Are Films the Answer to Understanding Energy's Complexities?

The issues and choices surrounding our use of energy have rarely been more complex than today, yet our main channels for information about them are discouragingly shallow.  The web is often more effective at spreading misperceptions than fact-based analysis.  When our visual media focus on energy, it's usually to flash bad news before flitting on to the next story, leaving behind images of burning oil platforms or blacked-out cities.  One bright spot is the recent wave of documentary films on energy topics.  Films engage us on a deeper level, and the energy challenges we face deserve such longer-form treatment. August seems like a perfect time to suggest a few of them to you.  If you're reading this blog, then I'm betting you might at least consider watching a movie about energy instead of the latest summer blockbuster.   

Although it was hardly the first serious film about energy, the recent trend seemed to start with "Gasland". For all its inaccuracies, which have been documented by groups outside industry, that film helped start a national conversation about the right way to develop the enormous unconventional oil and gas resources that new combinations of technology have unlocked. In the spirit of making that dialog more constructive and even-handed, you should also know about two other documentaries covering the same topic and region from a different angle.  To many of the farmers and other landowners in depressed counties of New York and Pennsylvania, fracking is not a curse but an actual or potential lifeline. Seeing "Truthland" and "Empire State Divide" might not convert fracking skeptics into gas industry supporters, but it should at least fill in some of the gaps left by the "Gasland's" starkly one-sided portrayal of shale gas.

Another energy film I recently ran across, "spOILed", offers a timely reminder that despite oil's many problems it remains an essential ingredient of our global civilization, providing affordable mobility and a host of products that have made our lives much easier than those of our ancestors--or of people in countries that still lack reliable access to energy.  "spOILed" is also very much a movie about the dangers of Peak Oil, which envisions a world in which declining oil production, rising demand in developing countries, and geopolitical risks create persistent and growing shortages of oil.  This is particularly sobering when combined with a sense of just how challenging it will be to obtain the services that oil now provides from other energy sources.   Unfortunately, the film's message was undermined by occasionally jarring choices of visuals, some hyperbolic claims--no indoor plumbing without oil?--and by political overtones that might limit its effectiveness with the wider audience it appears to target. 

The energy film project that I'm most excited about is one aimed consciously at finding and cultivating "The Rational Middle" in the energy debate.  According to its director, Gregory Kallenberg, it started with a TED talk following his previous film, "Haynesville", which examined the impact of shale gas in Northern Louisiana.  As I understand it, the current project consists of 10 short videos on energy, four of which have been released on the group's website so far.  From the episodes I've seen, Mr. Kallenberg's team assembled an impressive group of experts, including Amy Myers Jaffe of the Baker Institute at Rice University, Michael Levi of the Council on Foreign Relations, former Energy Information Agency Administrator Richard Newell, and Dr. Michael Webber of the University of Texas. The series is being launched with a road show featuring panels of some of the same experts interviewed in the films, starting with a session at this year's Aspen Ideas Festival.  The films are focused on information and process, rather than on selling one point of view. Aside from a few assertions in a couple of interviews, the factual presentation in the initial videos was very sound.  I expect to have more to say about The Rational Middle as additional episodes become available. 

If the we are to develop effective energy policies for the 21st century, the public's desire for clean, secure, reliable and affordable energy must be grounded in facts and figures that help us to differentiate realistic expectations from wish fulfilment.   I'm encouraged that a growing number of filmmakers seems willing to explore energy issues in the depth they deserve, with production values that will connect with today's audiences, rather than turning them off. Enjoy!

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The 2013 US Energy Agenda

It's tempting to focus mainly on the energy issues that have come up in the context of the presidential campaign, such as the Keystone XL pipeline, tax breaks for energy companies, and whether and how to regulate hydraulic fracturing, a.k.a "fracking".  Yet whoever is inaugurated next January, and however he resolves these issues, he will also face a much wider array of energy concerns, including some that are outgrowths of current policies or have emerged after a long gestation.  Though not intended as an exhaustive list, here are a few such issues that merit close attention from the next president's energy team.

