Home » Posts tagged "Energy"

Energy

Shale Drives Manufacturing Back to the U.S.
The Washington Post recently highlighted a growing trend that holds great economic promise for the United States. Specifically, the Post noted that European industry is moving to the United States to take advantage of lower energy costs, specifically clean-burning natural gas. Of course, this is just the latest in a series of economic good news attributable to the nation’s growth in oil and natural gas development from shale resources. Little wonder, then, why major U.S. investment banks are declaring that “energy is beginning to carry America.”

johnkrohn

JD
Communications Director

The Washington Post recently highlighted a growing trend that holds great economic promise for the United States.  Specifically, the Post noted that European industry is moving to the United States to take advantage of lower energy costs, specifically clean-burning natural gas. Of course, this is just the latest in a series of economic good news attributable to the nation’s growth in oil and natural gas development from shale resources. Little wonder, then, why major U.S. investment banks are declaring that “energy is beginning to carry America.”

To exemplify the exodus by European manufacturers, the Post highlighted German chemical company BASF, which has invested more than $5.7 billion in North America over the last four years.  According to company representatives, the reason behind this significant investment is pretty straight-forward:

“It’s become clear, with the drop in gas and electricity prices in the United States, that we are, at the moment, at a significant disadvantage with our competitors,”

“It’s a very slow process, but it’s a continuous one,” said Harald Schwager, the head of BASF’s European operations, referring to the manufacturing outflow. “Once a customer of ours decides to build a new factory in the U.S., then this customer will request from us to be close by with our production. And so, over time, you see a self-accelerating process, which will move production into the U.S.”

The reason more companies are placing manufacturing facilities in the United States – after a decade’s worth of decline for the industry – is also fairly simple. Affordable natural gas supplies, made possible through the responsible development of shale. This not only translates into lower feedstock costs for manufacturers like BASF, but it’s also caused wholesale electricity prices in the United States to drop by more than 50 percent since 2008.

For these reasons, BASF’s investments are noteworthy — but they are by no means unique. In fact, Austrian steelmaker Voestalpine recently came to a similar decision when its senior leadership decided to locate a new steel plant in Texas, a decision the company reached after examining 17 sites in eight different countries.  In explaining his company’s decision, Dr. Wolfgang Eder noted:

 ”In the USA, re-industrialization is being promoted very consistently, ambitiously and with great conviction,” Eder told Reuters. “Low energy prices gave us the final – and not insignificant – push.”

Of course, these are just a few examples of a much larger trend that’s being witnessed in communities across the United States. The French oil and gas pipeline company Vallourec has opened multiple steel plants in Youngstown, Ohio, providing over $700 million in economic activity for this once struggling Rust Belt city.  At the same time, in Louisiana, the South African based company Sasol is building the nation’s first commercial plant to convert natural gas to liquid fuels, thanks to the United States’ newfound abundance of affordable natural gas. This project, which has been billed as the largest manufacturing investment in Louisiana’s history, is expected to provide nearly $14 billion in economic activity and 7,000 well-paying construction jobs.

All of this activity, and more, has led outlets like NPR to run headlines like: “Cheap Natural Gas Pumping New Life into U.S. Factories.”  While it would be easy to dismiss such a headline as anecdotal, recent experience and statements by U.S. executives and federal officials show it is indeed true – and perhaps even an understatement.

Drew Greenbelt, owner of Baltimore based Marlin Steel Wire Products, recently noted his company’s orders are rising because his customers are receiving a widening discount in the price of natural gas and electricity. Specifically, he noted the savings are “making U.S. companies that used to be at a price disadvantage now uniquely positioned to win contracts they never won in the past — or haven’t for a while.” He added: “Everyone talks about what’s going on in North Dakota, but it’s filtering down now to conventional factories throughout America.”

Last year John Surma, chairman of U.S. Steel, observed the following: “It has become clear to me that the responsible development of our nation’s extensive recoverable oil and natural gas resources has the potential to be the once-in-a-lifetime economic engine that coal was nearly 200 years ago.”

The aggregate benefits of these investments to the overall U.S. economy were recognized last year by former Treasury Secretary Timothy Geithner, who told NBC News: “The economy now is actually looking quite resilient,” before adding that two of the biggest reasons for that development are gains in domestic oil and gas production and domestic manufacturing. “If you look at what’s happening in energy, enormous boom,” Geithner said. “In manufacturing, [the country is having] one of the strongest periods in manufacturing revival that we’ve seen in almost a generation.”

All of this supports a report issued more than a year ago by the global consulting firm PricewaterhouseCoopers. That study, titled “Shale Gas: a Renaissance in U.S. Manufacturing?” predicted that shale development would save U.S. manufacturers nearly 12 billion dollars per year in energy costs. When combined with increased demand for manufacturing products due to oil and gas development, the result of the U.S. energy boom would be an additional one million U.S. manufacturing jobs by 2025.  It’s worth noting this activity is all in addition to the $545 billion in economic activity supported by America’s oil and natural gas industry just last year.

As the discussion about U.S. energy policy and shale development continues, we should remember: Just four years after the onset of one of the deepest recessions in U.S. history, shale development is providing millions of jobs, billions of dollars in new investment, and is breathing new life into a vital sector of our economy. Oh, and did we mention it’s giving us cleaner air, too?

Important Lessons on Life and Shale – from Tim Allen?
On Friday, ABC aired an episode of the sitcom “Last Man Standing” entitled “Mother Fracker,” a reference to the fact that the show’s on-screen mom (Vanessa Baxter) works as a geologist for an energy company. When Vanessa goes to her daughter Eve’s school to discuss her job, the class of early teens (and the teacher) all accuse her of harming the environment and apparently even causing cancer. Ultimately, however, the show provides some much-needed perspective on today’s ongoing debate over hydraulic fracturing.

