodegradation, minimize the possibility that chemicals included in fracturing fluids would adversely affect [underground sources of drinking water]," Source: EPA: Hydraulic Fracturing of Coaled Methane Reservoirs; National Study Final Report, June 2004 http://www.epa.gov/ogwdw/uic/pdfs/cbmstudy attach uic final fact sheet.pdf It's our experience in Pennsylvania that we have not had one case in which the fluids used to break off the gas from 5,000 to 8,000 feet (1,500-2,400 m) underground have returned to contaminate ground water. John Hanger, former secretary of the Pennsylvania Department of Environmental Protection Fracking fluid is now going through a change to make the small 0.5% portion of chemicals even safer. As The Associated Press reported in August 2011, one Halliburton executive drank a new recipe for hydraulic fracking fluid at a conference by the Colorado Oil and Gas Association. The intent was to quash fears about what is hydraulic fracking and the chemicals that are used — Halliburton's development uses food industry materials — by showing how safe they can be. "During a keynote lunch speech at the conference presented by the Colorado Oil and Gas Association, Halliburton Co. CEO Dave Lesar talked about addressing public concerns about hydraulic fracturing, which extracts natural gas by blasting a mix of water, chemicals and sand underground. He raised a container of Halliburton's new fracking fluid made from materials sourced from the food industry, then called up a fellow executive to demonstrate how safe it was by drinking it, according to two attendees. The executive mocked reluctance, then took a swig. The thing I took away is the industry is stepping up to plate and taking these concerns seriously," Ken Carlson, a Colorado State University environmental engineering Professor, told the AP. "Halliburton is showing they can get the same economic benefits or close to that by putting a little effort into reformulating the fluids." Source: http://www.huffingtonpost.com/2011/08/22/halliburton-executive-drinks-fracking- fluid n 933621.html The process is safe, and continues to be proven as such. For example, on May 13th 2011, the New York Times reported: Hydraulic fracturing, or "fracking;' got a clean bill of health this week in the first scientific look at the safety of the oil and production practice. Source: http://www.nytimes.com/gwire/2011/05/13/13greenwire-baffled-about-fracking- vo u re -n of -a I o n e-44383. ht m l In a May 6th 2011 story on a senate hearing, E&E Newswires reported: The debate about hydraulic fracturing has intensified as advances in the technology have opened vast gas -bearing formations in densely populated areas, like the Northeast. Critics say fracturing could cause some of the hazardous chemicals in the fluid to find its way into groundwater, but industry representatives say the fluid would have to travel upward through thousands of feet of rock, and there has never been a proven case of that happening. Source: http://www.eenews.net/public/eenewspm/2011/05/06/2 The British also aren't worried about it: The British government's health agency is the latest body to give fracking a clean bill of health, in a move that should galvanize the country to act on its considerable reserves of shale gas. Reuters reports: Public Health England (PHE) said in a review that any health impacts were likely to be minimal from hydraulic fracturing, or fracking, which involves the pumping of water and chemicals into dense shale formations deep underground.... `The currently available evidence indicates that the potential risks to public health from exposure to emissions associated with the shale gas extraction process are low if operations are properly run and regulated, " said John Harrison, director of PHE's center for radiation, chemical and environmental hazards. Source: http://www.reuters.com/article/2013/10/31/us-britain-health-fracking- idUSBRE99U0KX20131031 RELEVANCE: The EPA sees no threat to drinking water in studies they have conducted. Neither does the British Public Health agency. There is a huge financial incentive by drilling companies to manage fracking water properly or face EPA fines. Newer formulations of fracking fluid are safe enough to actually drink. Scientific studies show the process is safe. If fracking is safe, and has been in use since 1949, with it used in over 2 million wells, how did it get such a bad reputation? The answer lies in an activist movie known as "Gasland", seen on HBO in 2010 and also shown in "alternative" theatres in the USA, such as the Pageant Theater in downtown Chico. In that movie, a claim is made that fracking caused groundwater to become flammable, due to methane gas leaking into the water table. This frame from the dramatic scene in that film shows a Colorado resident igniting his tap water with a cigarette lighter. Source: GASLAND trailer, 2010 https://www.youtube.com/watch?v=dZelAeHOQz The implication made by the director/producer (Josh Fox) in the film is that this flammable tapwater was caused by the recent increased in fracked wells in that part of Colorado; Weld County. To the untrained and uncurious, this certainly seems like a valid conclusion. However, research shows a few inconvenient facts about that movie. A 1976 study by the Colorado Division of Water found that this area was plagued with gas in the water problems back then. And it was naturally occurring. As the report stated there was "troublesome amounts of methane" in the water decades before fracking began. It seems that in geographical areas gas has always been in the water. But Josh Fox knew this and chose not to mention it in Gasland. Draw your own conclusions. Another filmmaker asked Fox about this omission at a screening at Northwestern University in Chicago. You can watch that video here: https://www.youtube.com/watch?v=e9Cf U mOQeO k And as way of verification of the Gasland's claim of (racking causing methane in groundwater was based on a fabricated claim or not, I went looking for the 1976 report that McAleer cited. I didn't find it, but I did find another report from the American Association of Petroleum Geologists (AAPG) which was equally damning: DOI:10.1306J03B5B46B-16D1-llD7-8645000102C1865D Distinction Between In -Situ Biogenic Gas and Migrated Thermogenic Gas in Ground Water, Denver Basin, Colorado: ABSTRACT Dudley D. Rice, Lewis R. Ladwig AAPG Bulletin Volume 67 (1983) Nlegw��e•ric>, gaa wmI bcWrs� grmard �tEr in the 9#em� Das�l. awUNrn 4Ye1d counw, CnNrada.'tBlRgas3pereneyr: uis�te�in Lhe3mund waiarMrheayuirer- Ho weuer, exmhafon reniting from reduction to hydrostatic premure during water production may create free gas, w Mch can amumrdate in weds and btrMings andpose aro explosion and fire hazard'.. Source: http://search.datapages.com/data/doi/10.1306/03B5B46B-16D1-11D7- Also, the state of Colorado Department of Natural Resources came to a similar conclusion n a report they produced about the Gasland movie, saying that the methane came from nearby coal seams (biogenic) and what not from fracking operations, and had been present for quite some time: ...we concluded that Mike Markham's and Renee McClure's wells contained biogenic gas that was not related to oil and gas activity. Unfortunately, Gasland does not mention our McClure finding and dismisses our Markham finding out of hand. The Markham and McClure water wells are both located in the Denver -Julesburg Basin in Weld County. They and other water wells in this area draw water from the Laramie -Fox Hills Aquifer, which is composed of interbedded sandstones, shales, and coals. Indeed, the water well completion report for Mr. Markham's well shows that it penetrated at least four different coal beds. The occurrence of methane in the coals of the Laramie Formation has been well documented in numerous publications by the Colorado Geological Survey, the United States Geological Survey, and the Rocky Mountain Association of Geologists dating back more than 30 years. For example, a 1976 publication by the Colorado Division of Water Resources states that the aquifer contains "troublesome amounts of... methane. "A 1983 publication by the United States Geological Survey similarly states that (mjethone-rich gas commonly occurs in ground water in the Denver Basin, southern Weld County, Colorado. " And a 2001 report by the Colorado Geological Survey discusses the methane potential of this formation and cites approximately 30 publications on this subject. Finally, it should be understood that the COGCC Director, Dave Neslin, offered to speak with Gasland's producer, Josh Fox, on camera during the filming of the movie. Because the issues are technical and complex and arouse concerns in many people, Director Neslin asked that he be allowed to review any material from the interview that would be included in the final film. Unfortunately, Mr. Fox declined. Such a discussion might have prevented the inaccuracies noted above. Source: http://cosec.state.co.us/library/GASLAND%20DOC.pdf Methane in Water Wells by Donald K. Keech and Michael S. Gerber =9: aWepe 9 type uwm.amm- rv0y 3n preset stella are problems docs, it presents unique problems for water well drilling mm. The major concern relates tes to to flam- atible and explosive hazards aaao- ae 1). with methane gas (see oral Fig - are p. However, with the treatment and othediscusedr in sol article, methane and other dissolved gazes can ayattevely removed from the water yeem. Mofthe paraffin is the first mem- bcrofthcparaBinsc omof eis. mt- cd hydrocarbons. Methane is a col - in underground mines. Methane can also begcnmtcdby the daaom- position of catbonacious matter in swampy or marshy areas and is often called"marsh ga,." The gas thin came., problems in water wells can occur in either bedrock or overburden wells. Methane isgenerated in source reek, then "stored" in a reservoir with some type of cap rock or impervious layer to contain the gas underground. In Michigan, these wells generally ocwr in areas underlain with Antrim or Cold- tered in water wells This higher Bm gas may escape from not oil/gas well blowout or from a fail.. at an underground gas storage field. Table 1 lists same chametcris- tic analyses of dissolved gas from wall water Th. analyses arc all from wells in Michigan drillol no deeper then 120 fact and Was - times the variability in competi- tion of dissolved gas the can be anticipated from awell with typical gas problems such as milky water, pulsations at the fences or flam- mable conditions. Essentially, what we have is an activist movie director making false claims that can be easily refuted with geologic studies done by the State of Colorado, refusing to have his work reviewed, and those false claims being used to incite and worry people who are otherwise unable to make distinctions themselves. From 1982, Well Water Journal, they write about several naturally occurring instances of methane in water wells, and fracking is nowhere to be seen: See: http://eidmarcellus.org/wp-content/uploads/2011/05/Water-Well-Journal.pdf Despite this and many more inaccuracies being well documented, activist organizations like Greenpeace, with multi-million dollar budgets, include the "flaming faucets" claim in their own anti-fracking materials, such as this one from their website, seen below. Item# 10 says: "Concentrated Methane gas create flammable water and poisonous fumes" Nome a Whet W. Do I stm Global : The Vrablam > 1.,k—, a l mkmy 11--,- Despite the science of naturally occurring methane being well known and well documented, anti-fracking activist groups simply don't care; they'll make the claims that (racking caused it anyway. Their goal is to stifle energy development, there's more on that later in this report. This is what is happening in Butte County with the "Frack Free Butte County" activists. Much of the claims they are making can be easily refuted if you bother to do a modicum of research. For example, one of their claims is: Fracking uses gross amounts of water. in a drought, the last thing we should rely on is fracking for purposes supplied by other sources. What they don't seem to realize is that fracking is a closed water system, it does not constantly use "millions of gallons of water" (a common citation to position (racking as a water hog), but instead uses water one time that it treats and recycles at the surface. The shale gas industry uses water: 1-5 million gallons per well. However, its needs are not great in comparison with those of other industries, such as the power generation industry, or even the quantity used in domestic appliances. Gas drilling in Pennsylvania uses less than 60 million gallons per day, compared with 1,550 MG/day used in public water systems, 1,680 MG/day used in industry and 5,930 MG/day used in power generation in the state (US Geological Survey). A single shale gas well uses in total about the same amount of water as a golf course uses in three weeks. Approximately one-third of the water pumped down the gas well for fracking returns eventually to the surface together with gas during production. In the Marcellus Shale in Pennsylvania, this water is saline, because the shale rock was formed on the bed of an ancient sea. The water is extracted from the gas, collected in pools doubly lined with heavy-duty polythene, and either re -used for fracking in other wells or desalinated, treated and disposed of as waste. This is no different from the treatment of waste water in any other industrial process. Pollution incidents involving such 'produced water' are rare. A gas well operated by EOG Resources blew out in Clearfield County, Pennsylvania, in June 2010, spilling 35,000 gallons of slick water. The water was contained by berms and linings, and there were no injuries or significant damage to the environment. Side note on water use in Butte County: If you look at the amount of water used by the Sierra Nevada Brewery in Chico per year, you'll find it far and regularly exceeds any expectation of water to be used for hydraulic fracturing in Butte County, should it ever occur in Butte County. For example in 2007, SNB used over 6 million barrels of water (31 US gallons/barrel) for a total of 186 million gallons of water. Source: http://www.sierranevada.com/sites/default/files/content/sustainability/reports/SN Sus tainabilitvReport2012 2.pdf (see page 10, water) Another claim used by activists is that the water coming to the surface is radioactive. The returning water is also slightly more radioactive than surface water because of naturally occurring isotopes within the rocks. However, this radioactivity drops when the salt is removed and before the water is disposed of in the sewage system. In any case many granite rocks have higher natural radioactivity, so exposure to waste water from gas drilling is likely to be no more hazardous than exposure to some other kinds of rock. There is no evidence that either gets close to being hazardous. Indeed the Pennsylvania Department of Environmental Protection has tested the water in seven rivers to which treated waste water from gas wells is discharged and found not only no elevation in radioactivity but: All samples were at or below background levels of radioactivity; and all samples showed levels below the federal drinking water standard for Radium 226 and 228. -- Pennsylvania Department of Environmental Protection, 7 March 201140 All technologies have environmental risks. Press coverage that talks about 'toxic', 'carcinogenic' and 'radioactive' chemicals' is meaningless. Vitamin A is toxic in large doses. A single cup of coffee contains more known carcinogens than the average American ingests from pesticide residues in a whole year. Bananas are radioactive due to the radioactive potassium they get and concentrate from the soil. The vegetable Asparagus contains poisonous Arsenic. Dihydrogen monoxide is a chemical (water, H20). RELEVANCE: As demonstrated above, the list of easy refutations to activist's claims about (racking is quite long, if any of you want to have them specifically addressed, I'll be happy to do so personally on request. A Fracking Good Story Carbon dioxide emissions in the U.S. are at 0 their lowest level in 20 years. It's not because Uk of wind or solar power. sy&) tombory This will surprise you - fracking has actually helped solve the "global warming" problem The same people who complain that fracking will kill the planet also say similar things about carbon dioxide emissions related to "global warming". The great irony of fracking to produce more natural gas is that it has helped make a shift from coal to natural gas in energy production, actually reducing carbon dioxide emissions in the USA. As demonstrated in this article, carbon dioxide emissions in the U.S. are at their lowest level in 20 years thanks to fracking. Source: http://www.slate.com/articles/health and science/project syndicate/2012/09/thanks to fracking u s carbon emissions are at the lowest levels in 20 years .html The EIA data shows natural gas on the rise and carbon dioxide falling: USA Carbon Dioxide Emissions From Energy Consumption by Source Data from EIA Monthy Energy Review - June 2012 7000 6500 6000 a 5500 x O 5000 C a 4500 cj 4000 y 3500 c f 3000 v m 2500 g 0 2000 FE 1500 1000 500 _._. 