They should begin by taking a fresh and objective look at the overall US energy posture and devising a clear and concise way to describe it to the public.  Big changes have taken place, with many of the issues that preoccupied us for the last decade or longer having become less relevant or out of date.  Topping that list is the sense of energy scarcity that has burdened us since the oil crises of the 1970s and early 1980s.  There's a realistic possibility that the combination of "tight oil" and the gas liquids production from shale gas could push domestic US petroleum/liquids production back above its early '70s peak of around 11 million barrels per day. At the same time, our net oil imports are declining, due in large part to the weak economy.  However, as the share of fuel efficient vehicles in our car fleet increases, it's reasonable to think that we've already seen the peak of US demand for petroleum fuels, even after the economy returns to healthy growth.  The net result might fall short of energy independence, but it will put us in a much better position than our largest economic rivals in terms of real energy security. 

Then there's shale gas.  Not only has it reversed a worrisome decline in US natural gas production that prompted numerous projects to import liquefied natural gas (LNG), but it has upended our assumptions about future prices and emissions in the electric power sector, while completing the divorce of oil and electricity that began in the 1980s.  Now we're talking seriously about exporting natural gas. When you combine all these changes with biofuels that are contributing roughly a million barrels per day to US supply (in volumetric, though not BTU-equivalent terms) the need to revisit some of our most basic assumptions about energy looks compelling. 

Energy scarcity isn't the only paradigm that needs to be rethought.  The current administration apparently took office with a view that was prevalent in the environmental community and among some in energy circles, that the solutions to climate change and energy security were effectively synonymous and synergistic.  That view predates the shale/tight oil revolution and was founded on the notion that renewable energy and efficiency were the only serious answers to both concerns.  That linkage was always oversimplified, because it ignored the trade-offs inherent in the shortcomings of every energy technology available.  And now, thanks to unexpected technological developments, we face an explicit choice between energy abundance based on hydrocarbons and a lower-emissions future based on renewables and electric vehicles that won't reach the required scale for decades, despite promising early signs. The transition from the former to the latter appears long and largely unpredictable, nor will it be cheap. 

The next administration also faces a set of practical issues, along with the big-picture reframing described above. Two of these issues involve urgent tasks.  The first is the growing need for a thorough evaluation of the recent and current approach to incentivizing renewable energy technologies and projects.  Since early 2009 we've spent tens of billions of dollars on a constellation of federal grants, tax credits, and loan guarantees to stimulate the growth of a domestic renewable and advanced energy industry and the deployment of its products. There's a lot of new hardware on the ground, but the sustainability of this industry looks uncertain. Although only a fraction of the companies that received federal support have failed, the tally has grown large enough--with the addition of Abound Solar last week--that it's no longer acceptable merely to shrug off these losses as par for the course.  We need some hard-nosed, detail-oriented outsiders to conduct a comprehensive post-expenditure review and extract the major lessons learned.  That should be an absolute prerequisite before anyone contemplates renewing or expanding any of these programs, including the Pentagon's $210 million "green fleet" program.

Another urgent clean-up task is the reform of the federal Renewable Fuel Standard (RFS).  This 2007 mandate was premised on the imminent arrival of cellulosic biofuel technologies that have turned out to be much harder than expected to transfer from demonstration to commercial scale.  That has resulted in drastic annual revisions to the cellulosic biofuel targets of the mandate, but even these lower targets have not been achieved.  Instead, the EPA imposes penalties on refiners and gasoline blenders for failing to blend non-existent volumes, with consumers ultimately absorbing the higher costs at the pump.  The attractive vision of abundant renewable fuels has thus turned into a bureaucratic game.  And while corn ethanol supplies 10% of gasoline and consumes nearly 40% of the US corn crop, it cannot more than double to meet the entire 36 billion gallon per year RFS target for 2022, nor should we wish it to.  Instead, the RFS must be updated to reflect reality, and the associated biofuel-credit trading system should be restructured to squeeze out the fraud that is infecting it, instead of leaving refiners and blenders--and again ultimately consumers--to pick up a tab estimated at $200 million. 

These items don't constitute an entire energy agenda by themselves, but together with a few higher-profile proposals from among those that both campaigns will announce and debate during the next four months, they could fill out a worthy first-hundred-days' energy plan for 2013.

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Does Energy-Related Drilling Trigger Earthquakes?

Last week the National Research Council published a comprehensive study of the seismic hazards and risks of a variety of energy-related drilling activities.  Despite widely publicized reports of drilling-related quakes in Ohio and Arkansas, the report concluded that such events are very rare, compared to both the total number of wells drilled and to naturally occurring earthquakes.  Nor are the technologies with the highest rates of induced seismicity necessarily the ones that come first to mind.  Rather than ignoring these risks because of their rarity, the committee of university and industry experts that produced the report recommended the development of new protocols for monitoring and managing these risks, as well as further research into the potential for induced seismicity from emerging technologies like carbon capture and storage (CCS.) 

