fracking – praag.org

Significant oil discovery in England

There could be up to 100 billion barrels of oil onshore beneath the South of England, says exploration firm UK Oil & Gas Investments (UKOG).

Last year, the firm drilled a well at Horse Hill, near Gatwick airport, and analysis of that well suggests the local area could hold 158 million barrels of oil per square mile.

But only a fraction of the 100 billion total would be recovered, UKOG admits.

The North Sea has produced about 45 billion barrels in 40 years.

“We think we’ve found a very significant discovery here, probably the largest [onshore in the UK] in the last 30 years, and we think it has national significance,” Stephen Sanderson, UKOG’s chief executive told the BBC.

UKOG says that the majority of the oil lies within the Upper Jurassic Kimmeridge formation at a depth of between 2,500ft (762m) and 3,000ft (914m).

Most experts believe fracking, or hydraulic fracturing, will be needed to get commercial quantities of oil from the region.

Concerns over fracking led to large-scale protests when Cuadrilla drilled at Balcombe, West Sussex, in 2013.

Source: BBC

Ukrainian army leaves fracking equipment behind

On the outskirts of the village of Shishkovo under the snow and rain rusts the expensive equipment: four residential trailers for employees, diesel substation and equipment for conducting seismic surveys. Judging by the labels this equipment was certified in the U.S., and now it is in possession of the people of Donbass.

Local residents recall that this was a temporary base of geologists from Ukrgazdobicha. The residents of the Shishkovo witnessed the beginning of the work.

“This equipment was brought at a time when in June the Ukrainian tanks came from Metallist and started shelling the city. As we suppose, Kiev authorities planned a quick capture of South-East, Donbass in particular, for further extraction of shale gas,” explains a local resident Vladimir.

“They were from Western Ukraine. Geo-research. They were saying something about gas, said there is shale gas here. First there were two vehicles, then 10 -12. There was a lot,” says a resident.

Earlier the field was divided into squares, here the expert gasman conducted seismic studies and measurements and were preparing to install a rig.

Local mechanics and welders were not hired, because many of the them spoke out against the extraction of shale gas.

The residents of Shishkovo were not notified of the purpose of the camp. The camp was staffed mainly with residents of Western Ukraine, which is revealed by the documents left behind : “Ivano-Frankovsk, Cherkassy, Poltava region, Zhitomir region.” The documents also mention both gas and oil research.

According to the paperwork for 2013 found onsite, similar bases were also located in villages Shevchenko, Raigorodka and Gerasimovka.

As the local residents say, the research continued until the Ukrainian national guard had left. Along with tanks and howitzers the Ukrainian soldiers also took part of the seismic equipment, but in the rush they did not have the time to gather everything.

This abandoned base can be observed well from the Ukrainian side of the frontline. Just over this field, a mile from the abandoned base is the town of Schastye, which is under the complete control of the Ukrainian army. Even now, in the midst of a ceasefire it is not safe to be here. Locals say that during evening hours the Ukrainian Armed forces and volunteer battalions begin to fire at each other.

Translated from Russian LifeNews

Fracking, climate change, solar in the security mix

The global oil market is going through an upheaval, with non-OPEC production led by North American producers surging while OPEC’s traditional price-setting role changes. First, US oil production and proven oil reserve growth over the past several years is astonishing. Despite the current oil price decline, US oil production growth in 2015 is expected to grow around 1 million barrels per day. However, those growth rates probably won’t be sustained over the long term.

Second, if you look at the world’s largest oil reserve holders and countries that have reserve-to-production ratios in excess of 100 years, they are almost exclusively OPEC members. The cartel’s market influence has diminished in the face of robust non-OPEC production, but the group’s power is likely to endure over the long term purely due to the sheer volume of oil its members collectively control.

The Saudis will remain the de facto leaders of OPEC until another country can build comparable spare production capacity, which in the Saudis case is currently around 2 mmb/d. Saudi Arabia has 266 billion barrels of proven high-quality, cheap-to-produce oil reserves. The US, in contrast, boasts only 44.2 billion barrels of mostly expensive-to-produce oil reserves. Technology is a wild card that has the potential to unlock additional petroleum resources and reduce production costs, but it would be a mistake to discount Saudi Arabia’s power as an oil country, particularly over the long term.

That means, of course, that the Bahrain-based Fifth Fleet will remain a key asset. Add the Iranian nuclear talks, the predations of the Islamic State of Iraq and the Levant (ISIL), and the simmering tensions between Israel and its neighbors to the oil that flow through the Strait of Hormuz and there seems little doubt we will keep substantial naval, air and expeditionary forces in the area for the foreseeable future.

But these shifting energy markets raises larger strategic questions.

Colin spoke with one of the wisest analysts about the energy sector and its national security implications, Tony Cordesman of the Center for Strategic and International Studies. A former senior Pentagon and NATO official, Cordesman also served as director of policy and planning for resource applications at the Department of Energy. He doesn’t foresee any immediate major strategic shifts created by the energy market changes. At the same time, he acknowledges that major technological and market shifts have usually gone unnoticed until they hit us in the face.

Cordesman points to the solar and nuclear markets, where we have all been expecting or hoping for major technological breakthroughs “since the Nixon administration.” Then he notes that, in the oil market, “no one predicted that the most critical technological breakthrough would prove to be fracking.” Can we expect a breakthrough in the solar, nuclear or biofuel arenas? “It may take 25 to 50 years or it will happen almost without warning,” he predicts.

The current situation in the alternative energy world: We’re seeing the strong growth of renewable energy, albeit from a low base. The growth rate of installed US solar power capacity has been impressive, but that growth rate has slipped in the past few years as the technology has gained market share. “U.S. solar power capacity would need to grow at an annual rate of 22 percent in order for solar to provide 10 percent of the nation’s electricity in 2030, from less than 1 percent now,” Breaking Energy recently reported.

