Tag Archives: Shale gas

Alberta’s oil exports face ocean of trouble

Canadians hoping Alberta’s oil exports from its tar and oil sands will expand may be disappointed. One supertanker port has turned the economics upside down.

OTTAWA, 12 March, 2018 – Alberta’s oil exports are at serious risk. Last month the first supertanker capable of holding two million barrels of oil sailed for the first time from America’s newly upgraded – and only – terminal able to handle crude-carrying giants of this size: the Louisiana Offshore Oil Port (LOOP).

She was bound for China, and her maiden voyage signals a major shift in global oil shipping patterns, economics, and the highly competitive oil refinery business.

The LOOP terminal is deep in the Mississippi Delta. A 29-kilometre pipeline stretches across the shallow Gulf of Mexico coastal shelf to a point deep enough to allow similar Very Large Crude Carriers (VLCCs) to unload their vast tonnages. Nearby a complex of salt caverns and surface tanks stores both oil imports headed for US refineries and fast-increasing volumes of oil bound for export.

The LOOP terminal is a speculator’s venture on steroids. Built with private capital, it is North America’s first oil port dedicated to the planet’s largest crude tankers, handling two-way oil flows.

It’s designed to thrive on fierce global fights over not just oil supply and demand, but the multi-billion dollar bets corporate oil traders and hedge funds place, hoping to buy low and sell high – now or years hence.

Two cargoes at once

Any VLCC from any country can now unload or load oil at the LOOP. They can carry it – two million barrels at a time – to ports across the globe, at a price lower than smaller tankers.

And because the LOOP bi-directional pipeline can pump oil at a mind-bending 100,000 barrels an hour, supertankers can arrive with one load for refining and sail with another, barely dropping anchor.

That will probably prove fatal to the plans of the Canadian province of Alberta to expand unrefined bitumen exports by either the proposed Trans-Mountain pipeline to the British Columbia coast or the planned Keystone XL pipeline to Texas.

Bitumen, or asphalt, is the feedstock which tar sands and oil sands producers remove from the ground, thick enough to require mining, not pumping. It then has to be diluted with light crude oil or other chemicals before it can go through a pipeline (hence the term diluted bitumen).

Multiple snags

The LOOP threatens Alberta’s export plans for several reasons:

• Potential foreign refiners and customers will demand that future oil price, quality, shipping costs, and delivery speeds match those that LOOP can offer;

• For safety reasons, the maximum oil tanker cargo allowed into British Columbia’s ports is an Aframax class ship, at 80% capacity, carrying 550,000 barrels – only about a quarter of the load of a VLCC. So a refiner in Asia would need to charter four tankers to ship the same amount as from the LOOP terminal, then wait longer for the full order to arrive;

• The diluted bitumen Alberta wants to export has chemical and combustion properties that make it far inferior to the higher-quality oil the LOOP has access to from US formations in the Dakotas and Texas, or OPEC countries, or the North Sea. Tar sands/oil sands bitumen can be upgraded and refined, but that adds significant costs and requires dedicated facilities.

• The terminus of the Keystone XL will be refineries on the Texas Gulf Coast near Houston which are not connected to the LOOP. Even if future Alberta bitumen were to be refined there, it would take three fully-loaded Aframax tankers leaving Texas for ship-to-ship transfers to each VLCC.

These important changes in tanker and terminal technology and scale are no secret in the oil industry outside Canada. Nor is the dirty chemical composition of tar sands/oil sands bitumen. Nor is the cutthroat competition among global oil producers, refiners, shippers, and speculators, in which nickels per barrel of oil delivered are fought over fiercely.

Long build-up

In fact, the bad news for Alberta’s oil patch has been building up for a decade. That’s when shipbuilders in South Korea, China and Japan began constructing what has become a global fleet of about 750 VLCCs (with 50 more ordered for 2018), and the scrapping of Aframax class tankers began accelerating.

This in turn drove down the benchmark price for ocean oil shipping, triggered the LOOP terminal upgrade, effectively consigned oil terminals like British Columbia’s to minor league status, and left oil deposits far from deep port tidewater at a significant cost disadvantage.

When the undeniably dirty content of Alberta’s bitumen deposits is added into these negative cost equations, global oil players know when to quit.

Compared to conventional heavy crude, bitumen contains 102 times more copper, 21 times more vanadium, 11 times more sulphur, 11 times more nickel, six times more nitrogen, and five times more lead, according to the US Geological Survey. It also has a much lower ratio of hydrogen to carbon, which degrades combustion efficiency.

This helps explain why recently oil giants such as Exxon Mobil, Conoco Phillips, Royal Dutch Shell, Total and Norway’s Statoil have abandoned gargantuan bitumen deposits in western Canada and/or taken billion-dollar write-downs, to the howls of shareholders.

No refiners will pay the same price to process sweet light crude and bitumen

For environmentalists and climate scientists, the chemical composition of Alberta bitumen is cause for deep worry about toxic air emissions, potential spills into waterways and aquifers, and further destabilisation of the climate. Together with First Nations, they have vowed to fight long and hard for ecological reasons.

But for potential foreign purchasers of that oil, the key question is how much extra it will cost to extract the dirty compounds in Alberta bitumen so that its quality matches export oil being produced at high-grade, low-cost US shale formations like the Bakken, Permian, and Eagle Ford.

No refiners will pay the same price to process sweet light crude and bitumen because they have to make costly capital outlays to configure their refineries to extract higher sulphur and heavy metals, make up the hydrogen deficit of bitumen, then dispose of the mountains of carbonised crud (petcoke) left over. So refiners – anywhere on the planet – will charge Alberta producers more to process each barrel of bitumen.

Alberta’s huge deposits cost too much to dig up, refine, and ship. They are in the wrong place. And they rank among the dirtiest to refine into gasoline, aviation fuel, or home heating oil.

These are the reasons – hiding in plain sight – why western Canada bitumen fetches a lower price than oil shipped from Texas and the North Sea. The LOOP terminal will magnify that spread.

Output to rise

Such details are apparently irrelevant to Alberta premier Rachel Notley and her federal tar sands/oil sands ally, prime minister Justin Trudeau. Instead, they support almost doubling oil production (causing GHGs to rise from 70 to 100 megatonnes per year) – roughly equal to the annual greenhouse gas emissions from all the cars, trucks, buses and boats currently used by 14 million people in Ontario.

About 20 months ago, many of the Big Oil players began to cut their losses and quietly stampede away from Alberta’s oil. Many bought into US shale oil plays.

Then Washington repealed a 40-year ban on the export of oil drilled by producers within the US. Suddenly, Americans could sell to Asia and Europe. Countless more shale wells were drilled, American pipelines began filling to capacity, and high-quality crude began flowing faster to refineries on the Gulf Coast.

By the end of 2017 US oil production was at an historic high, vast tank farms were full, and even major OPEC countries – reeling from the tsunami of oil coming from their new American competitor – tried to shore up world prices by cutting production and selling premium blends at deeply discounted prices to Asian and US customers.

Some buyers are storing high-quality, low-cost oil in VLCCs hunkered down in harbours across the globe. (That fleet of 750 supertankers could collectively store some 1.5 billion barrels of oil at any given time.)

A minor swing in oil prices can cause a VLCC to change course mid-ocean and head for a new customer offering a better price

Some American shale oil producers, who can drill deposits quickly and cheaply and then tap or cap them depending on the transient price of oil, can survive at US$20 a barrel. Most producers need $40 to justify pumping and selling for a profit. Alberta’s proposed new projects may need $80 to 100 per barrel to permit such huge capital investments. That is nowhere on the horizon.

By contrast, a minor swing in oil prices can cause a VLCC to change course mid-ocean and head for a new customer offering a better price. How could a new tar sands/oil sands project be bankrolled when such price volatility is the new normal, and decades-long contracts are ancient history? It couldn’t.

There is no business case for an expansion of Alberta’s tar sands/oil sands on the scale needed to justify the Keystone XL and Trans-Mountain export pipelines because of one bare fact: there are zero foreign buyers who today will commit to decades-long purchase contracts for unrefined bitumen at a fixed price near US$80 per barrel.

Instead, global traders will literally buy future oil by the boatload, then book terminal time at any deepwater ocean port like the LOOP, anywhere in the world, to embark with two million barrels in a single cargo. – Climate News Network

 

Originally published exclusively on The Energy Mix, and republished by permission. The Mix is a thrice-weekly e-digest on climate, energy and post-carbon solutions.

Paul McKay – paul@paulmckay.com – is an award-winning investigative reporter and author. His reports have appeared in the Ottawa Citizen, Toronto Star, Globe and Mail, and Vancouver Sun.

Canadians hoping Alberta’s oil exports from its tar and oil sands will expand may be disappointed. One supertanker port has turned the economics upside down.

OTTAWA, 12 March, 2018 – Alberta’s oil exports are at serious risk. Last month the first supertanker capable of holding two million barrels of oil sailed for the first time from America’s newly upgraded – and only – terminal able to handle crude-carrying giants of this size: the Louisiana Offshore Oil Port (LOOP).

She was bound for China, and her maiden voyage signals a major shift in global oil shipping patterns, economics, and the highly competitive oil refinery business.

The LOOP terminal is deep in the Mississippi Delta. A 29-kilometre pipeline stretches across the shallow Gulf of Mexico coastal shelf to a point deep enough to allow similar Very Large Crude Carriers (VLCCs) to unload their vast tonnages. Nearby a complex of salt caverns and surface tanks stores both oil imports headed for US refineries and fast-increasing volumes of oil bound for export.