The study encompassed four categories of energy-related drilling, including oil & gas exploration and production, geothermal energy, liquid disposal wells, and CCS.  Within oil & gas, they looked at conventional production and "enhanced recovery", along with hydraulic fracturing or "fracking". The latter two techniques involve pumping water or some other fluid into a reservoir to stimulate production.  For geothermal, they considered conventional geothermal, both liquid- and vapor-dominated reservoirs, and "enhanced" or engineered geothermal systems, which pump fluid into hot, dry rock to extract useful heat.  They found recorded seismic events in all categories and sub-categories, though again the numbers are small, particularly for quakes large enough to cause damage: Fewer than 160 recorded events globally over magnitude 2.0 within a period of about 30 years from a well population in the millions, and against a natural annual background of 1.4 million small earthquakes of 2.0 or greater and more than 14,000 larger quakes of 4.0 or greater.

In assessing the incidence of seismic events attributed to or suspected to have been caused by energy activities, the committee set a threshold for what they called "felt seismic events".  This is crucial, because all of these technologies routinely cause minuscule events--"microseisms"--that can be detected by a seismometer in close proximity, but would go unnoticed by anyone standing on the surface.  Magnitude 2.0 seems to be the lowest level event likely to be felt by an observer in the vicinity, while an event of 4.0 would be accompanied by more shaking over a larger area, and thus felt by many more people.  Having grown up in earthquake country, I can attest to this.  Anything below about 4.0 would often be mistaken for a train or large truck passing by, while most damage was due to quakes of 5.0 or greater.  For comparison, last year's quake in Mineral, VA that affected the Washington Monument and National Cathedral registered 5.8. Only about a dozen of the induced seismic events included in the study were larger than that.

It's important to note that the mechanisms by which various energy-related drilling and injection processes trigger felt seismic events are fairly well understood.  Scientists and engineers have known since the 1920s that human activities can trigger quakes, and the geosciences have advanced enormously since then.  The main contributing factors identified in the report were the effect of fluid injection on increasing the pressure in the pores of subsurface rocks near faults, along with the "net fluid balance", which they defined as the "total balance of fluid introduced into or removed from the subsurface."  As a result of these factors, drilling approaches in which the net fluid balance isn't materially altered, such as in waterflood enhanced oil recovery, or for which the changes are short-lived, as in hydraulic fracturing, tend to have very low rates of inducing felt seismic events.   In particular, the study found only one documented felt seismic event, of magnitude 2.8, attributable to shale fracking, out of 35,000 fracked shale gas wells. 

By contrast, liquid disposal wells, which steadily increase subsurface pore pressure over time, along with several types of geothermal production, exhibit somewhat higher rates of felt seismic events, though these are still relatively rare and generally minor in impact.  At least theoretically, CCS seems to have a somewhat higher potential for causing seismic events, although this has apparently not been manifested in the substantial number of wells injecting CO2 for enhanced oil recovery--cited in the report as 13,000 as of 2007 and many more today.  Surprisingly, the largest quakes attributed to human activities were associated with conventional oil production, including a couple of 6+ quakes in California and one measuring 7.3 in Uzbekistan. 

One of the most interesting findings in the report was that there is no single government agency in the US with jurisdiction over induced seismic events associated with energy production.  Responsibility--and capabilities--appear to straddle the Environmental Protection Agency, US Geological Survey, Forest Service and Bureau of Land Management, along with various state agencies.  The committee proposed the development of new coordination mechanisms to address these events, as distinct from the ad hoc cooperation that has taken place to date.

I'm not sure what policy makers--the report was commissioned by the Chairman of the Senate Energy and Natural Resources Committee--and the public will make of these findings.  At least from a statistical perspective the technologies assessed here look safe in terms of their seismic risks, and it would be hard to justify sweeping new regulations on the basis of this report.  (I don't know how practical the "traffic light" monitoring system the authors propose would be.)  On the other hand, with the exception of a few people in naturally quake-prone areas--including one neighbor back in California who thinks they are "fun"--earthquakes are fear-inducing, in both anticipation and experience.  Arriving at a consensus on how low a risk of felt seismic events is acceptable might not be easy, especially where natural earthquakes are rare.  Although the public's appetite for reassurance seems to be fairly low these days, it's clear that the National Research Council, an arm of the private, non-profit National Academies chartered by Congress during the Lincoln administration, sees no reason to panic about the seismic hazards and risks entailed in energy-related drilling.