0 1970 1972 1974 1976 1976 1980 1982 19a4 1986 1988 1990 1992 1994 1996 1996 2000 2002 20U 2006 2008 2010 2012 2014 Years .. ., Here is a magnified view of that top line from the Energy Information administration data. CO2 Emissions Tumble Thanks To Fracking U.S. carbon dioxide emissions are at their lowest level in decades, as the naturat gas 5503 tracking boom spurs a switch from coal- fired plants Enaryy.l fiWL+I&Y4'IGtYeT./M14fA'ID� So many activists want us to get off "dirty coal" as an energy source, yet they seem unwilling and unable to accept a much cleaner burning fuel, natural gas, because it involves "fracking". Getting off coal is inevitable but when environmentalists have decided that they will not allow any more Hydroelectric dams, Nuclear Power stations, or Coal power stations, what is left? Clean burning natural gas. It makes perfect sense as the bridge fuel, because wind and solar are nowhere close yet to filling the need globally: 100 a 90 80 70 a U 60 50 0 40 3 o 30 20 a 10 = Solar M Wind ® Biomass & Other Data from the 2014 BP Statistical Review of World Energy: http://www.bp.com/content/dam/bp/pdf/Energy-economics/`statistica I-review-2014/BP- stat istica I-review-of-world-ene rev -2014 -fu I I -report. pdf But, you shouldn't take my word for it, read what they say at U.C. Berkeley about Natural Gas in their August 2014 report: Climate Impacts of Coal and Natural Gas In a world where a cost ---competitive near--- zero carbon energy source is not readily available, particularly in developing countries, replacing coal electric generation with natural gas could provide an effective strategy to mitigate climate change and reduce harmful air pollution. Source: http://static.berkeleyearth.org_/ydf/climate-impacts-of-coal- and-natural-eas.pdf Just as surprising, the leader of the group that produced that report, Berkeley Earth, is an advocate of fracking to produce more natural gas. Deadly particulate pollution known as PM2.5 (highly regulated in California) is currently killing over three million people each year, primarily in the developing world, demonstrates Richard Muller (Professor of Physics at the University of California, Berkeley since 1980) in Why Every Serious Environmentalist should favour Fracking. The summary page from that report: WHY EVERY SERIOUS ENVIRONMENTALIST SHOULD FAVOUR FRACKING RICHARD A. MULLER AND ELIZABETH A. MULLER SUMMARY • Environmentalists who oppose the development of shale gas and tracking are making a tragic mistake. Some oppose shale gas because it is a fossil fuel, a source of carbon diodde. Some are concerned by accounts of the fresh water k needs, by flaming faucets, by leaked "fugitive methane', by pollution of the ground with tracking fluid and by damaging earthquakes. • These concerns are either largely false or can be addressed by appropriate regulation. • For shale gas is a wonderful gift that has arrived just in time. it can not only reduce greenhouse gas emissions, but also reduce a deadly pollution known as PM? -5 that is currently killing ower three million people each year, primarily in the developing work!. • This air pollution has been largely ignored because PM25 was an unrecognised danger until recently; only in 1997 did it became pan of the US National Ambient Air Quality Standard& it is still not monitored in much of the worid. Greenhouse warming is widely acknowledged as a serious long-term threat but PM2.5 is currently harming more people. Europe shares an ironic advantage with Chin — the high price paid for imported natural gas, typically USStO per million BTU (compared to USS3.50 in the U% At those prices, the cost of "is drilling and completion can be much higher and still be profitable. Europe can therefore be the tenting and proving ground where innovative technal gy can be tried and perfected while still profitable. • As both global warming and air pollution can be mitigated by the development and utilisation of shale gas, developed economies should help emerging economies switch from coal to natural gas Shale gas technology should be advanced as rapidly as possible and shared freely. Finally, environmentalists should recognise the shale gas revolution as beneficial to society — and lend their full support to helping it advance. See the full report: http://www.cps.org.uk/files/reports/original/131202135150- W hvEvervSeriousEnvironmentalistShouldFavourFracking.pdf And finally, from a political perspective, just how much support does the anti- fracking movement in Butte County have? You might think with all those signatures gathered, they have broad support. The "Frack Free Butte County" group tried to get their fellow citizens to fund their efforts via a crowd sourcing campaign. They only raised 9% of their expected goal as seen in the IndieGogo campaign: Signup Log, RGOGO EXPLORE HOW IT WORKS START YOUR CAMPAIGN Q Hooray! IndwgR;n just gnz more sociai. You can nrT eri ,,a4na[ woo FIiiccb�npk -ndg a—'jriClimg. Learn more. X Frack-Free Butte County Story Updates 9 Comments 4 funders 72 11k1 132. 6 u ® 0 O l� 0Tww 8,1 Emeil Emueu LmN Follow $3,666 USO ar r i _. i,ont 00 time left 4 Flexible Funding 0 SELECT A PERK $20 USC Source: https://www.indiegogo.com/proiects/frack-free-butte-county That speaks loudly when the citizenry can't get behind it financially. It also suggests that the people who did contribute money (just 72 people) are limited to their friends and peers. Summary and my best advice • Fracking is not something that just started, it is a long and proven process • Fracking is safe, despite activist claims of flaming faucets and other nonsense • Fracking is not a water hog in comparison to other industries, and it is a one-time use rather than an ongoing use • Fracking has economic benefits, providing clean inexpensive energy • Fracking has ecological benefits, including reduced carbon dioxide and reduced PM2.5 particulates by the energy it produces • Fracking is an emotional and sometimes irrational activist issue that is soundly refuted by government and scientific studies • Fracking is a tool being used improperly by activists to stifle energy production If you pass a fracking ban, will it affect me? No. However it may affect landowners who may wish to develop or improve wells in the small pockets of natural gas near Willows. A ban may render their mineral rights moot. But, as we already know, there is only a small amount of gas wells in Butte County, and some of those were enhanced with fracking (check well logs) though owners don't want to admit it for fear of activists chaining themselves to wells or other such emotional things. A fracking ban here probably won't matter much in the scheme of gas production, but if passed it will be used as a political bandwagon tool. It will set a precedent to the effect of "Butte County did it, and they haven't drilled wells in 25 years!". A (racking ban in Butte County will be just about as useless in the grand scheme of things as the infamous "nuclear weapons ban" in Chico, but it will make some emotional folks feel good about themselves. If I were to be in your position, I'd put it up to a vote of the people of Butte County, rather than approve a ban outright. I think you'll find it has about as much support in the citizenry as the ill- fated attempt to ban Genetically Modified Food (GMO's) a few years back. You may wonder to yourselves "why did Anthony Watts spend all this time writing this report if somebody didn't pay him to do it or he's not part of some political agenda?". That would be a fair question. The answer is simply this: I do this sort of work daily on my website, wattsupwiththat.com which is now approaching 200 million views. This paper is simply a collection of what I've learned and printed through that website. It was a simple matter to collate for you. I see the issue as so polarized, I thought you could use the help from somebody who can empathize with your situation and see through the hype on both sides. Thank you for your consideration. Pointmaker WHY EVERY SERIOUS ENVIRONMENTALIST SHOULD FAVOUR FRACKING RICHARD A. MULLER AND ELIZABETH A. MULLER SUMMARY Environmentalists who oppose the development of shale gas and fracking are making a tragic mistake. • Some oppose shale gas because it is a fossil fuel, a source of carbon dioxide. Some are concerned by accounts of the fresh water it needs, by flaming faucets, by leaked "fugitive methane", by pollution of the ground with fracking fluid and by damaging earthquakes. • These concerns are either largely false or can be addressed by appropriate regulation. For shale gas is a wonderful gift that has arrived just in time. It can not only reduce greenhouse gas emissions, but also reduce a deadly pollution known as PM2.5 that is currently killing over three million people each year, primarily in the developing world. This air pollution has been largely ignored because PM2.5 was an unrecognised danger until recently; only in 1997 did it become part of the US National Ambient Air Quality Standards. It is still not monitored in much of the world. Greenhouse warming is widely acknowledged as a serious long-term threat, but PM2.5 is currently harming more people. • Europe shares an ironic advantage with China — the high price paid for imported natural gas, typically US$10 per million BTU (compared to US$3.50 in the US). At those prices, the cost of shale drilling and completion can be much higher and still be profitable. Europe can therefore be the testing and proving ground where innovative technology can be tried and perfected while still profitable. As both global warming and air pollution can be mitigated by the development and utilisation of shale gas, developed economies should help emerging economies switch from coal to natural gas. Shale gas technology should be advanced as rapidly as possible and shared freely. • Finally, environmentalists should recognise the shale gas revolution as beneficial to society — and lend their full support to helping it advance. 1. REDUCING PM2.5 AND GREENHOUSE GASES 1.1 PM2.5., the dirty secret PM2.5 refers to particulate matter 2.5 microns or smaller, microscopic dust particles created directly from burning fuel but also by secondary chemical reactions from emitted sulphur and nitrous oxides (SOx and NOx). These particulates are so tiny that they penetrate deep into human lungs where they are absorbed into the blood and lead to cardiorespiratory disease. The US Environmental Protection Agency (EPA) estimates PM2.5 is responsible for about 75,000 premature deaths per year in the United States,' even though US measured air quality levels are typically ranked in the good to moderate categories, with an AQI (air quality index) of 0 to 100. [EPA 2010; Lepeule 20111. To put this in perspective, yearly automobile deaths in the US in 2012 were less than half of that. European air pollution deaths were estimated at 400,000 per year by the European Environment Commissioner, more per person than in the US because the PM2.5 levels are significantly higher. [EI Pais 20131. It is not just PM2.5 that kills, but larger particles (PM10), ozone, sulphur and nitrous oxides and other pollutants. But the Air Quality Index (AQI) around the world is usually dominated by PM2.5.2 But US and European pollution levels are small compared to those in the developing world. In ' The EPA number is 63,000 to 88,000 at 95 confidence. See EPA 2010, Appendix G page 2. 2 The AQI is defined separately for each pollutant, based on its estimated health effects. But, by convention, the total AQI is set to that of the leading component for the location. Recently that has almost always been PM2.5. 2 early 2013, the level in Beijing soared to an AQI of 866, far above the nominal hozardous3 threshold of 300. As we write this (November 2013) the level in Delhi India is 817. On 21 October 2013, Harbin, a city in northern China with 11 million people, turned on its centralised coal system and the pollution level surged off scale at 1,000. The city's official news site said, "You can't see your fingers in front of your face." [NYT 20131. Airport visibility dropped below 10 metres. The government shut schools, airports and many highways, and told people to stay at home. You can look up current PM2.5 levels on the internet.4 On the day we are writing this, most of the US is "good" (less than 50), most of the UK is "moderate" (50 to 100), Paris is "unhealthy for sensitive groups" at 114, and Vienna is "unhealthy" at 161. PM2.5 is a horrific environmental problem. The Health Effects Institute estimated that air pollution in 2010 led to 3.2 million deaths that ' Pollution categories for air quality and the colours used to depict them on maps are • good: green, AQI 0-50, PM2.5 concentration 0-12 pg/m' • moderate: yellow, AQI 51-100, PM2.512-35 pg/m3 • unhealthy for sensitive groups: orange, AQI 101- 150, PM2.5 35-55 pg/m3 • unhealthy: red, AQI 151-200, PM2.5 55-150 pg/m3 • very unhealthy: purple, AQI 201-300, PM2.5 151- 250 pg/m3 • hazardous: brown, AQI above 301, PM2.5 above 250 pg/m3 Note: for PM2.5 above 500, AQI and PM2.5 are essentially identical. " For China and India, see aqicn.org (also try the map link); for Europe, see aqicn.org/map/europe/; for the US see airnow.gov (with many map choices) or commons.wi kimed ia.o rg/wi ki/Fi le: Pm25-24a- super.gif. Centre for Policy Studies year, including 1.2 million in China and 620,000 in India. [O'Keefe 2013, Yang 20131. And the pollution is getting worse as global use of coal continues to grow. The most dramatic and compelling new result linking coal pollution to death comes from the Huai River Study. [Chen 20131. In this investigation, scientists took advantage of a Chinese government policy that for 30 years supplied free coal north of the Huai River for heating and cooking, and forbade such coal in homes south of the river. The study determined that the 250 million people who live north of the river were exposed, on average, to an additional 184 µg/m3 of particulates, and that they lost, on average, 5.5 years of life from the extra pollution. As a rule of thumb, they estimate that each average added exposure of 100 µg/m3 will reduce average lifetime by three years. From this we can calculate that the level reached in Harbin, an AQI of 1000 (which for such high levels also means 1000 µg/m3) should lead to a thousand excess deaths from just one day of exposure.5 China not only has the greatest yearly death toll from air pollution, but is also key for mitigating global warming. China surpassed the US in CO2 production in 2006; growth was so rapid that by late 2013, China's CO2 emissions are nearly twice those of the US. If its growth continues at this rate (and China has averaged 10% GDP growth per year for the For 30 years of exposure of 100 pg/m3, based on the Huai Inver study, we expect 3 years lost per person. For one day at 1000 pg/m', we expect 3x10/30/365 = 0.0027 years lost per person. For 11 million people, that is 30,000 person-years lost. If the average premature death takes place at age 35, then that amounts to 860 deaths. If the average premature death takes place at age 50 (loss of life of 20 years per affected person) then 1500 deaths are expected. past 20 years) China will be producing more CO2 per person than the US by 2023. If the US were to disappear tomorrow, Chinese growth alone would bring worldwide emissions back to the same level in four years. To mitigate global warming, it is essential to slow worldwide emissions, not just those in the developed countries. And we feel this must be done without slowing the economic growth of the emerging world. It is amazing that PM2.5 levels are not more widely addressed by environmentalists, by political leaders, by journalists, and by the general public. They should not, cannot, be ignored. PM2.5 kills more people per year than AIDS, malaria, diabetes or tuberculosis. We must do something. But what? 1.2 Energy conservation The most effective way to keep pollution out of the air is to leave it underground, buried with the original coal. That can be done by using less energy — energy conservation — and that can be achieved without any lowering of productivity, comfort, or perceived standard of living, primarily by improving efficiency. Indeed, European nations, the US, China and other countries are working hard to do this. China's official goal is to have energy use grow at a rate 4% slower than that of their economy. That is a challenging but realistic goal; the US improved its energy conservation by 5% per year in the decade following the 1973 OPEC oil embargo, through higher miles -per -gallon for cars, better insulation in homes and buildings, and improved efficiency in engines and appliances. The reason that such yearly improvement is feasible is that conservation can be highly profitable. In the US, homeowners who invest in conservation typically achieve a payback time 3 Centre or Policy Studies of five to ten years. If you think of it as an investment, then a five-year payback is a 20% annual return. A 10 -year payback is a 10% return. And it is a tax-free return; you don't pay taxes on money not spent. Energy conservation is so profitable that it is worth doing regardless of its mitigation of air pollution and global warming [Muller, 20121. However, if the prodigious growth rate of the Chinese economy continues, then even if they meet their conservation goals, their energy use will increase 6% per year. If they stick with coal, then their PM2.5 and greenhouse emissions will grow too. In 2013, China's economic growth slowed to between 7% and 8% per year. Even if that lower rate continues, slowing energy growth will not be enough by itself to stop the rapid rise of pollution. Energy conservation is an essential part of China's programme, perhaps the most important part, but it is far from sufficient. 1.3 Renewables Two facts about China are often put forth to express optimism about renewables. One is that 20% of China's electric power already comes from renewables, and the other is that China's solar capability is growing rapidly: seven gigawatts (GW) capacity was added just last year. Thus China is a leader, setting an example that the rest of the world can follow. We tend to think of renewables as environmentally benign, but according to the US Energy Information Administration (EIA), 86% of China's renewable energy in 2011 came from hydroelectric dams. The rest came from wind (90/.), biomass (4%), with only 0.4% from solar. Is more hydropower environmentally desirable? In China the recently completed Three Gorges Dam displaced 1.2 million people ('voluntarily", the government says), obliterated 1,350 villages, 4 140 towns, and 13 cities. China is already planning extensive new dams on the Mekong River, with disastrous ecological impacts expected, not only in China but also Burma, Laos, Thailand, Cambodia, and Vietnam. In 2012, there were 76 GW of wind capacity in China, but because of variability, the average power delivered was 22 GW, that is, about a 29% capacity factor. That amounted to 1.5% of China's electricity generation. The intermittency can be tolerated when wind is a small portion of total power generation, but it becomes a major problem when used on a large scale. Energy storage is still expensive, and so large-scale wind is not likely to do more than supplement coal, hydro, and other more reliable alternatives. Biomass is a renewable, good for global warming, but it too produces PM2.5. Other renewables (geothermal, tidal, wave) offer little hope of significant coal displacement in China [Muller 20121. Solar, at 0.4% of China's electricity, is far behind other renewables. The recent addition of 7 GW solar capacity is easily misinterpreted. Capacity refers to peak power, the power that can be delivered when the sky is clear and the sun is directly overhead. Average in night and day, and you lose half the output. Grazing light at dawn and dusk halves output again. Finally, experience in US and China indicates that cloudy weather halves output yet again; it will be worse in cloudy parts of the UK and Europe. This means that in 2012 China produced an average solar capacity under 1 GW. And that production rate may decrease now that Wuxi Suntech Power, the major Chinese producer, defaulted on a $541 million bond and was placed into insolvency in March 2013. Compare that 1 GW of new solar to the expansion of Chinese coal, which has added an average capacity of 50 GW per year over [fC entre or Policy Studies the past several years, a gigawatt per week, enough added each year to power seven new New York cities. Solar is being left in the dust by coal. Nuclear power is not a renewable, but like wind and solar, it produces essentially no PM2.5 or CO2. China is currently planning 32 new nuclear plants. But these require high capital investment, and that makes them less attractive for rapid large-scale deployment in the developing world. The developed world has the financial resources to subsidise solar and wind, at least for peak power purposes in their own countries. But developing countries are not wealthy enough to do that, and yet their expected energy growth is too big for the developed world to subsidise. The recent retreats from subsidising renewables in Spain and Germany demonstrate how fragile and fickle government support can be. There is a general rule which is especially true for developing economies: If it isn't profitable, it isn't sustainable. 