Dana
Staff Geologist

 

On Friday, ABC aired an episode of the sitcom “Last Man Standing” entitled “Mother Fracker,” a reference to the fact that the show’s on-screen mom (Vanessa Baxter) works as a geologist for an energy company. When Vanessa goes to her daughter Eve’s school to discuss her job, the class of early teens (and the teacher) all accuse her of harming the environment and apparently even causing cancer. Ultimately, however, the show provides some much-needed perspective on today’s ongoing debate over hydraulic fracturing.

After Vanessa and Eve return home from school, Eve and the other kids begin discussing the supposed harms from hydraulic fracturing. When Mike Baxter (played by Tim Allen) informs them that energy use requires tradeoffs, and then asks if they would “go off the grid” to be ideologically consistent, the kids agree that they should.

One of the daughters, Mandy, is excited to oppose hydraulic fracturing because Hollywood actor Mark Ruffalo also opposes it. When Mike takes her laptop, Mandy replies: “That doesn’t use energy — it runs on a battery!” – a frustratingly symbolic comment. Of course, after Mike cuts electricity to the whole house, most of the kids relent immediately.

Eve, however, remains steadfast in her beliefs and decides to go live out in the yard in a tent (itself made of and from hydrocarbons, but let’s set that aside for a moment). As she walks out, Vanessa asks Mike, “Why don’t we just send her to her room?” Mike’s reply: “Oh, with all that evil electricity? No way.”

For much of the rest of the episode, Vanessa feels guilty that her daughter is living outside in the snow. She wishes it were summer instead, so that her daughter could “take a stand” without risking freezing to death. Wouldn’t that be nice: only having to live by your principles when the weather outside allows for it!

Mike, however, is unflagging, believing not only that the daughter cannot live without electricity, but that she needs to apologize to Vanessa for making her mother feel guilty.

Already we can see that the episode is a fascinating encapsulation of the debate not just over hydraulic fracturing, but natural gas development as a whole – indeed all forms of energy production. On one side are the adults, who recognize that living with basics like electricity, central heat, and hot food requires the production and delivery of affordable, reliable energy. Earlier in the episode, both of them dismiss solar as being “too expensive” and say that wind power “kills birds.”

But here’s the truth: All forms of energy development do involve risks. But the truly adult question is whether the benefits – in the case of natural gas: jobs, affordable energy, and a clean-burning fuel – outweigh the costs. If we listen to state regulators, independent experts, and peer-reviewed research, there’s no question that shale development is an overwhelmingly net positive.

That actually brings us to another scene later in the show. As Eve sits outside in front of a burning pile of wood, Mike leaves the house with a cup of water and douses the flame. “You’re producing way too many greenhouse gases out here,” he says. Indeed, according to the EIA, wood burning has a methane emission factor that is 25 to 50 times larger than natural gas, and nitrous oxide emissions for wood are more than 30 times larger than those from natural gas.

Do opponents of natural gas really believe we should revert back to a greenhouse-gas spewing fuel like … wood?

Finally, Vanessa – good mother that she is – cannot stand to see her daughter shivering in the cold any longer. She exits the house to go talk to Eve and try to reason with her. “When you’re an adult,” Vanessa says, “things aren’t so black and white. You have to pay bills, which means we have to make choices, and sometimes, we have to compromise.”

Ultimately, Eve is moved by her mother’s speech and comes back in, to which Mike’s first response is that she needs to talk to her mother (although not before recommending she take a shower). He does, however, make a valid point about Eve’s actions: “You’re not wrong about caring about stuff.”

Perhaps the most instructive line of the episode, however, comes from Vanessa in her plea to Eve to come in from the cold. Her statement is a fascinating metaphor for the real-life challenge of convincing ideological opponents of hydraulic fracturing (symbolized by Eve) that their cause simply is not compatible with reality:

“Eve, the world isn’t perfect, and everybody has to compromise. Unless you’re a trust fund millionaire or a fourteen year old living in a tent. Someday you’ll understand that. I just wish that day was now.”

Don’t we all.

Another Reality Check for Food & Water Watch
According to a new Food & Water Watch report, hydraulic fracturing is a “false solution” that will not have a material impact on U.S. energy security. The entire report, from the title to the footnotes and everything in between, is essentially a compilation of statements that are contradicted by the facts, credible experts, publicly available data, and even good old common sense. And although F&WW was able to secure some headlines upon releasing this booklet of debunked talking points, the public, as always, is much more interested in the truth – and deserves it, too.

Steve
Spokesman

 

According to a new Food & Water Watch report, hydraulic fracturing is a “false solution” that will not have a material impact on U.S. energy security. The entire report, from the title to the footnotes and everything in between, is essentially a compilation of statements that are contradicted by the facts, credible experts, publicly available data, and even good old common sense. And although F&WW was able to secure some headlines upon releasing this booklet of debunked talking points, the public, as always, is much more interested in the truth – and deserves it, too.

Of course, it’s worth noting that none of this is surprising. Food & Water Watch is one of the most active and vocal groups opposing not just hydraulic fracturing, and there is no amount of hyperbole or duplicity that exceeds their standards of activism. For example, the group accuses the industry of living in a “fantasy world” where hydraulic fracturing does not contaminate groundwater – even though the U.S. EPA, state regulators from across the country, and experts at MIT and Stanford (among many others) have all affirmed that, in fact, hydraulic fracturing does not contaminate groundwater. But why let such details get in the way of a perfectly good fundraising appeal?