Wind and solar are used to generate electricity but coal will remain a significant source of US power generation for decades, although its market share looks likely to decline — for environmental reasons. The renewable energy story is important, and while it is changing the way utilities do business, wind and solar are only beginning to compete with fossil fuels on price. In most cases, their competitiveness is a result of tax incentives often referred to as subsidies. Also, the intermittent nature of these resources is a technical challenge that must be overcome in order to efficiently integrate large volumes of wind and solar energy into the power grid during times of peak demand. Creative financing and technological advances – particularly in energy storage – will help renewable electricity sources compete over time, but coal and natural gas will remain significant components of the US power generation mix for the foreseeable future.

At the international level, the issue of burning coal to generate power is far more complex. It is cheap and represents a comparatively cost-effective way to electrify large portions of the global population that currently have no access to power. Indeed, nine countries are collectively about to build roughly 550 gigawatts of new coal-fired capacity over the next two and a half decades.

And Then, Climate Change

In many ways, reducing emissions from coal-fired power generation is the key to dealing with climate change. China has been acting to address coal plant emissions due to its dangerous air pollution levels, which is an important piece of the climate change puzzle.

This poses a great conundrum for China. The Communist Party’s leaders are trying to forge a China united between rural and urban areas and that requires huge and fast economic development — much of it dependent on the use of cheap and readily available coal. Weaning themselves off of coal may be promising in terms of reducing emissions, but Cordesman says they are unlikely to be able to accept the economic tradeoffs.

For the same reasons, many other developing countries including India, Bangladesh and Pakistan are increasing their coal-fired power generation fleets.

Some think the ship has already sailed on preventing the impacts of climate change and now focus on adapting to extreme weather and other consequences as opposed to mitigating emissions such that they limit global temperatures from increasing more than 2 degrees Celsius.

Optimists remain however, and international agreements are not the only thing to focus on when thinking about what the world is doing to address the issue. “At every level—individuals, families, cities, states, provinces, even multinational corporations—efforts to cut CO2 are underway,” David Biello, associate editor for environment and energy at Scientific American, wrote in a recent post. He goes on to point out, “these are first steps and they are coming at a quickening pace, which suggest a possible future free of catastrophic climate change. More and faster should be the new slogan for action to address global warming. How much more and how much faster should be the only issue for negotiation.”

Texans ban fracking in its birthplace

Voters approved a ban on hydraulic fracturing in the north Texas town of Denton on Tuesday, making it the first city in the Lone Star State to outlaw the oil and gas extraction technique behind the U.S. energy boom.

The vote in the city of 123,000 was highly symbolic because hydraulic fracturing, better known as fracking, is widely used in Texas, the top crude producer in the United States.

“Denton, Texas is where hydraulic fracturing was invented,” said Bruce Baizel, Earthworks energy program director. “If this place in the heart of the oil and gas industry can’t live with fracking, then who can?”

Green groups said the result served as a wake-up call to the industry.

Groups like Frack Free Denton won even though they were outspent by a margin of 10 to one, according to organizers and local media reports.

The Texas Oil & Gas Association, the state’s energy lobby, on Wednesday quickly filed for an injunction.

“A ban on hydraulic fracturing is inconsistent with state law,” Thomas Phillips, a former head of the Supreme Court of Texas who now represents the trade group, said.

In a frack job, a mix of pressurized water, sand and chemicals is used to unlock hydrocarbons from rock. Operators claim it is safe but many environmental groups oppose the practice – calling it wasteful, polluting, dirty and noisy.

Fracking was pioneered at the Barnett shale formation where Denton is located. Exxon Mobil’s XTO unit honed its shale expertise in the natural gas-rich Barnett. Most of the crude output in Texas comes, however, from the growing Eagle Ford and Permian fields to the south and west.

The Denton referendum pitted oil and gas operators and mineral rights owners against residents who say their homes and lives are being encroached on by work that can be noisy, soak up scarce water supplies and overwhelm roads with heavy truck traffic.

“It’s essentially a ban on all drilling,” said Ed Ireland, executive director of the Barnett Shale Energy Education Council, a group aligned with producers. “No one would try to drill a well if they can’t frack it.”

Source: Reuters

Shell pushes SA for shale

Royal Dutch Shell pushed SA on Wednesday to decide on its application, now nearly four years old, to explore for shale gas in the Karoo, a pristine semi-desert that may contain some of the world’s largest reserves.

Shell’s application in early 2011 for an exploration licence in the Karoo, which the US Energy Information Administration says may hold up to 390-trillion cubic feet of technically recoverable reserves, caused an uproar from farmers and green groups, and an 18-month moratorium on the issuing of permits.

A year ago, several ministers — including then-mining minister Susan Shabangu — suggested hydraulic fracturing, or fracking, exploration licences were about to be issued but none has been forthcoming.

The mining ministry has failed to clarify reasons for the delay, either to Reuters or Shell.

“Why it is taking so long is a conundrum that we are trying to figure out,” Shell SA chairman Bonang Mohale told a news conference.

“We were hoping that by now we would have at least started the exploration process.”

With energy firms chasing large natural gas finds in places such as Mozambique, Brazil and China, SA could ill-afford to carry on delaying much longer, he added.

“Capital is moving,” he said. “My guess is that we are probably months away, not years away, from the issuing of exploration rights.”

The US estimates give SA the world’s eighth-biggest shale reserves, with nearly two-thirds the deposits estimated in the US.

Shell says it is committed to investing $200m in gas exploration in the area, which lies at the underdeveloped heart of Africa’s most advanced economy.

A Shell-commissioned study by Cape Town-based consultancy Econometrix suggests extracting 50-trillion cubic feet of gas would add $20bn, or 0.5%, of gross domestic product annually for 25 years to an economy that has always been a major energy importer.

The study also suggests it would create 700,000 jobs, a major draw for a government trying and failing to come up with answers to persistent 25% unemployment.

Opponents of shale gas fracking say the government has failed to introduce a suitably robust regulatory framework to prevent damage to the delicate environment, ecosystems and water supplies of the Karoo.