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Does A Golden Age of Gas Depend on Golden Rules for Gas?

Last Friday I was in Washington, DC for the presentation of the International Energy Agency's latest report on natural gas, "Golden Rules for A Golden Age of Gas."  It is a follow-up to last year's IEA scenario describing the enormous gas potential now being unlocked by new combinations of technology. According to IEA's chief economist, Fatih Birol, who was the lead speaker at the event at the Carnegie Endowment for International Peace, the new report addresses the key uncertainty in delivering on that potential, including the potential of new gas supplies to "fracture established balances in the world energy system."  In IEA's view the resources and technologies are in place, but environmental and social challenges represent serious potential roadblocks; overcoming those obstacles calls for a new set of principles along the lines of the ones included in the report.  Fundamentally, as Dr. Birol put it, the industry must focus on its "social license to operate", if it is to develop the massive global resources of shale and other unconventional gas to the extent now being envisioned.  I believe many in the industry would agree that that license can't be taken for granted. 

The report spells out seven principles that IEA sees as prerequisites for securing the necessary concurrence from governments and publics.  While several of them merely enunciate common sense, others will likely be controversial on one side or the other--if not in theory then in their implementation.  IEA's description of these principles can be found in the report's executive summary. I would paraphrase them as:

1. Operate with transparency
2. Choose appropriate sites
3. Contain potential contaminants
4. Be vigilant with water!
5. Control emissions
6. Recognize scale
7. Regulate carefully

None of these is likely to startle my regular readers, since I've been writing about shale gas extraction and its potential economic, environmental and geopolitical consequences for several years.  The aspect of these principles that got my attention during Friday's presentation concerned IEA's admonition to "Be ready to think big."  Dr. Birol cited statistics indicating that there are currently around 100,000 unconventional wells in the US today--a figure that might include unconventional oil wells.  Supplying the levels of shale gas forecasted by IEA and other agencies would require on the order of one million wells.  That compares to a total US well population of roughly a half-million.  Drilling on that scale requires that we get it right, because if we don't, even small consequences could compound.  However, Dr. Birol also made it very clear that in the view of the IEA, the industry is entirely capable of getting it right.

The findings of this report--at least the high-level findings--have been widely embraced across the environmental and business spectrum.  Among groups embracing the report are the American Petroleum Institute and the Investor Environmental Health Network, while EPA Assistant Administrator Gina McCarthy, who was also on Friday's panel, seemed to place her agency's regulatory approach to shale gas in the context of IEA's principles.  The harshest criticism I've seen so far is that while it acknowledges the industry's work on best practices, it fails to recognize that much of this is already standard practice, at least in the US.  Along those lines, API and the American Natural Gas Alliance (ANGA) are jointly issuing a new report on methane emissions from hydraulically fractured ("fracked") gas wells today.

IEA's report and the early reactions to it clearly illustrate that despite the many thousands of unconventional gas wells that have already been drilled, and the dramatic impact of shale gas on both natural prices and gas-dependent industries, we are still in the early days of a possible global energy revolution.  The extent of that revolution hasn't yet been determined, and it will be shaped as much by the reactions of numerous stakeholders as by the investment plans of producers. Whether you see that as a good or bad thing, it's an indisputable feature of the world in which we now live.  However, I don't think it's appropriate to view IEA's seven principles exclusively as a set of rules to be imposed on a reluctant industry; they're as much about getting the rest of society comfortable with an energy resource that could provide enormous economic and environmental benefits, globally, particularly with regard to greenhouse gas emissions.  Although Dr. Birol emphasized that unleashing all this shale gas won't be sufficient to solve the climate problem, he also demonstrated that without it, our chances of reining in emissions look even worse, because the main trade-off globally is not gas vs. renewables, but gas vs. coal.  Getting this right is crucial for many reasons, and the IEA's report looks like a helpful contribution to the dialogue that must take place.

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2011 in Energy: The Year of...