The LOOP terminal is a speculator’s venture on steroids. Built with private capital, it is North America’s first oil port dedicated to the planet’s largest crude tankers, handling two-way oil flows.

It’s designed to thrive on fierce global fights over not just oil supply and demand, but the multi-billion dollar bets corporate oil traders and hedge funds place, hoping to buy low and sell high – now or years hence.

Two cargoes at once

Any VLCC from any country can now unload or load oil at the LOOP. They can carry it – two million barrels at a time – to ports across the globe, at a price lower than smaller tankers.

And because the LOOP bi-directional pipeline can pump oil at a mind-bending 100,000 barrels an hour, supertankers can arrive with one load for refining and sail with another, barely dropping anchor.

That will probably prove fatal to the plans of the Canadian province of Alberta to expand unrefined bitumen exports by either the proposed Trans-Mountain pipeline to the British Columbia coast or the planned Keystone XL pipeline to Texas.

Bitumen, or asphalt, is the feedstock which tar sands and oil sands producers remove from the ground, thick enough to require mining, not pumping. It then has to be diluted with light crude oil or other chemicals before it can go through a pipeline (hence the term diluted bitumen).

Multiple snags

The LOOP threatens Alberta’s export plans for several reasons:

• Potential foreign refiners and customers will demand that future oil price, quality, shipping costs, and delivery speeds match those that LOOP can offer;

• For safety reasons, the maximum oil tanker cargo allowed into British Columbia’s ports is an Aframax class ship, at 80% capacity, carrying 550,000 barrels – only about a quarter of the load of a VLCC. So a refiner in Asia would need to charter four tankers to ship the same amount as from the LOOP terminal, then wait longer for the full order to arrive;

• The diluted bitumen Alberta wants to export has chemical and combustion properties that make it far inferior to the higher-quality oil the LOOP has access to from US formations in the Dakotas and Texas, or OPEC countries, or the North Sea. Tar sands/oil sands bitumen can be upgraded and refined, but that adds significant costs and requires dedicated facilities.

• The terminus of the Keystone XL will be refineries on the Texas Gulf Coast near Houston which are not connected to the LOOP. Even if future Alberta bitumen were to be refined there, it would take three fully-loaded Aframax tankers leaving Texas for ship-to-ship transfers to each VLCC.

These important changes in tanker and terminal technology and scale are no secret in the oil industry outside Canada. Nor is the dirty chemical composition of tar sands/oil sands bitumen. Nor is the cutthroat competition among global oil producers, refiners, shippers, and speculators, in which nickels per barrel of oil delivered are fought over fiercely.

Long build-up

In fact, the bad news for Alberta’s oil patch has been building up for a decade. That’s when shipbuilders in South Korea, China and Japan began constructing what has become a global fleet of about 750 VLCCs (with 50 more ordered for 2018), and the scrapping of Aframax class tankers began accelerating.

This in turn drove down the benchmark price for ocean oil shipping, triggered the LOOP terminal upgrade, effectively consigned oil terminals like British Columbia’s to minor league status, and left oil deposits far from deep port tidewater at a significant cost disadvantage.

When the undeniably dirty content of Alberta’s bitumen deposits is added into these negative cost equations, global oil players know when to quit.

Compared to conventional heavy crude, bitumen contains 102 times more copper, 21 times more vanadium, 11 times more sulphur, 11 times more nickel, six times more nitrogen, and five times more lead, according to the US Geological Survey. It also has a much lower ratio of hydrogen to carbon, which degrades combustion efficiency.

This helps explain why recently oil giants such as Exxon Mobil, Conoco Phillips, Royal Dutch Shell, Total and Norway’s Statoil have abandoned gargantuan bitumen deposits in western Canada and/or taken billion-dollar write-downs, to the howls of shareholders.

No refiners will pay the same price to process sweet light crude and bitumen

For environmentalists and climate scientists, the chemical composition of Alberta bitumen is cause for deep worry about toxic air emissions, potential spills into waterways and aquifers, and further destabilisation of the climate. Together with First Nations, they have vowed to fight long and hard for ecological reasons.

But for potential foreign purchasers of that oil, the key question is how much extra it will cost to extract the dirty compounds in Alberta bitumen so that its quality matches export oil being produced at high-grade, low-cost US shale formations like the Bakken, Permian, and Eagle Ford.

No refiners will pay the same price to process sweet light crude and bitumen because they have to make costly capital outlays to configure their refineries to extract higher sulphur and heavy metals, make up the hydrogen deficit of bitumen, then dispose of the mountains of carbonised crud (petcoke) left over. So refiners – anywhere on the planet – will charge Alberta producers more to process each barrel of bitumen.

Alberta’s huge deposits cost too much to dig up, refine, and ship. They are in the wrong place. And they rank among the dirtiest to refine into gasoline, aviation fuel, or home heating oil.

These are the reasons – hiding in plain sight – why western Canada bitumen fetches a lower price than oil shipped from Texas and the North Sea. The LOOP terminal will magnify that spread.

Output to rise

Such details are apparently irrelevant to Alberta premier Rachel Notley and her federal tar sands/oil sands ally, prime minister Justin Trudeau. Instead, they support almost doubling oil production (causing GHGs to rise from 70 to 100 megatonnes per year) – roughly equal to the annual greenhouse gas emissions from all the cars, trucks, buses and boats currently used by 14 million people in Ontario.

About 20 months ago, many of the Big Oil players began to cut their losses and quietly stampede away from Alberta’s oil. Many bought into US shale oil plays.

Then Washington repealed a 40-year ban on the export of oil drilled by producers within the US. Suddenly, Americans could sell to Asia and Europe. Countless more shale wells were drilled, American pipelines began filling to capacity, and high-quality crude began flowing faster to refineries on the Gulf Coast.

By the end of 2017 US oil production was at an historic high, vast tank farms were full, and even major OPEC countries – reeling from the tsunami of oil coming from their new American competitor – tried to shore up world prices by cutting production and selling premium blends at deeply discounted prices to Asian and US customers.

Some buyers are storing high-quality, low-cost oil in VLCCs hunkered down in harbours across the globe. (That fleet of 750 supertankers could collectively store some 1.5 billion barrels of oil at any given time.)

A minor swing in oil prices can cause a VLCC to change course mid-ocean and head for a new customer offering a better price

Some American shale oil producers, who can drill deposits quickly and cheaply and then tap or cap them depending on the transient price of oil, can survive at US$20 a barrel. Most producers need $40 to justify pumping and selling for a profit. Alberta’s proposed new projects may need $80 to 100 per barrel to permit such huge capital investments. That is nowhere on the horizon.

By contrast, a minor swing in oil prices can cause a VLCC to change course mid-ocean and head for a new customer offering a better price. How could a new tar sands/oil sands project be bankrolled when such price volatility is the new normal, and decades-long contracts are ancient history? It couldn’t.

There is no business case for an expansion of Alberta’s tar sands/oil sands on the scale needed to justify the Keystone XL and Trans-Mountain export pipelines because of one bare fact: there are zero foreign buyers who today will commit to decades-long purchase contracts for unrefined bitumen at a fixed price near US$80 per barrel.

Instead, global traders will literally buy future oil by the boatload, then book terminal time at any deepwater ocean port like the LOOP, anywhere in the world, to embark with two million barrels in a single cargo. – Climate News Network

 

Originally published exclusively on The Energy Mix, and republished by permission. The Mix is a thrice-weekly e-digest on climate, energy and post-carbon solutions.

Paul McKay – paul@paulmckay.com – is an award-winning investigative reporter and author. His reports have appeared in the Ottawa Citizen, Toronto Star, Globe and Mail, and Vancouver Sun.

Gas leaks fuel climate change

Gas leaks

Gas leaks from pipelines and wells are a source of methane emissions that could be easily fixed.

LONDON, 26 October, 2016 – A leading authority on the effects of methane in the atmosphere has called for a new drive to cut gas leaks from pipelines and wells.

Euan Nisbet, professor of Earth sciences at Royal Holloway, University of London, says that ever more sensitive detection equipment using global satellite positioning systems has made it relatively cheap and quick to check where leaks are coming from.

“Methane is an obvious target to help with climate change and it is easiest to stop the emissions coming from fossil fuels,” he says. “This is the low-hanging fruit.”

Biological sources

Nisbet and a team that includes scientists from the US National Oceanic and Atmospheric Administration (NASA) and Victoria University in New Zealand have just published new research showing that recent rises in methane are coming largely from biological sources such as swamp gas, rice fields and even the flatulence of cattle.

The study, first outlined in the American Geophysical Union’s journal Global Biogeochemical Cycles, has been seen by some in the fossil fuel industry as evidence that they have been unfairly scapegoated.

They believe that shale drilling in particular has been wrongly blamed by environmentalists for growing methane levels.

Methane is considered to be 25 times as dangerous to the atmosphere over a century as carbon dioxide – but more than 80 times as dangerous over just 20 years. And since the beginning of the industrial revolution, methane concentrations are believed to have more than doubled, while CO2 has risen by a more modest 40%.

There is a very large global gas industry
and we should be able to cut these leaks”

Nisbet says there is little doubt that significant growth in methane emissions through most of the 20th century was largely the result of leaks from the gas and coal industry.

There was a brief break in the upward trajectory in the first years after 2000, but growth began again in 2007 and then doubled in the 12 months of 2014.

