Snake Oil: How Fracking's False Promise of Plenty Imperils Our Future

by Richard Heinberg

  8. Matthew DiLallo, “Can Fracking Benefit Your Community Too?” Motley Fool, March 26, 2013, http://www.fool.com/investing/general/2013/03/26/can-fracking-benefit-your-community-too.aspx. Alan Bjerga, “Small Towns Find Fracking Brings Boom, Booming Headaches,” Bloomberg, March 27, 2013, http://www.bloomberg.com/news/2013-03-27/small-towns-find-fracking-brings-boom-booming-headaches.html.

  9. Stephen Herzenberg, “Drilling Deeper into Job Claims: The Actual Contribution of Marcellus Shale to Pennsylvania Job Growth,” policy brief, Keystone Research Center, June 20, 2011, http://keystoneresearch.org/sites/keystoneresearch.org/files/Drilling-Deeper-into-Jobs-Claims-6-20-2011_0.pdf.

  10. Susan Christopherson, “The Economic Consequences of Marcellus Shale Gas Extraction: Key Issues,” Community & Regional Development Initiative, Cornell University, CaRDI Reports no. 11 (September 2011), http://www.greenchoices.cornell.edu/downloads/development/marcellus/Marcellus_CaRDI.pdf. See also “Economic Impacts of Fracking,” Save Colorado from Fracking, http://www.savecoloradofromfracking.org/harm/economic.html.

  11. Tara Lohan, “Resource Curse: Why the Economic Boom That Fracking Promises Will Be a Bust For Most People (Hard Times, USA),” AlterNet, March 6, 2013, http://www.alternet.org/hard-times-usa/resource-curse-why-economic-boom-fracking-promises-will-be-bust-most-people-hard. See Susan Christopherson and Ned Rightor, “How Should We Think About the Economic Consequences of Shale Gas Drilling?” http://www.greenchoices.cornell.edu/downloads/development/marcellus/Marcellus_SC _NR.pdf.

  12. Deborah Rogers, “Externalities of Shales: Road Damage,” Energy Policy Forum (blog), April 1, 2013, http://energypolicyforum.org/2013/04/01/externalities-of-shales-road-damage/.

  13. “Increased Crime Rates,” Save Colorado from Fracking, modified October 3, 2005, http://www.savecoloradofromfracking.org/harm/index.html.

  14. Deborah Rogers, “Shale and Wall Street: Was the Decline in Natural Gas Prices Orchestrated?” Energy Policy Forum, February 2013, http://shalebubble.org/wall-street/.

  15. Brett Shipp, “Landowners Upset Over Unpaid Royalties in the Barnett Shale,” WFAA-TV (website), updated October 26, 2012, http://www.wfaa.com/news/investigates/Landowners-upset-over-unpaid-royalties-in-the-Barnett-Shale-175868241.html.

  16. Andrea Ahles, “DFW Airport Settles Lawsuit with Chesapeake,” Fort Worth Star-Telegram, September 7, 2012, http://www.star-telegram.com/2012/09/06/4237684/dfw-airport-settles-lawsuit-with.html.

  17. Daniel Yergin, Chairman, IHS Cambridge Energy Research Associates, (testimony, Senate Energy and Natural Resources Committee, Senate Energy Committee), October 4, 2011, http://press.ihs.com/press-release/energy-power/testimony-daniel-yergin-testimony-senate-energy-and-natural-resources-com.

  18. Daniel Yergin (testimony submitted for hearings on America’s Energy Security and Innovation, Subcommittee on Energy and Power of the House Energy and Commerce Committee), February 5, 2013, http://docs.house.gov/meetings/IF/IF03/20130205/100220/HHRG-113-IF03-Wstate-YerginD-20130205.pdf.

  19. “USA: United LNG, Petronet Reach Main Pass Energy Hub Agreement,” LNG World News, posted April 25, 2013, http://www.lngworldnews.com/usa-united-lng-petronet-reach-main-pass-energy-hub-agreement/.