At the start of 2011, I thought the hallmark of the year's energy events and trends might involve regulation, with the White House seeking to implement measures that couldn't garner enough support in Congress to become laws. But for every major new regulation issued, such as last week's release of the new Mercury and Air Toxics Standards for power plants, others were delayed or deferred, including the EPA's effort to regulate greenhouse gases under the Clean Air Act and the agency's proposed ozone standard. Outside of the utilities and other industry groups directly affected by these rules, it seems likely that 2011 will instead be remembered for big, unpredictable events like the Fukushima nuclear accident and the Solyndra bankruptcy scandal, along with several major trends that reached critical mass this year. Anyone attempting to pick the energy story of the year is spoiled for choice.

In my search for a catchy title for this year's final posting, I toyed with "The Year of Solyndra", "The Year of Shale", "The Year of Fukushima", "The Year of Exports", and various other combinations of the energy buzzwords that percolated into our consciousness this year. In some ways, they'd all be apt choices. Here's a quick rundown on why they might merit that kind of recognition, with links to previous postings providing more details on each:

• If 2011 is the year of Solyndra, it's not because of the possibility that the government's $535 million loan to the firm was the result of political influence (cue Major Renault), or even that the Department of Energy is unlikely to recover more than pennies on the dollar in the firm's bankruptcy. Instead, it's because Solyndra highlighted the much broader and deeper problems of a global solar industry that, despite continued demand growth that other industries would kill for, now faces overcapacity and the fallout from the winding down of unsustainable government support. Germany's Solar Millennium is just the latest victim of this trend. Along with BP's exit from the solar business after 40 years, it provides a further reminder that renewable energy firms must succeed not just as technology providers, but as businesses that can earn consistent profits and continue to attract investors.



• Shale gas was hardly new to the scene in 2011; it has been expanding rapidly for several years and now accounts for up to a third of US natural gas production. However, the controversy surrounding drilling techniques like hydraulic fracturing that make its exploitation possible became much more widespread this year, while some scientists raised questions about its contribution to greenhouse gas emissions. Shale gas has the potential to transform nearly every aspect of our energy economy, and probably sooner than renewable energy sources could. That has some folks nervous, while others are eager for shale gas to displace coal from electricity generation, compete with oil in transportation, and revive the domestic petrochemical industry. I suspect we'll see all of those to some extent, provided we don't regulate shale out of the running.



• The aftermath of Fukushima could prove equally transformational, though it remains to be seen whether the ultimate result is safer nuclear power or a global retreat from one of our largest sources of low-emission energy. All but 8 of Japan's 54 nuclear power plants are currently idle, and that nation must shortly decide whether it will eventually restart those units that weren't critically damaged, or shut down the rest and attempt to run its manufacturing-intense economy on a combination of renewables and much larger imports of fossil fuels. The German government's post-Fukushima decision to phase out nuclear energy entirely could provide an even quicker test of the same proposition.



• Another major shift that has been in the news recently involves exports. Although the US has long exported coal and various petroleum products, we could shortly become a bigger, more consistent exporter of many fuels, including liquefied natural gas (LNG), gasoline and diesel. As the reaction in a CBS news segment last week demonstrated, the US public doesn't know quite what to make of this, yet. Becoming a major energy exporter while still importing a net 9 million barrels per day of crude oil is very different than the picture of isolated self-sufficiency that four decades of "energy independence"rhetoric has evoked. We shouldn't be surprised that energy can provide a boost, and not just a drain on our trade balance. This topic requires more public discussion and education, before we see serious proposals to ban such exports--proposals that would make no more sense than banning exports of corn, tractors, or aircraft in an attempt to keep their US prices low.



• It's also tempting to call this the Year of Oil Price Confusion. The news media gradually woke up to the huge gap that had developed between global oil prices and the oil price that Americans tend to watch most closely, the one for West Texas Intermediate crude. Yet despite numerous stories on the storage and pipeline crunch and supply glut at Cushing, Oklahoma, few reporters and networks seemed able to follow through by breaking their old habit of treating the NYMEX WTI price and its gyrations as if it were still the best indicator of the overall oil market. Fortunately, the problem is in the process of being resolved, as pipelines are reversed and more tankage built.



• Finally, there was the administration's non-decision on the Keystone XL pipeline. Observers can read much into this, including the growing influence of citizen activists mobilized via social media. However, if it does nothing else, the Keystone controversy should put to rest the superficial fallacy that anything that improves greenhouse gas emissions is automatically good for energy security, instead of requiring difficult trade-offs. In that context, the prospect that the administration might ultimately turn down the permit for Keystone would be easier to stomach if the net greenhouse gas savings involved amounted to more than a paltry 0.3% of annual US emissions, based on the emissions from incremental oil sands production the pipeline might facilitate, compared to those from the conventional imported oil it would displace.

