Tag: Fracking

Sheila McNulty

The issue of hydraulic fracturing, or fracking, has taken on a life of its own. But with so much misinformation, it is hard for the general public to know whether it is a good thing or a bad thing. The truth is – as with any polarising issue – somewhere in the middle. New York appears to have accepted that and decided to move forward to permit fracking in all but the most sensitive areas of the state.

But even as New York is poised to lift its moratorium on fracking, New Jersey’s legislature has moved to impose one. What this illustrates is just how divisive this issue has become.

Let us look at some of the pros: Hydraulic fracturing in a series of stages, combined with horizontal drilling, has given the US oil and gas industry a new lease of life. After years of declining production, the technology has enabled the country to grow not only natural gas but oil production. And with a country that consumes so much energy and has yet to make any serious attempt to scale back its usage, this can only be a good thing. It means more domestic supply to meet demand, which translates into less money leaving the country for imports and heightened energy security. And more drilling, of course, means more jobs and more economic activity.

Now here are the cons: if drillers are irresponsible about how they use the technology – and with far more than 1,000 operators drilling and producing across the country there will always be some who are – it hurts everyone. The damage to the environment and people could be very real. One only needs to think of Macondo, BP’s well at the centre of last year’s accident in the Gulf of Mexico.

As the EPA investigates the environmental risks associated with fracking, the industry must ensure it has no Macondos. By proving the industry can safely and responsibly develop the US’ domestic resources, companies eventually win over the public, and politicians, who are so afraid of the technology they are banning it outright.

But the industry cannot do this if it is not permitted to frack at all. Take New Jersey, which has just  passed a ban on fracking this week. While New Jersey is not a major gas producer – and does not seem to have the geology ever to be – this is, nonetheless, a symbolic gesture that might well ensure that what it does have is never developed.  That leaves the burden to other states, such as Texas, to continue producing the gas used by those in New Jersey.

While this is not fair, the industry will say it would rather deal with states individually than have a restrictive federal law passed down that might, in the end, restrict the use of fracking in industry-friendly places such as Texas.

Certainly there are risks of that happening, but it seems to make the most sense for the US to approach this issue on the federal level. If a fair, science-based investigation can be conducted, and the industry be given an opportunity to defend itself against the charges of environmentalists, perhaps a workable solution can be found - one that permits fracking to continue across the country with the necessary safeguards to prevent a disastrous onshore event, such as Macondo was to the offshore industry.

That way states like New York – which was among the first of a string of places to put a temporary ban on fracking - and New Jersey will not scare off the public and politicians in other states from permitting something that might well be done safely  – and limit imports and grow energy security as much as possible. For a country that consumes so much energy and cannot seem to get its arms around a comprehensive plan to reduce carbon emissions with a real committment to renewables and energy efficiency, this seems the best course to take.

Sheila McNulty

The technological advances in the oil and gas patch just keep coming. While everyone has been scrambling to catch up with the shale gas revolution, the industry has been working on another potentially significant breakthrough in gas. This one is in producing gas that has long been stranded offshore in areas too far or too small to warrant a pipeline to shore.

Royal Dutch Shell recently announced it would be the first producer to invest in a multibillion dollar project to capture this gas. The project will be a floating liquified natural gas terminal – known as a FLNG terminal in the industry – that makes it economic to get at such gas fields. No pipelines need to be built. Shell just produces the gas until it runs out and then moves along to the next field.

Sheila McNulty

A shale gas wellAs questions about hydraulic fracturing – fracking as it is known in the industry – continue to build, the oil and gas industry is finding investors asking for more transparency as to how companies are going to face the growing risks to production.

France has banned fracking, and US federal regulators are investigating the safety of the process.

But the real risk to the industry at this point is how some US states and cities have taken the issue into their own hands: Pittsburgh has banned such drilling, and the New York State Assembly approved a temporary moratorium. There are other efforts under way in pockets across the US to further control or bar the process.

Kiran Stacey

Many thanks for all your questions for James Cameron, vice chairman of Climate Change Capital. His answers will appear on this site on Friday, February 4th.

Next week, the person in the hotseat will be Josh Fox, the Oscar-nominated director of the film the entire natural gas world is talking about: Gasland.

This is your chance to ask Josh all about his experience of making a movie about shale gas; from what resistance he had to overcome from gas companies when making the film, to the truth behind the famous tap-on-fire sequences, to what governments are likely to do to regulate fracking in future.

Email all your questions to energysource@ft.com by the end of Sunday, February 6th.

Kiran Stacey

Gasland, the environmental documentary about the effects of shale gas extraction, has been nominated for a “best documentary” Oscar.

The makers are, of course, buzzing, but, predictably, gas campaigners are livid. This is the rather cuting response from Energy In Depth, the lobbying group, which has mounted something of a campaign against the film:

While it’s unfortunate there isn’t an Oscar category for propaganda, this nomination is fitting, as the Oscars are aimed at praising pure entertainment among Hollywood’s elite.

Ouch. If you have any questions arising from the film, or if there’s anything you would like to ask about shale gas or fracking, watch out for our Energy Source readers’ Q&A with Josh Fox, coming up on February 11th. I’ll advertise it fully nearer the time.

Sheila McNulty

A group of US investors have filed shareholder resolutions with nine oil and gas companies, pressing them to disclose plans for managing risks associated with the technology being used to extract gas from shale rock.

With the US Environmental Protection Agency investigating the risks; a New York State moratorium on use of the technology; and cases like the one being built against Range Resources in Texas, the resolutions are no surprise.

Kiran Stacey

Last night, Gasland, the film that has stoked an intense debate about the ethics of the shale gas boom in the US, premiered here in the UK.

It couldn’t have been better timed – Cuadrilla is due to begin more drilling at its shale gas site near Blackpool later this month. And the Tyndall Centre, in conjunction with the Co-op, helped get the debate moving on this side of the Atlantic with a report calling for a halt to all such drilling while the risk is properly assessed.

But what of the film itself?

Kiran Stacey

A hat tip to Nick Grealy of No Hot Air for spotting this one. On Wednesday, the energy minister Greg Barker gave an intriguing glimpse of the UK attitude towards fracking, the gas extraction method that has caused so much controversy in the US. And it’s good news for the gas companies.

Here is the full exchange:

Mr Bain: To ask the Secretary of State for Energy and Climate Change what his policy is on the use of hydraulic fracturing by the oil and gas industry; and what discussions he has had with his EU counterparts on regulation of the use of hydraulic fracturing.

Gregory Barker: Hydraulic fracturing has long been used to increase the productivity of oil and gas fields and, more recently, of shale gas reservoirs, where the rock has low natural permeability. The Department has no objection to the use of this technique so long as all of the relevant environmental and planning assessments have been carried out and permissions granted. I have had no discussions with my EU counterparts on the regulation of the use of hydraulic fracturing.

Kiran Stacey

Yesterday’s decision by the Obama administration to put a moratorium on drilling in the eastern Gulf of Mexico further intensifies the current debate about hydraulic fracturing, the controversial process by which much of the unconventional gas is being exploited in the US.

The process has been at the centre of the most recent argument between the oil and gas industry and environmentalists since Gasland was released earlier this year, highlighting the effect of some of the chemicals used in extraction. But the argument has gathered pace in the last few days, not least because of the announcement by Ken Salazar (pictured) that he would consider tightening up rules so that companies have to disclose what chemicals are being used to extract the gas.

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