1.4 Scrubbers In principle, scrubbers in coal smokestacks can remove many of the pollutants, and they are widely but not universally used in the US and Europe. US regulation requires them eventually to be installed, but retrofitting and operating such scrubbers has often proven more expensive than simply shutting down the coal plants and switching to natural gas. A 2008 report from the China Energy Group at MIT illustrates the severity of the cost problem in the developing world. Even when scrubbers have been installed, local coal power plant operators in China consistently turn them off because of the expense of operation. [Steinfeld 20081. 1.5 Shale gas Natural gas offers a practical and relatively quick way to stem the rise of PM2.5 air pollution. At the same time, as an alternative to coal, it offers an important opportunity to significantly slow the growth of CO2 emissions. Shale gas is natural gas, mostly methane, tightly trapped inside shale rock. Conventional natural gas is the small fraction that has slowly leaked out of the shale over millions of years and became concentrated in easily reached geologic pockets. But shale gas is the source, and as such is much more abundant than conventional gas. Its existence has been known for a long time, but most geologists thought its extraction was economically unfeasible, until recently. Over the past two decades, geologists discovered they can release it in vast quantities by using horizontal drilling (which can follow a deeply -buried thin shale bed for over a mile) and multi -stage frocking (hydraulic fracturing — pumping water into the rock at pressures of a thousand atmospheres). In the US, shale gas production has grown by a factor of 17 in the last 13 years. It now supplies 35% of US natural gas. In the US, substitution of shale gas for coal power was driven in large part by the fact that old coal plants needed to be retrofitted with expensive scrubbers; it was often cheaper to decommission them and build a new combined cycle gas plants instead. The cleanliness shale gas delivers is intrinsic. Compared to coal, shale gas results in a 400 - fold reduction of PM2.5, a 4,000 -fold reduction in sulphur dioxide, a 70 -fold reduction in nitrous oxides (NOx), and more than a 30 -fold reduction in mercury. [EIA 1999, EIA 2009]. As a result of this coal -to -gas transition, over the last 15 years, the electric power derived from coal in the US has dropped by 1/3, replaced by 2 shale gas power. This reduction, in turn, is responsible for much of the unanticipated drop in US greenhouse gas emissions during that same period. [Hausfather, 20131. China became a net importer of natural gas in 2007, and by 2012 the imports grew to 29% of its gas consumption. [EIA 20131. And yet it is believed that China has enormous reserves of shale gas, perhaps 50% larger than those of the US. [EIA 20111. If that shale gas can be utilised, it offers China a wonderful opportunity to mitigate air pollution while still allowing energy growth. And shale gas can help address the global warming issue too. When burned to produce energy, natural gas produces typically half the CO, of coal (depending on the grade).6 In addition, when the heat energy is used to produce electricity, natural gas can produce electricity with 50% higher efficiency than can coal, even when the coal is burned in the most efficient way, in a pulverised supercritical power station. The net result is that CO2 produced per kilowatt-hour of electricity from gas is only one third to one half that of coal. And, the capital cost of such a gas-fired plant is much less than that of a similarly sized coal- fired plant. a The CO2 produced in burning coal depends on the grade, that is, on how much of the coal is carbon and how much is complex hydrocarbons. Natural gas consists primarily of methane, CH,, and when methane is burned more than half of the energy comes from the hydrogen which burns into harmless H2O — water. (Although H2O is a greenhouse gas, the amount produced is overwhelmed by natural H2O.) In contrast, when carbon burns, all the energy comes from creating carbon dioxide. 6 2. IS SHALE GAS ENVIRONMENTALLY BENIGN? Despite the immense potential environmental value of shale gas, the list of potential environmental negatives is also significant. We need to sort out which threats are real and which ones are based on misunderstanding; the rapid development of shale gas has been matched by an equally rapid growth of misinformation about the potential dangers. The following paragraphs go through these one by one and explain why, although all of them must be addressed, none of them are showstoppers. 2.1 Shale gas production depletes limited supplies offresh water A large amount of fresh water is normally used in US fracking operations, typically about a 1 gallon of water for each million BTUs of shale gas produced. (1 million BTUs of energy requires 1,000 cubic feet of gas, or about 30 cubic metres.) For a single well, that can amount to two to five million gallons of water, enough to fill several Olympic -sized swimming pools. Yet viable alternatives exist. Virtually all of the shale gas regions have abundant resources of deep brines — salty water — well below the shallow depths where fresh water is found. This is not accidental; the same sedimentary geology that trapped shale gas provides barriers that trap rainfall. Potable water is typically found from the surface to a depth of about 100 metres; below that, the water is too salty for any commercial purpose — other than fracking. At 300 to 500 metres, still relatively shallow compared to the shale layers, abundant saline water can be extracted. Moreover, most of the water that flows back from the well can be treated and reused. A gas and oil company named Apache has been on the forefront of reducing fresh water Centre or Policy Studies use. They first did this at the Horn River formation in Canada where brines proved not only practical but cheaper than use of fresh water. Then they eliminated fresh water use in fracking operations in Irion County, Texas; this year they have used only recycled produced water from fracking operations and oil fields together with brackish water obtained from the Santa Rosa formation at 800 to 900 feet depth [Reuters 2013]. In all of Apache's hydraulic fracturing operations in the Permian Basin, more than half the water is sourced from non - fresh water sources, about 900 wells. In the US, many farmers and ranchers prefer that fresh water be used since they can make additional income by selling it. Saline water requires different additives to address viscosity, corrosion, scaling, and bacteria, but the required chemicals are not substantially more expensive than those for fresh water. In his book on shale gas, Vikram Rao, the former CTO at Halliburton, recommends that brines completely replace fresh water for (racking operations. [Rao 20121. 2.2 Flaming faucets! Fracking pollutes ground water The famous "flaming faucets" shown in the movie Gasland (and on youTube) were not due to fracking, despite what that movie suggests. The accounts were investigated by state environmental agencies, and in every case traced to methane -saturated ground water produced by shallow bacteria. Indeed, the movie FrackNotion includes a clip in which the Gasland producer, writer, and star Josh Fox admits that flaming faucets were common long before fracking was ever tried. Nonetheless, there have been suggestive correlations between local water contamination and well locations. In cases in which contamination has been documented as coming from the wells, it has not come from the (racking (which typically takes place at depths of two to four kilometres), but from improper wastewater disposal or from leaking shallow casings in old drill holes. Properly designed drilling, fracking, and completion regulations, coupled with effective monitoring, can ensure that shale gas production has small or zero detrimental effect on the environment. This leakage issue is not particularly linked to shale gas wells; the same dangers occur for conventional gas and oil wells. The reason for legitimate concern is that with shale gas, the number of wells in a region can be large, so the risk of contamination is higher. The solution lies in regulating shale at least as stringently as conventional oil and gas. If ground water contamination occurs, fine the perpetrator enough to make it highly unprofitable. Monitoring can be done both through government and community inspections; the threat of stiff fines will drive all operations to use industry best practice. 2.3 Fugitive methane — a powerful greenhouse gas Methane, the dominant component in natural gas, is a much more powerful greenhouse gas than carbon dioxide. The initial scare of the danger of "fugitive" (leaked) methane came from mistaken use of the fact that its "greenhouse potential" is 83 times that of CO2, kilogram per kilogram' That makes it seem that even 1% leakage would undo its advantage over coal. But if you take into account the fact that methane is rapidly e This value and the subsequent values are the those used in the latest report of the International Panel on Climate Change. The value 83 is for a 20 year time frame. 7 Centre for Policy Studies destroyed in the atmosphere (with a much shorter lifetime than CO2), then the potency is reduced to about 34 times. And the fact that methane weighs less (molecule per molecule) than CO2 means that leaked methane is only 12 times more potent for the same energy produced.' Because natural gas power plants are more efficient than those of coal, even with leakage rate of up to 17% (far higher than even the most pessimistic estimates), natural gas still provides a greenhouse gas improvement over coal for the same electricity produced. [Muller, 2013; Cathles et al. 20111. How much methane leaks in actual practice? Initial analysis by Howarth [20111 suggested that it might be as high as 8%. That is well below the coal equivalent percentages, but it certainly makes natural gas less attractive from a global warming perspective. However, Howarth's original work made assumptions for parameters that were not directly measured, and many of these were "conservative estimates" — which means prejudicial against natural gas. It took two years, but finally a calibrated study of 190 wells showed that the leakage from shale gas production averaged about 0.4%. [Allen, 2013; Hausfather & Muller 20131. If we add in leakage in pipelines and storage, the maximum is still only 1.40%, and the greenhouse advantage over coal is large. A recent report by Miller at al. [20131 suggests the rate could be twice that; but even if this new report is more accurate than the EPA value, fugitive methane is still a vast greenhouse gas improvement compared to coal. 9 A kilogram of methane produces 2.75 kg of CO2 when burned. That means that to calculate what happens if methane leaks, we have to compare the potency of 1 kg of methane to the potency of the 2.75 kg of CO2 that otherwise would have been put into the atmosphere. That reduces the ratio from 30 to 30/2.75 = 11. 8 In retrospect, that low number of 1.4% for leakage is not surprising. Any producer who leaks 8% of his gas (the Howarth number) is throwing away 8% of the revenue, and a much larger percentage of the profit. 2.4 Poisoning the ground with (racking fluid A few years ago, one of the competitive secrets to fracking was in the choice of chemical additives to the fracking water. Environmentalists worried about the potential harm that such additives could do to the underground rocks and if accidently released to the surface and mixed with groundwater. To alleviate concerns, over 55,000 wells in the US are now disclosing the fluids they use; the compositions are published online at fracfocus.org. Additives include friction reducers, oxygen scavengers, corrosion and scale inhibitors, and biocides. Some companies have gone further: executives of the firms have drunk fracking fluid at press conferences to demonstrate how harmless it is. The concern of harming the ground needs to be put in perspective. The shale is already full of nasty chemicals, including the very hydrocarbons the drillers are trying to obtain (gasoline, kerosene), carcinogenic compounds known as PAHs, as well as arsenic and heavy metals including mercury and lead. Nobody drinks the flowback water. It is bad stuff, due to what comes out of the ground rather than what was pumped down, and it must be handled appropriately. About 30% of the water injected into the ground comes back, a combination of fracking fluid and produced water from the ground. At least 90% of this water can be recycled and put back into future wells. That leaves 3% or less to be disposed of. Regulation should require that residual waste water not be released into the surface environment, but be trucked away; if liquid, then buried in disposal wells. Such practices are already in use in the US as well as in Sichuan Province of China. Southwestern Energy, one of the largest US shale gas companies, states on its website that it recycles 100% of its waste water. 2.5 Earthquakes induced by fracking Injecting water into the ground can induce earthquakes. In 2011, a magnitude 5.6 earthquake triggered by water injection in Oklahoma destroyed 14 homes and injured two people. A good review was recently published in Science. [Ellsworth, 20131. No large earthquakes have been associated with fracking but rather with "disposal wells". There are about 30,000 such wells in the US, most used for conventional oil and gas wastewater burial. Of these, most show no injection -induced seismicity; the ones that do are the ones that dispose of very large volumes or dispose of water directly into faults. Fracking does not inject similarly huge amounts of water, and for that reason has not been the cause of large earthquakes. Typical earthquakes generated directly by (racking are magnitude one to two, too small for a human to feel although detectable by seismometers. The energy factor for a one -magnitude difference is typically 30, so a magnitude two fracking earthquake is smaller than a magnitude five disposal earthquake by 30x30x30 = 27,000 times, the same energy ratio as for a match compared to ten pounds of TNT. We can prevent disposal earthquakes by recycling water to minimise injection volumes and by taking care in the choice of disposal well locations. 2.6 Shale gas is a fossil fuel True. And as such, it contains substantial amounts of carbon, and eventually we need to stop injecting CO2 into the atmosphere. But the increases in atmospheric CO2 that we are observing is coming largely from expanding coal use in developing countries. If their increased energy needs can be met from natural gas instead of coal, we can slow global warming by a factor of two to three. That means that instead of having 30 to 50 years before we reach twice the preindustrial carbon dioxide levels in the atmosphere, we might have 60 to 100 years or more. In that time, the cost of solar, wind, energy storage and nuclear could drop to a level at which they can be afforded by the developing world; we may even have fusion energy, or something we have yet to dream of. In fact, with the hoped for economic growth, there may be little of developing world that is undeveloped in 50 years, and the whole world could afford to use zero carbon energy sources even if the cost of solar and wind were to remain high. 2.7 Cheap natural gas will slow the development of solar and wind If natural gas is available, then it reduces the pressure to develop inexpensive renewable technologies. For some environmentalists, this is their most serious concern. With natural gas providing a cheap alternative, the pressure to produce cheap solar and wind is reduced. Yet cheap natural gas can also make it easier for solar and wind energy to further penetrate electricity markets by providing the rapid back-up that those intermittent sources require. In addition, natural gas is the only base load fuel that can be downscaled into microgrids and distributed generation networks to provide that same flexibility and reliability for solar energy on rooftops and in 0 Centre or Policy Studies buildings, expanding the market for urban solar systems. Particularly for areas focusing on distributed generation, natural gas can be an enabler of wind and solar. And there is a real danger that if shale gas is not developed, then the main competition to solar and wind will be cheap coal. That is difficult to avoid even in the developed world. Because of Fukushima, Japan is shutting down many of its nuclear plants. As a result it expects to expand its coal use by 23% in 2014. Ironically, one of the larger coal plants it will open is in Fukushima. In Germany, also shutting down nuclear, the greatest energy expansion is coming in coal. In 2012, coal accounted for 45% of Germany's electric power, and in 2013 it has already grown to 50%. Solar in Germany is at 14%. Moreover, if it is to grow substantially and supply more than just peak power needs, solar needs good energy storage systems. Letting a perfect renewable future be the enemy of a good short- to medium-term transition from coal to gas would probably result in a world with more overall greenhouse gas emissions and deaths from air pollution. 