It was a busy year for energy, and if my short list of top stories missed something crucial, please let me know. 2012 promises to be just as interesting, with a Presidential election, in which energy issues could feature prominently, added to the mix. In the meantime, I'd like to wish my readers in the UK and Commonwealth a happy Boxing Day, and to all a Happy New Year.

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Why Does Gazprom Oppose Shale Gas?

I see that Russia's national gas company, Gazprom, is warning Europeans about the environmental risks of shale gas development. Aside from the hypocrisy stemming from a Russian legacy of environmental disregard that rivals the worst excesses committed anywhere, along with the likelihood of Gazprom profiting if it can deter competition from proliferating shale drilling technologies like hydraulic fracturing (a.k.a "fracking") and horizontal drilling, this looks quite clever. Environmental concerns--exaggerated or not--are the Achilles heel of shale drilling. We've seen how how effective environmental opposition to fracking has been in places like New York state. The mere fact of Gazprom's warning about shale drilling doesn't constitute a winning argument either for or against the practice, but the reasons they would be moved to comment might shed further light on shale's potential, which they publicly dismiss as a temporary phenomenon.

If Russia's leaders have anything to fear from the development of shale gas in Europe, much of the blame rests with their own behavior. Gazprom alone has access to the largest conventional natural gas reserves on earth--more than the entire natural gas reserves of Iran--and it has built the pipelines necessary to make Russia the dominant gas supplier to Europe. The latest addition to that network, the Nordstream pipeline--a source of some controversy of its own a few years back--opened just last month. They are also almost certainly correct that European shale gas would be more expensive than Russian gas, at least initially, if you ignore its value in providing Europe with some much-needed leverage with a supplier that hasn't hesitated to play hardball in the past, to the point of cutting off gas shipments during contractual disputes--in winter.

Since Gazprom's credibility on the economic and commercial merits of shale gas development is effectively nil, it makes perfect sense that they would pick up on the environmental arguments that have slowed development elsewhere and in some cases brought it to a standstill. The effectiveness of these arguments is enhanced because they contain a grain of truth: Like all other industrial-scale activities, shale gas drilling is not risk-free. It is possible for a drilling contractor to fail to cement a well properly, creating a chance of contaminating nearby water wells, although some presumed instances of this turned out to have other causes. It's also possible for a driller to mishandle fracking fluid or produced water above ground and affect surface water supplies. Then there are the allegations that leaking methane from shale gas wells negates any emissions benefits and renders the gas at least as bad as coal for climate change--never mind that these claims have been comprehensively examined and disproved.

Although I expect debate on these points to continue for some time, I believe that ultimately shale gas drilling will proceed on a large scale in the US and globally, with some minor tweaks to a regulatory system that already does a pretty good job of monitoring the activity and weeding out those producers that aren't diligent enough about protecting the public and environment. I would also argue that this scenario must be exactly what Gazprom's management believes will happen in Europe, absent a lot more support for those who oppose shale gas for a variety of reasons, including its competition with the more expensive forms of renewable energy. That doesn't automatically make European opponents of shale drilling convenient tools for the resource nationalism of an increasingly authoritarian neighbor, but it certainly ought to make them exercise great caution before entering into any "strange bedfellows" alliances with as self-interested a party as Russia's state energy complex.

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Is Shale Gas Too Good to Be True?

Yesterday I participated in a webinar examining the sustainability aspects of the shale gas revolution. The online audience asked good, probing questions, and if there was a theme to them, it seemed to be that somehow the sudden abundance of natural gas resulting from a novel combination of shale-exploitation technologies--as well as the technologies themselves--must at a minimum be considered a mixed blessing, if not actually too bitter a pill to swallow, because of its perceived shortcomings and the potential threat it poses to other, favored energy technologies. I find that simultaneously understandable and unfortunate.