  20. “US Congressmen Favour Export of Natural Gas to India,” Hindu Business Line, April 27, 2013, http://www.thehindubusinessline.com/economy/article4660270.ece.

  21. The IEA believes that at a natural gas price of $5 per thousand cubic feet, US utilities will begin switching back to coal. http://business.financialpost.com/2013/05/27/iea-says-u-s-gas-prices-of-us5-could-spur-return-to-coal/?__lsa=f9f8-7e1f.

  22. Deborah Rogers, “PA Jobs Numbers Poor in Spite of Marcellus Shale,” Energy Policy Forum, February 4, 2013, http://www.frackcheckwv.net/2013/02/11/low-job-count-in-pa-marcellus-shale-development/.

  23. Deborah Rogers, “Shale and Wall Street,” Energy Policy Forum, February 2013. Data from U.S. Bureau of Labor Statistics, posted May 8, 2012, http://data.bls.gov/timeseries/CES1021100001?data_tool=XGtable.

  24. Brad Plumer, “The US Oil and Gas Boom Has Had a Modest Economic Impact—So Far,” Washington Post, April 23, 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/23/the-oil-and-gas-boom-has-had-a-surprisingly-small-impact-on-the-u-s-economy/.

  25. Chesapeake Energy Corporation, Q3 2008 Business Update Call Transcript, October 19, 2008, http://seekingalpha.com/article/100644-chesapeake-energy-corporation-q3-2008-business-update-call-transcript.

  26. Deborah Rogers, “Shale and Wall Street,” http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf.

  27. Matthieu Auzanneau, “Total Production by the Top Five Oil Majors Has Fallen by a Quarter Since 2004,” The Oil Drum (blog), April 19, 2013, http://www.theoildrum.com/node/9946.

  28. Steve Andrews, “Commentary: Interview with Steven Kopits,” Peak Oil Review (April 29, 2013): 6–10, http://aspousa.org/wp-content/files/por130429.pdf.

  29. “ExxonMobil: ‘We’re Losing Our Shirts’,” gCaptain (blog), June 27, 2012, http://gcaptain.com/exxonmobil-were-losing-shirts/.

  30. Clifford Krauss and Eric Lipton, “After the Boom in Natural Gas,” New York Times, October 20, 2012, http://www.nytimes.com/2012/10/21/business/energy-environment/in-a-natural-gas-glut-big-winners-and-losers.html?pagewanted=all&_r=3&. Philip Bump, “Frackers Struggle While Financiers Make Millions. Sounds Familiar.” Grist (blog), October 22, 2012, http://grist.org/news/frackers-struggle-while-financiers-make-millions-sounds-familiar/.

  31. Deborah Rogers, “Shale and Wall Street,” http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf.

  CHAPTER 6

  1. Chris Nelder, “Are Methane Hydrates Really Going to Change Geopolitics?” Atlantic, May 2, 2013, http://www.theatlantic.com/technology/archive/2013/05/are-methane-hydrates-really-going-to-change-geopolitics/275275/.

  2. Charles C. Mann, “Yes, Unconventional Fossil Fuels Are That Big of a Deal,” Atlantic, May 7, 2013, http://www.theatlantic.com/technology/archive/2013/05/yes-unconventional-fossil-fuels-are-that-big-of-a-deal/275616/.

  3. Roberto Cesare Callarotti, “Energy Return on Energy Invested (EROI) for the Electrical Heating of Methane Hydrate Reservoirs,” Sustainability 3, no. 11, (November 7, 2011): 2105–2114. doi: 10.3390/su3112105.

  4. Cutler J. Cleveland and Peter A. O’Connor, “Energy Return on Investment (EROI) of Oil Shale,” Sustainability 3, no. 11 (November 22, 2011): 2307–2322, doi: 10.3390/su3112307.

  5. Charles Hall, “Unconventional Oil: Tar Sands and Shale Oil—EROI on the Web, Part 3 of 6,” The Oil Drum (blog), posted by Nate Hagens, April 15, 2008, http://www.theoildrum.com/node/3839.