Many scientists, as well as anti-fossil fuel campaigners, did presume that the growth in US shale drilling and other hydrocarbon activities was causing most of the problems.

Nisbet now believes these assumptions must be rethought. He says: “Our results go against conventional thinking that the recent increase in atmospheric methane must be caused by increased emissions from natural gas, oil, and coal production.

“Our analysis of methane’s isotopic composition clearly points to increased emissions from microbial sources, such as wetlands or agriculture.”

Significant gas leaks

But Nisbet still thinks it would be misguided to stop putting effort into halting leaks from the gas industry.

“It is deeply troubling that there seems to be strong growth in methane levels in the Amazon Basin and the tropics,” he says. “It is likely to be the result of changing weather patterns due to global warming, which are slowing the natural processes that remove methane from the atmosphere.

“But it is not easy to counter these changes, compared with the relatively low cost of removing gas leaks from pipelines. There is a very large global gas industry, and we should be able to cut these leaks.”

Nisbet is also concerned that there has been more and more evidence that methane levels from oil and gas operations have been repeatedly underestimated. He, and others, believe that the UN climate change negotiators may be working with outdated numbers that underestimate the amount of fossil fuel-related methane in the atmosphere.

There have also been repeated warnings about the dangers of future methane leaks in the Arctic tundra as global warming causes soils to thaw in the far north.

Meanwhile, research published last month suggests there may be relatively easy ways of reducing greenhouse gases in agriculture. It claimed that directly seeding rice into fields rather than transplanting it into flooded paddies would dramatically reduce methane emissions. – Climate News Network

Gas leaks from pipelines and wells are a source of methane emissions that could be easily fixed.

LONDON, 26 October, 2016 – A leading authority on the effects of methane in the atmosphere has called for a new drive to cut gas leaks from pipelines and wells.

Euan Nisbet, professor of Earth sciences at Royal Holloway, University of London, says that ever more sensitive detection equipment using global satellite positioning systems has made it relatively cheap and quick to check where leaks are coming from.

“Methane is an obvious target to help with climate change and it is easiest to stop the emissions coming from fossil fuels,” he says. “This is the low-hanging fruit.”

Biological sources

Nisbet and a team that includes scientists from the US National Oceanic and Atmospheric Administration (NASA) and Victoria University in New Zealand have just published new research showing that recent rises in methane are coming largely from biological sources such as swamp gas, rice fields and even the flatulence of cattle.

The study, first outlined in the American Geophysical Union’s journal Global Biogeochemical Cycles, has been seen by some in the fossil fuel industry as evidence that they have been unfairly scapegoated.

They believe that shale drilling in particular has been wrongly blamed by environmentalists for growing methane levels.

Methane is considered to be 25 times as dangerous to the atmosphere over a century as carbon dioxide – but more than 80 times as dangerous over just 20 years. And since the beginning of the industrial revolution, methane concentrations are believed to have more than doubled, while CO2 has risen by a more modest 40%.

There is a very large global gas industry
and we should be able to cut these leaks”

Nisbet says there is little doubt that significant growth in methane emissions through most of the 20th century was largely the result of leaks from the gas and coal industry.

There was a brief break in the upward trajectory in the first years after 2000, but growth began again in 2007 and then doubled in the 12 months of 2014.

Many scientists, as well as anti-fossil fuel campaigners, did presume that the growth in US shale drilling and other hydrocarbon activities was causing most of the problems.

Nisbet now believes these assumptions must be rethought. He says: “Our results go against conventional thinking that the recent increase in atmospheric methane must be caused by increased emissions from natural gas, oil, and coal production.

“Our analysis of methane’s isotopic composition clearly points to increased emissions from microbial sources, such as wetlands or agriculture.”

Significant gas leaks

But Nisbet still thinks it would be misguided to stop putting effort into halting leaks from the gas industry.

“It is deeply troubling that there seems to be strong growth in methane levels in the Amazon Basin and the tropics,” he says. “It is likely to be the result of changing weather patterns due to global warming, which are slowing the natural processes that remove methane from the atmosphere.

“But it is not easy to counter these changes, compared with the relatively low cost of removing gas leaks from pipelines. There is a very large global gas industry, and we should be able to cut these leaks.”

Nisbet is also concerned that there has been more and more evidence that methane levels from oil and gas operations have been repeatedly underestimated. He, and others, believe that the UN climate change negotiators may be working with outdated numbers that underestimate the amount of fossil fuel-related methane in the atmosphere.

There have also been repeated warnings about the dangers of future methane leaks in the Arctic tundra as global warming causes soils to thaw in the far north.

Meanwhile, research published last month suggests there may be relatively easy ways of reducing greenhouse gases in agriculture. It claimed that directly seeding rice into fields rather than transplanting it into flooded paddies would dramatically reduce methane emissions. – Climate News Network

Oil majors tread cautiously towards renewables

Faced by falling oil prices and plunging profits, big oil companies are investing in renewables and clean energy, but still focussing on fossil fuels.

LONDON, 22 May, 2016 – The big oil companies’ on-off affair with renewable energies seems to be back on track.

Recent reports say Shell, the Anglo-Dutch oil conglomerate, is to invest $1.7 billion in forming a new company division aimed specifically at developing renewable energy and low carbon power. 

This follows on the heels of an announcement by the  French oil company Total, another of the oil giants, that it is stepping up its investments in clean energy, spending more than $1 bn buying Saft, a major battery manufacturer. Total has also purchased  a majority share in SunPower,  a leading solar concern.

Even ExxonMobil, for long an organisation which cast doubt on the whole science of global warming, has recently announced plans to investigate fuel cell technology in order to build carbon capture and storage facilities and eliminate greenhouse gas emissions from power installations. 

Low investments

On the face of it, this is all good news in the battle against climate change. Emissions from fossils fuels, particularly from oil and coal burning, are a major driver of global warming.

Yet as a proportion of their overall spending, the oil giants’ investments in renewables are still very low, and are dwarfed by their spending on fossil fuel-related activities.

Also, in the past, the oil majors have made much-publicised announcements about alternative energy investments, only to later quietly withdraw their support.

As a recent report pointed out, the oil companies have failed to adapt to an increasingly fragmented global energy system. Buffeted by low oil prices and tightening climate change-related regulations, they have seen a sharp drop in their financial fortunes.

BP has been worst hit, reporting a loss of $6.5 billion in 2015 compared to a profit of $3.8bn the previous year. 

Market share lost

Operating in an oil market which is increasingly chaotic and unstructured is not easy. The major oil companies – once all-powerful in the energy market – have over the years lost production and market share to state-owned conglomerates, most of them gathered under the Organisation of Petroleum Exporting Countries (OPEC) umbrella.

In recent years OPEC itself has begun to fracture, and production level agreements have broken down.

Member countries Saudi Arabia and Iran are bitter enemies. Libya is in a state of near civil war. There is political chaos in Venezuela. Rebel groups are attacking oil installations in Nigeria

Meanwhile non-OPEC members – the US and Canada – have been adding to a global oil glut – caused primarily by a slowing world economy – by pumping out millions of barrels of oil from shale deposits and by fracking

Experts say that in order to survive, the oil majors have to invest in new technologies, including renewables. Once again, the companies are taking tentative steps along that path, but it might be too little, too late for them to survive. – Climate News Network

Faced by falling oil prices and plunging profits, big oil companies are investing in renewables and clean energy, but still focussing on fossil fuels.

LONDON, 22 May, 2016 – The big oil companies’ on-off affair with renewable energies seems to be back on track.

Recent reports say Shell, the Anglo-Dutch oil conglomerate, is to invest $1.7 billion in forming a new company division aimed specifically at developing renewable energy and low carbon power. 

This follows on the heels of an announcement by the  French oil company Total, another of the oil giants, that it is stepping up its investments in clean energy, spending more than $1 bn buying Saft, a major battery manufacturer. Total has also purchased  a majority share in SunPower,  a leading solar concern.

Even ExxonMobil, for long an organisation which cast doubt on the whole science of global warming, has recently announced plans to investigate fuel cell technology in order to build carbon capture and storage facilities and eliminate greenhouse gas emissions from power installations. 

Low investments

On the face of it, this is all good news in the battle against climate change. Emissions from fossils fuels, particularly from oil and coal burning, are a major driver of global warming.

Yet as a proportion of their overall spending, the oil giants’ investments in renewables are still very low, and are dwarfed by their spending on fossil fuel-related activities.

Also, in the past, the oil majors have made much-publicised announcements about alternative energy investments, only to later quietly withdraw their support.

As a recent report pointed out, the oil companies have failed to adapt to an increasingly fragmented global energy system. Buffeted by low oil prices and tightening climate change-related regulations, they have seen a sharp drop in their financial fortunes.

BP has been worst hit, reporting a loss of $6.5 billion in 2015 compared to a profit of $3.8bn the previous year. 

Market share lost

Operating in an oil market which is increasingly chaotic and unstructured is not easy. The major oil companies – once all-powerful in the energy market – have over the years lost production and market share to state-owned conglomerates, most of them gathered under the Organisation of Petroleum Exporting Countries (OPEC) umbrella.

In recent years OPEC itself has begun to fracture, and production level agreements have broken down.