The spokeswoman for the mining ministry did not respond to requests for comment.

Source: Reuters

Washington takes on ISIS, Iran, Russia

It was heinous. It was underhanded. It was beyond the bounds of international morality. It was an attack on the American way of life. It was what you might expect from unscrupulous Arabs. It was “the oil weapon” — and back in 1973, it was directed at the United States. Skip ahead four decades and it’s smart, it’s effective, and it’s the American way. The Obama administration has appropriated it as a major tool of foreign policy, a new way to go to war with nations it considers hostile without relying on planes, missiles, and troops. It is, of course, that very same oil weapon.

Until recently, the use of the term “the oil weapon” has largely been identified with the efforts of Arab producers to dissuade the United States from supporting Israel by cutting off the flow of petroleum. The most memorable example of its use was the embargo imposed by Arab members of the Organization of the Petroleum Exporting Countries (OPEC) on oil exports to the United States during the Arab-Israeli war of 1973, causing scarcity in the U.S., long lines at American filling stations, and a global economic recession.

After suffering enormously from that embargo, Washington took a number of steps to disarm the oil weapon and prevent its reuse. These included an increased emphasis on domestic oil production and the establishment of a mutual aid arrangement overseen by the International Energy Agency (IEA) that obliged participating nations to share their oil with any member state subjected to an embargo.

So consider it a surprising reversal that, having tested out the oil weapon against Saddam Hussein’s Iraq with devastating effect back in the 1990s, Washington is now the key country brandishing that same weapon, using trade sanctions and other means to curb the exports of energy-producing states it categorizes as hostile. The Obama administration has taken this aggressive path even at the risk of curtailing global energy supplies.

When first employed, the oil weapon was intended to exploit the industrial world’s heavy dependence on petroleum imports from the Middle East. Over time, however, those producing countries became ever more dependent on oil revenues to finance their governments and enrich their citizens. Washington now seeks to exploit this by selectively denying access to world oil markets, whether through sanctions or the use of force, and so depriving hostile producing powers of operating revenues.

The most dramatic instance of this came on September 23rd, when American aircraft bombed refineries and other oil installations in areas of Syria controlled by the Islamic State of Iraq and Syria (ISIS, also known as ISIL or IS). An extremist insurgent movement that has declared a new “caliphate,” ISIS is not, of course, a major oil producer, but it has taken control of oil fields and refineries that once were operated by the regime of Bashar al-Assad in eastern Syria. The revenue generated by these fields, reportedly $1 to $2 million daily, is being used by ISIS to generate a significant share of its operating expenses. This has given that movement the wherewithal to finance the further recruitment and support of thousands of foreign fighters, even as it sustains a high tempo of combat operations.

Black-market dealers in Iran, Iraq, Syria, and Turkey have evidently been assisting ISIS in this effort, purchasing the crude at a discount and selling at global market rates, now hovering at about $90 per barrel. Ironically, this clandestine export network was initially established in the 1990s by Saddam Hussein’s regime to evade U.S. sanctions on Iraq.

The Islamic State has proven adept indeed at exploiting the fields under its control, even selling the oil to agents of opposing forces, including the Assad regime. To stop this flow, Washington launched what is planned to be a long-term air campaign against those fields and their associated infrastructure. By bombing them, President Obama evidently hopes to curtail the movement’s export earnings and thereby diminish its combat capabilities. These strikes, he declared in announcing the bombing campaign, are intended to “take out terrorist targets” and “cut off ISIL’s financing.”

It is too early to assess the impact of the air strikes on ISIS’s capacity to pump and sell oil. However, since the movement has been producing only about 80,000 barrels per day (roughly 1/1,000th of worldwide oil consumption), the attacks, if successful, are not expected to have any significant impact on a global market already increasingly glutted, in part because of an explosion of drilling in that “new Saudi Arabia,” the United States.

As it happens, though, the Obama administration is also wielding the oil weapon against two of the world’s leading producers, Iran and Russia. These efforts, which include embargoes and trade sanctions, are likely to have a far greater impact on world output, reflecting White House confidence that, in the pursuit of U.S. strategic interests, anything goes.

Fighting the Iranians

In the case of Iran, Washington has moved aggressively to curtail Tehran’s ability to finance its extensive nuclear program both by blocking its access to Western oil-drilling technology and by curbing its export sales. Under the Iran Sanctions Act, foreign firms that invest in the Iranian oil industry are barred from access to U.S. financial markets and subject to other penalties. In addition, the Obama administration has put immense pressure on major oil-importing countries, including China, India, South Korea, and the European powers, to reduce or eliminate their purchases from Iran.

These measures, which involve tough restrictions on financial transactions related to Iranian oil exports, have had a significant impact on that country’s oil output. By some estimates, those exports have fallen by one million barrels per day, which also represents a significant contraction in global supplies. As a result, Iran’s income from oil exports is estimated to have fallen from $118 billion in 2011-2012 to $56 billion in 2013-2014, while pinching ordinary Iranians in a multitude of ways.

In earlier times, when global oil supplies were tight, a daily loss of one million barrels would have meant widespread scarcity and a possible global recession. The Obama administration, however, assumes that only Iran is likely to suffer in the present situation. Credit this mainly to the recent upsurge in North American energy production (largely achieved through the use of hydro-fracking to extract oil and natural gas from buried shale deposits) and the increased availability of crude from other non-OPEC sources. According to the most recent data from the Department of Energy (DoE), U.S. crude output rose from 5.7 million barrels per day in 2011 to 8.4 million barrels in the second quarter of 2014, a remarkable 47% gain. And this is to be no flash in the pan. The DoE predicts that domestic output will rise to some 9.6 million barrels per day in 2020, putting the U.S. back in the top league of global producers.