2.8 Shale Gas Development Industrialises Rural Lands The large-scale and long-term structures used to deliver solar and wind power are much more likely to interfere with the local environment. Many people are already complaining about "industrializing the landscape" with wind turbines. Wind farms off the coast of Cape Cod in the US have been opposed by environmentalists who considered them unsightly and worry that they interfere with sea life. In contrast, the drilling derrick for a natural gas well is normally portable, and is in place for only one to three months. Then it is replaced with a much smaller work -over rig for a few weeks, and then replaced with a small 10 "Christmas tree" of pipes, valves, and gas/liquid separator in a fenced platform about 30 metres square. In China, half of the concrete drilling platform is removed when production starts, and recovered land is restored to agriculture and homes. A single well can extract gas from a mile of shale, and multiple wells (different underground locations and depths) are now being drilled from a single platform both in the US and in China, and that reduces the number of platforms needed in a given area. A serious but temporary local impact can come from the heavy truck traffic needed to bring in pumps and materials, particularly in areas where roads are poor. In China, local communities benefit from the road improvements that the gas companies make to bring in materials and equipment, and so they are tolerant of the temporary disruptions. Indeed, agreements are negotiated between the gas companies and the local communities. 3. SHALE GAS CAN BE THE SOLUTION The argument up to now can be summarised as follows: shale gas is urgently needed to address the greatest human -caused environmental disaster of our time, rising levels of air pollution, currently causing over three million deaths per year worldwide. At the same time it can dramatically slow the rate of global warming, and, as a bridging fuel, provide the time we need to develop truly sustainable non -carbon energy sources. The main dangers of shale gas can all be addressed by regulation to ensure that development is done using industry best practice, with heavy fines for malefactors. But why is shale gas needed in the developed world — a world that can afford to pay the premium for solar and wind? The fundamental reason is speed. Europe can develop shale gas far more rapidly than it can move to solar and wind, largely because of the low cost, the absence of an intermittency problem, and good existing gas infrastructure. To the extent that shale gas replaces coal, it will save hundreds of thousands of deaths each year, lives that will be lost if we choose the slower and more expensive transition to renewables. In addition, shale gas can enable Europe to quickly follow the US lead to lowering greenhouse gases. Coal use is still widespread in Europe. In 2009, it produced 28% of the electric power in the UK, 56% in the Czech Republic, and 42% (more recently up to 500/) in Germany. Shale development in the US was facilitated by the fact that the US is blessed with some geologic regions in which the underground formations were most amenable to the new technology, not only in Texas but also in Pennsylvania and North Dakota. Shale layers tended to be at modest depths and unbroken by faults and other structures that complicate the shale formations in China and Europe. It is not just the presence of shale gas that determines economic viability. Drilling a shale gas well is a complex operation. Each well typically costs between US$3 million to US$6 million; initial exploration wells can be twice as expensive. Even if they are productive, the bottom line is whether they produce enough to yield a profit. China and Europe have the "advantage" (for development) that they are importing natural gas at a high price, which makes locally produced shale gas competitive. (In the US, facilities designed to import liquefied natural gas are now being converted to export facilities.) China and Europe need inexpensive gas if they are to substitute clean shale gas energy for coal. In fact, a number of shale formations in the US were economic failures. Many people have heard of the great successes: the Barnett, the Marcellus, the Bakken. But virtually nobody outside the shale gas community knows of the Caney in Oklahoma, the Conesauga in Alabama, the Mancos in New Mexico, the Mowry in Wyoming, or the Kreyenhagen in California. These were failed efforts, sites that were drilled but have not yet led to development. Chinese shale gas development has been proceeding slowly, in part because their geology is complex, and in part because of their inexperience with free enterprise. China's first attempts at introducing competition, based on open bidding for shale gas leases, have been very disappointing; many of the winning companies do not have the technical or financial capability for the rapid and innovative development that was needed. China has found it difficult to decontrol prices, a key step towards making shale gas competitive. Until China masters the free -enterprise system (and it has a long way to go), rapid technological advances are far more easily achieved in the West through competition and iteration, and then exported to China. Shale gas mining in the West is undergoing rapid technological development that is bringing down the cost. We already mentioned the use of brines in place of fresh water. Perhaps equally important is the improvement of extraction efficiency. Industry experts believe that the cubic metres of gas recovered from a given well can be doubled in the near future by better design of the fracking stages to match geologic formation characteristics. And they also believe that number could double again in the next decade. Soon that will mean four times the production for only a minor increase in cost. Such an advance is expected to turn currently difficult fields into major producers, to open up fields in China, Europe, and the US that are currently unprofitable. 11 The main impediment to the advance of technology in the US is the low price obtained for natural gas (under US$3.50 per million BTU, at the time of writing). As a result, few new gas wells are being drilled; emphasis is on wells that yield more valuable heavy hydrocarbons and oil. The price is still low in the US because of limited demand increase and the large number of shale gas wells already drilled and producing — over 100,000. After an initial surge of production, shale gas wells continue to produce at a low level for decades. But demand is rising as more US coal plants switch to natural gas and as the petrochemical industry moves back to the US (from places like Qatar) because of the newly low price of feedstock. We can expect the price to rise a bit (to US$4.50? US$5.00?) and that will encourage additional innovation. As mentioned above, Europe shares the ironic advantage of China — the high price it is accustomed to pay for imported natural gas, typically US$10 per million BTU (compared to the USS3.50 in the US). At those prices, the cost of shale drilling and completion can be much higher and still be in the profitable range. That means that Europe can be the testing and proving ground where innovative technology can be tried and perfected while still profitable. It is not just a matter of low cost and clean air, but an issue of energy security. Europe is far more dependent on Russian gas than it likes, and the Russian shutdown of the Ukrainian pipeline in 2009 clearly made Europeans recognise their vulnerability. 12 4. CONCLUSION The air pollution crisis in China and in the rest of the developing world is only beginning. We observed on recent trips to China that many people mistakenly believe any level of pollution below an AQI of 250 is just "haze" and rarely bother to put on masks. When the PM2.5 levels rise above this, the government issues radio alerts and most residents mask up. The average AQI in Beijing° this year has been 159, in the unhealthy range; the US mean is 45. As the pollution grows it will soon be a mask day every day. Foreign businessmen who recently flocked to China as the land of opportunity now spend as much of their time as possible out of the country. Air pollution makes it an unattractive place to raise a family. Chinese citizens who have the capability of living abroad are doing so. The Chinese government is deeply concerned about this brain drain. And their worst fear is social disharmony, a force that could disrupt their very rule. We must help the world switch from coal to natural gas. This is not just a public heath issue but a humanitarian one. We need to advance shale gas technology as rapidly as possible and to share it freely. We are in the midst of the greatest environmental catastrophe of modern times, but we are also in the midst of an energy revolution, comparable in significance to the 1849 US gold rush. Shale gas, with its near-total reduction of PM2.5 pollution provides a solution to the pollution. It can be a clean technology, and even though it will not halt global warming, only energy conservation offers a more affordable way to slow it. Environmentalists should recognise the shale gas revolution as beneficial to society and lend their full support to helping it advance. 10 The historic Beijing hourly PM2.5 record since 24 January 2013 has been recorded by Andy Young at http:/Noung-O.com/airquality/ REFERENCES Allen, D. T. at al, 2013, Measurements of methane emissions at natural gas production sites in the United States, www.pnas.org/cgi/doi/10.1073/pnas.1304880110 Cathles, L. M., L. Brown, M. Taam, A. Hunter. 2011. A commentary on "The greenhouse -gas footprint of natural gas in shale formations" by R.W. Howarth, R. Santoro, and Anthony Ingraffea. Climatic Change. DOI 10.1007/s10584-011-0333-0 Chen, Y., A. Ebenstein, M. Greenstone, H. Li, 2013, Evidence on the impact of sustained exposure to air pollution on life expectancy from China's Huai River policy. www.ipnas.oLq/cgi/doi/10.1073/pnas.1300018110 EIA 1999. Natural Gas 1998, Issues and Trends. Energy Information Administration document DOE/EIA- 0560(98). http//wwweiaggv/pub/oil gas/natural gas/analysis publications/natural gas 1998 issues trends /12df/it98 pdf EIA 2009. Modern Shale Gas Development in the United States — A Primer. United States Energy Information Administration. April 2009. httoi//www nett doe.gov/technologies/oil- gas/publications/er)reports/shale gas primer 2009.pd EIA 2011, World Shale Gas Resources — An Initial Assessment of 14 Regions Outside the United States. US Energy Information Administration report, Washington DC, April 2011, available at wwweia.gov EIA 2013. www.eia.gov/COUNTRIES/cab.cfm?fir)s=CH EI Pais, 12 November 2013. English edition available at: http7//elpaiscom/elr)ais/2013/l0/l8/inenglish/l382105674 318796html Ellsworth, W.L., 2013. Injection -Induced Earthquakes. Science 341, 1225942 (2013). DOI: 10.1126/ science.1225942 https7/lwww.sciencemag.org/content/341/6142tl225942,abstract EPA 2010. Quantitative Health Risk Assessment for Particulate Matter, report EPA -452/R-10-005. Hausfather, Z., 2013. Explaining and Understanding Declines in U.S. CO2 Emissions http //static berkeleyearth org/memos/explaining-declines-in-us-carbon pdf Hausfather Z. and R. Muller, 2013, New EPA Report Reveals Significantly Lower Methane Leakage from Natural Gas. http //static berkeleyearth o[q/memoslel2a-report-reveals-lower-methane-leakage-from- natural-gas.pdf Howarth, R. W, R. Santoro, A. Ingraffea, 2011, Methane and the greenhouse -gas footprint of natural gas from shale formations, Climate Change, DOI 10.1007/sl0584-011-0061-5. For a discussion of this paper, see httr)://www.valeclimatemediaforum org/2011/05/coal-preferable-to-natural-gas-or-noU International New York Times, 22 October 2013, page 1 13 Centre tar Policy Studies Lancet 2012, Global Burden of Disease Study. This study consisted of seven Articles, which can be accessed at http-//wwwthelancetgom/themed/global-burden-of-disease Lepeule, J, F. Laden, D Dockery, J Schwartz, 2012. Chronic Exposure to Fine Particles and Mortality: An Extended Follow-up of the Harvard Six Cities Study from 1974 to 2009. Environmental Health Perspectives vol. 120 1 no. 71 July 2012, pp 965-970. Miller, S. A. at al, 2013. Anthropogenic emissions of methane in the United States, Proc. US National Academy of Sciences, www.r)nas.org_lggi/dol/ 01073/pnas 1314392110 . Muller, R. A., 2012. Energy for Future Presidents (Norton, New York). Muller, R. A., 2013. Fugitive Methane and Greenhouse Warming, Berkeley Earth memo. http,//static berkeleyearth ora/memos/fugitive-methane-and-greenhouse-warming.12df O'Keefe, 2013. www.healtheffects.org/Slides/AnnConf20l3/0Keefe-Sun.lpdf Rao, 2012. V., Shale Gas, The Promise and the Peril, 198 pages, RTI Press. Reuters 2013. Fracking without freshwater at a west Texas oilfield. http //in reuters com/article/2013/11/21/apache-water-idiNL2NOJ514J20131121 Steinfeld, E. S., R. K. Lester, E. A. Cunningham, 2008. Greener Plants, Grayer Skies? A Report from the front lines of China's Energy Sector. Industrial Performance Center. http,//web.mit.edu/ipc/publications/pdf/08-QQ3.pdf Yang G, Wang Y, Zang Y, at al. (2013). Rapid health transition in China, 1990-2010: findings from the Global Burden of Disease Study 2010. Lancet 2013; 381:1987-2015. This paper can be downloaded (after you have registered for free) at: http-//download.thglancet.com/mmcs/ ournals/lancet/PlIS0140673Ql3610971/mmclpdf?id=de2e5b4bld4 61676:68d48003:142252cOc077-26961383605243403 14 THE CENTRE FOR POLICY STUDIES The Centre for Policy Studies is one of Britain's best-known and most respected think tanks. Independent from all political parties and pressure groups, it consistently advocates a distinctive case for smaller, less intrusive government, with greater freedom and responsibility for individuals, families, business and the voluntary sector. Through our Associate Membership scheme, we welcome supporters who take an interest in our work. Associate Membership is available for £100 a year. Becoming an Associate will entitle you to all CPS publications produced in a 12 -month period; invitations to lectures and conferences; advance notice by e-mail of our publications, briefing papers and invitations to special events. Please contact Jenny Nicholson, Deputy Director, Events and Fundraising, for more details at the address below. H THE AUTHORS Richard A Muller has been Professor of Physics at the University of California, Berkeley since 1980. He is recognised as one of the world's leading climate scientists and is the co-founder and scientific director of Berkeley Earth, a non-profit organization that re -analysed the historic temperature record and addressed key issues raised by climate sceptics. He is the author of Physics for Future Presidents and Energy for Future Presidents and six other books. He has founded two projects that led to Nobel Prizes and was named by Foreign Policy as one of its 2012 Top 100 Global Thinkers. Elizabeth A. Muller is co-founder and Executive Director of Berkeley Earth, and founder and Managing Director of the China Shale Fund, an investment fund that brings together the best geological minds for innovation in shale gas in China. Previously, she was Director at Gov3 (now CS Transform) and Executive Director of the Gov3 Foundation. From 2000 to 2005 she was a policy advisor at the Organization for Economic Cooperation and Development (OECD). She has advised governments in over 30 countries in both the developed and developing world. The aim of the Centre for Policy Studies is to develop and promote policies that provide freedom and encouragement for individuals to pursue the aspirations they have for themselves and their families, within the security and obligations of a stable and law-abiding nation. The views expressed in our publications are, however, the sole responsibility of the authors. Contributions are chosen for their value in informing public debate and should not be taken as representing a corporate view of the CPS or of its Directors. The CPS values its independence and does not carry on activities with the intention of affecting public support for any registered political party or for candidates at election, or to influence voters in a referendum. ISBN 978-1-906996-80-2 © Centre for Policy Studies, December 2013 57 TUFTON STREET, LONDON SW1P 30L TEL 44(0) 20 7222 4488 FAX 44(0) 20 7222 4388 WWW. CPS.ORC. UK The Shale Gas Shock Matt Ridley Foreword by Freeman Dyson The Global Warming Policy Foundation GWPF Report 2 G_WPF Reports Views expressed in the publications of the Global Warming Policy Foundation are those of these authors, not those of the GWPF, its Trustees, its Academic Advisory Council members or its Directors. The Global Warming Policy Foundation Director Dr Benny Peiser Board of Trustees Lord Lawson (Chairman) Sir Martin lacomb Lord Barnett Henri Lepage Lord Donoughue Baroness Nicholson Lord Fellowes Lord Turnbull Rt Rev Peter Forster, Bishop of Chester Academic Advisory Council Professor David Henderson (Chairman) Professor Richard Lindzen Adrian Berry (Viscount Camrose) Professor Ross McKitrick Sir Samuel Britton Professor Robert Mendelsohn Sir Ian Byatt Professor Sir Alan Peacock Professor Robert Carter Professor Ian Plimer Professor Vincent Courtillot Professor Gwyn Prins Professor Freeman Dyson Professor B P Radhakrishna Christian Gerondeau Professor Paul Reiter Dr Incur Goklany Dr Matt Ridley Professor William Happer Sir Alan Rudge Dr Terence Kealey Professor Philip Stott Professor Anthony Kelly Professor Richard Tol Professor Deepok Lal Dr David Whitehouse Professor Harold Lewis The Shale Gas Shock Matt Ridley Foreword by Freeman Dyson ISBN: 978-0-9566875-2-4 © Copyright 2011 The Global Warming Policy Foundation The Shale Gas Shock Contents Foreword....................................................................................3 Summary....................................................................................4 Introduction................................................................................5 History........................................................................................7 Peakgas?................................................................................1 1 Sceptical counter-arguments........................................................13 Worldwide interest....................................................................14 Coal -bed methane and tight gas in sandstone................................15 Shale gas exploitation worldwide................................................16 Shale gas in Europe..................................................................16 The predictability of shale gas....................................................18 Environmental impacts................................................................19 Frackingfluid............................................................................19 