Member countries Saudi Arabia and Iran are bitter enemies. Libya is in a state of near civil war. There is political chaos in Venezuela. Rebel groups are attacking oil installations in Nigeria

Meanwhile non-OPEC members – the US and Canada – have been adding to a global oil glut – caused primarily by a slowing world economy – by pumping out millions of barrels of oil from shale deposits and by fracking

Experts say that in order to survive, the oil majors have to invest in new technologies, including renewables. Once again, the companies are taking tentative steps along that path, but it might be too little, too late for them to survive. – Climate News Network

Shell swims against oil price tide

As the giant Shell oil company begins highly controversial exploration drilling in the Arctic, the price of crude continues to slide. LONDON, 30 August, 2015 – It’s a gamble – some would say a giant gamble. Before even one litre of oil has been found, the Anglo-Dutch Shell group is believed to have spent more than US$7 billion – just making preparations for its latest Arctic venture. Shell is betting on finding the oil industry’s Holy Grail: according to 2008 estimates by the US Geological Survey, the Arctic contains more than 20% of the world’s remaining hydrocarbon resources – including at least 90 billion barrels of oil. If Shell does strike oil in big quantities maybe its gamble will pay off – and its anxious shareholders can look forward to handsome payouts. But the whole venture is a high-risk business. The decision by the US administration to allow Shell to start drilling in the Chukchi Sea, off the coast of Alaska, is highly controversial. Environmentalists and scientists say any further exploitation of fossil fuels must be halted in order to limit the rise in average global temperatures to within 2°C of pre-industrial levels and avert serious climate change.

Possible catastrophe

Drilling conditions in the Arctic can be treacherous: in 2012 a Shell rig which had been drilling for oil in the Beaufort Sea off Alaska ran aground in a storm and had to scrapped. Any oil spill in the ecologically rich waters of the Arctic could be catastrophic. Hillary Clinton, President Obama’s former secretary of state and now a presidential contender, criticises Washington for allowing Shell to drill. “The Arctic is a unique treasure”, she says. “Given what we know, it’s not worth the risk of drilling.” Shell says its operations meet the highest standards. “We owe it to the Arctic, its inhabitants, and the world to work with great care as we search for oil and gas resources and develop those at the request of governments across the region”, the company says. The financial rationale of Shell’s move is also being questioned. Drilling in the Arctic is an expensive business and involves complex logistical challenges.

Stubbornly low

Analysts say so-called unconventional oil – crude recovered from difficult environments such as the Arctic – needs to command a price of between US$70 and US$100 a barrel to make its recovery economical. At present, though oil demand is strong, there are deep uncertainties about future economic growth, particularly in China. Oil is staying stubbornly below US$50 per barrel. The big oil producers such as Saudi Arabia have not, as in the past, lowered output in order to shore up prices. A tentative agreement between western nations and Iran on nuclear issues is likely to mean new supplies of Iranian crude hitting the international market, putting further downward pressure on prices. Despite continue bombing and communal strife, Iraq is gearing up its oil production. One of the major factors influencing the downward movement of oil prices over recent years has been the development of the US fracking industry, with vast amounts of oil and gas recovered from shale deposits deep underground. Perhaps Shell – and big producer countries like Saudi Arabia – foresee an end to the fracking boom.

Fracking slows

As recovery from shale deposits becomes more difficult and prices remain low, fracking is not enjoying the explosive growth it saw a few years ago. Some drilling sites in the US states of Texas and North Dakota are being abandoned. Several of the smaller fracking companies – which borrowed large amounts during the good times to finance their operations – have gone bust. But there is still a global glut of oil: the International Energy Agency says there is unlikely to be a rebound in oil prices any time soon. The drilling season in the Arctic is brief: the days shorten quickly and the ice begins to form. Shell – and its shareholders – will be hoping for quick returns. International negotiators preparing for the climate summit in Paris later this year are calling for urgent action to head off global warming. There are many who hope Shell’s exploration activities will not succeed – and that the Arctic hydrocarbons stay where they are, thousands of feet below the seabed. – Climate News Network

As the giant Shell oil company begins highly controversial exploration drilling in the Arctic, the price of crude continues to slide. LONDON, 30 August, 2015 – It’s a gamble – some would say a giant gamble. Before even one litre of oil has been found, the Anglo-Dutch Shell group is believed to have spent more than US$7 billion – just making preparations for its latest Arctic venture. Shell is betting on finding the oil industry’s Holy Grail: according to 2008 estimates by the US Geological Survey, the Arctic contains more than 20% of the world’s remaining hydrocarbon resources – including at least 90 billion barrels of oil. If Shell does strike oil in big quantities maybe its gamble will pay off – and its anxious shareholders can look forward to handsome payouts. But the whole venture is a high-risk business. The decision by the US administration to allow Shell to start drilling in the Chukchi Sea, off the coast of Alaska, is highly controversial. Environmentalists and scientists say any further exploitation of fossil fuels must be halted in order to limit the rise in average global temperatures to within 2°C of pre-industrial levels and avert serious climate change.

Possible catastrophe

Drilling conditions in the Arctic can be treacherous: in 2012 a Shell rig which had been drilling for oil in the Beaufort Sea off Alaska ran aground in a storm and had to scrapped. Any oil spill in the ecologically rich waters of the Arctic could be catastrophic. Hillary Clinton, President Obama’s former secretary of state and now a presidential contender, criticises Washington for allowing Shell to drill. “The Arctic is a unique treasure”, she says. “Given what we know, it’s not worth the risk of drilling.” Shell says its operations meet the highest standards. “We owe it to the Arctic, its inhabitants, and the world to work with great care as we search for oil and gas resources and develop those at the request of governments across the region”, the company says. The financial rationale of Shell’s move is also being questioned. Drilling in the Arctic is an expensive business and involves complex logistical challenges.

Stubbornly low

Analysts say so-called unconventional oil – crude recovered from difficult environments such as the Arctic – needs to command a price of between US$70 and US$100 a barrel to make its recovery economical. At present, though oil demand is strong, there are deep uncertainties about future economic growth, particularly in China. Oil is staying stubbornly below US$50 per barrel. The big oil producers such as Saudi Arabia have not, as in the past, lowered output in order to shore up prices. A tentative agreement between western nations and Iran on nuclear issues is likely to mean new supplies of Iranian crude hitting the international market, putting further downward pressure on prices. Despite continue bombing and communal strife, Iraq is gearing up its oil production. One of the major factors influencing the downward movement of oil prices over recent years has been the development of the US fracking industry, with vast amounts of oil and gas recovered from shale deposits deep underground. Perhaps Shell – and big producer countries like Saudi Arabia – foresee an end to the fracking boom.

Fracking slows

As recovery from shale deposits becomes more difficult and prices remain low, fracking is not enjoying the explosive growth it saw a few years ago. Some drilling sites in the US states of Texas and North Dakota are being abandoned. Several of the smaller fracking companies – which borrowed large amounts during the good times to finance their operations – have gone bust. But there is still a global glut of oil: the International Energy Agency says there is unlikely to be a rebound in oil prices any time soon. The drilling season in the Arctic is brief: the days shorten quickly and the ice begins to form. Shell – and its shareholders – will be hoping for quick returns. International negotiators preparing for the climate summit in Paris later this year are calling for urgent action to head off global warming. There are many who hope Shell’s exploration activities will not succeed – and that the Arctic hydrocarbons stay where they are, thousands of feet below the seabed. – Climate News Network

Fracking fuels conflict over water resources

Limited water supplies near the richest oil and gas reserves accessible through fracking threaten to create tensions that could block future projects using the controversial extraction process. LONDON, 15 September, 2014 − The vast quantities of water needed to release oil and gas by fracturing rock formations are not available in large areas with the richest deposits – posing major challenges to the future viability of fracking. According to a report by the World Resources Institute (WRI), 38% of the areas where shale gas and oil is most abundant is arid or already under severe water stress – and the 386 million people living in these areas need all the spare water they can get. Among the countries that have areas with potentially large quantities of shale underground, but which have limited water supplies, are China, India, Pakistan, South Africa, Mexico, the US and the UK. Andrew Steer, president of the WRI, said: “These factors pose significant social, environmental, and financial challenges to accessing water, and could limit shale development.”

Stumbling block

The report says that estimates of shale gas reserves add 47% to the global, technically-recoverable natural gas reserves and 11% to the oil reserves. But it points out that that “as countries escalate their shale exploration, limited availability of fresh water could become a stumbling block”. The method of releasing the trapped gas and oil in the process known as fracking is controversial because it involves injecting large quantities of water and chemicals underground to fracture the rock and release the oil and gas. In some areas of the US, where fracking has been pioneered and has enabled large new supplies of oil and gas to be produced to the benefit of the economy, there has been trouble with the release of methane into the atmosphere and contamination of water supplies. In many areas that have potential for fracking, this had led to a public backlash − even where there is plenty of potential water for use in the process. An example is the Canadian province of Nova Scotia, where the Environment Minister, Andrew Younger, has imposed an indefinite ban on fracking onshore and plans to bring forward legislation to ban the practice. “Nova Scotians have clearly indicated they are not yet ready for the use of hydraulic fracturing in the development of shale reserves,” Younger said. “We will respect their views.”