I came of age just as US attitudes concerning energy shifted from the assumption of perpetual abundance to perennial insecurity and periodic scarcity. Energy security has been a consistent theme of public discourse for my entire adult life, varying only in intensity as we lurched from crisis to crisis with long respites in between. If the shale gas revolution had arrived thirty years earlier, I'm confident it would have been embraced as a national windfall--a jackpot lottery win. After all, we're talking about a newly accessible resource that is equivalent to finding an Iraq's worth of hydrocarbons under our feet, not deep offshore or in some distant country. Yet despite boosting US gas production to levels unseen since the early 1970s and resetting gas prices to pre-2000 levels, after adjusting for inflation, the reception of shale gas has been decidedly mixed, as witnessed by yesterday's vote by the New York legislature to impose a six-month moratorium on gas drilling in a state overlying a portion of one of the largest gas reservoirs in the world.

Shale gas isn't the silver bullet for our energy and emissions problems, but it can contribute significantly towards alleviating both. Combined-cycle power plants burning gas emit only about 45% as much greenhouse gases as best-in-class coal-fired power plants, and comparisons to the oldest, least-efficient US coal plants are even more favorable. At current gas prices, which are mainly the result of the shale gas boom, the resulting power is cheaper than from any renewable source without substantial subsidies, and than most even after subsidies. In the last several years gas-fired power plants have taken market share from coal equivalent to the entire output of all US wind farms, and there's no wait for scaling-up.

At the same time, the concerns about shale gas reflected in some of yesterday's questions are entirely understandable, particularly in an era dominated by low trust in all institutions. For example, is it possible that unreported natural gas leaks are releasing enough methane, which is a strong greenhouse gas, to offset all the emissions benefits from gas-fired generation? Perhaps, even though the gas leaks identified in a new GAO report amount to just 0.2% of US marketed production, and thus equate to only about 6% of the CO2-equivalent emissions associated with US gas consumption. But as I noted in the webinar, even if the leaks are in fact much larger they are controllable; they are not an inherent feature of shale gas production in the way coal's CO2 emissions are inherent in coal combustion.

Concerns about water consumption and safety hit even closer to home. Having reviewed the list of fracking chemicals on Halliburton's website, I wouldn't want them in my drinking water, either, any more than I'd want my family consuming any of the various household chemicals under our kitchen sink or elsewhere in our home. However, there's nothing about the process of hydraulically fracturing shale strata thousands of feet deeper underground than the deepest aquifers that puts our drinking water at any greater risk than many routine industrial or agricultural operations. As a technology fracking is neither newer nor riskier than many other things to which we don't give the slightest thought. Much of the attention it has gained is the result of its application in unaccustomed places--a reaction shared by wind turbines, utility-scale solar plants, and long-distance transmission lines.

The biggest uncertainties associated with shale gas don't concern the size of the resource or our ability to extract it safely, but whether we will decide to allow this to be done on a scale that would make a meaningful difference in our energy and emissions balances, or under such tight restrictions that we will forgo its game-changing potential. Like anything, shale gas drilling and fracking must be done responsibly, in accordance with state and local regulations and to industry standards that are constantly improving. Post-Deepwater Horizon, that's a much tougher sell, but it doesn't make it any less important. Shale gas isn't perfect energy, not because of any unique imperfections, but because there is no perfect energy source. It requires mature, reasonable assessments of its risks that don't assume that there is.

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Shale Gas and Drinking Water

Life is full of unintended consequences, and the energy industry is currently dealing with a significant one related to the step-change in US natural gas reserves and production made possible by exploiting gas resources locked up in deposits of a sedimentary rock called shale. The very success of these efforts has placed a decades-old, widely-used drilling technique called "hydraulic fracturing" at the center of a major controversy. In fact, it's hard to find references to fracturing (often called "frac'ing" or "fracking") that don't describe it as a "controversial drilling practice." As best I can tell from delving into the technology involved, the controversy around fracking is largely an artificial one, though that hasn't deterred Congress from holding hearings on it or introducing legislation to regulate it further at the federal level, on top of the state level where it already appears currently well-regulated.

I should preface my comments on fracking by pointing out that I haven't had any direct experience with the practice, either during my time at Texaco or in my studies of chemical engineering, a field that overlaps petroleum engineering extensively, though not in the specifics of this subject. My analysis and conclusions are the result of some research and a lengthy conversation with a former mentor who knows more about fracking from first-hand experience than most of us ever will.