Flamingfaucets..........................................................................21 Wastewater..............................................................................21 Waterdepletion........................................................................22 Landscape and habitat impact....................................................23 Shalegas price..........................................................................24 Energyefficiency........................................................................25 New markets for gas in transport................................................27 Feedstock and fertiliser................................................................28 Effect on world trade..................................................................29 Greenhouse gas emissions..........................................................30 Conclusion: gas and decarbonisation..........................................31 About the Author Matt Ridley is one of the world's foremost science writers. His books have sold over 800,000 copies and been translated into 27 languages. His new book 'The Rational Optimist' was published in 2010. He is a member of the GWPF's Academic Advisory Council. Freeman Dyson Freeman Dyson FRS, a world-renowned theoretical physicist, is Professor Emeritus of Mathematical Physics and Astrophysics at the Institute of Advanced Study in Princeton where he held a chair for many years. Dyson is the author of numerous widely read science books. He is a member of the GWPF's Academic Advisory Council. E The Shale Gas Shock Foreword by Freeman Dyson I agree emphatically with the conclusions of Matt Ridley's report. This foreword explains why Two scenes from my middle-class childhood in England. In my home in Winchester, coming wet and cold into the nursery after the obligatory daily outing, I sit on the rug in front of the red glowing gas -stove and quickly get warm and dry. In the Albert Hall in London, in a posh seat in the front row of the balcony, I listen with my father to a concert and hear majestic music emerging out of yellow nothingness, seeing neither the orchestra nor the conductor, because the hall is filled with London's famous pea -soup fog. The gas -fire was the quick, clean and efficient way to warm our rooms in a damp climate. The fog was the result of a million open - grate coal fires heating rooms in other homes. In those days the gas was coal -gas, with a large fraction of poisonous carbon monoxide, manufactured locally in gas -works situated at the smelly and slummy east end of the town. Since those days, the open -grate coal fire was prohibited by law, and the coal -gas was replaced by cleaner and safer natural gas. London is no longer the place where your shirt -collar is black with soot at the end of each day. But I am left with the indelible impressions of childhood. Coal is a yellow foulness in the air. Gas is the soft purring of the fire in a cozy nursery. In America when I raised my own children, two more scenes carried the some message. In America homes are centrally heated. Our first home was heated by coal. One night I was stoking the furnace when a rat scuttled out of a dark corner of the filthy coalcellar, and I killed him with my coal -shovel. Our second home was heated by oil. One happy day, the oil -furnace was replaced by a gas -furnace and the mess of the oil was gone. We were then told that the supply of natural gas would last only thirty years. Now the thirty years are over, but shale gas has extended the supply to a couple of centuries. While the price of oil goes up and up, the price of gas goes down. In America, coal is a bloody fight in the dark. Gas is a clean cellar which became the kids' playroom. The most important improvements of the human condition caused by new technologies are often unexpected before they happen and quickly forgotten afterwards. My grandmother was born around 1850 in the industrial West Riding of Yorkshire. She said that the really important change in working-class homes when she was young was the change from tallow candles to wax candles. With wax candles you could read comfortably at night. With tallow candles you could not. Compared with that, the later change from wax candles to electric light was not so important. According to my grandmother, wax candles did more than government schools to produce a literate working class. Shale gas is like wax candles. It is not a perfect solution to our economic and environmental problems, but it is here when it is needed, and it makes an enormous difference to the human condition. Matt Ridley gives us a fair and even-handed account of the environmental costs and benefits of shale gas. The lessons to be learned are clear. The environmental costs of shale gas are much smaller than the environmental costs of coal. Because of shale gas, the air in Beijing will be cleaned up as the air in London was cleaned up sixty years ago. Because of shale gas, clean air will no longer be a luxury that only rich countries can afford. Because of shale gas, wealth and health will be distributed more equitably over the face of our planet. Freeman Dyson, 22 April 2011 The Shale Gas Shock Summary Shale gas is proving to be an abundant new source of energy in the United States. Because it is globally ubiquitous and can probably be produced both cheaply and close to major markets, it promises to stabilise and lower gas prices relative to oil prices. This could happen even if, in investment terms, a speculative bubble may have formed in the rush to drill for shale gas in North America. Abundant and low-cost shale gas probably will — where politics allows — cause gas to take or defend market share from coal, nuclear and renewables in the electricity generating market, and from oil in the transport market, over coming decades. It will also keep the price of nitrogen fertiliser low and hence keep food prices down, other things being equal. None the less, shale gas faces a formidable host of enemies in the coal, nuclear, renewable and environmental industries — all keen, it seems, to strangle it at birth, especially in Europe. It undoubtedly carries environmental risks, which may be exploited to generate sufficient public concern to prevent its expansion in much of western Europe and parts of North America, even though the evidence suggests that these hazards are much smaller than in competing industries. Elsewhere, though, increased production of shale gas looks inevitable. A surge in gas production and use may prove to be both the cheapest and most effective way to hasten the decarbonisation of the world economy, given the cost and land requirements of most renewables. The Shale Gas Shock Introduction 1 . The detection and exploitation of shale gas has been described as nothing less than a revolution in the world energy industry, promising to transform not only the prospects of the gas industry, but of world energy trade, geopolitics and climate policy. Production of 'unconventional' gas in the U.S. has rocketed in the past few years, going beyond even the most optimistic forecasts. It is no wonder that its success has sparked such international interest... A few years ago the United States was ready to import gas. In 2009 it had become the world's biggest gas producer. This is phenomenal, unbelievable. - Anne -Sophie Corbeau, International Energy Agency' 2. The claim made by shale gas's champions is that, in defiance of early scepticism, shale gas is proving to be: ubiquitous, with the result that it promises to be developed near to markets rather than in places where it happens to be abundant, like oil; cheap, with the result that it promises gradually to take market share from nuclear, coal and renewable energy and to replace oil in some transport and industrial uses; environmentally benign, with the result that it promises to reduce pollution and accelerate the decarbonisation of the world economy. 3. This report considers these claims and assesses them against various counter -claims. It finds that although there are considerable uncertainties that make hyperbole unwise, shale gas will undoubtedly prove to be a significant new force in the world energy scene, with far-reaching consequences. I hfp://www.bbc.co.uk/news/business12245633 The Shale Gas Shock Geological definitions 4. Shale gas is one form of unconventional gas extracted from source rocks such as shale, coal and sandstone. • Shale is a common form of fine-grained sedimentary rock laid down as mud in relatively calm seas or lakes. • Black shale is shale that was laid down in especially anoxic conditions on the floors of stagnant seas and is rich in organic compounds derived from bacterial, plant and animal matter. • Conventional gas is gas that has migrated, usually from shale, to permeable reservoirs, predominantly sandstone. • Shale gas is gas that remains tightly trapped in shale and consists chiefly of methane, but with ethane, propane, butane and other organic compounds mixed in. It forms when black shale has been subjected to heat and pressure over millions of years, usually at depths of 5,000-15,000 feet. • Coal -bed methane is gas trapped in coal seams that can be tapped by similar methods to those used for shale gas. • Tight sand gas is gas held in sandstone reservoirs that are unusually impermeable; it can be extracted by fracturing the rock. Shale gas drilling 5. The technology of shale gas production is changing all the time, but the basic steps are these: • Seismic exploration. Underground rock formations are mapped using sound waves and 3D reconstruction to identify the depth and thickness of appropriate shales. This may be done from the air, desktop (re -analysing old data) or ground survey. • Pad construction. A platform for the drilling rig is levelled and hard -cored over an area of about 5 acres. • Vertical drilling. A small drilling derrick drills up to 12 holes down to the shale rock, encasing the borehole in five concentric sleeves of steel and concrete near the surface, falling to one sleeve as the depth increases. Suitable shales are typically 4,000-12,000 feet below the surface. • Horizontal drilling. A larger drilling derrick, 150 feet high, is assembled on site and slant -drills each well horizontally into the shale formation for up to 4,000 feet in different directions, using gas sensors to ensure it stays within the seam. The derrick is then removed after about 30-40 days and the wellhead capped. The Shale Gas Shock Fracturing or 'fracking'. The concrete casing of the horizontal pipe is perforated with small explosive charges and water mixed with sand is pumped through the holes at 5,000 psi (pounds per square inch) to fracture the rock with hairline cracks up to 1,000 feet from the pipe. The sand is used to prop open the fissures, finer sand being used as the cracks propagate further from the pipe. This takes about 3-10 days. The effectiveness of (racking is rising, as 12 -stage (racking replaces 5 -stage (racking. Waste disposal. Tanks collect water that flows back out of the well. The water is generally reused in future frocking, or desalinated and disposed of as waste water through the sewage system. Production. A 'Christmas tree' valve assembly about the size of a garden shed, and a set of small tanks about the size of a small garage, remains on site to collect gas (and small quantities of oil), which then flows through underground pipes to a large compressor station serving a large number of wellheads and onwards to trunk pipelines. b. Approximately 25% of a shale gas well's gas production emerges in the first year and 50% within four years. Thereafter the output falls very slowly and wells are expected to continue supplying gas for about 30-50 years. There is considerable disagreement over how rapidly gas production declines during this period. History 7. Like many technological revolutions, shale gas came about through a timely combination of existing technologies rather than through one new invention: • The knowledge that shale rock contains gas is old; brief bursts ('shows') of gas would be encountered when drilling through shales to reach oil reservoirs. • Hydraulic frocking of rock to open pores and allow the extraction of hydrocarbons dates back to the 1940s. • Horizontal drilling was already in use in the oil industry in the 1970s but improved in the 1990s. • Seismic exploration was also old, but growing computer power led to the development of sophisticated 3D reconstructions of rock strata in the 2000s. 8. It was George Mitchell's genius to bring these four elements together in the 1990s in Texas and discover that significant quantities of natural gas could be extracted from deep shales that had been subjected over the aeons to heat and pressure, using 'slick' (i.e., treated for low - viscosity) water and sand, rather than gel, in just the right mixture to fracture the rock and horizontal drilling to expand the reach of each well. The Shale Gas Shock 9. This turned conventional wisdom on its head. Shales had always been thought unprofitable rocks, not because they lacked hydrocarbons — they derive from muds rich in organic matter laid down in ancient seas or lakes — but because they were not permeable enough for the oil or gas to escape. Indeed, shale often forms the 'cap' that holds in place the profitable oil and gas reservoirs that have migrated into permeable sandstones beneath. 10. The Barnett Shale in the Fort Worth Basin was the first to be developed and surprised many forecasters by its extent and the productivity of its wells. The Barnett Shale now provides about 5% of US natural gas supply. Mitchell Energy and Development began experimenting with hydraulic frocking in the Barnett Shale in 1981 but it was not until 1999 that it found the right 'light sand frac' to release worthwhile amounts of gas'. Mitchell was then acquired by Devon Energy, bringing the expertise of horizontal drilling. The success of Mitchell spun off imitators and attracted rivals to learn the new technology. Some of these then began to hunt out other shale basins, including the Fayetteville and Woodford Shales in Arkansas and Oklahoma, first developed in 2004, and the Haynesville Shale in Louisiana, first developed in 2008. 400 c m 1995 1990 1995 2000 2005 Year Yearly production of gas from the Barnett Shale in the Fort Worth Basin in BCF)Billion Cubic Feet) Source: geology.com 2 h#p://www.isg.utexas.edu/news/feats/2007/barne#/father_of_bome0.html The Shale Gas Shock 1 1. A greater surprise lay in Pennsylvania, where oil drilling had first been invented in 1859 by Edwin Drake and which had long been thought 'played out' by the beginning of the 21 st century. In 2003 a disappointing $6m series of 'dry' wells drilled by Range Resources into a very deep Lockport Dolomite formation had passed through black shale called the Marcellus Formation. Visiting Texas, Range's geologist, Bill Zagorski, suddenly realised the similarity of Marcellus Shale to the Barnett Shale. He suggested the use of hydraulic (racking of the Marcellus Shale. 12. Range Resources returned to Washington County, Pennsylvania, and hydraulically (rocked the Renz 1 well in October 2004, to stimulate gas flow'. Over the next three years it perfected the formula for stimulating quantities of gas from the Marcellus shale°. When Range announced in December 2007 that it had succeeded in producing a flow of 22 million cubic feet of gas per day from seven horizontal wells, geologists led by Terry Engelder of Penn State University realised that the sheer extent of the Marcellus Formation, a black shale laid down in a stagnant sea 385 million years ago, implied a large resource, of perhaps 50 Tcfs. 13. Yet even this estimate proved conservative. By 2011, some estimates of the gas recoverable from the 'beast in the east' had reached 516 Tcf°, equivalent to 25 years' US consumption and worth potentially $2 trillion. This could prove over -optimistic: the proportion that will be recovered, between 10% and 40%, depends on the price of gas and the evolution of technology. Yet it is possible that the Marcellus shale could be not only the largest gas field ever discovered in North America, but possibly larger than any conventional gas field in Russia, the Middle East or North Africa bar the giant South Pars field shared by Qatar and Iran 7. 14. In arguing for high recovery rates from Marcellus, shale gas champions maintain that shallow wells (which have been subjected to less gas -creating pressure and heat) in the North- eastern part of the Marcellus shale are among the most productive. And Marcellus is only one of three overlapping shale strata in the Appalachian Basin. The Utica and Devonian shales cover similarly large areas, extending into Quebec and Ohio respectively. Neither is yet fully tested. 15. Shale gas sceptics counter that gas production in the Barnett and Haynesville shales has quickly focussed on a relatively small 'core area' or sweet spot, where wells are most productive. They consider it likely that this will also happen in the Marcellus Shale, raising both the risk and cost incurred drilling unproductive wells and lead to lower recovery percentages'. 3 http://www.aapg.org/explorer/2010/04apr/marcellus0410.cfm 4 http://www.post-gazene.com/pg/l 1079/1133325-503.stm 5 http://www.geosc.psu.edv/-ite2/references/linkl 50.pdf 6 Penn State University. 7 IPC Petroleum Consulting inc 8 hnp://www.theoildrum.com/node/7075 0 The Shale Gas Shock 16. There is thus considerable uncertainty about how much gas the Marcellus Shale will eventually produce. Combining the probable, possible and speculative quantities in the Marcellus, Haynesville, Barnett, Woodville and other shales, together with conventional fields, the Potential Gas Committee of the Colorado School of Mines (PGC), estimated in 2009 that America holds 2,074 Tcf of gas. In 2010, HIS CERA estimated resources between 2,000 Tcf 'discovered' and 3,000 Tcf 'expected''. United States Shale Gas Plays n«.ro. ar«row+«n�nn�n N /� nh( tlion f Y I-0 Fal Ibn L:�I �' (Y.eeMn � a ®(N+civ.Na,on3 a <A Wl 9 IHS Cambridge Energy Research Associates Report 'Fuelling North America's Energy Future', 2010. 10 The Shale Gas Shock Peak gas? 17. Until 2008, most experts believed that world natural gas supplies would run out sooner than oil or coal supplies. The exhaustion of natural gas reserves has been regularly predicted. For example, in 1922 President Warren Harding's US Coal Commission, after interviewing 500 experts over 11 months, opined: Already the output of [natural] gas has begun to wane. Production of oil cannot long maintain its present rate. US Coal Commission, 192210 18. In 1956, M. King Hubbert predicted that gas production in the United States would peak at about 14 trillion cubic feet per year some time around 1970. In 2002, an Exxon executive pointed out that US gas discoveries had peaked before 1980". 