Food & Water Watch also changes its message on hydraulic fracturing depending on the audience involved. A petition from the organization calls for a moratorium “until it is proven safe for our environment and the public’s health.” That’s quite a bit different from the group’s website, which says hydraulic fracturing is “inherently unsafe” and cannot be made safe by any amount of regulation. Once again, the organization is simply looking for more members (and their donations, naturally), so the broader net they can cast – even at the expense of their own credibility – the better.

As to the report that F&WW just released, the organization reveals its true intent on the first page of the executive summary with the following passage:

“Hinging U.S. energy policy on fracking, and thus betting America’s future on the supposed abundance of oil and natural gas, would simply perpetuate America’s destructive dependence on the oil and gas industry. The only security that would be enjoyed is the security of the industry’s profits.” (p. 2)

In other words, the authors set the tone of the entire document by beginning with blatant demagoguery, even though they clearly hoped it would be received as a serious report.

Without further ado, let’s examine some of the specific inaccuracies, falsehoods, and misrepresentations that one would expect to populate a report issued by Food & Water Watch, and predictably appeared in its latest attempt to feign credibility.

–

F&WW: “The United States can and will achieve a transition off of fossil fuels through conservation and through the deployment of proven energy efficiency and renewable energy technologies. The question is whether this transition will take place before or after the fossil fuel industry lays waste to the water we drink, the air we breathe, the communities we love and the climate on which we all depend.” (p. 3)

REALITY: Since the report has a stated mission of undermining the benefits of hydraulic fracturing, it’s reasonable to assume that the claims made here are also references to impacts supposedly due to hydraulic fracturing. Let’s examine each one individually.

“…lays waste to the water we drink…”

  • Lisa Jackson, current EPA administrator: “In no case have we made a definitive determination that [hydraulic fracturing] has caused chemicals to enter groundwater.” (April 2012)
    • Jackson: “I’m not aware of any proven case where [hydraulic fracturing] itself has affected water.” (May 2011)
  • U.S. EPA: “EPA did not find confirmed evidence that drinking water wells have been contaminated by hydraulic fracturing fluid injection…” (2004)
  • Carol Browner, former EPA administrator: “There is no evidence that the hydraulic fracturing at issue has resulted in any contamination or endangerment of underground sources of drinking water.” (May 1995)
  • U.S. Dept. of Energy and Ground Water Protection Council: “[B]ased on over sixty years of practical application and a lack of evidence to the contrary, there is nothing to indicate that when coupled with appropriate well construction; the practice of hydraulic fracturing in deep formations endangers ground water. There is also a lack of demonstrated evidence that hydraulic fracturing conducted in many shallower formations presents a substantial risk of endangerment to ground water.” (May 2009)
  • Center for Rural Pennsylvania: “[S]tatistical analyses of post-drilling versus pre-drilling water chemistry did not suggest major influences from gas well drilling or hydrofracturing (fracking) on nearby water wells…” (Oct. 2011)
  • John Hanger, Former Pa. DEP Secretary: “We’ve never had one case of fracking fluid going down the gas well and coming back up and contaminating someone’s water well.” (2012)
  • Dr. Stephen Holditch, Department of Petroleum Engineering, Texas A&M University: “I have been working in hydraulic fracturing for 40+ years and there is absolutely no evidence hydraulic fractures can grow from miles below the surface to the fresh water aquifers.” (Oct. 2011)

“…the air we breathe, the communities we love…”

  • Pennsylvania Department of Environmental Protection: “Results of the limited ambient air sampling initiative in the northeast region did not identify concentrations of any compound that would likely trigger air-related health issues associated with Marcellus Shale drilling activities.” (Jan. 2011)
    • Pa. DEP: “Results of the limited ambient air sampling initiative conducted in the southwest region did not identify concentrations of any compound that would likely trigger air-related health issues associated with Marcellus Shale drilling activities.” (Nov. 2010)
  • Texas Commission on Environmental Quality: “After several months of operation, state-of-the-art, 24-hour air monitors in the Barnett Shale area are showing no levels of concern for any chemicals. This reinforces our conclusion that there are no immediate health concerns from air quality in the area, and that when they are properly managed and maintained, oil and gas operations do not cause harmful excess air emissions.” (Aug. 2010)
  • Sue Mickley, M.P.H., and Uni Blake, M.S., Toxicology: “Health records indicate that while production increased, fewer residents were diagnosed with serious illnesses such as cancer, respiratory disease, strokes, and heart disease.” (Oct. 2011)
  • Associated Press: Critics of fracking often raise alarms about groundwater pollution, air pollution, and cancer risks, and there are still many uncertainties. But some of the claims have little — or nothing— to back them. For example, reports that breast cancer rates rose in a region with heavy gas drilling are false, researchers told The Associated Press. Fears that natural radioactivity in drilling waste could contaminate drinking water aren’t being confirmed by monitoring, either. And concerns about air pollution from the industry often don’t acknowledge that natural gas is a far cleaner burning fuel than coal. (July 2012)

**Be sure also to check out what the Bureau of Labor Statistics says about relatively low health risks from oil and natural gas development.

“…and the climate on which we all depend.”