For the Obama administration, the results of this are clear. Not only will American reliance on imported oil be significantly reduced, but with the U.S. absorbing ever less of the non-domestic supply, import-dependent countries like India, Japan, China, and South Korea should be able to satisfy their needs even if Iranian energy production keeps falling. As a result, Washington has been able to secure greater cooperation from such countries in observing the Iranian sanctions — something they would no doubt have been reluctant to do if global supplies were less abundant.

There is another factor, no less crucial, in the aggressive use of the oil weapon as an essential element of foreign policy. The increase in domestic crude output has imbued American leaders with a new sense of energy omnipotence, allowing them to contemplate the decline in Iranian exports without trepidation. In an April 2013 speech at Columbia University, Tom Donilon, then Obama’s national security adviser, publicly expressed this outlook with particular force. “America’s new energy posture allows us to engage from a position of greater strength,” he avowed. “Increasing U.S. energy supplies acts as a cushion that helps reduce our vulnerability to global supply disruptions and price shocks. It also affords us a stronger hand in pursuing and implementing our international security goals.”

This “stronger hand,” he made clear, was reflected in U.S. dealings with Iran. To put pressure on Tehran, he noted, “The United States engaged in tireless diplomacy to persuade consuming nations to end or significantly reduce their consumption of Iranian oil.” At the same time, “the substantial increase in oil production in the United States and elsewhere meant that international sanctions and U.S. and allied efforts could remove over 1 million barrels per day of Iranian oil while minimizing the burdens on the rest of the world.” It was this happy circumstance, he suggested, that had forced Iran to the negotiating table.

Fighting Vladimir Putin

The same outlook apparently governs U.S. policy toward Russia.

Prior to Russia’s seizure of Crimea and its covert intervention in eastern Ukraine, major Western oil companies, including BP, Chevron, ExxonMobil, and Total of France, were pursuing elaborate plans to begin production in Russian-controlled sectors of the Black Sea and the Arctic Ocean, mainly in collaboration with state-owned or state-controlled firms like Gazprom and Rosneft. There were, for instance, a number of expansive joint ventures between Exxon and Rosneft to drill in those energy-rich waters.

“These agreements,” Rex Tillerson, the CEO of Exxon, said proudly in 2012 on inking the deal, “are important milestones in this strategic relationship… Our focus now will move to technical planning and execution of safe and environmentally responsible exploration activities with the goal of developing significant new energy supplies to meet growing global demand.” Seen as a boon for American energy corporations and the oil-dependent global economy, these and similar endeavors were largely welcomed by U.S. officials.

Such collaborations between U.S. companies and Russian state enterprises were then viewed as conferring significant benefits on both sides. Exxon and other Western companies were being given access to vast new reserves — a powerful lure at a time when many of their existing fields in other parts of the world were in decline. For the Russians, who were also facing significant declines in their existing fields, access to advanced Western drilling technology offered the promise of exploiting otherwise difficult-to-reach areas in the Arctic and “tough” drilling environments elsewhere.

Not surprisingly, key figures on both sides have sought to insulate these arrangements from the new sanctions being imposed on Russia in response to its incursions in Ukraine. Tillerson, in particular, has sought to persuade U.S. leaders to exempt its deals with Rosneft from any such measures. “Our views are being heard at the highest levels,” he indicated in June.

As a result of such pressures, Russian energy companies were not covered in the first round of U.S. sanctions imposed on various firms and individuals. After conflict arose in eastern Ukraine, however, the White House moved on to tougher sanctions, including measures aimed at the energy sector. On September 12th, the Treasury Department announced that it was imposing strict constraints on the transfer of U.S. technology to Rosneft, Gazprom, and other Russian firms for the purpose of drilling in the Arctic. These measures, the department noted, “will impede Russia’s ability to develop so-called frontier or unconventional oil resources, areas in which Russian firms are heavily dependent on U.S. and western technology.”

The impact of these new measures cannot yet be assessed. Russian officials scoffed at them, insisting that their companies will proceed in the Arctic anyway. Nevertheless, Obama’s decision to target their drilling efforts represents a dramatic turn in U.S. policy, risking a future contraction in global oil supplies if Russian companies prove unable to offset declines at their existing fields.

The New Weapon of Choice

As these recent developments indicate, the Obama administration has come to view the oil weapon as a valuable tool of power and influence. It appears, in fact, that Washington may be in the process of replacing the threat of invasion or, as with the Soviet Union in the Cold War era, nuclear attack, as its favored response to what it views as overseas provocation. (Not surprisingly, the Russians look on the Ukrainian crisis, which is taking place on their border, in quite a different light.) Whereas full-scale U.S. military action — that is, anything beyond air strikes, drone attacks, and the sending in of special ops forces — seems unlikely in the current political environment, top officials in the Obama administration clearly believe that oil combat is an effective and acceptable means of coercion — so long, of course, as it remains in American hands.

That Washington is prepared to move in this direction reflects not only the recent surge in U.S. crude oil output, but also a sense that energy, in this time of globalization, constitutes a strategic asset of unparalleled importance. To control oil flows across the planet and deny market access to recalcitrant producers is increasingly a major objective of American foreign policy.

Yet, given Washington’s lack of success when using direct military force in these last years, it remains an open question whether the oil weapon will, in the end, prove any more satisfactory in offering strategic advantage to the United States. The Iranians, for instance, have indeed come to the negotiating table, but a favorable outcome on the nuclear talks there appears increasingly remote; with or without oil, ISIS continues to score battlefield victories; and Moscow displays no inclination to bend on Ukraine. Nonetheless, in the absence of other credible options, President Obama and his key officials seem determined to wield the oil weapon.

As with any application of force, however, use of the oil weapon entails substantial risk. For one thing, despite the rise in domestic crude production, the U.S. will remain dependent on oil imports for the foreseeable future and so could still suffer if other countries were to deny it exports. More significant is the possibility that this new version of the oil wars Washington has been fighting since the 1990s could someday result in a genuine contraction in global supplies, driving prices skyward and so threatening the health of the U.S. economy. And who’s to say that, seeing Washington’s growing reliance on aggressive oil tactics to impose its sway, other countries won’t find their own innovative ways to wield the oil weapon to their advantage and to Washington’s ultimate detriment?