  6. Jacob Chamberlain, “Deeper Than Deepwater: Shell Plans World’s Riskiest Offshore Well,” Common Dreams (website), May 9, 2013, http://www.commondreams.org/headline/2013/05/09-2.

  7. Hughes, “Drill, Baby, Drill,” 129.

  8. Bryan Walsh, “A Rig Accident Off Alaska Shows the Dangers of Extreme Energy,” Time, January 2, 2013, http://science.time.com/2013/01/02/a-rig-accident-off-alaska-shows-the-dangers-of-extreme-energy/#ixzz2SuGACsh6. Stephanie Joyce, “Shell Tallies Cost of Kulluk Grounding,” Alaska Public Media (website), February 1, 2013, http://www.alaskapublic.org/2013/02/01/shell-tallies-cost-of-kulluk-grounding/.

  9. See, for example, “Improving Efficiency in Upstream Oil Sands Production,” ExxonMobil, http://www.exxonmobil.com/Corporate/energy_production_oilsands.aspx. John Kemp, “Column—Bakken Output May Be Boosted by Closer Oil Wells: Kemp,” Reuters, May 8, 2013, http://in.reuters.com/article/2013/05/08/column-kemp-us-oilwells-idINL6N0DP2LW20130508.

  10. Francie Diep, “Solar Panels Now Make More Electricity Than They Use,” Popular Science, April 3, 2013, http://www.popsci.com/science/article/2013-04/solar-panels-now-make-more-electricity-they-use.

  11. Doug Hansen and Charles Hall, eds. “New Studies in EROI (Energy Return on Investment),” special issue, Sustainability (2011), http://www.mdpi.com/journal/sustainability/special_issues/New _Studies_EROI.

 
12. Jessica Lambert et al., “EROI of Global Energy Resources,” (State University of New York, College of Environmental Science and Forestry, November 2012), http://www.roboticscaucus.org/ENERGY POLICYCMTEMTGS/Nov2012AGENDA/documents/DFID _Report1_2012_11_04-2.pdf.

  13. Charles A. S. Hall, “Editorial: Synthesis to Special Issue on New Studies in EROI (Energy Return on Investment),” Sustainability 3, no. 12 (December 14, 2011): 2496–2499, doi:10.3390/su3122496. Andrew McKay has proposed a new unit he calls “Petroleum Production per Unit of Effort,” or PPUE, which reflects drilling rates, drilling depths, and cost of production. World PPUE improved between 1980 and 2000 but has declined dramatically since 2000. http://www.resilience.org/stories/2013-05-28/drilling-faster-just-to-stay-still-a-proposal-to-use-production-per-unit-effort-ppue-as-an-indicator-of-peak-oil.

  14. Andrew Lees, “In Search of Energy,” in The Gathering Storm, ed. Patrick Young (Derivatives Vision Publishing, 2010).

  15. “Engine Trouble: A Rise in Energy Costs Will Hit Productivity,” Economist, October 21, 2010, http://www.economist.com/node/17314626?subjectid= 2512631&story_id=17314626.

  16. Tim Morgan, “Perfect Storm: Energy, Finance, and the End of Growth,” Tullett Prebon (blog), January 2013, 77, ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf.

  17. Bryan Sell, David Murphy, and Charles A. S. Hall, “Energy Return on Energy Invested for Tight Gas Wells in the Appalachian Basin, United States of America,” Sustainability 3, no. 10 (October 20, 2011), doi: 10.3390/su3101986. Caveats are from private communications with one of the study’s authors.

  18. Hughes, “Drill, Baby, Drill,” 75.

  19. For further discussion of this point, citing failures to improve efficiency in tar sands operations, see Andrew Nikiforuk, “Difficult Truths about ‘Difficult Oil.’” http://www.resilience.org/stories/2013-05-23/difficult-truths-about-difficult-oil.