19. In fact, though oil may yet grow more scarce and costly during this century, there is no realistic prospect of the world 'running out' of coal or gas this millennium. As the GBR 2009 Report put it: If one compares the global annual production of all energy resources at the end of 2007 (439 E1) and the amount of reserves (38 700 EJ) and resources (571 700 EI), a ratio of approximately 1 : 90 : 1300 results. GBR 200912 20. Like the peak -oil theory of the 1970s (when Jimmy Carter, influenced by E.F. Schumacher, argued that oil could be used up within a decade) and the peak -coal debate of 1865 (when W.E. Gladstone, influenced by W.S. Jevons, argued that Britain should retire its national debt before its coal ran out), all these forecasts proved to be for too pessimistic. It is notable that shale gas was first exploited in the most explored part of the world, the United States. Part of the reason for these false predictions was that strict price regulation of gas in the 1970s halted gas exploration in its tracks, producing a peak that some mistook for the beginning of exhaustion of reserves. 10 Quoted in Bradley, R.L. 2007. Capitalism at Work. Scrivener Press. P 206. 11 hHp://www.woridenergysource.com/articles/pdF/longwell WE_v5n3.pdf 12 hHp://www.bgr,bund.de/cln_116/nn_335082/EN/Themen/Energie/Produkte/energyresources_2009.htm1?_nnn=true The Shale Gas Shock 21. Recently, the Congressional Research Service has claimed that America now has the world's largest fossil -fuel resources - greater than Saudi Arabia, Canada and China combined" - thanks to shale gas. This is misleading and not just because Canada's 3 trillion barrels of oil sands, one trillion of which are now thought to be economically recoverable, were omitted from the calculation. It is important to realise that the shale gas revolution will not much change estimates of the total hydrocarbon resources existing in the world. Coal, shale oil and oil sands already exist in quantities for greater than can be consumed over the next few centuries. The question has always been one of price: many of these resources are inaccessible at anything less than very high prices. This is especially true of methane hydrates, also known as clathrates, found near the continental margins of the ocean floor. Estimates of the quantities of methane in such reservoirs are that they contain at least twice as much energy, possibly ten times as much, as in all coal, oil and natural gas resources combined: up to 3 million Tcf. To date no practical means to mine this solid fuel, even in shallow permafrost, has been found, and commercial development is probably at least 30 years away. None the less, they serve to remind us that methane is not in any sense likely to 'run out, 14. 22. The key question about shale gas is not therefore whether it exists in huge quantities, but whether it can now be exploited on a large scale at a reasonable price. This is what potentially makes it different from shale oil, tar sands and clathrates: its champions claim that it can compete on volume and price, and even undercut conventional gas reserves. Global Hydrocarbon Occurrences (per Rogner 1997) 30000 I i ■Me[Mne Cbtrt-eyes I5000 j ---¢Coal _..... .._ . _. -.. a UMoervemanal Gas 0 •UMOMPMaPAI Oi u 10000 r 'Conventbral Gas .... ... .. ...... ............. .-... tt. COnvefM1gnBl Oa 2 j a 15000 �.-..--- e _...._-_-- .......... .. ...... -�- `e aao-._- ... -..... ._.._... _.___- ..- conmmm aesm�+ ¢aroma+ce wse uo«�.remas Source: AI Fin Energy blog 13 http://www.energy[ribune.com/articles.cfm/6933/US-Has-Earths-Largest-Energy-Resources 14 http://fossil.energy.gov/programs/oilgas/publications/methane_hydrates/MHydrate_overviem_06-2007.pdf 12 The Shale Gas Shock Sceptical counter -arguments 23. Not everybody agrees with these estimates. Art Berman, a geological consultant, is a well known sceptic, who argues that early experience suggests that only about 10% of each shale gas field will prove to be recoverable. Given that there are large uncertainties about the size of shale gas fields, a careful reading of the PGC report would conclude that US shale gas resources may last for as little as seven years rather than 10015. 24. Berman also argues that far from continuing to produce gas for 40 years, each well may have a rapid decline rate and cease to be commercial within just a few years; decline rates are so high that, without continuous drilling, overall production would plummet. So if you take the position that we're going to get all these great reserves because these wells are going to last 40 -plus years, then you need to explain why one-third of wells drilled 4 and 5 and 6 years ago are already dead. - Art Berman, interview with the Energy Bulletin, 19 July 201016 25. Consequently, in the rush to develop shale gas wells and demonstrate high volumes of production to shareholders, most companies are spending 200-400% of cashflow on drilling and are creating only negative shareholder value as they accumulate debt. As volumes depress prices, this becomes a self-fulfilling prophecy, exacerbated by the 'use -it -or -lose -it' character of 5 -year drilling leases. However great the resource proves to be, companies will go bust trying to develop it. This is a pattern familiar to historians of early railways and dot -corn companies. In short, there is a speculative bubble in shale gas". 26. This argument has force, but Berman's audience is investors, not consumers. It is quite possible that investment in shale gas firms will indeed prove risky as their very success drives gas prices down. But that will only happen if volumes of gas produced are high; and it does not mean that exploration and drilling will cease, for if they did, prices would rise again and exploitation would resume. After all, this has been the experience of the coal industry, the oil industry, and many other industries throughout history: success drives down prices, leading to business failures, but over the long term this does not prevent continuing expansion of production because low prices stimulate expanding consumption. 15 http://www.theoildrvm.com/node/7075 16 http://energybulletin.net/node/53556 17 http://energybulletin.net/node/53556 13 The Shale Gas Shock 27. What makes it possible for prices to fall while production expands in an industry is unit cost reduction through innovation: a farmer, for example, works out how to continue to grow wheat profitably at lower wheat prices. The chief cost of shale gas production is the leasing of drilling and fracking equipment. The cost of this has been falling as companies learn to complete drilling and frocking in shorter and shorter times. With horizontal drilling and hydraulic fracturing being still a fairly new combination of technologies, less than ten years old, unit cost reduction has been dramatic. Some companies are claiming to have halved their costs in approximately two years as they climbed the learning curve1B. The key question is how far this can continue and when unit costs will flatten out. At present, the overwhelming weight of opinion is that further cost reductions are possible. This means that, even though there is a speculative bubble leading to low prices and some bankruptcies, a large and sustained increase in gas production from shale is none the less likely. Finding: Low gas prices are a consequence of high production Worldwide interest 28. The Marcellus discovery alerted the world beyond the gas industry to shale gas. Similar shales exist on all continents, wherever ancient seas and lakes have left deposits of mud. By one estimate, there are 688 suitable shale deposits in 142 basins, only a handful of which have yet been explored". Exploration of shale gas basins has begun in Poland, Morocco, South Africa, Australia, New Zealand, China and other places. It is unlikely that Marcellus will turn out to be the richest deposit in the world. 29. No reliable estimate of unconventional gas resources worldwide yet exists20. Most observers follow Rogner's 1997 stab in saying that about 16,110 Tcf of in-place shale gas are likely to exist, of which 10-40% would be recoverable 21. In March 2011, The Energy Information Administration commissioned a report from Advanced Resources International to assess 48 shale basins in 32 countries. The study arrived at an estimate of technically recoverable resources totaling 5,760 Tcf in those basins (plus 862 Tcf in the United States) 22 and total in-place resources of 25,300 Tcf, not counting large parts of the globe that were not covered, which included Russia. These numbers could prove either too optimistic or too pessimistic. 30. World energy consumption is less than 500 exajoules per year, equivalent to approximately 500 Tcf. Thus recoverable shale gas resources of, say, 8,000 Tcf (i.e., 20-30% of in-place resources) would last at least a century if their consumption displaced half of conventional gas use (which is 23% of total energy use). In January 2011 the International Energy Agency raised its estimate of how long world gas reserves will actually last to quarter of a millennium23. Given the likelihood of other energy sources coming on line long before then, the energy expert Nick Grealy has said that shale gas may be 'essentially eternal'2d. Finding: Shale gas is likely to occur abundantly worldwide 14 The Shale Gas Shock l Y yrp t 01 y„♦ ( Map of 48 major shale gas basins in 32 countries Source: Energy Information Administration: World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States, April 2011 Coal -bed methane and tight gas in sandstone 31. Shale is not the only source of unconventional gas. The some horizontal drilling and hydraulic fracking technology can extract methane from tight sandstones and coal seams. Coal -bed methane is already a major contributor to US gas supplies in the San Juan basin of New Mexico. One estimate of coal -bed methane resources worldwide comes to a range of 3,540 to 7,630 Tcf25, of which 830 Tcf is recoverable with current technology, or about one- third of shale gas quantities. Total tight gas sands could be similar in quantity but with lower recoverable percentages. 18 http://www.oxfordenergy.org/pdfs/NG46.pdf 19 http://w .woridenergy.org/documents/sholegasfeport.pdf 20 hnp://www.rpseo.org/attachments/articles/239/KuuskracHandoutPoperExpandedPresentWorldwideGasShatesPresentation.pdf 21 http://www.worldenergy.org/documents/shalegasreport.pdf 22 http://www.eia.doe.gov/todayinenergy/detaii.cfm?id=811 23 http://www.bbc,co.uk/news/business-12245633 24 Grealy, N. 2010. Global Shale Gas: What now? What next? No Hot Air, London. 25 http://www.rpsea.org/attachments/articles/239/KuuskroaHandoutPaperExpandedPresentWorldwideGasShalesPresentation.pdf 15 The Shale Gas Shack Shale gas exploitation worldwide 32. The rate at which shale gas deposits are exploited worldwide will depend on how fast other countries develop the necessary techniques, and on political will. To take one example, there is little doubt that there will be a shale gas boom in China, for three reasons: China has a policy of encouraging gas use to replace coal; Chinese firms have invested $6 billion in buying into US shale gas firms to learn techniques; and Chinese recoverable resources of shale gas are estimated by EIA/ARI to exceed US ones by 40%26 33. In Russia, by contrast, the powerful position of Gazprom, with its control over gas exports and its huge reserves of conventional gas, will be an impediment to shale gas development. In an indication that it does not welcome shale gas as a competitor in export markets, Gazprom's chief executive Alexander Medvedev has suddenly shown a touching and surprising concern for the environmental health of American women: Every American housewife is aware of shale gas, but not every housewife is aware of the environmental consequences of the use of shale gas. I don't know who would take the risk of endangering drinking water reservoirs. - Alexander Medvedev, interview with the Daily Telegraph, 12 February 201027. Shale gas in Europe 34. There is disagreement as to whether the US experience will prove typical in Europe. Lane Energy and other firms began drilling and frocking in the Silurian shales of Poland in 2010 and are expected to announce imminently that they have found gas. Rich shale gas basins occur in Austria and Hungary. Cuadrillo has drilled a well near Blackpool in England and expects to (rack it soon. 35. Chatham House argues that in Europe shale gas may encounter new and special difficulties: In Europe the geology is less favourable, there are no tax breaks and the service industry for onshore drilling is far behind that in the United States. - Paul Stevens, Chatham House, September 201028. 26 hHp://www.bloomberg.com/news/2011-04-14/china-may-start-shalegas-production-by-2015-ministry-says-1-.html 27 hffp://blogs.telegraph.co.uk/finonce/rowenamason/100003741 /russionenergy-giant.gazprom-shalegas-is-really-really'really- r u b b i s h -n o -re o i l y -i t -i s/ 28 h"p://www.chathamhouse.org.uk/Files/17344_r_0910stevens_es.pdf 29 h"p://www.oxfordenergy.org/pdfs/NG46.pdf 16 The Shale Gas Shock 36. Certainly, there is less experience with entrepreneurial wildcat drilling than in the US; there are fewer firms to compete for contracts; there is higher population density and less tolerance of industrial activity in rural areas (though this has not stopped the wind industry); and planning laws and environmental regulation are tighter and more sluggish. Consequently, Florence Geny argues that the cost of drilling for shale gas in Europe could be double that of America29. France has already imposed a moratorium on shale gas drilling. 37. On the other hand, Europe also has advantages. Hydrocarbons are mostly nationalised, so there is no need for gas firms to negotiate with many different landowners (though the owner of the site of the actual drilling pad will surely need compensation); European drillers can benefit from prior American experimentation and can go straight to the newest kind of horizontal drilling and (racking technology with its small footprint and high success rate; many countries in Europe already have well developed gas pipeline infrastructure. 38. None the less, shale gas will encounter formidable opposition from entrenched and powerful interests in the environmental pressure groups, in the coal, nuclear and renewable industries, and from political inertia. Ultimately, it will be a matter of whether overborrowed European governments, businesses and people will be able to resist such a hefty source of new revenue and a clean energy source requiring no subsidy. Finding: Europe's politics will decide whether shale gas exploitation occurs. 17 The Shale Gas Shock The predictability of shale gas 39. The shale gas industry argues that, on the whole, dry wells do not now happen because gas occurs throughout the continuous shale stratum, rather than being concentrated in 'traps' as conventional gas is. Once the geology is better understood, production is predictable and similar for each well so long as the drilling is accurate and the fracking is successful. The more wells are drilled, the better the properties of the shale become known - effectively 'de -risking' the field. This is unlike conventional gas drilling and means that gas companies can choose where to drill based on how close to pipelines and markets the site is, rather than gambling on lucky strikes in remote locations. 40. This is the so-called 'manufacturing model', in which shale gas is said to resemble a widget factory more than an oil field. However, this is misleading. Since activity in shale gas fields usually contracts into core areas where productivity is highest, and since the decline rate of production from a shale gas well is still highly uncertain, there will still be great differences between good wells and bad ones. The claim of repeatable and uniform results by the shale play promoters cannot be supported by case histories to date. We contend that the factory model is not appropriate because the geology of these plays is more complex than operators claim. - Art Berman, The Oil Drum, 28 October 201030 41. None the less, the widespread nature of shale gas, together with the high cost of transporting gas, means that shale gas development will be concentrated in areas close to major markets. Interestingly, this makes shale gas less of a threat to wilderness areas than conventional gas. As Nick Grealy comments: A 'weak shale' in Northern Germany or Central Britain would be of far higher value than a 'strong' shale in central Australia or Alaska. - Nick Grealy, No Hot Air, 201031. 42. This will damp volatility in price and lead to the viability of longer-term contracts to use gas and longer-term plans to substitute gas for oil and coal in chemical, industrial and transport applications. Finding: shale gas is not just extra gas, it is potentially predictable, low-risk gas. 30 http://www.theoildrum.com/node/7075 31 Global Shale gas: what now? What next? No Hot Air. It3 The Shale Gas Shock Environmental impacts 43. Shale gas was welcomed at first by environmentalists as a lower -carbon alternative to coal. For example, Robert F Kennedy Jr wrote in the Financial Times: Surprisingly, America has more gas generation capacity - 450 gigawatts - than it does for coal. However, public regulators generally require utilities to dispatch coal -generated power in preference to gas. For that reason, high -efficiency gas plants are in operation only 36 per cent of the time. By changing the dispatch rule nationally to require that whenever coal and gas plants are competing head-to- head, gas generation must be utilised first, we could quickly reduce coal generation and achieve massive emissions reductions. - Robert F. Kennedy, Financial Times, 19 July 200932. 44. However, as it became apparent that shale gas was a competitive threat to renewable energy as well as to coal, the green movement has turned against shale. Its criticism is fivefold: • The shale gas industry uses dangerous chemicals in the (racking process that might contaminate groundwater; • poorly cased wells allow gas to escape into underground aquifers; • waste water returning to the surface during production, contaminated with salt and radon, may pollute streams; • the industry's use of water for fracking depletes a scarce resource; • the exploitation of shale gas damages amenity and landscape value. Fracking fluid 45. The first problem came about because of the industry's initial refusal to reveal the ingredients of the slick water used in hydraulic fracking. Pressed by regulators, shale gas companies are now becoming more transparent about the chemicals in (racking fluid. Typically, what goes down the well is 94.62% water, 5.24% sand, 0.05% friction reducer, 0.05% antimicrobial, 0.03% hydrochloric acid and 0.01 % scale inhibitor33. The actual chemicals are used in many industrial and even domestic applications: polyacrylamide as a friction reducer, bromine, methanol and naphthalene as antimicrobials, hydrochloric acid and ethylene glycol as scale inhibitors, and butanol and ethylene glycol monobutyl ether as surfactants". At high dilution these are unlikely to pose a risk to human health in the event they reach groundwater. 