  • Fatih Birol, International Energy Agency: “The replacement of coal by shale gas is a key factor and what happened in the U.S. could very well happen in China and other countries and could definitely help in reducing CO2 emissions.” (June 2012)
  • Fred Krupp, President of Environmental Defense Fund: “Natural gas burns cleaner than coal, emits less in the way of greenhouse gases, and avoids mercury and other pollutants from coal… We need to find a way to take advantage of this historic opportunity to cut back on burning coal, which is the worst energy option.” (Nov. 2011)
  • President Barack Obama: “The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy.” (Jan. 2012)
    • President Obama: “By 2035, 80 percent of America’s electricity will come from clean energy sources. Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all– and I urge Democrats and Republicans to work together to make it happen.” (Jan. 2011)
  • Heather Zichal, White House energy and climate adviser: “The president has made clear that he believes this important, abundant domestic resource [natural gas] holds unique promise to fuel our energy sector, fuel our vehicles, as well as fuel job growth — all while reducing harmful emissions.” (May 2012)
  • Associated Press: “In a surprising turnaround, the amount of carbon dioxide being released into the atmosphere in the U.S. has fallen dramatically to its lowest level in 20 years, and government officials say the biggest reason is that cheap and plentiful natural gas has led many power plant operators to switch from dirtier-burning coal.” (Aug. 2012)
  • Reuters (referencing U.N. energy expert): “Natural gas, including non-traditional shale gas, should play a major role in cutting greenhouse gases, protecting forests and improving the health and living standards of the world’s poor, the co-head of a U.N. sustainable energy program said on Monday. Without it, the U.N.’s Sustainable Energy for All Initiative will have difficulty meeting goals of ensuring universal energy access, doubling the world’s share of renewable energy and doubling the rate of improvement in energy efficiency by 2030, Kandeh Yumkella, co-head of the initiative, told Reuters.” (June 2012)

F&WW: “As for global climate change, the growing scientific consensus is that natural gas is a false solution.” (p. 3)

REALITY: Fittingly, F&WW’s definition of a “growing scientific consensus” – according to the footnote associated with this claim – is two reports from the widely discredited Prof. Robert Howarth of Cornell University. A known commodity at “anti-fracking” rallies, Howarth’s arguments about natural gas from shale being worse than coal have been debunked by the U.S. Department of Energy, his own colleagues at Cornell, and even by a study that was paid for in part by the Sierra Club. Consider:

  • John Hanger, former Secretary of Pennsylvania DEP: “Professor Horwath’s conclusion that gas emits more heat trapping gas than carbon flies in the face of numerous life cycle studies done around the world.” (April 2011)
  • U.S. Department of Energy: “Average natural gas baseload power generation has life cycle GHG emissions 53% lower than average coal baseload power generation.” (Jan. 2012)
  • University of Maryland: “GHG impacts of shale gas are…only 56% that of coal. … [A]rguments that shale gas is more polluting than coal are largely unjustified.” (Dec. 2011)
  • Carnegie Mellon University: “For comparison purposes, Marcellus shale gas adds only 3% more emissions to the average conventional gas, which is likely within the uncertainty bounds of the study. Marcellus shale gas has lower GHG emissions relative to coal when used to generate electricity.” (Aug. 2011)
  • Cornell Prof. Lawrence Cathles: “[I]n their recent publication in Climatic Change Letters, Howarth et al. (2011) report that their life-cycle evaluation of shale gas drilling suggests that shale gas has a larger GHG footprint than coal and that this larger footprint ‘undercuts the logic of its use as a bridging fuel over the coming decades’. We argue here that their analysis is seriously flawed in that they significantly overestimate the fugitive emissions associated with unconventional gas extraction, undervalue the contribution of “green technologies” to reducing those emissions to a level approaching that of conventional gas, base their comparison between gas and coal on heat rather than electricity generation (almost the sole use of coal), and assume a time interval over which to compute the relative climate impact of gas compared to coal that does not capture the contrast between the long residence time of CO2 and the short residence time of methane in the atmosphere.” (Oct. 2011)

F&WW also cites the Pétron study from earlier this year, which focused on an operating environment in Colorado that doesn’t even exist anymore, but was nonetheless extrapolated to be somehow relevant to a discussion about the technologies and regulations in place today. Michael Levi, a climate change expert at the Council on Foreign Relations, even has a peer-reviewed paper that explains why that study’s findings are “unsupportable,” mostly because they hinge upon a methane leakage rate that doesn’t mesh with reality (inflated leakage rates are also at the core of Prof. Howarth’s conclusions, so it should not be surprising that experts have debunked both studies).

It is little wonder, then, why Food & Water Watch buried these details in a footnote instead of mentioning them by name in the body of the report: No one with any scientific credentials, outside of a handful of folks who are ideologically committed to shutting down oil and natural gas development, takes them seriously.

F&WW: “The uncertainty surrounding EUR calculations lies at the root of a June 2011 investigation by the New York Times, which was full of revelations, including, ‘An internal Energy Information Administration document says companies have exaggerated “the appearance of shale gas well profitability,” are highlighting the performance of only their best wells and may be using overly optimistic models for projecting the wells’ productivity over the next several decades.’” (p. 11)

REALITY: Those who follow the news would be surprised to see that Food & Water Watch, attempting to undermine the facts about America’s abundant natural gas supplies, is relying on a New York Times story that was criticized by none other than the New York Times’ own public editor. Why? Because the EIA information cited in that report – and used as evidence here by Food & Water Watch – was sourced to an intern at that agency. The Times inflated the importance of the “report” by keeping that information hidden from its readers. In response, here’s what that newspaper’s then-public editor, Arthur Brisbane, said about the story and its deceptive use of an intern as a source:

The “intern” was C. Hobson Bryan, a 2009 college physics-engineering graduate who E.I.A. said was hired as an intern in summer 2009 and upgraded to general engineer in March 2011. One of his e-mails was attributed to “one official” who said the shale industry may be “set up for failure.” Later, he was an “energy analyst” wondering, “Am I just totally crazy, or does it seem like everyone and their mothers are endorsing shale gas without getting a really good understanding of the economics at the business level?” Next he was “one federal analyst” who said, “It seems that science is pointing in one direction and industry PR is pointing in another.”

