Hydraulic fracturing has rescued the oil and gas industry, producing huge profits and cutting dependence on crude. But the price to be paid will be huge.
In the past few years a new word has entered our lives: “fracking”. This is a method of extracting gas and oil from rocks. It originated in the US, where it was seen as the biggest energy development in decades, and is now coming to Britain. Although only in its exploratory stages here, it has already caused controversy and protests.
While David Cameron and the Tories have made it clear they are in favour of it, for many environmental campaigners the word “fracking” conjures up all that is wrong with energy policy and the failure to deal with climate change. Its supporters have made massive claims as to the benefits of fracking and it has been heralded as the solution to the world's future energy needs.
Since the 1980s there has been a growing debate about something called “peak oil”. This is often caricatured as an argument between those who say we are running out of oil and those who say we are not. In fact the problem is not whether there is any oil left in the ground. There is. The problem is accessing it physically and at prices people are willing to pay.
Peak oil has always been about timing — not that oil would suddenly run out, but that the era of cheap oil and expanding production is coming to an end.
Fracking is also presented as a solution to climate change because its products, shale gas and tight oil, are cleaner than coal and so will help reduce carbon emissions. But shale gas and tight oil are still fossil fuels. Burning them contributes further to global warming.
The fracking process causes huge immediate environmental problems. It requires enormous quantities of water to blast the shale rocks. Sourcing the water is a problem, as is getting it to the drilling area. It has been estimated that a single well pad cluster may require more than 60 million gallons of water in its short lifetime.
Moving the equipment, water and chemicals for one well can generate between 1,800 and 2,600 lorry trips, with the knock-on effects of road use, noise and air pollution. Then there is the problem of what to do with the waste water which contains a cocktail of chemicals.
There is the risk of contaminating water tables. Although fracking wells are isolated by cemented steel well casings, these have been shown to leak. The cocktail of chemicals has caused contamination of ground water at sites in the US and can cause chemicals to leak into drinking water, even making it flammable.
Fracking has caused earthquakes. In Britain Cuadrilla Resources had to suspend its first test drilling after fluid was blasted into a previously unknown faultline.
Scientists agree that we need to avoid an average temperature increase of 2˚C above pre-industrial levels. It may seem a relatively minor change but this increase would have an enormous impact on the global climate. The worry is that a 2˚C rise is a tipping point, beyond which there is no return.
Some people claim that shale gas is a “transition fuel”, a stop-gap measure while the world makes the transition to renewable energy sources. However, although less carbon dioxide is produced, the process of fracking leaks methane gas. Methane is another greenhouse gas but is up to 100 times more damaging than carbon dioxide. New research has found that methane leaks from fracking are three times greater than forecast.
According to a study by the National Academy of Sciences, the US environment agency “significantly underestimated” the methane emissions from fracking by as much as 100 to 1,000 times. This means that life cycle greenhouse gas emissions from shale gas are 20 percent to 100 percent higher than those from coal on a 20-year time frame.
Meanwhile the US coal industry, faced with competition from the cheap gas, has increased its exports to China. The US power industry has replaced coal with gas produced from fracking in order to generate power. But recent research has shown that around half of the unused coal has been exported, contributing to global climate change.
It is no surprise that fracking companies have faced protests. New York State has a moratorium on fracking and four cities in Colorado have voted to ban it. As the industry starts carrying out surveys and exploratory drilling in Britain, it has faced opposition here too with anti-fracking camps, such as those at Balcombe in West Sussex and Barton Moss in Greater Manchester.
But the Tories want to press on. Cameron, who once pledged his would be the “greenest” government ever, said he wants to “go all out” for shale gas. Chancellor George Osborne promised that Britain would be “at the forefront of exploiting shale gas…and we will make it happen”.
The Tories have cut subsidies for renewable energy and are encouraging the fracking industry by offering bribes to councils. They plan to make it easier to frack for shale gas under private land by changing the law so that trespass laws no longer apply.
Many areas of Britain are threatened. Dozens or even hundreds of wells will need to be built within a few square kilometres. This is much easier in the US where there are big tracts of land as well as an existing infrastructure for onshore drilling. In Britain the shales are far closer to the major population centres.
So an average of 96 people live in each square mile of the key fracking state of Texas, and just 10 in North Dakota, but in the affected parts of North West England the figure is over 1,300 people in each square mile.
Above all else fracking flies in the face of the scientific consensus that to avoid catastrophic global warming we need to leave the vast majority of fossil fuel reserves underground.
Fracking is only one of a number of what are termed “extreme energies” currently being pursued. Others include extracting oil from the tar sands or deep water drilling miles beneath the ocean’s surface.
These resources are of low quality, harder to extract and much dirtier than previous sources. They incur far higher production costs and greater environmental risks and have only become viable because of the high price of oil and recent technological developments.
Capitalism requires huge quantities of energy. Coal drove the industrial revolution for over 200 years. But the 20th century was the century of oil. A barrel of oil contains the energy equivalent of 23,000 hours of human labour. Up until the year 2000 the price of oil (adjusted for inflation) averaged just £12 per barrel in most years.