32 hfp://www.k.com/cros/s/0/58ec3258-748b-11 de8ad5-00144feabdc0.html#ixzz1 H4rlpsil 33 Range Resources. 34 hRp://www.waytogoto.com/wiki/index.php/Slickwater 19 The Shale Gas Shock 46. But can they even infiltrate groundwater? The aquifers used for well water in states like Pennsylvania lie just a few hundred feet below the surface, whereas the shale gas is several thousand feet below. Seismic studies show that there is approximately one mile of solid rock between the (racking fissures and the aquifer: Even in areas with the largest measured vertical fracture growth, such as the Marcellus, the tops of the hydraulic fractures are still thousands of feet below the deepest aquifers suitable for drinking water. - Kevin Fisher, American Oil and Gas Reporter, July 201035 47. The well pipe running down through the aquifer is encased in alternating layers of concrete and steel and is generally triple -encased down to the depth of aquifers (less than 500 feet). For the well to produce gas it is vital that there are no leaks of either gas or fracking fluids into the aquifer or any other strata, so it is not in the company's interest to allow this. However, on rare occasions wells may fail through the loss of the drilling bit and have to be abandoned. In such cases, the well must be sealed with cement but it is possible that this can be unsuccessful or that contamination can occur before it takes effect. 48. The industry contends that ground water contamination occurs much more frequently as a result of pollution unrelated to the shale -gas industry: agricultural runoff, oil spills from the transport industry, run-off from abandoned coal mines, and so forth. Wherever well water has been tested before and after gas drilling, no evidence has been found of groundwater contamination by (racking fluids. 49. Shale gas operations in the United States are heavily regulated and closely monitored. State regulators from Alaska, Colorado, Indiana, Louisiana, Michigan, Oklahoma, Pennsylvania, South Dakota, Texas and Wyoming have all asserted in writing that there have been no verified or documented cases of groundwater contamination as a result of hydraulic fracking36. Here is a typical statement: No groundwater pollution or disruption of underground sources of drinking water has been attributed to hydraulic fracturing of deep gas formations. Joseph J. Lee, Pennsylvania Department of Environmental Protection, 1 June 20093'. Finding: groundwater contamination by fr possible but unlikely if proper procedures 35 hap://www.bfenvironmental.com/pdfs/inducedfracturingoilreporter.pdf 36 Energy In Depth website 37 Grealy, N. 2010, Global Shale Gas: What now? What next? No Hot Air, London. 20 fluid is lowed. The Shale Gas Shock Flaming faucets 50. Can gas escape into aquifers? Again, the industry has no interest in allowing this to happen because it would reduce the productivity of a well, so the casing of the well pipe is in everybody's interest. There are cases in Colorado, highlighted by a flaming tap in Fort Lupton in the film Gasland, where gas in domestic drinking water from an aquifer can be ignited. However, testing has shown that in Fort Lupton the water well penetrates several coal seams and the gas is 'biogenic' gas (from coal) with a chemical signature different from the 'thermogenic' deep shale gas below: In most cases, however, the [Colorado Oil and Gas Conservation Commission] has found that contamination is not present or that the methane comes from biogenic sources and is not attributable to oil and gas production. - Colorado Oil and Gas Conservation Commission , 20103e 51. Natural gas in well water is a phenomenon that was known for many decades before shale -gas drilling began. (A similar phenomenon allows journalists to film scientists igniting methane that escapes through holes made in ice on Arctic lakes - again this has always happened as a result of organic decay on the lake bed.) 52. In April 2010 Cabot Oil and Gas Corporation paid a fine to the state of Pennsylvania after contamination of the drinking water of 14 homes in Dimock following a water well explosion possibly caused by gas escaping from an incompletely cased well. Cabot maintains that it was not the cause of gas contomination39. Finding: gas contamination of aquifers occurs naturally and has not usually been found to result from shale gas production. Waste water 53. Approximately one-third of the water pumped down the well for (racking returns eventually to the surface together with gas during production. In the Marcellus Shale this water is saline, because the shale rock was formed on the bed of an ancient sea. The water is extracted from the gas, collected in pools doubly lined with heavy-duty polythene, and either re -used for (racking in other wells or desalinated, treated and disposed of as waste. This is no different from the treatment of waste water in any other industrial process. Pollution incidents involving such 'produced water' are rare. A gas well operated by EOG Resources blew out in Clearfield County, Pennsylvania, in June 2010, spilling 35,000 gallons of slick water. The water was contained by berms and linings, and there were no injuries or significant damage to the environment. 38 http://cogcc.state.co.U$/library/GASIAND%20DOC.pdf 39 http://w .cabotog.com/pdfs/Cabot_Release_Statement_9-28-10.pdf 21 The Shale Gas Shock 54. The returning water is also slightly more radioactive than surface water because of naturally occurring isotopes within the rocks. However, this radioactivity drops when the salt is removed and before the water is disposed of in the sewage system. In any case many granite rocks have higher natural radioactivity, so exposure to waste water from gas drilling is likely to be no more hazardous than exposure to some other kinds of rock. There is no evidence that either gets close to being hazardous. Indeed the Pennsylvania Department of Environmental Protection has tested the water in seven rivers to which treated waste water from gas wells is discharged and found not only no elevation in radioactivity but: All samples were at or below background levels of radioactivity; and all samples showed levels below the federal drinking water standard for Radium 226 and 228. - Pennsylvania Department of Environmental Protection, 7 March 201140. 55. All technologies have environmental risks. Press coverage that talks about 'toxic', 'carcinogenic' and 'radioactive' 'chemicals' is meaningless. Vitamin A is toxic. A single cup of coffee contains more known carcinogens than the average American ingests from pesticide residues in a whole year 41. Bananas are radioactive d2. Dihydrogen monoxide is a chemical". The question that needs to be posed is always: how toxic, how carcinogenic, how radioactive? Finding: the shale gas; industry poses no new or special surface water pollution risks. Water depletion 56. The shale gas industry uses water: 1-5 million gallons per well. However, its needs are not great in comparison with those of other industries, such as the power generation industry, or even the quantity used in domestic appliances. Gas drilling in Pennsylvania uses less than 60 million gallons per day, compared with 1,550 used in public water systems, 1,680 used in industry and 5,930 used in power generation in the state (US Geological Survey). A single shale gas well uses in total about the same amount of water as a golf course uses in three weeks. Finding: the shale gas industry does not significantly; contribute to depletion of water resources. 40 http://www.portal.state.pa.us/portal/server.pt/community/newsroom/14287?id=%2016532%20&typeid=l 41 There are more rodent carcinogens in a single cup of coffee than potentially carcinogenic pesticide residues in the average American diet in a year, and there are still a thousand chemicals left to test in roasted coffee" Ames, B.N. and Gold, L.S. (1998) The causes and prevention of cancer: the role of environment. Biotheropy 11:205-20 42 htlp://chemistry.about.com/b/2008/08/11 /bananas-are-radionctive.htm d3 H2O 44 hfp://www.nytimes.com/201 1 /02/27/us/279as.html?pagewanted=3&_r=1 &ref=homepage&src=me 22 The Shale Gas Shock Landscape and habitat impact 57. According to some sources, shale gas exploitation has a major impact on the landscape and habitat. For example a New York Times article in February 2011 described western Pennsylvania thus: Drilling derricks tower over barns, lining rural roads like feed silos. Drilling sites bustle around the clock with workers, some in yellow hazardous material suits, and 18 -wheelers haul equipment, water and waste along back roads. — The New York Times, 26 February 201 1d4 . 58. 1 visited the some area shortly after this article was published and found this picture misleading in the extreme. Drilling derricks were few, hard to spot in the rolling landscape and they 'bustled' for about a month only on each site before being dismantled. The 'back roads' had in many cases been extensively improved and paved by the gas drilling companies. Gas production Christmas trees — small, green pieces of plumbing about the size of a garage or a large garden shed — were inaudible and all but invisible among woods, horse pastures, corn fields and houses. Red-tailed hawks soared over drilling sites and a flock of wild turkeys crossed the road nearby. Signs of prosperity stemming from royalties and company spending, in the shape of new fences and barns, new community centres and revitalized town shops, were everywhere. Shale gas well in production in the Morcellus area. The well head is seen in the midlde of the pad. To the right is shown separation equipment and tanks for storing produced water before being further treated. 1photo: Statoil/Chesapeake) 23 The Shale Gas Shock 59. Note that new technology further reduces the impact. The old technology of vertical drilling would require a footprint of many wells covering 19% of the surface of the area from which gas was being extracted. Horizontal drilling of several wells from one pad reduces this to less than 1%: a 6 -acre drilling pad extracts gas from beneath 1,000 acres of land. And even this is gone after a few weeks, leaving just the 'Christmas tree' behind. The concrete, forest clearance and visual impact of more than 50 wind turbines with equivalent energy output is gigantic by comparison (see below). Shale gas price 60. Until recently the conventional wisdom held that shale gas would be expensive compared with gas from conventional sources and would be uneconomic at prices below $8.50 per MMBTU45. However, according to IHS CERA, shale gas is now being produced more cheaply than most conventional gas". The predictability of shale gas wells combined with the growing experience in how to reduce the time and cost of drilling and fracking wells, means that currently many firms are claiming to be able to produce shale gas at a marginal cost of less than $4 per MMBTU (4.5 cents per kilowatt-hour) — not least because they are close to retail markets. In addition, multi -stage frocking has increased the effectiveness of the fracking process. If this proves sustainable, it effectively makes gas easily competitive with coal, usually the cheapest energy fuel. 61. According to the Institute of Energy Research, the cost of electricity from new plants designed to open in 2016 from different sources will be approximately as follows (in dollars per megawatt -hour): Solarthermal ..............................................312 Offshore Wind ............................................243 Solar photovoltaic........................................21 1 Coal with CCS ............................................136 Nuclear......................................................1 14 Biomass......................................................1 12 Wind..........................................................97 Coal..........................................................95 Gas with CCS..............................................89 Hydro........................................................86 Gas, combined cycle..................................63 Levelized Cost of New Generation Resources Source: U.S. Energy Information Administration, Annual Energy Outlook 2011 hitp://www.eia.doe.goy/oiaf/aeo/electricity—generotion.htmi 24 The Shale Gas Shock 62. These numbers include costs of capital, fuel, operation and maintenance, and transmission and take into account capacity factor — how much of the time the plant can be on line. Of course, actual costs will vary greatly in practice according to location, design, subsidies and price regulation. None the less, it is clear that gas can, given a level playing field, beat all other technologies on price. As contracts that link gas to oil prices expire, and the price of gas decouples from that of oil, gas's advantage may actually grow. Finding: shale gas is inexpensive and its price advantage may widen. Energy efficiency 63. Gas is the most efficient fuel for generating electricity. New combined -cycle gas turbines can achieve almost 60% heat -to -electricity conversion (5,785 btu/kWh), whereas even the newest coal fired turbines cannot yet reach 50% (6,824 btu/kWh)". With waste heat capture for district heating (co -generation(, thermal efficiency can approach 80%. Only a perception that gas is expensive, volatile in price, politically unreliable or likely to grow scarce has stood in the way of a global 'dash for gas' in power generation. If gas supplies prove to be diversified, domestic, abundant and long-lasting, then these perceptions will fade. 64. Moreover, gas-fired turbines are equally efficient at many different scales down to 50MW, whereas efficient coal or nuclear plants are much larger. And they reach peak efficiency within minutes, so can be powered up and down to meet demand spikes, or to back up intermittent renewable -energy output. This efficiency leads to gas being potentially the cheapest and most flexible fuel for generating electricity. 65. In addition, gas has various advantages over other ways of generating electricity: 66. Gas versus coal. Given the higher efficiency of gas turbines and the lower carbon content of gas, burning gas produces only 37% of carbon dioxide as burning coal for the same electricity output'. In addition, unlike burnt coal, burnt shale gas includes no sulphur dioxides, no mercury and fewer nitrogen oxides. It requires no surface mining and mountaintop removal, no tunnelling and ground subsidence and results in many fewer human fatalities. Gas is piped to customers rather than transported by congested road or rail. Therefore, while coal is cheap, it has many environmental externalities, not all of which are fully priced in. 'Clean coal' with carbon dioxide emissions removed would probably be — at 9 cents per kilowatt hour — roughly twice as costly as gas for electricity generation, yet have only a slim carbon emission advantage. Gas, because it burns cleaner, is also more amenable to carbon capture than coal. 45 hnp://www.energybulletin.net/node/49342 46 IHS Cambridge Energy Research Associates Report 'Fuelling North America's Energy Future', 2010. 47 http://www.npc.org/Study_Topic Papers/4-DTG-ElectricEfficiency.pdf 48 http://www.npc.org/Study_Topic_Papers/4.DTG-ElectricEfficiency.pdf 25 The Shale Gas Shack 67. Gas versus oil. Oil is very useful as a transport fuel but is generally too expensive as a fuel for electricity generation, outside the Middle East. The exhaustion of many onshore oil fields has driven oil exploration into deep offshore waters and towards expensive tar sands and tar shales. In the United States, the effect of shale gas has been to decouple the price of gas from that of oil, with gas prices now much lower per unit of energy, further pricing oil out of the electricity generating industry. The some decoupling will happen in the rest of the world as long term linked oil -and -gas contracts gradually expire. Oil is effectively priced out of baseload electricity generation for the foreseeable future. 68. Gas versus nuclear. Gas-fired electricity is cheap to build and costly to fuel; nuclear is the opposite. In practice, thanks to safety requirements, planning delays and design difficulties, nuclear power plants are generally proving far more expensive than expected and the price per kilowatt-hour of nuclear electricity is nearly double that of gas, though of course this may change. Besides, nuclear power, like coal, is most efficient when big. Gas-fired electricity is efficient even at relatively small scales. This means that small units of gas-fired power stations can be added to serve local urban markets, whereas nuclear comes in large units often for from markets. 69. Gas versus wind. A gas drilling rig, like a wind turbine, is an intrusion into a rural area. However, it need not be on a hilltop like a windmill and can be hidden in a rolling landscape. With each wellhead capable of producing gas from up to 12 wells, or about 50 billion cubic feet over 25 years, the output of one drilling pad is equivalent to the average output of about 47 giant 2.5MW wind turbines (which also last about 25 years), and is continuous rather than unpredictable and intermittent. Yet the footprint of a shale gas drilling derrick (about 6 acres) is only a little larger than the forest clearance necessary for a single wind turbine (4 acres), requires vastly less concrete per kilowatt-hour, stands one-third as tall and is present for just 30 days instead of 25 years. Additionally, gas drilling rigs have not been known to kill birds of prey or have any other impacts on wildlife, whereas wind farms kill tens of thousands of birds of prey annually". 70. Gas versus solar. Unlike solar power, shale gas works even at night and on cloudy days. It can be stored cheaply in underground salt caverns, whereas storage of solar electricity is impossibly expensive. It produces electricity at about one-third the cost of solar power and it is found closer to large customer concentrations than the deserts where solar power is most efficient. None the less, abundant gas may prove to be the friend rather than the rival of solar power, because unlike coal and nuclear power it can be powered up and down quickly and efficiently. Using coal or nuclear to back-up intermittent renewable energy results in wasteful production of carbon dioxide, negating virtually all carbon -savings that the renewable resource promises. If the costs of solar power do fall rapidly, it is conceivable that one day an electricity system based on solar power by day and gas by night may well prove economically viable. 