Areas of stress

The WRI has produced a detailed map of shale oil and gas reserves, overlaid with colours indicating of areas high water stress. It illustrates where most conflict over the use of resources is likely to be. The report comments on the problems facing companies and governments in persuading their citizens to sacrifice limited water supplies so that oil and gas can be extracted. “The findings indicate that companies developing shale resources internationally are likely to face serious challenges to accessing fresh water in many parts of the world,” the report says. “These challenges highlight a strong business case for strategic company engagement in sustainable water management at local and regional levels. “They also point to a need for companies to work with governments and other sectors to minimise environmental impacts and water resources depletion.” – Climate News Network

Limited water supplies near the richest oil and gas reserves accessible through fracking threaten to create tensions that could block future projects using the controversial extraction process. LONDON, 15 September, 2014 − The vast quantities of water needed to release oil and gas by fracturing rock formations are not available in large areas with the richest deposits – posing major challenges to the future viability of fracking. According to a report by the World Resources Institute (WRI), 38% of the areas where shale gas and oil is most abundant is arid or already under severe water stress – and the 386 million people living in these areas need all the spare water they can get. Among the countries that have areas with potentially large quantities of shale underground, but which have limited water supplies, are China, India, Pakistan, South Africa, Mexico, the US and the UK. Andrew Steer, president of the WRI, said: “These factors pose significant social, environmental, and financial challenges to accessing water, and could limit shale development.”

Stumbling block

The report says that estimates of shale gas reserves add 47% to the global, technically-recoverable natural gas reserves and 11% to the oil reserves. But it points out that that “as countries escalate their shale exploration, limited availability of fresh water could become a stumbling block”. The method of releasing the trapped gas and oil in the process known as fracking is controversial because it involves injecting large quantities of water and chemicals underground to fracture the rock and release the oil and gas. In some areas of the US, where fracking has been pioneered and has enabled large new supplies of oil and gas to be produced to the benefit of the economy, there has been trouble with the release of methane into the atmosphere and contamination of water supplies. In many areas that have potential for fracking, this had led to a public backlash − even where there is plenty of potential water for use in the process. An example is the Canadian province of Nova Scotia, where the Environment Minister, Andrew Younger, has imposed an indefinite ban on fracking onshore and plans to bring forward legislation to ban the practice. “Nova Scotians have clearly indicated they are not yet ready for the use of hydraulic fracturing in the development of shale reserves,” Younger said. “We will respect their views.”

Areas of stress

The WRI has produced a detailed map of shale oil and gas reserves, overlaid with colours indicating of areas high water stress. It illustrates where most conflict over the use of resources is likely to be. The report comments on the problems facing companies and governments in persuading their citizens to sacrifice limited water supplies so that oil and gas can be extracted. “The findings indicate that companies developing shale resources internationally are likely to face serious challenges to accessing fresh water in many parts of the world,” the report says. “These challenges highlight a strong business case for strategic company engagement in sustainable water management at local and regional levels. “They also point to a need for companies to work with governments and other sectors to minimise environmental impacts and water resources depletion.” – Climate News Network

Campaigners spy signs of concern among frackers

Does the NATO Secretary General really believe that Russia is secretly the puppet master behind efforts to stop shale gas extraction in Europe, or is it – asks UK Green Party MP Caroline Lucas − just an indication of the growing effectiveness of anti-fracking campaigns?  LONDON, 25 June, 2014 − Arriving at the beautiful village of Balcombe last August, ready to take part in the growing protests against Cuadrilla’s plans to start fracking deep in the Sussex countryside in southern England, my biggest concern – as I weaved my way through families with children and dogs, stepping over people picnicking on rugs on the grass verge − was whether we’d escape without rain. I have to confess that looking out for Russian spies was not high on my list of preoccupations. Yet if Anders Fogh Rasmussen, the NATO Secretary General, is to be believed, perhaps it should have been.

Stunned audience

Speaking at a Chatham House conference in London last week, Rasmussen stunned his audience by asserting that Vladimir Putin’s Russian government was behind attempts to undermine projects using hydraulic fracturing technology in Europe. He said: “. . . I have met allies who can report that Russia, as part of their sophisticated information and disinformation operations, engages actively with so-called non-governmental organisations, environmental organisations working against shale gas – obviously to maintain European dependence on imported Russian gas. That’s my interpretation.” This is a pretty mind-boggling assertion − and it is one for which absolutely no evidence at all was adduced.

“The fact that these are the views of the man in charge of the biggest nuclear alliance on Earth is positively terrifying”

If this had been the “interpretation” of a fellow Balcombe protester who had turned to their homemade cider a shade early on in the proceedings, it would simply be odd. But the fact that these are the views of the man in charge of the biggest nuclear alliance on Earth is positively terrifying. The allegation is, quite simply, ludicrous. I’ve met a good many anti-fracking campaigners over the years, and I have never heard anything so absurd. Indeed, Greenpeace gave the proposition admirably short shrift, saying: “The idea that we’re puppets of Putin is so preposterous that you have to wonder what they’re smoking over at NATO HQ.” Quite. But Rasmussen’s assertion is also deeply worrying. First, it besmirches the motivations of many thousands of sincere protesters who campaign in good faith against a technology that causes serious pollution to water, soil and air, and which will lock us into ever greater fossil fuel dependence at precisely the time when climate scientists are warning that we urgently need to invest in renewables instead. It is a technology, moreover, that will not deliver the much-vaunted European energy independence claimed for it, since even under the most optimistic scenarios, shale gas is projected to meet just 10% of European gas demand by 2030. Most commentators agree that 2%-3% is a more realistic estimate (International Energy Agency: World Energy Outlook 2012). Even in the best case scenario, the volumes of EU shale gas will be too small to impact meaningfully on EU security of supply concerns. Second, it raises serious questions about the judgment of one of the most powerful men in the world. The head of NATO must be dangerously deluded if he genuinely believes his own rhetoric. And if his assessment is in such serious doubt over this, on how many other issues is his judgment falling short?

Growing campaigns

Perhaps one thing this episode does show, however, is how effective the growing anti-fracking campaigns are becoming, and therefore how much of a threat they pose to those shale gas enthusiasts who still believe − flying in the face of the evidence − that it will offer a low-cost, low-carbon energy future. Fracking is already banned in five of the 14 EU Member States with estimated reserves − including in France, which has the second largest resources after Poland. The reality is that one doesn’t need to fantasise about possible Russian attempts to discredit fracking. The evidence is doing that very effectively on its own. The bigger conundrum is why, in a country with such plentiful renewable resources as the UK, we have a government intent on locking us into yet more fossil fuel dependence. Judging by the bewildering lack of ministerial commitment in the UK to cheaper, more plentiful renewables − which, alongside a serious investment in efficiency and conservation, really could deliver energy independence − perhaps we should check whether the Russians have infiltrated the Department for Energy and Climate Change as well. If so, they seem to have been remarkably effective. – Climate News Network

  • Caroline Lucas, the UK’s only Green Party Member of Parliament, was arrested at a protest against fracking in southern England last year. She was found not guilty of the charges the police brought against her – for wilful obstruction of a public highway and breaching an order under section 14 of the Public Order Act (relating to public assemblies).

Does the NATO Secretary General really believe that Russia is secretly the puppet master behind efforts to stop shale gas extraction in Europe, or is it – asks UK Green Party MP Caroline Lucas − just an indication of the growing effectiveness of anti-fracking campaigns?  LONDON, 25 June, 2014 − Arriving at the beautiful village of Balcombe last August, ready to take part in the growing protests against Cuadrilla’s plans to start fracking deep in the Sussex countryside in southern England, my biggest concern – as I weaved my way through families with children and dogs, stepping over people picnicking on rugs on the grass verge − was whether we’d escape without rain. I have to confess that looking out for Russian spies was not high on my list of preoccupations. Yet if Anders Fogh Rasmussen, the NATO Secretary General, is to be believed, perhaps it should have been.

Stunned audience

Speaking at a Chatham House conference in London last week, Rasmussen stunned his audience by asserting that Vladimir Putin’s Russian government was behind attempts to undermine projects using hydraulic fracturing technology in Europe. He said: “. . . I have met allies who can report that Russia, as part of their sophisticated information and disinformation operations, engages actively with so-called non-governmental organisations, environmental organisations working against shale gas – obviously to maintain European dependence on imported Russian gas. That’s my interpretation.” This is a pretty mind-boggling assertion − and it is one for which absolutely no evidence at all was adduced.

“The fact that these are the views of the man in charge of the biggest nuclear alliance on Earth is positively terrifying”

If this had been the “interpretation” of a fellow Balcombe protester who had turned to their homemade cider a shade early on in the proceedings, it would simply be odd. But the fact that these are the views of the man in charge of the biggest nuclear alliance on Earth is positively terrifying. The allegation is, quite simply, ludicrous. I’ve met a good many anti-fracking campaigners over the years, and I have never heard anything so absurd. Indeed, Greenpeace gave the proposition admirably short shrift, saying: “The idea that we’re puppets of Putin is so preposterous that you have to wonder what they’re smoking over at NATO HQ.” Quite. But Rasmussen’s assertion is also deeply worrying. First, it besmirches the motivations of many thousands of sincere protesters who campaign in good faith against a technology that causes serious pollution to water, soil and air, and which will lock us into ever greater fossil fuel dependence at precisely the time when climate scientists are warning that we urgently need to invest in renewables instead. It is a technology, moreover, that will not deliver the much-vaunted European energy independence claimed for it, since even under the most optimistic scenarios, shale gas is projected to meet just 10% of European gas demand by 2030. Most commentators agree that 2%-3% is a more realistic estimate (International Energy Agency: World Energy Outlook 2012). Even in the best case scenario, the volumes of EU shale gas will be too small to impact meaningfully on EU security of supply concerns. Second, it raises serious questions about the judgment of one of the most powerful men in the world. The head of NATO must be dangerously deluded if he genuinely believes his own rhetoric. And if his assessment is in such serious doubt over this, on how many other issues is his judgment falling short?