As with the introduction of drones, the United States now enjoys a temporary advantage in energy warfare. By unleashing such weapons on the world, however, it only ensures that others will seek to match our advantage and turn it against us.

Source: Oilprice.com

Blame the environmentalists

Here’s The Script, in four despicable acts:

Act 1. Fracking boom goes bust as production from shale gas and tight oil wells stalls out and lurches into decline.
Act 2. Oil and gas industry loudly blames anti-fracking environmentalists and restrictive regulations.
Act 3. Congress rolls back environmental laws.
Act 4. Loosened regulations do little to boost actual oil and gas production, which continues to tank, but the industry wins the right to exploit marginal resources a little more cheaply than would otherwise have been the case.

You can bet The Script is being written in operational detail right now at corporate headquarters in Oklahoma City and Houston, and in the offices of PR firms in New York and Boston. Each of its elements has the inevitability of events in a Shakespearean tragedy.

It’s fairly clear that the fracking bubble will burst soon—almost certainly within the decade. Our ongoing analysis at Post Carbon Institute documents the high per-well decline rates (a typical well’s production drops 70% during the first year), the high variability of production potential within geological formations being tapped, and the dwindling number of remaining drilling sites in the few “sweet spots” that offer vaguely profitable drilling potential. Meanwhile, as the Energy Information Administration (EIA) has recently documented, the balance sheets of fracking companies are loaded with debt while surprisingly short on profits from sales of product—with real profits coming mostly from sales of assets (drilling leases).

The industry continues to claim that tight oil and shale gas are “game changers” and that these resources will last many decades if not centuries. Though the CEOs of companies engaged in shale gas and tight oil drilling are undoubtedly aware of what’s going on in their own balance sheets, hype is an essential part of their business model—which can be summarized as follows:

Step 1. Borrow money and use it to lease thousands of acres for drilling.
Step 2. Borrow more money and drill as many wells as you can, as quickly as you can.
Step 3. Tell everyone within shouting distance that this is just the beginning of a production boom that will continue for the remainder of our lives and the lives of our children, and that everyone who invests will get rich.
Step 4. Sell drilling leases to other (gullible) companies at a profit, raise funds through Initial Public Offerings or bond sales, and use the proceeds to hide financial losses from your drilling and production operations.

In the financial industry this would be recognized as a variation on the old “pump and dump” scam, yet the US government’s own EIA has just quietly confirmed that this is standard practice in the companies responsible for the “miraculous” US oil and gas renaissance that other departments of government are relying on for job creation projections, future tax revenues, and (reputed) energy export clout in the new cold war against Russia.

The bursting of the fracking bubble will have almost nothing to do with environmentalists, but they have deliberately and courageously put themselves in harm’s way. Fracking has terrible impacts on water, air, soil, human health, the welfare of livestock and wildlife, and the climate.

Hundreds of local anti-fracking groups have sprung up across the country in recent years, often started by ordinary citizens who suddenly found their wells fouled, their livestock sickened, or their children suffering from headaches and nosebleeds as a result of nearby fracking operations. Yet it has often been difficult for environmental scientists to document such impacts, due to deliberate efforts on the part of industry to impede studies and publications (for example, requiring non-disclosure agreements where complaints are met with cash settlements); indeed, industry spokespeople continue to deny that fracking is responsible for any environmental or human health problems. The industry despises environmentalists. But the real motivation for The Script is not petulance or revenge.

No, this is all business. Environmentalists will merely be handy scapegoats. Blaming environmentalists for the bursting of the fracking bubble will divert public attention from the industry’s own bad business practices. But even more usefully, telling receptive members of Congress that falling oil and gas production rates are due to anti-fracking, fear-mongering, business-hating enviros will set the stage for new and powerful calls to roll back local, state, and national regulations. Congress’s likely response: “Poor you! What can we do to help? How about some further exemptions to the Clean Air and Clean Water acts? Maybe a preemption of local fracking ordinances with a new industry-friendly national rule? Would you care for some drilling leases on millions of acres of federal land as an appetizer, while you’re waiting? They’re on the house.”

The industry has a lot to gain by portraying itself as the victim of powerful environmental interests. But will this gambit actually initiate a new round of oil and gas production growth? That’s remotely possible, since there are still billions of tons of low-grade hydrocarbon resources trapped beneath American soil. But don’t count on it. It takes money to drill, even if it’s other people’s money. As the quality of available resources declines, the amount of money needed to yield each new increment of energy from those resources grows. The industry will have to find and persuade a new flock of investors, which is likely to be difficult once shale gas and tight oil production is clearly headed south with an accelerating trend. Carrying loads of debt has been relatively easy due to ultra-low interest rates; if the Federal Reserve decides to let rates drift back upward, this alone could be a stake through the industry’s heart.

One way or another, the current fracking bubble is likely to constitute the last gasp of production growth for US oil and gas. The Script can’t solve all the industry’s problems. But it might yield a few consolation prizes.

What could keep The Script from succeeding? The industry’s PR offensive will be much less effective if mainstream media prominently and repeatedly publish good analyses of what’s going on in the geology of the fracking fields and the balance sheets of the drilling companies; and if public officials understand and talk about the real reasons for the coming stall and drop in US oil and gas production.

Source: postcarbon.org

Fracking associated with human hormone disruption

Many chemicals used in hydraulic fracturing, or fracking, can disrupt not only the human body’s reproductive hormones but also the glucocorticoid and thyroid hormone receptors, which are necessary to maintain good health, a new study finds. The results were presented Monday at the joint meeting of the International Society of Endocrinology and the Endocrine Society: ICE/ENDO 2014 in Chicago.