At the time of the first two e-mails, Mr. Bryan was a general engineer; at the time of the third, he was an intern. The document viewer included three other e-mails dating to his internship period in which Mr. Bryan was referred to as an “official.”

Can an intern be an “official”? It doesn’t sound right to me.

If F&WW had a leg to stand on in its claim that we only possess half the natural gas supplies that experts from across the board have determined we have, it wouldn’t need to deceive the public with a debunked New York Times story to support its thesis.

F&WW: “Such exports [of liquefied natural gas, or LNG] clearly belie the industry’s patriotic rhetoric on U.S. energy security and energy independence, revealing profit as the true motive.” (p. 12)

REALITY: If Food & Water Watch had approached this issue with a sober attention to detail – and if they weren’t so blindly committed to a narrative about “profits” and ulterior motives – they would have realized that shifting from being a net energy importer to a net energy exporter means a country has more control over its economy and its energy future. One might even say that it would make that country (gasp!) more secure.

And here’s some evidence to support that:

  • Brookings Institution: “As U.S. foreign policy undergoes a ‘pivot to Asia,’ the ability of the U.S. to provide a degree of increased energy security and pricing relief to LNG importers in the region will be an important economic and strategic asset. … The potential benefits of U.S. LNG exports relate to trade, macroeconomics, and geopolitics.” (May 2012)
  • International Energy Agency: The [2012 World Energy Outlook] finds that the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows. In the New Policies Scenario, the WEO’s central scenario, the United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in energy, in net terms, by 2035. North America emerges as a net oil exporter, accelerating the switch in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to Asia by 2035. (Nov. 2012)
  • Steven Chu, Nobel Laureate and Secretary of Energy: “Exporting natural gas means wealth comes into the United States.” (Feb. 2012)
  • Michael Levi, CFR: “Gas exports could help narrow the U.S. current account deficit, shake up geopolitics, and give the United States new leverage in trade negotiations.” (June 2012)
  • Baker Institute, Rice University: “The United States should focus squarely on setting the policies needed to ensure that shale gas can play a significant role in the U.S. and global energy mix, thereby contributing to greater diversification of global energy supplies and to the long-term national interests of the United States.” (July 2011)

F&WW: “If allowed to write its own policies, the oil and gas industry will simply extract as much as possible, as fast as possible, for maximum profit, while fighting to prolong America’s destructive dependence on fossil fuels. Then, once U.S. natural gas is gone, the global oil and gas industry will likely be well positioned to import foreign sources of fracked natural gas to feed this dependence; Royal Dutch Shell and ExxonMobil, in particular, are invested in building a global natural gas supply chain. Their strategic plans for such a global supply chain serve as an illustration of how Big Oil sees an opportunity, not a threat, in using natural gas in addition to oil to fuel transportation.” (p. 14)

REALITY: The term “tin foil hat” comes to mind here, because the situation Food & Water Watch envisions here is nothing short of conspiratorial. According to F&WW, oil and gas companies are going to deplete domestic resources deliberately, all so they can force America to buy more imported energy to feed a “dependence” that the industry created. And all of this, according to F&WW, is being clandestinely planned as a way to boost profits.

Interestingly, the situation they envision would actually be less profitable. If a company has a market for its product, where does it stand to reason that the company would prefer to have the product made: close to the market, or farther away? The answer to anyone with even a basic understanding of economics is clearly the former, as that would reduce operational costs.

And what is F&WW’s only evidence to support its thesis? Energy companies with operations around the globe are thinking of energy … on a global scale. Food & Water Watch wants us to think of this as equivalent to Freemasonry or the Illuminati, even though all they have done is repackage a well understood economic situation in the most nefarious light possible, hoping the general public is ignorant of even basic facts.

F&WW: “The popular claim of a 100-year supply of natural gas is based on the oil and gas industry’s dream of unrestricted access to drill and frack, and it presumes that highly uncertain resource estimates prove accurate.” (p. 17)

REALITY: Food & Water Watch actually lays out a longer (not to be confused with “more credible”) version of this argument earlier in the report. The goal is to undermine the use of “technically recoverable resources” as a meaningful measure of available oil and natural gas. As repeated here, F&WW believes these are “highly uncertain” numbers, and, as such, should be treated with a high degree of skepticism.

What does Food & Water Watch leave out, though? History.

–In 1980, the United States was said to have approximately 30 billion barrels of oil in “proved reserves.” But over the next three decades, the United States produced nearly 80 billion barrels – more than two and a half times what experts had predicted we even had available.

–In the three most recent years for which data is available, EIA’s estimates of U.S. proved reserves of oil rose by more than 21 percent, thanks in large part to expanded development of “tight” formations such as the Bakken (North Dakota, Montana) and Eagle Ford (Texas).

–In 1995, the U.S. Geological Survey estimated that the Bakken formation in North Dakota contained 151 million barrels of oil. In 2008, thanks to improvements in technology, the USGS had to upwardly revise its estimate to between three and 4.3 billion barrels of oil – an amazing 25 times more than they had estimated just 13 years earlier.

–In 2002, USGS estimated the Marcellus shale contained two trillion cubic feet (tcf) of natural gas. But in 2011, USGS upwardly revised that estimate by 4,100 percent to 84 trillion cubic feet, as the industry had since proved it could affordably and efficiently develop natural gas from shale.