  20. The EROEI for tight oil production in the Bakken play is under investigation; a report by Egan Waggoner on the subject is in preparation.

  21. Morgan, “Perfect Storm,” 3.

  22. Improvement in EROEI can be inferred from falling prices for new solar and wind installed capacity (private communication with Charles Hall). However, some renewable energy technologies achieve higher EROEI by relying on materials such as rare earth minerals that have an increasing energy cost over time due to depletion of the more accessible deposits. Also, as the best locations for wind turbines, tidal, and geothermal power are utilized, further expansion requires the use of less favorable locations, resulting in lower EROEI.

  23. “Renewable Electricity Futures Study,” National Renewable Energy Laboratory, last updated May 13, 2013, http://www.nrel.gov/analysis/re_futures/. One early reader of this chapter commented: “You don’t necessarily need the same amount of energy to achieve the same functionality post-fossil fuels. For example, in our plug-in vehicles we drive on about one-fifth of the energy used by a typical gas car to achieve the same result of moving people down the road. Plus we make that renewable energy by PV on our own rooftop for one-eighth the cost of gasoline. So you could say we only have one-fifth the energy available to us and paint a negative picture of having 80% less energy available, but we’re achieving the same motive result as a fossil fuel powered tool.”

  24. Benedikt Römer et al., “The Role of Smart Metering and Decentralized Electricity Storage for Smart Grids: The Importance of Positive Externalities,” Energy Policy 50 (November 2012): 486–495, http://www.sciencedirect.com/science/article/pii/S0301421512006416. Jan von Appen, “Time in the Sun: The Challenge of High PV Penetration in the German Electric Grid,” IEEE Power and Energy 11, no. 2 (March 2013): 55–64, doi: 10.1109/MPE.2012.2234407. For a more optimistic perspective on the potential of microgrids to enable higher levels of renewable energy, see Chris Nelder, “Microgrids: A Utility’s Best Friend or Worst Enemy?” http://www.resilience.org/stories/2013-05-24/microgrids-a-utility-s-best-friend-or-worst-enemy.

  25. http://www.iea.org/topics/renewables/.

  26. David Manners, “Massive Consolidation in Solar,” Electronics Weekly, January 14, 2013, http://www.electronicsweekly.com/news/business/massive-consolidation-in-solar-2013-01/.

  27. Andrew Herndon, “Biofuel Pioneer Forsakes Renewables to Make Gas-Fed Fuels,” Bloomberg.com, May 1, 2013, http://www.bloomberg.com/news/2013-04-30/biofuel-pioneer-forsakes-renewables-to-make-gas-fed-fuels.html.

  28. Louis Bergeron, “The World Can Be Powered by Alternative Energy, Using Today’s Technology, in 20–40 Years, Says Stanford Researcher Mark Z. Jacobson,” Stanford Report, January 26, 2011, http://news.stanford.edu/news/2011/january/jacobson-world-energy-012611.html. Amory Lovins, “A 40-year Plan for Energy,” TED talk (March 2012) http://www.ted.com/talks/amory_lovins_a_50_year_plan _for_energy.html.

  29. Ted Trainer, “Renewable Energy Cannot Sustain a Consumer Society,” (Dordrecht, The Netherlands: Springer, 2010). For a moderate and realistic take on the capabilities and limits of renewable energy, see David McKay, Sustainable Energy—Without the Hot Air (blog), http://www.withouthotair.com/.

  30. Prices could fall absent a full-fledged global recession, if energy efficiency in transport vehicles increases significantly (we are already seeing modest gains) and vehicle miles traveled decrease significantly in regions experiencing very low economic growth.

  31. Gail Tverberg, “Low Oil Prices Lead to Economic Peak Oil,” Our Finite World (blog), April 21, 2013, http://ourfiniteworld.com/2013/04/21/low-oil-prices-lead-to-economic-peak-oil/.