49 hHp://www.usatoday.com/news/nation/environment/2009-09-21-wind-farms_N.him?csp=34&loc=interstitialskip; hHp://www.teleg raph.co. uk/comment/col um n i sts/chri stopherbooker/7437040/Eco-friend ly-but-not-to-eagles. html; hnp://www.abcbi rd s.org/newsandreports/releases/070430_testi mony. htm I 26 The Shale Gas Shock 71. Gas versus biomass. Gas requires and attracts no subsidy, whereas the diversion of agricultural products into making fuel for power stations drives up world food prices by taking land away from growing food crops, exacerbating hunger, and does so while using for more water per unit of energy than gas. It also creates ash and has to be transported to power stations by road, neither of which is true of gas. 72. Unlike nuclear and renewable, gas-fired electricity requires no subsidy. As Nick Grealy put it to the House of Commons Energy and Climate Change committee: With respect, from what I see of the activities of your Committee, you are used to a large amount of people coming here and saying, "We need a subsidy for CCS, we need a subsidy for wind, we need a subsidy for nuclear" and so on. The shale gas industry wants to give you money. -Nick Grealy, testimony to House of Commons Energy and Climate Change Committee, 201 lso Finding: electricity generated using gas; is cheaper, cleaner, more environmentally beneficial and more humane than electricity from coal, oil, nuclear, wind, solar and biomass. New markets for gas in transport 73. Richly productive new shale gas fields like the Marcellus Shale lead to falling gas prices and to gas producers keen to entice new customers to use their product. Hence it is probable - if the optimists are right about supply - that gas will gradually find new markets. Besides partly displacing coal, nuclear and renewables in power generation, it may also expand into transport. 74. There are already nearly 15 million natural gas fuelled vehicles in the world. Natural gas fuelled vehicles are already widely used in some cities such as Washington DC, Kuala Lumpur and New Delhi as a pollution control measure. Now that natural gas tanks for cars have become much smaller, the only obstacle to car drivers also switching to cheap and low - emission gas is a lack of infrastructure in the form of refuelling stations - admittedly a formidable hurdle. Gas -powered vehicles produce almost no particulates, 60% less volatile organics, 50% less nitrogen oxides and 90% less carbon monoxide, which means less smog, ozone and brown haze. 50 hnp://www.publications.parliament.uk/po/cm201011 /croselect/cmenergy/uc795-ii/uc79501.htm 27 The Shale Gas Shock 75. The fuel cost savings following this conversion could be considerable. At current prices the cost of fuelling a natural gas vehicle is approximately one-third that of diesel or petrol. This gap is likely to increase. Furthermore, hybrid diesel -gas vehicles are under developments'. Even electric cars may benefit from cheaper gas: electricity generated from natural gas could have about twice the well -to -wheel efficiency of a petrol car. Only the high cost and long charging times of batteries stand in the way. Finding: gas could begin to take market share from oil in transport. Feedstock and fertiliser 76. Gas is a common feedstock for the chemical industry; so is ethane, a glut of which is now coming out of shale gas wells as a byproduct. Thus the shale gas revolution has already begun to draw chemical companies back to the Gulf of Mexico from the Persian Gulf, and hand them a competitive advantage52. As well as being a fuel, gas and natural-gas liquids such as ethane are used in the manufacture of plastic, specialty chemicals, agrochemicals and pharmaceuticals. Shale gas is therefore revitalising the chemical industry wherever it can be produced. 77. Much environmental criticism of modern high -output farming argues that it is unsustainable because it depends of synthetic nitrogen fertiliser, which is manufactured from air and natural gas. Some have argued that famine will result when the gas, and therefore the fertiliser, runs out. It is now clear that the gas will not run out and will probably remain low-cost, so high - output farming using fertiliser is indeed sustainable and affordable for the foreseeable future. This ensures not only food availability, but less pressure to convert wild lands to agriculture. Finding: shale gas has reduced the risk of a fertiliser crisis. 51 http://www.publications.parliament.uk/pa/cm201011/croselect/cmenergy/writev/shale/sg I Thtm 52 hep://www.businessinsider.com/us-shalegas-wont-just4evolutionize nergy-it-willeven-make-us-chemical-companies-ultro- cost-competitive-2010-3 53 hap://www.federalreserve.gov/BoardDocs/testimony/2003/20030610/default.htm 54 hep://www.montrealgazeee.com/news/nukes+fade+exports+will+gain/4480633/story.html 55 http://www.reuters.com/article/2010/06/04/cheniere-Ing-sabin&idUSNO423301520100604 56 http://online.wsi.com/article/SB 10001424052702303491304575187880596301668.html 57 http://www.energytribune.com/articies.cfm/6941 /0neCountrys-Disaster-Anothers-Boon M The Shale Gas Shock Effect on world trade 78. Unlike oil and coal, gas is not easily transported by sea, so a genuine world market in gas does not exist and prices can vary sharply between regions. Liquefaction of gas for transport is expensive and requires special deep -water facilities and ships. As recently as 2003, it was assumed that America's gas production would decline and it would have to begin importing liquefied natural gas from Qatar and other exporters. No less an authority than Alan Greenspan, then chairman of the Federal Reserve, said so to Congress in 2003: Today's tight natural gas markets have been a long time in coming, and futures prices suggest that we are not apt to return to earlier periods of relative abundance and low prices anytime soon... Access to world natural gas supplies will require a major expansion of LNG terminal import capacity. -Alan Greenspan, testimony to Congress, June 200353 79. Sure enough America did invest in natural gas import terminals, but the price of LNG crashed in 2008 because of the recession and the news of shale gas. Most import terminals have now been mothballed. 80. With US gas prices low and easily supplied by domestic production, Canadian gas exports fell sharply. Conventional gas from Alberta (and Alaskan may also now seek export markets. A $4.7 billion LNG export terminal in Kitmat, British Columbia, aims to begin exporting gas in 201554. America may follow suit in gas fields remote from large conurbations. In one case, Sabine Pass in Louisiana, Cheniere has already received approval to convert the terminal to an export facility capable of exporting gas within 5-10 yearsss 81. Loss of US export markets and the threat of Canadian competition in supplying Asian markets will in turn affect the ability of Qatar, Algeria, Venezuela and Russia to sustain LNG and pipeline export prices. Indeed, Qatari exports are now available to Europe and Asia at lower prices because of the loss of American markets. Consequently, an emerging cartel in the gas trade, through the Gas Exporting Countries Forum and run by Vladimir Putin, Hugo Chavez, Mahmoud Ahmadinejad and their ilk, now looks much less likely. Thus the emergence of shale gas, even if it were to happen only in the United States, may tip the geopolitical balance towards energy consumers like China, India, Japan and Europe at the expense of energy producers56 82. On the other hand, the crippling of the ageing Fukushima reactors (and some coal-fired plants) by the earthquake and tsunami in Japan in March 2011 is a reminder that demand for LNG imports could also rise. The earthquake reduced Japan's electricity generating capacity by 20%. It also led to the shutdown of Germany's older nuclear plants and promises of a review of nuclear plans in both the United States and China. The immediate effect was a rise in the price of gas, the only fuel that could quickly fill the gap in Japan's electricity market. Japan is already the largest importer of liquefied natural gas and it does not have good shale -gas geology. Its imports could now increase from 3.3 to 4.8 Tcf per year, according to one estimate, or by nearly half of Qatar's LNG output, or more than Australia's current capacity to expor157. 29 The Shale Gas Shock 83. Likewise, China's efforts to diversify its energy sector away from coal for environmental reasons are also bound to benefit the gas trade. China aims to get 10% of its power from natural gas by 2020 and, given that shale gas production in China may rise only slowly at first, this could result in demand for imported LNG of up to 9Tcf a year. Australia and Canada may be the beneficiaries58. Finding: shale gas may reduce price volatility in gas.:' Greenhouse gas emissions 84. As detailed above, burning natural gas produces less than 50% of the carbon dioxide emissions of burning coal for the some energy output. However, Professor Robert Howarth, a biologist at Cornell University, argues that the gas industry generates as much or more greenhouse gas as the coal industry, though only in the short term. This is because methane is a more potent greenhouse gas than carbon dioxide and methane leaks during frocking and production". 85. This conclusion requires unrealistic assumptions about: the quantity of methane that leaks during fracking, production and transport; the lack of methane leaks from coal mines; the residence time of methane in the atmosphere; and the greenhouse warming potential of methane compared with carbon dioxide60. For example, Howarth assumes that methane has 105 times the global -warming potential of carbon dioxide over 20 years; even the Intergovernmental Panel on Climate Change only uses a factor of 72 over 20 years, but prefers 25 over 100 years, which is the normal period of comparison. And Howarth gets his numbers on high gas leakage from shale gas wells from unreliable sources, his numbers on gas leakage from pipelines from long Russian pipelines, and assumes that 'lost and unaccounted for gas' is actual leakage rather than partly an accounting measureB1. He also fails to take into account the greater generating efficiency of gas than coal. As one critic puts it of Howarth's latest paper: Practically every paragraph includes an assumption, simplification or choice by the authors that tends to increase the calculated environmental impact of natural gas. Whether that's the result of bias or merely a series of judgment calls, it undermines confidence in the final conclusions at the some time it amplifies them. - Geoffrey Styles, The Energy Collective, 15 April 201 162. 86. Absent these unrealistic assumptions, gas is clearly a lower -emission fuel. It is also worth noting that the growth rate of methane concentration in the atmosphere 'slowed in the 1990s, and it has had a near -zero growth rate for the last few years' according to NOAA63. This is hardly the signature of a growing problem. 58 hnp://www.energytribune.com/articles.cfm/6941/OneCountrys-Disaster-Another -Boon 59 hnp://www.eeb.cornell.edu/howarth/GHG%20update%20for%20web%20.%2OJan%20201 1 %20%282%29.pdf 60 hHp://epa.gov/climatechange/emissions/downloads 10/US-GHGlnventorr2010_Chapter3-Energy.pdf 61 hnp://www.energyindepth.org/2011/04/five-things-to-know-about-the-cornell-shalcstudy/ 62 hnp://theenergycollective.com/geoffrerstyles/55663/still-not-worse oal 30 The Shale Gas Shock Conclusion: gas and decarbonisation 87. The dominant fuel in the world fuel mix has gradually shifted from wood to coal to oil over the past 150 years, with gas the latest fuel to grow rapidly. At this rate gas may overtake oil as the dominant fuel by 2020 or 2030. The consequence of this succession is that the carbon - hydrogen ratio in the world fuel mix has been falling steadily, because the ratio of carbon to hydrogen atoms is about 10 -to -1 in wood, 2 -to -1 in coal, 1 -to -2 in oil and 1 -to -4 in gas. On its current trajectory, the average ratio would reach 90% hydrogen in 2060, having been 90% carbon in 1850. Jesse Ausube) of Rockefeller University describes this phenomenon as follows: When my colleagues Cesare Marchetti, Nebojsa Nakicenovic, Arnulf Grubler and I discovered decarbonisation in the 1980s, we were pleasantly surprised. When we first spoke of decarbonisation, few believed and many ridiculed the word. Everyone 'knew' the opposite to be true. Now prime ministers and presidents speak of decarbonisation. Neither Queen Victoria nor Abraham Lincoln decreed a policy of decarbonisation. Yet, the energy system pursued it. Human societies pursued decarbonisation for 170+ years before anyone noticed. -Jesse Ausubel, International Journal of Nuclear Governance, Economy and Ecology, 200764. 88. Consequently, although increased energy use means that carbon dioxide emissions are rising all the time, the world is nonetheless slowly decarbonising. A sudden and forced acceleration of this decarbonisation is what environmentalists and many politicians are demanding in the name of climate change policy. The argument is that the cost of waiting for decarbonisation to happen of its own accord is higher than the cost of replacing existing fuels with low -carbon alternatives. 89. However, few of the low -carbon alternatives are ready to take up the challenge on a scale that can make a difference. Nuclear is too slow and costly to build; wind cannot provide sufficient volume of power or reliability; solar is too expensive; biofuel comes at the expense of hunger and high carbon dioxide emissions. All except nuclear (and to a lesser extent solar( require unacceptably vast land grabs. Diverting 5% of the entire world grain crop into the US ethanol program in 2011 will displace just 0.6% of world oil use65; getting 10% of Denmark's electricity from wind has saved no net carbon emissions (because of the need for inefficient back-up generation(66 90. The world would do well to heed the advice of Voltaire and not make the best the enemy of the good. Rapid decarbonisation using renewables is not just expensive and environmentally damaging, it is impossible. However, switching as much power generation from coal to gas as possible, and as much transport fuel from oil to gas as possible, would produce rapid and dramatic reductions in carbon dioxide emissions. 63 hnp://www.esrl.noaa.gov/gmd/obop/mlo/programs/esrl/methane/methane.html 64 hmp://phe.rockefeller.edu/docs/HeresiesFinol.pdf 65 hnp://www.energytribune.com//orticles.Cfm/6681 /Biofuels-Driving-Up-Food-Prices-Aslowc-Primary-Approaches- 66 Bryce, R. 2010. Power Hungry. Public Affairs. 31 The Shale Gas Shock 91. Just as genetically modified crops called the bluff of the organic movement, by demonstrating both better crop protection and better environment protection, so abundant gas is calling the bluff of the renewable energy movement by demonstrating both better economic efficiency and better carbon reduction. Yet Europe turned its back on GM crops when they ran into sudden and coordinated environmental opposition based on the precautionary principle that a new technology might be worse than an existing one. Meanwhile GM soya went on to give South America a competitive advantage in the world market in animal feed and GM maize gave North America a competitive advantage in human food. So, likewise, it is entirely possible that Europe may choose to excuse itself from the shale gas revolution and put itself at a competitive disadvantage in the electricity, transport, chemical and fertiliser industry, as well as finding decarbonisation harder. 92. If Europe and the wider world are bent on cutting carbon emissions, they would be foolish to ignore the claims of shale gas, at least until superior versions of nuclear or solar power are developed later in the century°'. Fortunately, this strategy is also the most affordable. Finding: Shale gas promises to bring environmental, economic and political benefits. Acknowledgements For interviews and assistance with finding sources of information, I am grateful to Nick Grealy of No Hot Air, Mike Mackin and Matt Pitzarello of Range Resources, Chris Tucker of Financial Dynamics and to Rob Bradley of Master Resource. For helpful comments on a draft of this report I thank Dieter Helm, David Henderson, Nigel Lawson and Benny Peiser. Disclosure The author has no direct financial interest in natural gas. He does have some small shareholdings in oil companies, which comprise less than 10% of his share portfolio. In addition he and his family benefit financially from income related to surface coal mining in Northumberland. Since this report concludes that gas threatens to take market share from both coal and oil, he therefore has the opposite of a vested interest in this conclusion. In the course of writing this report one visit was made to the operations sites of Range Resources in Pennsylvania. No payment or hospitality was offered or asked for. 67 Bryce, R. 2010. Power Hungry. Public Affairs. 32 The Global Warming Policy Foundation is an all -party and non-party think tank and a registered educational charity which, while open-minded on the contested science of global warming, is deeply concerned about the costs and other implications of many of the policies currently being advocated. Our main focus is to analyse global warming policies and their economic and other implications. Our aim is to provide the most robust and reliable economic analysis and advice. Above all we seek to inform the media, politicians and the public, in a newsworthy way, on the subject in general and on the misinformation to which they are all too frequently being subjected at the present time. The key to the success of the GWPF is the trust and credibility that we have earned in the eyes of a growing number of policy makers, journalists and the interested public. The GWPF is funded entirely by voluntary donations from a number of private individuals and charitable trusts. In order to make clear its complete independence, it does not accept gifts from either energy companies or anyone with a significant interest in an energy company. Views expressed in the publications of the Global Warming Policy Foundation are those of these authors, not those of the GWPF, its Trustees, its Academic Advisory Council members or its Directors. 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