The main concerns about fracking today involve its potential risk to our supplies of drinking water and the adequacy of current regulations to address this. Understanding whether these concerns are justified requires knowing a bit about how fracking works, as well as where drinking water comes from. I could fill up several postings exploring each of those topics, but for the purposes of this discussion let's take a quick look at one of the shale regions at the heart of this controversy, the Marcellus Shale in the Appalachian region of New York, Pennsylvania and the Virginias. In the course of my research I ran across a handy document on groundwater from Penn State. Aside from surface water (lakes, rivers and streams), it identifies the various aquifers in Pennsylvania by type in Figure 4. The key fact from the perspective of fracking safety is that the deepest of these aquifers lies no more than about 500 ft. below the surface, and typically less than a couple of hundred feet down. By contrast, the Marcellus Shale is found thousands of feet down--in many areas more than a mile below-ground--with a thickness of 250 feet or less. In addition, the gas-bearing layers are sealed in by impermeable rock, or the gas would eventually have migrated somewhere else. In other words, the shale gas reservoirs are isolated by geology and depth from the shallower layers where our underground drinking water is found.

Now consider what happens during drilling. As illustrated in this video from the American Petroleum Institute, the drill must go through the layers that might connect to a drinking water source on its way to the gas-prone shale far below. However, before the deeper horizontal portions of the well are fractured to create fissures in the shale through which the gas can flow, the vertical well is cased in steel pipe and cemented to the rock. This, by the way, is already required by law, and it seals off any possible connection with a drinking-water aquifer before the first gallon of fracturing fluid is pumped into the well. That fluid is mainly water, plus a few chemicals, such as surfactants (detergent) and gel to carry the sand used to prop open the fractured fissures. Some of that water remains in the reservoir--isolated from drinking water--and most of it is returned to the surface where it is captured for treatment and either disposal or re-use in another fracking job. As long as the well was completed in accordance with standard practices, the primary risk to water supplies is from surface activities that are already thoroughly regulated and have been for years. Accidental contamination of surface or groundwater would be handled by the appropriate authorities, and a driller would be liable for any damages.

The more I learned about fracking, the more puzzled I became that it has attracted so much criticism recently. After all, the practice was developed in the late 1940s and has been used since then in hundreds of thousands of wells to produce literally billions of barrels of domestic oil and trillions of cubic feet of domestic natural gas. That wouldn't be the case if this were some new, risky practice. In fact, it is an entirely mainstream industry practice that has become so vital to the ongoing production of oil & gas from the highly-mature resources of the United States that a study by Global Insight suggested that restrictions on fracking could cut US gas production by anywhere from 10-50% within this decade, depending on their severity. Similar consequences for oil production would follow. The only thing new here is the clever application of fracking with state-of-the-art horizontal drilling to shale reservoirs that couldn't economically produce useful quantities of gas without them.

The fracking controversy also involves a surprising irony: While many of us recall the old cliché about oil and water not mixing, it turns out that oil, natural gas and water are often found together deep underground--and this is not drinking water I'm talking about. Water is also routinely injected into producing oil & gas wells, either as liquid or as steam, in order to enhance recovery, and many wells produce a lot more water than oil. As a result, the oil & gas industry handles staggering volumes of water every day. By comparison fracking, in which water is only used to prepare a well and is not part of the ongoing production process, accounts for just a tiny fraction of the industry's involvement with water--all already regulated, I might add.

So how do we explain the current ruckus over hydraulic fracturing? Perhaps one reason this old practice is attracting new scrutiny is because it's being applied in parts of the country that haven't seen a drilling rig in decades, where it provokes a similar reaction to the arrival of 300-ft. wind turbines, utility-scale solar arrays, and long-distance transmission lines. But rather than just writing this off as yet another manifestation of NIMBY, I'm truly sympathetic to concerns about the integrity of our drinking water. My family drinks water out of the tap, and I would be irate if I thought we were being exposed to something dangerous. When you examine the science behind fracking and see that, if anything, these wells are drilled and isolated with more care than many water wells (which I understand often aren't cased and cemented to protect the water source from contact with other sedimentary layers) it becomes clear that the biggest potential exposure occurs not underground but at the surface, where fracking is just one of many other regulated industrial water uses, and a fairly small one at that. Thus, whether intentionally or as a result of a basic misunderstanding of how this technology works, we are being presented with a false dichotomy concerning shale gas and fracking. The real choice here isn't between energy and drinking water, as critics imply, but between tapping an abundant source of lower-emission domestic energy and what looked like a perpetually-increasing reliance on imported natural gas just a few years ago.

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