  32. Richard Heinberg, Blackout: Coal, Climate and the Last Energy Crisis (British Columbia, Canada: New Society Publishers, 2009). Tadeusz Patzek and Gregory Croft, “A Global Coal Production Forecast with Multi-Hubbert Cycle Analysis,” Energy 35, no. 8 (August, 2010): 3109–3122, http://www.sciencedirect.com/science/article/pii/S0360544 210000617.

  33. “The Dream that Failed,” Economist, March 10, 2012, http://www.economist.com/node/21549936.

  34. Gail Tverberg, “How Resource Limits Lead to Financial Collapse,” Our Finite World (blog), March 29, 2013, http://ourfiniteworld.com/2013/03/29/how-resource-limits-lead-to-financial-collapse/.

  35. This, by the way, would not solve serious ecological problems such as resource depletion, topsoil loss, species extinctions, and water scarcity. I’m focusing here only on our energy-economic-climate conundrum.

  ABBREVIATIONS

  Btu—British thermal unit

  EIA—Energy Information Administration

  EPA—Environmental Protection Agency

  EROEI—energy return on energy invested

  EROI—energy return on investment

  GDP—gross domestic product

  IEA—International Energy Agency

  LNG—liquefied natural gas

  mb/d—million barrels per day

  mcf—thousand cubic feet

  NGLs—natural gas liquids

  NOAA—National Oceanic and Atmospheric Administration

  PR—public relations

  tcf—trillion cubic feet

  USGS—United States Geological Survey

  GLOSSARY

  crude oil—As used herein, conventional crude oil not including natural gas liquids, biofuels, or refinery gains.

  horizontal well—A well typically started vertically, which is curved to horizontal at depth to follow a particular rock stratum or reservoir.

  hydraulic fracturing (“fracking”)—The process of inducing fractures in reservoir rocks through the injection of water and other fluids, chemicals, and solids under very high pressure.

  multi-stage hydraulic-fracturing—Each individual hydraulic fracturing treatment is a “stage” localized to a portion of the well. There may be as many as 30 individual hydraulic fracturing stages in some wells.

  oil shale—Organic-rich rock that contains kerogen, a precursor of oil; not to be confused with shale oil. Depending on organic content, it can sometimes be burned directly with a calorific value equivalent to a very low-grade coal. Can be “cooke
d” in situ at high temperatures for several years to produce oil or can be retorted in surface operations to produce petroleum liquids.

  petroleum liquids (also, “liquids”)—All petroleum-like liquids used as liquid fuels, including crude oil, lease condensates, natural gas liquids, refinery gains, and biofuels.

  play—A prospective area for the production of oil, gas, or both. Usually a relatively small contiguous geographic area focused on an individual reservoir.

  reserve—A deposit of oil, gas, or coal that can be recovered profitably within existing economic conditions using existing technologies. Has legal implications in terms of company valuations for the Securities and Exchange Commission.

  shale gas—Gas contained in shale with very low permeabilities in the micro- to nano-darcy range. Typically produced using horizontal wells with multi-stage hydraulic fracture treatments.

  shale oil—See tight oil.

  stripper well—An oil or gas well that is nearing the end of its economically useful life. In the United States, a “stripper” gas well is defined by the Interstate Oil and Gas Compact Commission as one that produces 60,000 cubic feet (1,700 m3) or less of gas per day at its maximum flow rate. Oil wells are generally classified as stripper wells when they produce 10 barrels per day or less for any 12-month period.

  tight oil—Also referred to as shale oil. Oil contained in shale and associated clastic and carbonate rocks with very low permeabilities in the micro- to nano-darcy range. Typically produced using horizontal wells with multi-stage hydraulic fracture treatments.

  type decline curve—The average production declines for all wells in a given area or play from the first month on production. For shale plays in this study, the type decline curves considered the average of the first four to five years of production.

  undiscovered technically recoverable resource—Resources inferred to exist using probabilistic methods extrapolated from available exploration data and discovery histories. Usually designated with confidence levels. For example, P90 indicates a 90% chance of having a least the stated resource volume whereas a P10 estimate has only a 10% chance.