–In 2000, the EIA estimated the United States had 177 tcf of natural gas in proved reserves. Yet by 2010, that number had increased to more than 304 tcf – an increase of more than 70 percent. Also worth noting: over that same period, the United States produced more than 270 tcf of natural gas, or 100 tcf more than the EIA predicted we even had available in proved reserves in 2000.

How was all of this possible? Because “technically recoverable resources” were recovered in large numbers, thanks primarily to technological innovation, which in turn helped reduce costs (and environmental impacts). And in some cases, production over time exceeded even what was considered recoverable. But to hear it from Food & Water Watch, these facts mean nothing, because “technically recoverable” has uncertainties tied to it.

All estimates have uncertainties tied to them; that’s why they’re called estimates. But it’s also important – if not more important – to remember that history has shown time and again that “proved reserves” dramatically underestimate how much energy we can develop. So when Food & Water Watch conflates “uncertainty” with “unreliable,” it’s either an attempt to sweep the facts under the rug, or a reflection of a fundamental misunderstanding of the industry they’re trying to malign.

–

They say the definition of insanity is doing the same thing over and over again and expecting different results. After the release of this latest report, which rehashes the same tired arguments that opponents have been making for years, it seems the researchers at Food & Water Watch should conduct an introspective review of that statement.

Shale Putting America Back In Motion
At the end of 2011, IHS CERA released a report on the enormous benefits being created by natural gas development across the United States. This past summer, a second installment of the IHS CERA study found that, by 2015, responsible natural gas production from shale and other “tight” reservoirs will create an astounding 1.5 million jobs. Now, just months later, IHS has released its latest report – a comprehensive and exciting compilation of America’s energy awakening, undoubtedly thanks to shale.

Dana
Staff Geologist

 

At the end of 2011, IHS CERA released a report on the enormous benefits being created by natural gas development across the United States. This past summer, a second installment of the IHS CERA study found that, by 2015, responsible natural gas production from shale and other “tight” reservoirs will create an astounding 1.5 million jobs. Now, just months later, IHS has released its latest report – a comprehensive and exciting compilation of America’s energy awakening, undoubtedly thanks to shale.

As the report lays out, production of these reserves via hydraulic fracturing and horizontal drilling is generating significant economic growth – and will continue to do so well into the future. According to IHS, continued oil and gas development from shale will lead to:

That’s unquestionably good news for a nation looking to jumpstart its economy and free itself from foreign energy dependence. And with nearly 1 in 10 new U.S. jobs created by oil and natural gas development, it’s not surprising the outlook is shining bright.

In fact, the development of American shale is already providing a major boost to American manufacturing. As the Wall Street Journal reported today, America’s once abandoned rust belt is now coming back to life thanks to affordable, clean-burning natural gas. From the Journal:

“‘I never would have expected that as a region we’d have a second chance to be a real leader in American manufacturing,’ Bill Flanagan of the Allegheny Conference on Community Development, a regional business group, told a crowd of locals who came to hear about the chemical plant. ‘Suddenly we’re back in the game.’

“…’The U.S. is now going to be the low-cost industrialized country for energy,’ the energy economist Philip Verleger says. ‘This creates a base for stronger economic growth in the United States than the rest of the industrialized world.’

And as Daniel Yergin, IHS Vice Chairman and a leading global authority on energy, also described it in the Wall Street Journal, shale development holds a “tantalizing prospect that the U.S. could regain market share among the world’s manufacturing exporters”, a statement confirmed time and again across the nation and in recent reports by PricewaterhouseCoopers.

Yet atop these outstanding economic impacts (as described in local, regional, and national news), the broader socio- and geopolitical impacts of America’s ability to generate its own energy  cannot be overlooked.  Reducing our trade deficit and decreasing our reliance on foreign, often insecure sources of energy have wide reaching benefits for our national security and economy alike.

From Dr. Yergin:

“Shale gas alone is now 10% of the overall U.S. energy supply. And similar technologies to recover so-called tight oil trapped in rock formations are largely responsible for boosting U.S. oil production by 25% since 2008—the highest growth in oil output of any country in the world over that time period.

“…the energy revolution is having other effects that get less attention. The balance of payments is one. The increase in domestic oil production over the past five years will reduce our oil-import bill this year by about $75 billion. The growth of shale gas will save the U.S. from spending $100 billion a year on imported LNG, which was the likely prospect five years ago.

“There is also a geopolitical dimension. The increase in U.S. oil production since 2008 is equivalent to almost 80% of what was Iran’s export level before the imposition of sanctions on the Tehran regime. Without the additional oil coming from the surge in U.S. oil output, the Iranian oil sanctions could not have worked as well as they have.

“…The rapid growth of oil and natural gas production represents a major opportunity for the U.S. Without these energy resources, the disappointing economic picture would look worse, and so would the jobs numbers. Instead, the energy revolution is helping revitalize the economy and make the U.S. more competitive in the global marketplace.”

From the creation of millions of jobs to the strengthening of our national security, the development of America’s shale reserves is proof-perfect that American ingenuity and technology can truly put America back in drive.

 

Poll: Americans Support Hydraulic Fracturing by More than 2-1 Margin
Americans consistently support more domestic energy development, and they also highly value a clean and well-protected environment. So it's of little surprise that a new poll released today shows that 57 percent of Americans support the use of hydraulic fracturing. Only 22 percent oppose the process, which means nationwide support outstrips opposition by a more than two-to-one margin.