Growing campaigns

Perhaps one thing this episode does show, however, is how effective the growing anti-fracking campaigns are becoming, and therefore how much of a threat they pose to those shale gas enthusiasts who still believe − flying in the face of the evidence − that it will offer a low-cost, low-carbon energy future. Fracking is already banned in five of the 14 EU Member States with estimated reserves − including in France, which has the second largest resources after Poland. The reality is that one doesn’t need to fantasise about possible Russian attempts to discredit fracking. The evidence is doing that very effectively on its own. The bigger conundrum is why, in a country with such plentiful renewable resources as the UK, we have a government intent on locking us into yet more fossil fuel dependence. Judging by the bewildering lack of ministerial commitment in the UK to cheaper, more plentiful renewables − which, alongside a serious investment in efficiency and conservation, really could deliver energy independence − perhaps we should check whether the Russians have infiltrated the Department for Energy and Climate Change as well. If so, they seem to have been remarkably effective. – Climate News Network

  • Caroline Lucas, the UK’s only Green Party Member of Parliament, was arrested at a protest against fracking in southern England last year. She was found not guilty of the charges the police brought against her – for wilful obstruction of a public highway and breaching an order under section 14 of the Public Order Act (relating to public assemblies).

Fracking boom threatens US water supplies

Campaigners in the US warn that fracking for oil or gas, which has transformed the country’s energy market, is seriously depleting or contaminating supplies of the most vital asset − water OREGON, 18 June − Since the onset of the fracking boom almost a decade ago, every state in the US has been examining its geological resources in the hope of finding oil or gas it can access through this extraction method. Almost half the states are now producing at least some shale gas, with a few – Texas, Pennsylvania, California, Colorado, North Dakota – sitting on massive deposits. Nearly half a million wells in the US were producing shale gas in 2012. But while many countries now seek to bolster their economies by following the American lead in exploiting this controversial new source of fossil fuels, campaigners in the US are warning of serious collateral damage to the environment: the depletion and contamination of vital water supplies. The process of fracking, short for “hydraulic fracturing”, involves injecting water, sand and chemicals down vertical wells and along horizontal shafts − which can be several miles long − to open up small pores in the rock. This releases the methane for capture. Fracking a well just once uses upwards of five million gallons of water, and each well can be fracked 18 times or more. Texas alone used an estimated 25 billion gallons of water for fracking in 2012, according to a recent report by Ceres, a not-for-profit group advising investors on climate change.

Demand accelerating

Where surface water is lacking, as in Texas, underground aquifers are being emptied at record rates. And while fracking’s water use still trails behind personal and agricultural uses, demand is accelerating even while much of the US is suffering extreme drought, which is probably caused or worsened by climate change exacerbated, ironically, by burning fossil fuels. There is no overarching policy regulating how the industry uses water. In the Energy Policy Act of 2005, a provision known as the “Halliburton loophole” exempts oil and gas operations from almost all federal air and water regulations, leaving protection of these basic life necessities to the states. Texas does not require operators to report groundwater use, but new regulations in California require operators to state where they will get their water and how they will dispose of their wastewater. Even in the face of a drought emergency, the state’s well operators still plan to take most of their water from surface sources, says Kyle Ferrar, California state co-ordinator of the Fractracker Alliance, a not-for-profit data analysis group. Disposing of the water when fracking is complete is also challenging. The wastewater is a mixture of the injected freshwater, fracking chemicals, and deep formation water, which is usually briny and often mildly radioactive. It can’t be recycled for typical water uses, as few public drinking water or sewage treatment plants are equipped to remove fracking contaminants. In fact, some of these contaminants react with chlorine compounds to form trihalomethanes, which can cause liver and kidney damage. The most reasonable wastewater solution appears to be re-using it in subsequent fracking operations − a practice that is growing in popularity among American well operators because it can reduce the amount of new water required. Waste can also be injected into spent oil and gas wells, much as CO2 is sequestered. The US Environmental Protection Agency operates an underground injection control programme, which it administers directly in some states and allows state government to run in others. But many operators still pump the waste into large surface ponds lined with plastic, allowing the water to evaporate and carry some contaminants into the atmosphere. Storm runoff can also transmit wastewater from ponds and landfills to surface and groundwater systems. Pennsylvania is struggling to balance its resources in the face of the fracking boom. In 2011, the Department of Environmental Protection asked the state’s gas well operators to stop discharging waste into surface waters. Because Pennsylvania’s geology is not conducive to stable injection wells, operators now ship much of their wastewater next door to Ohio, which encourages the practice as an income source.

Shady practices

In 2011, at least half the wastewater stored in Ohio came from out of state, according to the Environment Ohio Research & Policy Center. Many Ohio environmentalists object to taking other states’ waste − partly because the fracking boom has resulted in some shady practices. “Dumping seems to be a really ongoing problem,” explains Julie Weatherington-Rice, senior scientist at Bennett & Williams Environmental Consultants in Ohio. “We’re seeing dumping down old mineshafts and dumping on roads where the spigot at the end of the tank is [allowed] to dribble all the way to the [disposal] well.” In March, a Youngstown company admitted it had dumped thousands of gallons of waste into a stormwater sewer feeding into a river system. Testing revealed that the waste contained benzene, which is a known carcinogen, and toluene, a nervous system toxicant. If concrete wellbores or seals at the wellhead are misaligned or corroded, methane and chemicals can migrate into potable water aquifers − something that the small town of Dimock, Pennsylvania, learned the hard way in 2009. Most Dimock residents have individual water wells. Shortly after Cabot Oil and Gas began fracking in the area, a resident’s backyard water well exploded. After it was determined that Cabot’s operations were the source of the methane contamination, a consent agreement with the state required Cabot to supply Dimock’s drinking water. But the state allowed Cabot to stop supplying water in 2011, without testing residents’ well water, according to a report by StateImpact, a project of National Public Radio stations.

Potable water

Because many residents still don’t have potable water as a result of the contamination, volunteers from around the state are holding local events to raise money to supply water to Dimock, says Karen Feridun, an activist with Berks Gas Truth, an anti-fracking group. The situation remains unresolved for the long term. Although Pennsylvania and Texas have been hit especially hard by the effects of shale gas extraction, no part of the US is exempt. Even the Pacific Northwest,long insulated from fossil fuel extraction and burning by virtue of its massive hydropower projects and deep layers of flood basalt covering any oil or gas-bearing formations, is now vulnerable. The region faces the prospect of liquefied natural gas (LNG) pipelines and a massive increase in trains carrying oil and coal through the scenic Columbia River Gorge to west coast ports for shipment to China. LNG terminals are also being planned for gas shipment from the US east coast to Europe. At some point, campaigners warn, all Americans may have to choose between energy and clean water. “Make sure [fracking’s] not taking your drinking water or your irrigation or the water that your herds need to survive,” says Weatherington-Rice. “When this happens, you’ve lost that water forever.” – Climate News Network

Valerie Brown, based in Oregon, USA, is a science writer focusing on climate change and environmental health. She is a member of the National Association of Science Writers and Society of Environmental Journalists. In 2009, she received the Society of Environmental Journalists award for Outstanding Explanatory Reporting in Print for her article Environment Becomes Heredity for the Miler-McCune Center for Research, Media and Public Policy’s Pacific Standard journal. 

Campaigners in the US warn that fracking for oil or gas, which has transformed the country’s energy market, is seriously depleting or contaminating supplies of the most vital asset − water OREGON, 18 June − Since the onset of the fracking boom almost a decade ago, every state in the US has been examining its geological resources in the hope of finding oil or gas it can access through this extraction method. Almost half the states are now producing at least some shale gas, with a few – Texas, Pennsylvania, California, Colorado, North Dakota – sitting on massive deposits. Nearly half a million wells in the US were producing shale gas in 2012. But while many countries now seek to bolster their economies by following the American lead in exploiting this controversial new source of fossil fuels, campaigners in the US are warning of serious collateral damage to the environment: the depletion and contamination of vital water supplies. The process of fracking, short for “hydraulic fracturing”, involves injecting water, sand and chemicals down vertical wells and along horizontal shafts − which can be several miles long − to open up small pores in the rock. This releases the methane for capture. Fracking a well just once uses upwards of five million gallons of water, and each well can be fracked 18 times or more. Texas alone used an estimated 25 billion gallons of water for fracking in 2012, according to a recent report by Ceres, a not-for-profit group advising investors on climate change.

