Thursday, February 16, 2012

Shale gas subset of broader on-shore drilling movement

Open storage pits used to store drilling waste are part of a national debate
over the impact of on-shore drilling for oil and gas. This photo is from a report
 by the USGS outlining a study to exame brine contamination to aquatic
 resources from petroleum development in the Williston Basin

A brief trip to Naples, Fla. this week reinforced a point about the hydraulic fracturing debate: It’s not all about natural gas, and it’s not all about the northeast.

If you live in upstate New York, as I do, it’s easy to get the impression that the epicenter of the debate is here, where the state's delivery of new energy policy is experiencing a painful labor owing to the intensity of the controversy over fracking. But keep in mind that the fight over the fate of the Marcellus and Utica shales is a subset of a national debate over the role of on-shore drilling as a primary source of the nation’s energy. Hydraulic fracturing is an effective way to extract not only gas, but oil; and the controversy is relevant to anyplace that sits over “tight” carbon formations that have gone unexplored because, until now, they were thought to be inaccessibly trapped in rock.

A story in Sunday’s Bloomberg News by reporter Peter Orszag, quotes Jim Mulva, chief executive officer of ConocoPhillips: "The (hydraulic fracturing) revolution has spread to domestic oil production. And it may track the path it followed with natural gas. We just don't know yet. But it looks promising." The Bakken Shale in North Dakota and the Eagle Ford play in Texas are two examples of hydraulically fractured rock bearing lucrative flows of oil; and there is potential for oil production from many other tight formations yet to be discovered under the lower 48. So it was that, while eating breakfast in Naples a day after reading the Bloomberg story, I was greeted with a familiar headline: Florida Bills: Drill in State Parks. The article, by Mary Wozniak of the New-Press, detailed legislation to open Florida parks for drilling. This would mean “areas such as the 70,000-acre Fakahatchee Strand Preserve State Park could eventually be home to oil wells as well as endangered orchids and other species such as the endangered Florida panther, and drilling in the 23,000 Corkscrew Regional Ecosystem Watershed could be allowed as well as hiking.”

Wozniak's story did not specifically mention hydraulic fracturing. But it is central to the broader on-shore drilling issue. Partly because hydraulic fracturing is unregulated by the federal government, domestic carbon reserves that were once unworthy of necessary capital investment are now desirable for big oil companies, who can exploit them without the hindrance of having to comply to the Safe Drinking Water Act. There is still economic risks in playing the future markets of gas and oil, of course, and environmental risk in developing them on an unprecedented scale. Staking entrepreneurial risks on new frontiers is the American way, but seldom, if ever (when factoring in global warming) have the ramifications of the outcome, both positive and negative, spread so far. 

Increasing domestic petroleum reserves will tend to lower prices. That may be good for the economy in the short run, but bad for a country and a world trying to wean itself from fossil fuel and develop a sustainable future. Put another way, the use of high volume hydraulic fracturing will help ensure that Carbon remains King in the search for cheap energy. Inertia of developing renewable energy sources will increase as political and financial capital is committed to exploiting tight oil and gas reserves. High volume fracturing has been labeled by drilling industry proponents as a bridge to the future. The slogan implies that the future will hold renewable energy, but it really holds more fossil fuel.


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