Americans consistently support more domestic energy development, and they also highly value a clean and well-protected environment. So it’s of little surprise that a new poll released today shows that 57 percent of Americans support the use of hydraulic fracturing. Only 22 percent oppose the process, which means nationwide support outstrips opposition by a more than two-to-one margin.

The specific question asked:

“A process known as hydraulic fracturing, sometimes called fracking, is used to drill for oil and natural gas in shale oil reserves. Do you favor or oppose the use of fracking to produce more oil and natural gas in this country?”

The poll fits nicely with other recent surveys conducted that have found strong support for developing natural gas from shale. A survey by Harris Interactive, for example, found that despite “intense negative media focus,” 66 percent of Americans believe that the economic benefits of natural gas far outweigh any concerns about environmental impacts. A poll in October of last year found that 80 percent of Marylanders support natural gas production. In New York, more voters support hydraulic fracturing than oppose it, and in Pennsylvania, voters say — by a significant margin — that the economic benefits of drilling outstrip any perceived environmental impacts.

Nationwide, Americans strongly support more energy development and believe consumers will ultimately benefit.

Energy in Depth Issue Alert: Rep. Hinchey, EPA Administrator Jackson, HF, SDWA

On Tuesday, May 19, the office of U.S. Rep. Maurice Hinchey (D-N.Y.) issued a press release subsequent to a hearing of the House Interior Appropriations Subcommittee suggesting the congressman had gotten EPA administrator Lisa Jackson to “acknowledge” the need for her agency “to reexamine the Bush administration’s misguided views on the risks associated with hydraulic fracturing.”

Context

In 2005, Congress passed (with the vote of then-Sen. Barack Obama) the Energy Policy Act, a key provision of which sought to clarify Congress’s historical intent on whether the Safe Drinking Water Act (SDWA) of 1974 was ever designed to regulate hydraulic fracturing.

The answer was no, and in this case, history proved an effective guide: When SDWA was passed in 1974, hydraulic fracturing had already been in use for 25 years. Hydraulic fracturing was never considered for inclusion under SDWA jurisdiction at the time. The Act was amended in 1986, and then again in 1996. At no point in the process was the concept of SDWA regulation over fracturing ever considered a necessity – or even a possibility.

Subtext

Hydraulic fracturing is a commonly used, and increasingly critical, technology for finding and developing oil and gas resources trapped below rock that would otherwise be too deep, too hard and too expensive to access. The technique has been deployed more than a million times over the past 60 years, delivering to the American people more than 600 trillion cubic feet of American natural gas and seven billions barrels of American oil.

In 2008, a report issued by professors from Pennsylvania and New York suggested that the Marcellus Shale formation, a unit of sedimentary rock spread across much of the Appalachian Basin, could contain 516 trillion cubic feet of natural gas – enough to heat more than 60 million homes for 160 years. Without hydraulic fracturing, these resources cannot be feasibly or economically produced.

Politics

Those who oppose the responsible development of American energy have seized on hydraulic fracturing as a means of blocking reasonable access to, and production of, domestic energy resources. The centerpiece of their campaign appears to be focused on blaming hydraulic fracturing for everything from exploding houses in Ohio, to flammable water in Colorado, to hard water deposits in New York (each of these accusations, and others, are debunked here).

Despite these claims, hydraulic fracturing continues to be aggressively regulated by the states, and has compiled an unparalleled record of safety over the 60 years since its first commercial use.

Economic Impacts

More recently, legislation co-sponsored by Rep. Hinchey has sought to destroy this existing state-federal regulatory partnership in favor of an EPA-only approach. Were this and other restrictive regulatory measures to come to pass, a recent analysis showed it could result in the forced closure of more than half of America’s oil wells, a third of its gas wells, cost the federal government $4 billion in lost revenue, slash American oil production by 183,000 barrels per day, and natural gas by 245 billion cubic feet per year.

EPA on Record

In 1995, then-EPA administrator Carol Browner (currently the president’s energy and environment czar) wrote that that her agency saw “no evidence” that hydraulic fracturing “has resulted in any contamination or endangerment of underground sources of drinking water (USDW).”

“Moreover,” she added, “given the horizontal and vertical distance between the drinking water well and the closest gas production wells, the possibility of contamination or endangerment of USDWs in the area is extremely remote.”

In 2004, EPA issued a landmark report examining the question of safety as it relates to hydraulic fracturing, finding “the injection of hydraulic fracturing fluids” poses “minimal threat to USDWs.” In arriving at that conclusion, EPA stated it had “reviewed more than 200 peer-reviewed publications, other research, and public comments.”

States on Record

Recognizing that hydraulic fracturing is both a safe technology and a key driver of local economic development, states such as Alabama, Louisiana, North Dakota, Utah, Wyoming, Oklahoma and Texas have recently taken up or passed resolutions informing Congress and EPA that the current regulatory relationship is working well, and that efforts to disrupt it could produce serious and long-term consequences.

In New Mexico, former U.S. Energy Secretary and current Governor Bill Richardson introduced a plan in February aimed at easing unnecessary compliance burdens, recognizing that thousands of jobs and millions in potential revenue were tied to safe, responsible, state-regulated natural gas and oil production.

Statement from Lee Fuller, policy director for Energy In Depth

“Those familiar with the history surrounding the passage and amendment of the Safe Drinking Water Act understand what this measure was intended to do, and what it clearly was not. Unfortunately, instead of taking on the issue of responsible energy development candidly and on its merits, opponents of natural resource development have decided to target the essential tools needed to safely and efficiently bring this energy to market.”