“Among the chemicals that the fracking industry has reported using most often, all 24 that we have tested block the activity of one or more important hormone receptors,” said the study’s presenting author, Christopher Kassotis, a PhD student at the University of Missouri, Columbia. “The high levels of hormone disruption by endocrine-disrupting chemicals (EDCs) that we measured, have been associated with many poor health outcomes, such as infertility, cancer and birth defects.”

Hydraulic fracturing is the process of injecting numerous chemicals and millions of gallons of water deep underground under high pressure to fracture hard rock and release trapped natural gas and oil. Kassotis said spills of wastewater could contaminate surface and ground water.

In earlier research, this group found that water samples collected from sites with documented fracking spills in Garfield County, Colorado, had moderate to high levels of EDC activity that mimicked or blocked the effects of the female hormones (estrogens) and the male hormones (androgens) in human cells. However, water in areas away from these gas-drilling sites showed little EDC activity on these two reproductive hormones.

The new study extended the analysis to learn whether high-use fracking chemicals changed other key hormone receptors besides the estrogen and androgen receptors. (Receptors are proteins in cells that the hormone binds to in order to perform its function.) Specifically, the researchers also looked at the receptor for a female reproductive hormone, progesterone, as well as those for glucocorticoid—a hormone important to the immune system, which also plays a role in reproduction and fertility—and for thyroid hormone. The latter hormone helps control metabolism, normal brain development and other functions needed for good health.

Among 24 common fracking chemicals that Kassotis and his colleagues repeatedly tested for EDC activity in human cells, 20 blocked the estrogen receptor, preventing estrogen from binding to the receptor and being able to have its natural biological response, he reported. In addition, 17 chemicals inhibited the androgen receptor, 10 hindered the progesterone receptor, 10 blocked the glucocorticoid receptor and 7 inhibited the thyroid hormone receptor.

Kassotis cautioned that they have not measured these chemicals in local water samples, and it is likely that the high chemical concentrations tested would not show up in drinking water near drilling. However, he said mixtures of these chemicals act together to make their hormone-disrupting effects worse than any one chemical alone, and tested drinking water normally contains mixtures of EDCs.

“We don’t know what the adverse health consequences might be in humans and animals exposed to these chemicals,” Kassotis said, “but infants and children would be most vulnerable because they are smaller, and infants lack the ability to break down these chemicals.”

This study received funding from the Passport Foundation Science Innovation Fund, the University of Missouri, and from the Environmental Protection Agency, through a STAR predoctoral fellowship awarded to Kassotis.

Founded in 1916, the Endocrine Society is the world’s oldest, largest and most active organization devoted to research on hormones and the clinical practice of endocrinology. Today, the Endocrine Society’s membership consists of over 17,000 scientists, physicians, educators, nurses and students in more than 100 countries. Society members represent all basic, applied and clinical interests in endocrinology. The Endocrine Society is based in Washington, DC.

Fracking could cause cancer

Shale gas exploration, currently planned in the Karoo, won’t only negatively affect the environment and water resources in that region, but could pose significant health risks to surrounding communities, a Cape Town academic has warned.

These include cancer and the risk of tuberculosis.

Professor Bob Mash, head of family medicine at Stellenbosch University, said while fracking might reduce carbon emissions associated with the use of coal and had substantial economic benefits for the country, the drilling and fracking processes – which released hundreds of harmful chemicals, including silica – not only posed health risks to workers, but to other people as far as 200km away.

South Africa is about to embark on exploratory high-volume hydraulic fracturing to extract huge reserves of natural gas contained in the shale rock.

The government is expected to publish final regulations for hydraulic fracturing, otherwise known as fracking, this month, but President Jacob Zuma has already labelled the development of shale as a “game-changer” for South Africa’s economy.

Writing in the SA Medical Journal, Mash said exposure of workers to silica over long periods not only resulted in lung diseases such as silicosis and TB, but use of potential carcinogens during fracking, such as benzene, cadmium, ethylbenzene, formaldehyde, nickel sulphate and boric acid, could result in the development of various cancers.

Cadmium was linked to lung cancer as well as kidney, breast and prostate cancer while ethylbenzene was a possible carcinogen with links to kidney damage. Formaldehyde was linked to leukaemia and brain tumours.

Mash said no comprehensive health assessments had been done as part of the decision-making up to now, prompting him to call for a precautionary approach to fracking in South Africa.

Exploratory fracking was expected to cover an area of about 200 000km2, including the Karoo, parts of the Free State, Northern Cape, Eastern Cape and portions of KwaZulu-Natal.

“The voice of the health profession should be part of the debate, and a full health assessment is required before companies are given the go-ahead to drill,” Mash said.

Source: IOL

Drill, Baby Drill!

America is poised to displace Saudi Arabia as the world’s top oil producer with fracking. With that could come a hobbling of Opec and unforeseen shifts in US foreign policy.

So rapid has been the change in its energy fortunes that even some experts, as well as policy-makers in Washington, are struggling to keep up. Nor are we just talking oil. So much natural gas is being released by the shale also that for now outlandish quantities of it are simply being burned off into the atmosphere.

Even predicting future oil output isn’t the precise science you’d expect. “We keep raising our forecasts, and we keep underestimating production,” Lejla Alic, an analyst with the International Energy Agency noted recently. Last year US production reached 7.4 million barrels a day, an increase over 2012 of 15.3 per cent. A jump that large hasn’t been seen since 1951. This year the US should produce 8.3 million barrels a day.

Take another indicator – the volumes of crude being moved by trains, often a mile long, from the shale fields to refineries and terminals. In all of 2008, train companies moved 9,500 wagons of the black stuff. Last year, 400,000 of them rumbled across America.

How long America’s shale boom will last is hard to forecast also. In Texas, which on its own is set to increase production to 4 million barrels a day this year, the drilling peak still hasn’t been reached, but it’s the politicians around the world who set the price and make the markets. Increasingly, the decisions that matter will rest with the US, as it adjusts to its new status as a glut producer.

“The United States is now poised to become an energy superpower,” write By Robert D. Blackwill and Meghan O’Sullivan, in the current issue of Foreign Affairs magazine.