Demand accelerating

Where surface water is lacking, as in Texas, underground aquifers are being emptied at record rates. And while fracking’s water use still trails behind personal and agricultural uses, demand is accelerating even while much of the US is suffering extreme drought, which is probably caused or worsened by climate change exacerbated, ironically, by burning fossil fuels. There is no overarching policy regulating how the industry uses water. In the Energy Policy Act of 2005, a provision known as the “Halliburton loophole” exempts oil and gas operations from almost all federal air and water regulations, leaving protection of these basic life necessities to the states. Texas does not require operators to report groundwater use, but new regulations in California require operators to state where they will get their water and how they will dispose of their wastewater. Even in the face of a drought emergency, the state’s well operators still plan to take most of their water from surface sources, says Kyle Ferrar, California state co-ordinator of the Fractracker Alliance, a not-for-profit data analysis group. Disposing of the water when fracking is complete is also challenging. The wastewater is a mixture of the injected freshwater, fracking chemicals, and deep formation water, which is usually briny and often mildly radioactive. It can’t be recycled for typical water uses, as few public drinking water or sewage treatment plants are equipped to remove fracking contaminants. In fact, some of these contaminants react with chlorine compounds to form trihalomethanes, which can cause liver and kidney damage. The most reasonable wastewater solution appears to be re-using it in subsequent fracking operations − a practice that is growing in popularity among American well operators because it can reduce the amount of new water required. Waste can also be injected into spent oil and gas wells, much as CO2 is sequestered. The US Environmental Protection Agency operates an underground injection control programme, which it administers directly in some states and allows state government to run in others. But many operators still pump the waste into large surface ponds lined with plastic, allowing the water to evaporate and carry some contaminants into the atmosphere. Storm runoff can also transmit wastewater from ponds and landfills to surface and groundwater systems. Pennsylvania is struggling to balance its resources in the face of the fracking boom. In 2011, the Department of Environmental Protection asked the state’s gas well operators to stop discharging waste into surface waters. Because Pennsylvania’s geology is not conducive to stable injection wells, operators now ship much of their wastewater next door to Ohio, which encourages the practice as an income source.

Shady practices

In 2011, at least half the wastewater stored in Ohio came from out of state, according to the Environment Ohio Research & Policy Center. Many Ohio environmentalists object to taking other states’ waste − partly because the fracking boom has resulted in some shady practices. “Dumping seems to be a really ongoing problem,” explains Julie Weatherington-Rice, senior scientist at Bennett & Williams Environmental Consultants in Ohio. “We’re seeing dumping down old mineshafts and dumping on roads where the spigot at the end of the tank is [allowed] to dribble all the way to the [disposal] well.” In March, a Youngstown company admitted it had dumped thousands of gallons of waste into a stormwater sewer feeding into a river system. Testing revealed that the waste contained benzene, which is a known carcinogen, and toluene, a nervous system toxicant. If concrete wellbores or seals at the wellhead are misaligned or corroded, methane and chemicals can migrate into potable water aquifers − something that the small town of Dimock, Pennsylvania, learned the hard way in 2009. Most Dimock residents have individual water wells. Shortly after Cabot Oil and Gas began fracking in the area, a resident’s backyard water well exploded. After it was determined that Cabot’s operations were the source of the methane contamination, a consent agreement with the state required Cabot to supply Dimock’s drinking water. But the state allowed Cabot to stop supplying water in 2011, without testing residents’ well water, according to a report by StateImpact, a project of National Public Radio stations.

Potable water

Because many residents still don’t have potable water as a result of the contamination, volunteers from around the state are holding local events to raise money to supply water to Dimock, says Karen Feridun, an activist with Berks Gas Truth, an anti-fracking group. The situation remains unresolved for the long term. Although Pennsylvania and Texas have been hit especially hard by the effects of shale gas extraction, no part of the US is exempt. Even the Pacific Northwest,long insulated from fossil fuel extraction and burning by virtue of its massive hydropower projects and deep layers of flood basalt covering any oil or gas-bearing formations, is now vulnerable. The region faces the prospect of liquefied natural gas (LNG) pipelines and a massive increase in trains carrying oil and coal through the scenic Columbia River Gorge to west coast ports for shipment to China. LNG terminals are also being planned for gas shipment from the US east coast to Europe. At some point, campaigners warn, all Americans may have to choose between energy and clean water. “Make sure [fracking’s] not taking your drinking water or your irrigation or the water that your herds need to survive,” says Weatherington-Rice. “When this happens, you’ve lost that water forever.” – Climate News Network

Valerie Brown, based in Oregon, USA, is a science writer focusing on climate change and environmental health. She is a member of the National Association of Science Writers and Society of Environmental Journalists. In 2009, she received the Society of Environmental Journalists award for Outstanding Explanatory Reporting in Print for her article Environment Becomes Heredity for the Miler-McCune Center for Research, Media and Public Policy’s Pacific Standard journal. 

Can fracking rid us of nuclear waste?

FOR IMMEDIATE RELEASE Fracking is opposed by many communities for a range of reasons. But it appears the geology that holds hard-to-reach hydrocarbons could also be suitable for storing spent nuclear fuel. LONDON, 6 April – US scientists are proposing that the source of one controversial energy programme could provide a solution to the problems of another. Nuclear waste – that embarrassing by-product of two generations of uranium-fuelled power stations – could be stored indefinitely in the shale rock that right now provides a highly contentious source of natural gas for utility companies. An estimated 77,000 tons of spent nuclear fuel is stored in temporary, above-ground facilities: for decades, governments, anti-nuclear campaigners and nuclear generating companies have all agreed that such a solution is unsafe in the long-term, and unsatisfactory even in the short term. Nuclear fuel remains hazardous for tens of thousands of years. Everyone would like to see it safely tucked out of harm’s way. But for decades, there has been disagreement and uncertainty about what might constitute long-term safety. But Chris Neuzil of the US Geological Survey told the American Chemical Society annual meeting in Dallas that the unique properties of the sedimentary rock and clay-rich strata that make up the shale beds could be ideal. France, Switzerland and Belgium already planned to use shale repositories as a long-term home. For decades, US authorities planned to bury American waste under Yucca Mountain in Nevada, but abandoned the scheme in 2009.

Rare impermeability

For more than 60 years, miners and oil and gas companies have used controversial “fracking” or hydraulic fracture techniques to create flow channels to release oil and gas trapped in rock, and the approach has been amplified in the search for otherwise inaccessible natural gas or methane trapped underground. But fracking is necessary because shale rock is impermeable – hardly any water normally flows through shale beds – and this impermeability may actually make the rock perfect for long-term nuclear waste storage. Many shale formations are the product of very high pressures over many millions of years. Shale fractures may show up where roads cut through a hillside, but conditions deep underground are quite possibly much safer. Experiments have shown that water moves through the rocks only very slowly, if at all. “Years ago I would probably have told you shales below the surface were also fractured,” said Neuzil, who is examining a shale site in Ontario for the Canadian Nuclear Waste Management Organisation. “But we are seeing that that is not necessarily true.” However, one criterion for a safe burial site would have to be the absence of oil or natural gas or anything else that might attract the interest of a future generation of hydraulic fracture engineers. – Climate News Network

FOR IMMEDIATE RELEASE Fracking is opposed by many communities for a range of reasons. But it appears the geology that holds hard-to-reach hydrocarbons could also be suitable for storing spent nuclear fuel. LONDON, 6 April – US scientists are proposing that the source of one controversial energy programme could provide a solution to the problems of another. Nuclear waste – that embarrassing by-product of two generations of uranium-fuelled power stations – could be stored indefinitely in the shale rock that right now provides a highly contentious source of natural gas for utility companies. An estimated 77,000 tons of spent nuclear fuel is stored in temporary, above-ground facilities: for decades, governments, anti-nuclear campaigners and nuclear generating companies have all agreed that such a solution is unsafe in the long-term, and unsatisfactory even in the short term. Nuclear fuel remains hazardous for tens of thousands of years. Everyone would like to see it safely tucked out of harm’s way. But for decades, there has been disagreement and uncertainty about what might constitute long-term safety. But Chris Neuzil of the US Geological Survey told the American Chemical Society annual meeting in Dallas that the unique properties of the sedimentary rock and clay-rich strata that make up the shale beds could be ideal. France, Switzerland and Belgium already planned to use shale repositories as a long-term home. For decades, US authorities planned to bury American waste under Yucca Mountain in Nevada, but abandoned the scheme in 2009.

Rare impermeability

For more than 60 years, miners and oil and gas companies have used controversial “fracking” or hydraulic fracture techniques to create flow channels to release oil and gas trapped in rock, and the approach has been amplified in the search for otherwise inaccessible natural gas or methane trapped underground. But fracking is necessary because shale rock is impermeable – hardly any water normally flows through shale beds – and this impermeability may actually make the rock perfect for long-term nuclear waste storage. Many shale formations are the product of very high pressures over many millions of years. Shale fractures may show up where roads cut through a hillside, but conditions deep underground are quite possibly much safer. Experiments have shown that water moves through the rocks only very slowly, if at all. “Years ago I would probably have told you shales below the surface were also fractured,” said Neuzil, who is examining a shale site in Ontario for the Canadian Nuclear Waste Management Organisation. “But we are seeing that that is not necessarily true.” However, one criterion for a safe burial site would have to be the absence of oil or natural gas or anything else that might attract the interest of a future generation of hydraulic fracture engineers. – Climate News Network

Carbon output 'will climb 29% by 2035'

FOR IMMEDIATE RELEASE
Climate scientists agree that global carbon dioxide emissions need to be sharply cut. A prominent player in the energy industry predicts they will go in the opposite direction.

LONDON, 7 February – The good news, from the climate’s standpoint, is that while global demand for energy is continuing to grow, the growth is slowing. The bad news is that one energy giant predicts global carbon dioxide emissions will probably rise by almost a third in the next 20 years.

The Intergovernmental Panel on Climate Change says greenhouse gas emissions need to peak by 2020 and then decline if the world is to hope to avoid global average temperatures rising by more than 2°C over pre-industrial levels. Beyond 2°C, it says, climate change could become dangerously unmanageable.

But BP’s Energy Outlook 2035 says CO2 emissions are likely to increase by 29% in the next two decades because of growing energy demand from the developing world.

It says “energy use in the advanced economies of North America, Europe and Asia as a group is expected to grow only very slowly – and begin to decline in the later years of the forecast period”.