States to U.S. Congress: Hands Off Hydraulic Fracturing

As Waxman, DeGette consider handing regulatory reins over to EPA,state legislatures speak up in support for maintaining,strengthening current state-federal partnership

WASHINGTON, DC – As their federal counterparts in Washington, D.C. look for new and creative ways to restrict the responsible use of a critical natural gas and oil extraction technique known as hydraulic fracturing, states with decades of experience in regulating the technology are not taking the effort lying down.

Earlier this week, the Louisiana House became the latest in a string of legislatures where resolutions affirming the chamber’s support for hydraulic fracturing – or opposition to Congress’s effort to disrupt the current partnership – were either formally filed or broadly approved. Many of these states have effectively regulated fracturing activities for more than a half century, and stand to lose the most – in jobs, revenue, royalties and energy output – should EPA be given regulatory authority over the proven technology. To learn more specifics about hydraulic fracturing technology, click here.

“If hydraulic fracturing were unsafe, unregulated, and largely unnecessary as a tool of producing American energy, Congress would have a good reason to step in, and states would have an even better one to step out,” said Lee Fuller, a spokesman for Energy In Depth, a new coalition of American oil and natural gas trade groups. “Clearly, that is not the case. And that’s why you’ve seen states from the Southeast to the Intermountain West stand up, shoulder-to-shoulder, and affirm their support for this safe, critical and increasingly valuable well stimulation technology”.

The latest effort out of Baton Rouge, La. was introduced by Rep. Joe Harrison, R-Napoleonville, and calls on Congress to maintain a provision in existing federal law preserving Congress’s intent not to regulate hydraulic fracturing under the Safe Drinking Water Act (SDWA) of 1974, legislation designed to protect public water supplies. In 1974, hydraulic fracturing had already been in commercial use for 25 years. At no time during its deliberation, nor in subsequent debates on amendments to SDWA in 1986 and 1996, was the concept of regulating hydraulic fracturing under SDWA ever a consideration.

The reason? Hydraulic fracturing was then, and continues to be now, aggressively regulated by the states, compiling an impressive record of safety and performance over that time. More than 60 years after its first commercial use, not a single case of hydraulic fracturing-related contamination has been documented by the federal government. In fact, a landmark 2004 study conducted by EPA found that hydraulic fracturing posed “no threat” to underground drinking water supplies.

Because of that, other states – such as Alabama, North Dakota, Utah, Wyoming, Oklahomaand Texas – have taken up or passed resolutions similar to the one being considered in Louisiana. In New Mexico, former U.S. Energy Secretary and current Governor Bill Richardson introduced a plan in February aimed at easing unnecessary compliance burdens, recognizing that thousands of jobs and millions in potential revenue were tied to safe, responsible, state-regulated natural gas and oil production.

Those conclusions are supported in full by a recent set of studies known collectively as Project BRIEF (Bringing Real Information on Energy Forward), commissioned by the Energy in Depth coalition. In particular, BRIEF found that proposed changes to federal regulations, including those related to hydraulic fracturing, could result in:

Natural Gas Production Brings Jobs, Growth and Revenue to Northwest Louisiana

Sometimes numbers help put things in perspective. A new report prepared for the Louisiana Natural Resources Department, “Economic Impact of the Haynesville Shale on the Louisiana Economy in 2008,”  found that energy development in Northwest Louisiana is having providing some pretty serious economic growth.

The Shreveport Times reports the study found that as a result of those activities:

Natural Resources Secretary Scott Angelle said: the “study indicates that the Haynesville Shale may be every bit the game changer for our state that we all hoped it might be…I think we are entering the golden age of natural gas. And Louisiana has the opportunity to take the lead in supplying it and showing the rest of the nation how to make the best use of it.”

The article goes on to say that the Haynesville Shale play has “somewhat insulated the local economy from the national doldrums.”

Other states-New York, Pennsylvania and West Virginia, to name a few-have vast natural gas resources, just like Louisiana. In the coming years, they have the chance to experience the same benefits of the folks in the Bayou State.

Potential Hydraulic Fracturing Legislation Now Has a Sponsor

Rumors are circling around Washington that an amendment seeking to give EPA authority over the regulation of hydraulic fracturing will soon be added to massive climate change legislation sponsored by Congressman Henry Waxman of California and Ed Markey of Massachusetts. It appears the amendment’s author will be Congresswoman Diana DeGette of Colorado, who sponsored similar legislation in the last Congress (H.R. 7231).

The Colorado Independent reports:

U.S. Rep. Diana DeGette is leading the charge to increase federal oversight of the nation’s natural gas industry, reintroducing a bill that specifically targets a process called hydraulic fracturing.

DeGette and hydraulic fracturing detractors claim the practice harms the environment and is damaging to public health. But Energy in Depth readers (and the EPA) know that’s not the case-and that states already effectively regulate hydraulic fracturing.

The fluids used in the process are more than 95 percent water, and fracturing activities take place thousands of feet below the water table. What’s more, extensive precautions are taken to case wells near the surface to prevent any leakage of fracturing fluid, oil or natural gas.

And while the Independent refers to highlighting the economic consequences of eliminating this safe engineering practice as an industry “tactic,” we’re sure the hundreds of thousands of Americans whose jobs rely on hydraulic fracturing might think differently.

Here are the facts:

What’s more, regulating hydraulic fracturing out of existence would have disastrous economic consequences, including the loss of thousands of jobs, billions in government revenue and the closure of 150,000 natural gas wells.

America can’t afford to unnecessarily curb domestic energy production and destroy jobs-and the DeGette amendment would do just that.