The consequences are likely to be far-reaching, notably affording Washington a chance it hasn’t had since the energy crisis of the early 1970s to reassess its relationships with those countries, often ruled by unappetising despotic governments – Saudi Arabia included – on which America has had to depend for so long to feed its fossil fuel needs.

“Since 1971, when US oil production peaked, energy has been construed as a strategic liability for the country, with its ever-growing thirst for reasonably priced fossil fuels sometimes necessitating incongruous alliances and complex obligations abroad,” they write. “That logic has been upended, and the newly unlocked energy is set to boost the US economy and grant Washington newfound leverage around the world.”

Among the determinations Washington must make is whether to overturn a federal law, also dating back to the early ‘70s, that forbids US companies from exporting crude in all but a few circumstances. Full energy independence may still be many years away, but proponents of ending the ban argue it would not only further boost the US economy – fracking added 0.3 per cent to GDP growth last year – but also help America mitigate or even end Opec’s market influence and lessen Russia’s leverage also.

The Russia equation has, thanks to the Crimea crisis, raced to the fore, though it is more about gas from fracking than oil. America will see captured output touch 70 billion cubic feet a day in 2014, reaching over 100 billion cubic feet per day by 2040. In the past days, Bills have been tabled in both houses of Congress demanding that the federal government speed up the granting of licences to companies to export natural gas across the Atlantic precisely to reduce the dependency of Western Europe and Ukraine on Russian supplies.

Among those wading in is House Speaker John Boehner. “The US Department of Energy’s excruciatingly slow approval process amounts to a de facto ban on American natural gas exports that Vladimir Putin has happily exploited to finance his geopolitical goals,” he said in a statement last week.

Building the infrastructure to export quantities needed to alter the energy politics of Europe will take several years. Nor will changes in America’s foreign policy stance because of its newfound oil fortunes become obvious overnight.

Indeed, some experts warn against over-stating the likely effects. “The US has a lot of interest in what’s going on around the world, in the Middle East and elsewhere, regardless of whether it is independent or self-sufficient in fuels,” Adam Sieminski, the administrator of the Energy Information Administration in Washington told the Financial Post. “Those political and economic interests will remain whether we become an exporter or not.”

As vivid as the gas flares in the Texas sky at night, however, is America’s new-found love affair with fracking. Environmentalists warn loudly of water contamination disasters and some home owners speak of being rattled by man-made earthquakes, but there is no giving it up now. It’s a whole different world to 2008, when US oil production was at a historical low and Sarah Palin was drawing liberal ire declaring that “Drill, Baby Drill!” was the answer to all of America’s problems. Suddenly she seems to have been right.

Source: The Independent

Sasol to challenge Shell on Karoo shale gas

South African petrochemicals group Sasol Ltd is keen to invest in a domestic shale industry once it gets off the ground, its chief executive said, in a potential challenge to oil major Royal Dutch Shell.

South Africa’s cabinet proposed new regulations to govern exploration for shale gas late last year after it lifted a 2012 moratorium on the activity in the central Karoo region.

Fracking in the region might tap what is believed to be some of the world’s biggest reserves of the energy source and the government wants to develop an industry that it sees as a potential game-changer in Africa’s largest economy.

“I am very excited because of the technologies we can bring to the table. We’ve got shale gas upstream experience in British Columbia,” Sasol Chief Executive David Constable said on Monday.

“We want to get involved and participate and monetize that gas in country with gas to liquid, gas to power, gas to chemicals,” he said after the group posted a 26 percent rise in half-year earnings.

Shell has applied for an exploration licence and once all of the new regulations are in place it is expected to be near the front of the line.

Constable said Sasol wanted to take part. “We are really interested in what is going in the Shell block and would love to farm in or take a piece of it. Shell is issuing profit warnings and pulling back capex right now,” he said.

Shell said in January that it planned to cut capital spending to $37 billion this year from $46 billion in 2013, following a profit warning.

Shell was not immediately available to comment on Monday.

Constable said the government should take Shell’s strategy into account.

South Africa’s Public Investment Corporation (PIC), which is Sasol’s biggest shareholder with a 13 percent stake in the company and manages 1.4 trillion rand ($130.3 billion) in civil servant retirement funds, has also said it wants a big slice of the shale pie.

Fracking involves pumping pressurised water, chemicals and sand underground to release gas trapped in shale formations and the prospect of it occurring in the semi-arid and sparsely-populated Karoo region, known for its big skies and scenery, has raised concerns anong conservationists.

Constable said Sasol’s experience in British Columbia would enable the company to carry out the process “in an environmentally friendly fashion.”

Source: Reuters

Ukraine signs $10 billion fracking deal with Chevron

Ukraine signed a $10 billion shale gas production-sharing agreement with U.S. Chevron on Tuesday, another step in a drive for more energy independence from Russia.

The deal to develop its western Olesska field followed a similar shale gas agreement with Royal Dutch Shell in January and boosts Ukraine’s leadership at a time of fraught relations with Moscow over gas supplies.

“The agreements with Shell and Chevron … will enable us to have full sufficiency in gas by 2020 and, under an optimistic scenario, even enable us to export energy,” President Viktor Yanukovich told investors shortly before the signing.

The highest end of expectations for Olesska’s potential reserves would match around three years of European Union gas demand, but similarly sunny hopes for shale reserves in neighboring Poland have been very sharply downsized.

Source: Reuters

Fracking sites show increase in infant birth defects

Although fracking already attracts controversy as an allegedly bio-hazardous industry, a new study takes it up a notch by showing that the practice can badly impact the health of unborn children.

Babies still in their mothers’ wombs living within a 10-mile range of fracking wells are in much greater danger of congenital heart defects (CHD) and neural tube defects (NTD). This was surmised in a recent study correlating birth data with geographical locations of gas wells and congenital conditions.