But by 2035 energy use in the non-OECD economies is expected to be 69% higher than in 2012. In comparison use in the OECD will have grown by only 5%, and actually to have fallen after 2030, even with continued economic growth. The Outlook predicts that global energy consumption will rise by 41% from 2012 to 2035, compared with 30% over the last ten.

Nor does it offer much hope that the use of novel energy sources will help to cut emissions. It says: “Shale gas is the fastest-growing source of supply (6.5% p.a.), providing nearly half of the growth in global gas.”

Renewables shine

Burning gas produces much lower CO2 emissions than using coal, but the sheer volume of shale production is expected to cancel out any possible emissions reductions. In fact the Outlook says of its predictions:  “…emissions [of CO2] remain well above the path recommended by scientists…Global emissions in 2035 are nearly double the 1990 level.”

An advantage claimed by some supporters of shale gas is that it will increasingly replace a much more polluting fossil fuel, coal. But at the moment many coal-producing countries are finding markets overseas for those they have lost to shale gas at home.

Oil, natural gas and coal are each expected to make up around 27% of the total mix by 2035, with the remaining share coming from nuclear, hydroelectricity and renewables. Among fossil fuels gas, conventional as well as shale, is growing fastest and is increasingly being used as a cleaner alternative to coal.

Bob Dudley, BP Group chief executive, said the Group was “optimistic for the world’s energy future”. Europe, China and India would become more dependent on imports, he said, while the US was on course to become self-sufficient in energy.

The Outlook does provide encouragement to the producers of renewables, which are expected to continue to be the fastest growing class of energy, gaining market share from a small base as they rise at an average of 6.4% a year to 2035. – Climate News Network

FOR IMMEDIATE RELEASE
Climate scientists agree that global carbon dioxide emissions need to be sharply cut. A prominent player in the energy industry predicts they will go in the opposite direction.

LONDON, 7 February – The good news, from the climate’s standpoint, is that while global demand for energy is continuing to grow, the growth is slowing. The bad news is that one energy giant predicts global carbon dioxide emissions will probably rise by almost a third in the next 20 years.

The Intergovernmental Panel on Climate Change says greenhouse gas emissions need to peak by 2020 and then decline if the world is to hope to avoid global average temperatures rising by more than 2°C over pre-industrial levels. Beyond 2°C, it says, climate change could become dangerously unmanageable.

But BP’s Energy Outlook 2035 says CO2 emissions are likely to increase by 29% in the next two decades because of growing energy demand from the developing world.

It says “energy use in the advanced economies of North America, Europe and Asia as a group is expected to grow only very slowly – and begin to decline in the later years of the forecast period”.

But by 2035 energy use in the non-OECD economies is expected to be 69% higher than in 2012. In comparison use in the OECD will have grown by only 5%, and actually to have fallen after 2030, even with continued economic growth. The Outlook predicts that global energy consumption will rise by 41% from 2012 to 2035, compared with 30% over the last ten.

Nor does it offer much hope that the use of novel energy sources will help to cut emissions. It says: “Shale gas is the fastest-growing source of supply (6.5% p.a.), providing nearly half of the growth in global gas.”

Renewables shine

Burning gas produces much lower CO2 emissions than using coal, but the sheer volume of shale production is expected to cancel out any possible emissions reductions. In fact the Outlook says of its predictions:  “…emissions [of CO2] remain well above the path recommended by scientists…Global emissions in 2035 are nearly double the 1990 level.”

An advantage claimed by some supporters of shale gas is that it will increasingly replace a much more polluting fossil fuel, coal. But at the moment many coal-producing countries are finding markets overseas for those they have lost to shale gas at home.

Oil, natural gas and coal are each expected to make up around 27% of the total mix by 2035, with the remaining share coming from nuclear, hydroelectricity and renewables. Among fossil fuels gas, conventional as well as shale, is growing fastest and is increasingly being used as a cleaner alternative to coal.

Bob Dudley, BP Group chief executive, said the Group was “optimistic for the world’s energy future”. Europe, China and India would become more dependent on imports, he said, while the US was on course to become self-sufficient in energy.

The Outlook does provide encouragement to the producers of renewables, which are expected to continue to be the fastest growing class of energy, gaining market share from a small base as they rise at an average of 6.4% a year to 2035. – Climate News Network

Carbon output ‘will climb 29% by 2035’

FOR IMMEDIATE RELEASE Climate scientists agree that global carbon dioxide emissions need to be sharply cut. A prominent player in the energy industry predicts they will go in the opposite direction. LONDON, 7 February – The good news, from the climate’s standpoint, is that while global demand for energy is continuing to grow, the growth is slowing. The bad news is that one energy giant predicts global carbon dioxide emissions will probably rise by almost a third in the next 20 years. The Intergovernmental Panel on Climate Change says greenhouse gas emissions need to peak by 2020 and then decline if the world is to hope to avoid global average temperatures rising by more than 2°C over pre-industrial levels. Beyond 2°C, it says, climate change could become dangerously unmanageable. But BP’s Energy Outlook 2035 says CO2 emissions are likely to increase by 29% in the next two decades because of growing energy demand from the developing world. It says “energy use in the advanced economies of North America, Europe and Asia as a group is expected to grow only very slowly – and begin to decline in the later years of the forecast period”. But by 2035 energy use in the non-OECD economies is expected to be 69% higher than in 2012. In comparison use in the OECD will have grown by only 5%, and actually to have fallen after 2030, even with continued economic growth. The Outlook predicts that global energy consumption will rise by 41% from 2012 to 2035, compared with 30% over the last ten. Nor does it offer much hope that the use of novel energy sources will help to cut emissions. It says: “Shale gas is the fastest-growing source of supply (6.5% p.a.), providing nearly half of the growth in global gas.”

Renewables shine

Burning gas produces much lower CO2 emissions than using coal, but the sheer volume of shale production is expected to cancel out any possible emissions reductions. In fact the Outlook says of its predictions:  “…emissions [of CO2] remain well above the path recommended by scientists…Global emissions in 2035 are nearly double the 1990 level.” An advantage claimed by some supporters of shale gas is that it will increasingly replace a much more polluting fossil fuel, coal. But at the moment many coal-producing countries are finding markets overseas for those they have lost to shale gas at home. Oil, natural gas and coal are each expected to make up around 27% of the total mix by 2035, with the remaining share coming from nuclear, hydroelectricity and renewables. Among fossil fuels gas, conventional as well as shale, is growing fastest and is increasingly being used as a cleaner alternative to coal. Bob Dudley, BP Group chief executive, said the Group was “optimistic for the world’s energy future”. Europe, China and India would become more dependent on imports, he said, while the US was on course to become self-sufficient in energy. The Outlook does provide encouragement to the producers of renewables, which are expected to continue to be the fastest growing class of energy, gaining market share from a small base as they rise at an average of 6.4% a year to 2035. – Climate News Network

FOR IMMEDIATE RELEASE Climate scientists agree that global carbon dioxide emissions need to be sharply cut. A prominent player in the energy industry predicts they will go in the opposite direction. LONDON, 7 February – The good news, from the climate’s standpoint, is that while global demand for energy is continuing to grow, the growth is slowing. The bad news is that one energy giant predicts global carbon dioxide emissions will probably rise by almost a third in the next 20 years. The Intergovernmental Panel on Climate Change says greenhouse gas emissions need to peak by 2020 and then decline if the world is to hope to avoid global average temperatures rising by more than 2°C over pre-industrial levels. Beyond 2°C, it says, climate change could become dangerously unmanageable. But BP’s Energy Outlook 2035 says CO2 emissions are likely to increase by 29% in the next two decades because of growing energy demand from the developing world. It says “energy use in the advanced economies of North America, Europe and Asia as a group is expected to grow only very slowly – and begin to decline in the later years of the forecast period”. But by 2035 energy use in the non-OECD economies is expected to be 69% higher than in 2012. In comparison use in the OECD will have grown by only 5%, and actually to have fallen after 2030, even with continued economic growth. The Outlook predicts that global energy consumption will rise by 41% from 2012 to 2035, compared with 30% over the last ten. Nor does it offer much hope that the use of novel energy sources will help to cut emissions. It says: “Shale gas is the fastest-growing source of supply (6.5% p.a.), providing nearly half of the growth in global gas.”

Renewables shine

Burning gas produces much lower CO2 emissions than using coal, but the sheer volume of shale production is expected to cancel out any possible emissions reductions. In fact the Outlook says of its predictions:  “…emissions [of CO2] remain well above the path recommended by scientists…Global emissions in 2035 are nearly double the 1990 level.” An advantage claimed by some supporters of shale gas is that it will increasingly replace a much more polluting fossil fuel, coal. But at the moment many coal-producing countries are finding markets overseas for those they have lost to shale gas at home. Oil, natural gas and coal are each expected to make up around 27% of the total mix by 2035, with the remaining share coming from nuclear, hydroelectricity and renewables. Among fossil fuels gas, conventional as well as shale, is growing fastest and is increasingly being used as a cleaner alternative to coal. Bob Dudley, BP Group chief executive, said the Group was “optimistic for the world’s energy future”. Europe, China and India would become more dependent on imports, he said, while the US was on course to become self-sufficient in energy. The Outlook does provide encouragement to the producers of renewables, which are expected to continue to be the fastest growing class of energy, gaining market share from a small base as they rise at an average of 6.4% a year to 2035. – Climate News Network