Industrial capitalist economies were founded on this cheap fossil energy. Oil remains crucial for modern industrial life as we know it. In 1900 the world produced 150 million barrels of oil. In 2000 the figure was 28 billion barrels. By 2006 31 billion barrels were pumped out. In 2009 the US alone consumed nearly 19 million barrels of oil a day, 22 percent of total oil globally.
There are two consequences of this enormous reliance on oil. The first is that the quest to get access to, protect and find new sources of fossil fuels, especially oil, is a major preoccupation of modern states — and particularly shapes their foreign policies.
The second is that modern capitalism has become entwined with the growth of the fossil fuel economy; there are historic investments in the current energy infrastructure.
This has major implications for future energy use. There are enormous vested interests in pursuing more extreme sources of fossil fuels rather than making the change to renewables. In 2011 seven out of the top 20 public companies were oil giants with combined assets of over £1,000bn. This gives them enormous political and economic power.
Since the 1990s the US government, oil corporations and energy analysts have become more and more concerned about the end of cheap oil. In April 1998 for the first time the US imported more than 50 percent of its oil, and in the year 2000 there were blackouts as demand exceeded capacity.
A number of reports were commissioned by the US government. A key one was the National Energy Policy (NEP) of 2001, which was put under the direction of Vice President Dick Cheney, a former chief executive of oil services company Halliburton, as well as the vice chairman of the energy company Enron together with many of their consultants.
These people represent the vested interests of the oil corporations with the aim of ensuring that fossil fuels remained central to energy policies. The report concluded that energy production would have to increase in the Persian Gulf to meet the world’s energy needs, in particular Iraqi oil production.
It is worth noting, however, that relatively little of the US’s imported crude oil comes from the Middle East. In 2012 most of its oil came from Canada, Saudi Arabia, Mexico, Venezuela and Nigeria.
By 2008, five years after the invasion, Iraqi production had fallen below its 2001 level, and there was stagnation on a world scale. Oil prices soared, hitting nearly £92 a barrel in the summer of 2008. These shortfalls combined with high prices were an incentive for drillers to refine and deploy the costly hydraulic fracturing technology to extract the gas trapped in forbidding shale reservoirs.
The result is a fossil fuel boom in the US. Natural gas production is now higher than at any point in US history. Shale gas makes up 40 percent of its total gas production, and prices have now fallen. Domestic oil production has also soared.
The use of fracking has led many commentators to conclude they were wrong about peak oil. Instead they now claim that the “shale revolution” will secure long-term supplies.
However, as Richard Heinberg points out in his book Snake Oil: How Fracking’s False Promise of Plenty Imperils our Future, all the evidence suggests that its success will be short-lived.
Heinberg shows that shale gas and shale oil wells deplete quickly. Production typically declines 80 to 95 percent in the first three years of operation. In order to maintain current production, 7,200 new wells would be needed each year. That would mean drilling on an unprecedented scale.
Although there are vast deposits of tar sands, deepwater oil, oil shales, coal bed methane and other non-conventional fossil fuel resources, their exploration needs such enormous expenditure that increasing production to desired levels is difficult.
Geoscientist David Hughes, who worked for the Geological Survey of Canada for 32 years, predicted that “tight oil production in the US will peak between 2015 and 2017 followed by a steep decline”.
What has been created is a speculative boom, a bubble much the same as that which has hit the housing market. A land rush took place in the early years of the boom, when companies were leasing as much land as possible, as quickly as possible. The terms of the drilling leases required drilling sooner rather than later, even if that meant oversupplying the market.
Overproduction has led to lower prices that are now hurting the industry. Companies are facing declining profits. As Heinberg makes clear, the creative financing engineered by investment banks such as Goldman Sachs has forced drillers to keep drilling even when each new well is run at a loss.
So if fracking won’t solve our energy needs what will? There needs to be a rapid switch from fossil fuel-based energy generation to the use of renewables. In addition there needs to be a massive increase in energy efficiency and, at the same time, a programme of action to reduce emissions from industry and transport. All the studies show that if these were done we could meet the targets set by scientists to prevent catastrophic climate change. But it requires both money and political will.
Our future energy needs cannot be left to the markets. And this is where we have to go back to how the whole system is organised. The short-termism of capitalism, competition and the drive for profit, and the fact that governments are not prepared to break from the vested interests of the fossil fuel industry, present considerable obstacles to tackling climate change.
Over the past 20 years the climate movements have shifted their focus from the demand side and individual behaviour to the supply side with a focus on industries and corporations. The battle to halt climate change is one that has to take on the whole system, one that must break from the short-termism of profit, the chaos of the market and the irrationality of fossil fuels, including those from fracking.
What is fracking?
Hydraulic Fracturing, or fracking, is a method of extracting natural gas trapped deep in the ground in tiny spaces in rocks.
Very high pressure fluids are pumped into the rock, fracturing it and releasing the gas which can then be captured.
This technique was boosted by technology that allowed horizontal drilling that guides wells down into the ground for a kilometre and then bending them to extend horizontally another kilometre.
The technology has enabled the industry to access previously inaccessible natural gas.
Sometimes the shale rocks that yield natural gas contain oil. Since there is already an entirely different resource called “oil shale” this is called “tight oil” rather than “shale oil”.
Snake Oil: How Fracking’s False Promise of Plenty Imperils our Future, by Richard Heinberg is published by Clairview Books