Hydraulic fracking is a process of fracturing rock with the use of pressurized liquid consisting of water, sand and chemicals. It drills deep underground, forming fractures that force gas and other chemicals to come out of rock and into the hole. Proponents believe it is a much more economical way of getting to the gas and oil. Environmental groups maintain the process can cause small earthquakes and badly contaminate water, leading to a myriad of problems.

The study, called “Birth Outcomes and Maternal Residential Proximity to Natural Gas Development in Rural Colorado” comes from the National Institute of Environmental Health Sciences (NIH) and Environmental Health Perspectives (EHP), and explores three variations of birth defects, fetal growth and pre-term birth.

Some of the resulting conditions include endocardial cushion defect, pulmonary valve atresia and stenosis. It also turns out that if a pregnant mother lives within a 10-mile radius, the chances of the baby inheriting CHDs go up by 30 percent.

The Colorado study elicited data from sampling nearly 125,000 births in the period between 1996 and 2009.

“Fracking causes babies to be deformed – the more we learn about fracking, the worse it gets,” Gary Wockner, the director of the Clean Water Action program in Colorado, told environmental business portal Ecowatch.com while commenting on the research.

According to Wockner, this is the first serious study in the Colorado area to actually tackle the effects of fracking on people’s health.

“If you live near a fracking site and you want to have a healthy baby, you should consider moving,” he said.

There are a reported 47,000 gas wells in the state of Colorado. A substantial 26 percent of those are located within a 300 – sometimes as little as 30 – meter radius of any type of living structure.

However, numerous studies have been conducted on the chemicals released through the drilling process. According to the study, natural gas development (NGD) has led to emissions of harmful compounds such as nitrogen dioxide, sulfur dioxide and others substances. They show up everywhere, from wells to any type of receptacle containing water to pipelines and even home taps – basically, any place associated with the process of drilling.

A particular recent example, although not in Colorado, included a North Dakota man literally setting the water coming out of his tap on fire.

Even the less harmful pollutants, according to the study, have the capacity to increase exposure of the unborn fetus to more harmful mutagens.

And as the study concludes, “taken together, our results and current trends in NGD underscore the importance of conducting more comprehensive and rigorous research on the potential health effects of NGD.”

It remains to be seen how fracking in Colorado will be curtailed when the practice of gas drilling provides the state with nearly 44,000 jobs and brings in hundreds of millions of dollars. However, according to The Gazette, drilling keeps moving closer and closer to populated areas than before.

Source: globalresearch.ca

Drought ravages US after fracking

Some of the most drought-ravaged areas of the US are also heavily targeted for oil and gas development using hydraulic fracturing – a practice that exacerbates water shortages – according to a new report.

Three-quarters of the nearly 40,000 oil and gas wells drilled in the US since 2011 were located in areas of the country facing water scarcity, according to research by the Ceres investor network. Over half of those new wells were in areas experiencing drought conditions.

Hydraulic fracturing, or fracking, in those wells required the use of 97 billion gallons of water, Ceres found.

“Hydraulic fracturing is increasing competitive pressures for water in some of the country’s most water-stressed and drought-ridden regions,” said Mindy Lubber, president of the Ceres green investors’ network.

Lubber warned that the fracking boom across the US puts the industry on a “collision course” with other water users.

Fracking is the highly controversial process of injecting water, sand, and various chemicals into layers of rock, in hopes of releasing oil and gas deep underground. Fracking in a single well can take millions of gallons of freshwater. Much of the drilling has occurred in areas mired in multi-year droughts.

Half of the 97 billion gallons of water used since 2011 for fracking have gone to wells in Texas, a state in the midst of a severe, years-long drought. Meanwhile, oil and gas production through fracking is on track to double in the state over the next five years, the Guardian reported.

The report also found that rural communities in the Lone Star State are being hit hard by the fracking bonanza occurring especially in the Eagle Ford Shale in south Texas.

“Shale producers are having significant impacts at the county level, especially in smaller rural counties with limited water infrastructure capacity,” the report said. “With water use requirements for shale producers in the Eagle Ford already high and expected to double in the coming 10 years, these rural counties can expect severe water stress challenges in the years ahead.”

Levels of vital aquifers that serve local communities near Eagle Ford have dropped by up to 300 feet in the last few years.

Many small communities in areas of heavy fracking in Texas are in dire need of water, as supplies have run out in some places or will dry up soon in others. The Texas Commission on Environmental Quality says 29 communities across the state could run out of water in 90 days, and that many reservoirs in west Texas are at around 25 percent capacity.

In December, the San Antonio Express-News found that fracking was using more water than previously thought. The newspaper reported that in 2012, the industry used around 43,770 acre-feet of water in 3,522 Eagle Ford fracking wells – about the same usage of 153,000 San Antonio households.

“The oil and gas boom is requiring more water than we have,” Hugh Fitzsimons, a Dimmit County rancher and a director of the Wintergarden Groundwater Conservation District, told the Express-News. “Period.”

A separate study published this week found that the industry does a very poor job recycling fracking water in Texas. Researchers at the University of Texas’ Bureau of Economic Geology found that 92 percent of water used in 2011 to frack Barnett Shale in north central Texas was “consumed,” and not recycled. Only about five percent of all water used for fracking in that area has been reused or recycled in the “past few years.”

Other states do not fare well in the Ceres report, either. In Colorado, 97 percent of wells were in areas strapped for water, as demand for fracking water in the state is expected to double to six billion gallons – twice the annual use of the city of Boulder – by 2015.

In California, 96 percent of new wells were located in areas where competition for water is high. A drought emergency for the entire state – which has traditionally dealt with water-sharing and access problems – was declared last month.

The report found similar high percentages of wells built in other states – such as New Mexico, Utah and Wyoming – where water shortages exist.

“It’s a wake-up call,” said Prof. James Famiglietti, a hydrologist at the University of California, Irvine, according to the Guardian. “We understand as a country that we need more energy but it is time to have a conversation about what impacts there are, and do our best to try to minimize any damage.”

Source: RT