The Key Thing Nobody is Saying About Fracking

If natural gas truly is intended to be a “bridge fuel” as renewable electricity generation and storage technology improves, shouldn’t the 60 year supply of natural gas that does not require fracking be enough to fill that role?  

It has become impossible to talk about natural gas in 2013 America without talking about the controversial practice of horizontal-high volume hydraulic fracturing – fracking. Between spokesmen for the gas industry touting gas as the cheap, squeaky-clean “fuel of the future” and Josh Fox broadcasting images of flaming hoses, faucets, and the like to suggest the dangerous implications of gas development, it’s too easy to forget a simple fact.

Two-thirds of American natural gas reserves do not require fracking.

Hose on fire!

The natural gas debate summarized in one misleading image (Or, what happens when you hook your hose up to a gas vent and light it)

The Energy Information Agency (EIA) says that the United States has 97 trillion cubic feet (tcf) of proven, recoverable shale gas. That’s the type that you need to frack. The type that requires a drill to go through about 3000 feet before turning sideways, blasting apart the bedrock, flushing it all with water, sand, and chemicals, and collecting the resulting product. That gas has been associated with a number of dangers: earthquakes caused by the high-pressure lubrication of the bedrock, water contamination caused by faulty cement casings, and the leakage of methane, a greenhouse gas far more potent than carbon dioxide, to name a few. There’s no reason to suggest that these problems can’t be alleviated by proper regulation and oversight. But is the risk even necessary? Continue reading

Bubbles in the Ground: Is Natural Gas Too Cheap and Does Fracking Make Money?

Key Takeaways:

  • Gas companies have sunk large amounts of money into shale gas production
  • Current market prices are too low and will likely rise in the near future
  • Most US Natural gas reserves will not require fracking

I recently came across a blog post by a man named Mark Anthony arguing that natural gas produced is substantially underpriced in the United States, and that the companies producing it are carrying huge debt burdens relative to the value of this gas.

If his data are correct, then the actual cost of natural gas should be significantly higher than it is. He tallies debts of $500 billion from selected natural gas companies and the majors against production of 23 TCF of shale gas. This produces a debt load of $21.32 per million BTUs of shale gas produced so far – much, much higher than a price that has hovered between $3 and $4/MMBtu. Combined with the fact that the number of new wells drilled for fracking has plateaued, this would be terrible news for the companies. In his words:

The shale gas is neither cheap nor abundant…had gas prices been $2/mmBtu or $3/mmBtu higher, the industry would have taken home $46B or $69B more revenue. It would not have made a difference in the industry’s $500B collective debts.

What would you think if the US coal sector had accumulated half a trillion dollars of debts after producing coal for two decades? Patriot Coal went bankrupt for a mere $600M of debts, not $600B. I foresee a looming debt crisis of the NG industry. The debts must be resolved in one of two ways. Either NG prices go to ridiculous high levels and stay there sustainable, so the industry makes enough profits to pay off the debts before the gas runs out. If that does not happen, then many NG producers and banks in the shale business will go belly up.

Since there is such a huge discrepancy between the debt load and the market price, and since he did not source his data, I decided to attempt to reproduce his results myself. His production numbers were from 2011; by 2012 United States shale gas production totaled 32.75 trillion cubic feet, for an approximate revenue at $3.50 per million Btu of $117 billion.

Source: EIA

Source: EIA

So far, this is far below Anthony’s stated debt. But it turns out that his debt numbers were overstated by an average of 100 percent per company, excluding the majors (Exxon, Chevron, and company), which he lumped together. Continue reading

Laying Pipe in Addison County

This week, President of the College Ronald D. Liebowitz released a statement reiterating the College’s support for the Vermont Gas pipeline. This comes in the face of motivated and organized student and community opposition that has made its presence well known over the last few weeks. This decision repudiates the state’s ban on hydraulic fracturing by supporting a pipeline that will carry natural gas produced by the process across Vermont. It is also the right thing to do; it is the right thing for Middlebury College, the town of Middlebury and the state of Vermont.

I could spend pages debating the merits of fracking. It has become a dirty word within the environmental movement, and it is an undeniable fact that fracking has an environmental impact. Yet the severity of that impact has been overstated. Natural gas has replaced coal as the go-to method of electrical generation in the United States. This is a step forward; natural gas contains half the carbon dioxide and none of the particulate emissions of coal. Natural gas extraction, through hydraulic fracturing or any other means, has less of an impact on the landscape than the strip mining and mountaintop removal used to produce coal.

In this case, the gas delivered by the pipeline would mainly replace the fuel oil and propane that Vermont residents use to heat their homes. The process of producing either of these is no less fraught with pollution and environmental degradation than fracking. Propane is a byproduct of — surprise — natural gas or petroleum refining. Fuel oil is a similar, dirty leftover of this process. As conventional sources of oil disappear, oil companies increasingly turn to oil sand and oil shale. I don’t need to sell anybody at Middlebury on the harms of oil sand extraction, and oil from shale is produced by a mechanism similar to fracking for natural gas. Whether or not Addison County allows the pipeline, then, its residents will rely on the byproducts of the technological achievement that is fuel extraction through hydraulic fracturing. Continue reading

Middlebury Reaffirms Pipeline Support

Middlebury College President Ron Liebowitz has released a new statement reaffirming the College’s support of the VT Gas pipeline in light of an SGA resolution and a petition created by students asking that the college withdraw its support. The statement focuses on the economic impact of the pipeline. For curious parties without a Middlebury email account, I’m reproducing it here:  Continue reading

In Which I Get Public Fan Mail

A pair of Middlebury students – Anna Shireman-Grabowski ‘15.5 and Cailey Cron ‘13.5 – took the time this week to write a personal letter attempting to refute my analysis of the VT Gas pipeline project in the pages of The Campus. While I appreciate the gesture, they missed the larger point of my piece: that the pipeline will help real people and that benefits of this pipeline are greater than the cost. Unfortunately, they mostly ignored these larger issues and spent much of their piece instead accusing me of journalistic malpractice. The great thing about having a blog is that I can go through their letter point-by-point and defend myself while pointing out the serious holes in their logic. So get comfortable; here we go:

We wish to address serious factual inaccuracies in Zach Drennen’s April 25 column “Middlebury Finds a New Pipeline to Protest.” First, a clarification of terms: Zach, you mislead readers by describing the product transported by this pipeline as “natural gas.” Conventionally drilled natural gas is not without its own problems, but fracked gas, which this pipeline will carry, poses even more serious concerns.

I do not mislead my readers because the pipeline will, in fact carry natural gas. They’re taking a calculated gamble here by pretending that they support real natural gas but are most concerned about fracking – and that you will be too. But here’s why you shouldn’t: fracking is not nearly as bad as innacurate but powerful portrayals like Josh Fox’s Gasland might lead you to believe. And even if you do believe Fox’s perspective, it’s better than the mountain top removal used for coal mining, and the final product is both cleaner and cheaper than coal. Continue reading