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Shale’s acceptance by the IPCC doesn’t mean complacency

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Last month, the United Nations Intergovernmental Panel on Climate Change (IPCC) released its fifth report on climate change since it was established in 1988. While it advocated abandoning fossil fuels as the quickest way to combat global warming in coming decades, it surprised many by advocating the use of unconventional gas, including shale, as an aid to lowering emissions provided it replaces coal (the most emission-intensive of all major fossil fuels).

The “potential for large new gas supplies – not only from shale gas but also coal-bed methane, deep gas, and other sources could lower emissions where gas competes with coal if gas losses and additional energy requirements for the fracturing process can be kept relatively small”. A modern gas-fired power plant emits about half the carbon dioxide per unit of electricity than a comparable coal-fired unit.

“In the United States, 49 per cent of net electricity generation came from coal in 2006; by 2011 that share had declined to 43 per cent and by 2012 that share had declined to 37 per cent and could decline further as traditional coal plants face new environmental regulations as well as the competition from inexpensive natural gas.”

The IPCC’s proclamation that shale drilling can play a meaningful role in global efforts to reduce global warming is a strong endorsement for the industry. However, this support comes with caveats. The report warned about the challenges raised by unconventional sources of energy, such as their high capital intensity, high energy-intensity and cost, large demands on other natural resources such as water, and other environmental issues.

Fred Krupp, the head of the US Environmental Defense Fund, conveys a similar message in an opinion piece in this month’s Foreign Affairs magazine – that shale gas can help reduce the use of high-carbon coal as long as the environmental impact from drilling operations is contained. Citing soaring smog levels that have led people to leave their homes after falling ill in the US, he cautions that the environmental risks have dragged
public opinion of fracking to an all-time low.

“The industry cannot spin the facts to gain public acceptance or brush aside the harmful local impacts of drilling. Nor can it ignore the prospect that leaks and other releases of natural gas, which is composed primarily of methane, could accelerate climate change. Unburned methane is a particularly powerful greenhouse gas. According to the IPCC, during its first 20 years in the atmosphere, methane is 84 times as potent a greenhouse gas as carbon dioxide.”

The message of responsible drilling lies at the heart of our monthly reports. Indeed, we have warned previously over the high levels of methane leakage from both tight-oil and shale-gas wells. Although on a “well-to-wheel” basis, gas should be significantly less
carbon dioxide intensive than coal, if more than 2.7 per cent of produced methane leaks, then the advantage passes back to coal. Krupp cites a study by the US Environmental Protection Agency that showed US-wide leakage was some 1.5 per cent of production, but points to a 2013 Harvard study that suggested levels of 2.25 per cent.

In addition, as well as ensuring best practice in shale-related operations, it is above-ground issues, in particular the need for regular communication with the public, that can prevent communities, states, and countries putting the brakes on developing their unconventional oil and gas resources.

That’s what ReFINE, a research consortium led by Richard Davies at the UK’s Durham Energy Institute, seeks to achieve. Davies spoke at the UK Geological Society last month about how the group undertakes independent and neutral research in response to
questions and concerns they hear directly from communities across Europe.

For example, on the question of water contamination, ReFINE’s study revealed that fracking takes place far deeper underground than aquifers, which are just below the surface. No fractures spread beyond 600 metres vertically from the fracked horizontal section, and most
were around 300 metres; leading to the conclusion that fracking itself is very unlikely to be the cause of water contamination unless a lot of fluid over a long period was used that might result in larger ruptures. The group also concluded that, while there are three examples out of hundreds of thousands of fracked wells where tremors were felt, bigger events stemmed from other causes such as water disposal, geothermal activity or conventional oil and gas drilling.

Again, we have commented previously that earthquake risk appears to lie with poorly-regulated large-scale re-injection of wastewater, a practice uncommon outside parts of the US. The group also looked at well integrity, concluding that casing and liner cement may
crack or retain open channels, while a well’s casing that’s made from steel can corrode over time – both are being actively addressed in the US and full regulatory enforcement is due to kick-in during 2015. On the broader question of methane, Davies said there is
currently insufficient hard data for the entire shale drilling value chain to assess total emissions.

ReFINE’s research is but one example of academic and government institutions acting to address the public’s concerns. The group’s work reveals that, while fracking doesn’t usually result in water contamination, earthquakes, or well-leakages, there may be room for
improvement. For example, governments might choose, or be encouraged, to regulate the shallowest level at which fracking can occur, or the amount of fluid that can be used per well. If it ensured the sanctity of drinking water and removed a key public concern, there’s no
reason for the industry not to support such research (in fact, ReFINE counts oil companies among its funders.)

In conclusion, the IPCC report confirms that the shale industry has won cautioned support from the global decision makers on climate change. This is a pragmatic response given the limited role that renewables will play in the forthcoming decades in even the most optimistic
forecasts. It is driven by the need to significantly reduce coal’s contribution to energy supplies and, of course, global warming, but it presupposes that the gas industry
acts responsibly and safely. The ball is therefore now in the hands of the shale industry to actively respond to fears of the environmental impact of the process. One way is by supporting truly independent research groups bringing together all stakeholders, such as ReFINE, whose investigations provide transparency and reveal areas for operational improvements in order to reach a mutual level of comfort about shale activities, which is
key to the industry’s expansion.

Regester Larkin Shale Report® is published monthly. To receive the publication, please email insights@regesterlarkin.com.
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