(John Kemp is a Reuters market analyst. The views expressed are
By John Kemp
LONDON Feb 6 Fracturing oil and gas from
tight rock formations promises secure energy supplies for
generations, but only if industry and regulators can convince
voters it can be done safely without poisoning water supplies or
adding to global warming.
Like other forms of petroleum production, and innovative
technologies such as liquefied natural gas and nuclear, shale
gas and oil need a political "licence to operate". The
still-born nuclear industry shows what happens when industry and
regulators fail to win the public argument over safety and
Hydraulic fracturing has already unleashed a storm of
protest threatening the technology's viability. Critics point to
the enormous amount of water used, stressing supplies for
households and farming, the potential for cancer-causing
chemicals to seep into freshwater aquifers, risk of earthquakes,
and the enormous number of truck movements disrupting local
communities, not to mention the impact on global warming.
Josh Fox's 2010 film "Gasland" showing images of households
able to set fire to tap water containing methane and the recent
outcry over possible contamination of drinking water supplies at
Pavillion in Wyoming illustrate the concerns.
Now regulators and industry are starting to push back to
ensure exploitation of tight gas and oil formations is not
blocked by environmental and safety fears.
So far, the transformative potential of shale gas and tight
oil has won over most regulators, politicians and voters;
environmental concerns have been relegated to the background.
Money talks. And the need for secure energy supplies is too
important to ignore.
France, Bulgaria and some U.S. states have enacted bans or
moratoriums on fracking. But the technology has won indirect
endorsement from President Barack Obama and many other senior
policymakers are quietly embracing it.
Even environmental groups are hesitating about whether to
reject the technology outright.
"We all want American energy independence, but we have to do
it right ... much more needs to be done to protect our
communities and our environment," according to a blog post by
Natural Resources Defense Council President Frances Beinecke
("Obama calls for more clean energy and smart safeguards on
domestic drilling", Jan 25).
"We need to hold the industry to safety standards, set
sensitive places off limits, and keep contaminants out of our
air and water. Only government safeguards can achieve those
protections. Industry has already proven that it will not police
itself," Beinecke wrote.
Nonetheless, policymakers and the industry are taking no
chances. A huge confidence-building exercise is underway at
national, regional and international levels to assure voters
fracking can be done safely, without harming communities and
sensitive landscapes, and without adding to the greenhouse
DON'T USE THE F-WORD
The first stage is to reframe the issue. With all its
connotations of earthquakes and toxic chemicals, fracking is
increasingly the technology that dare not speak its name. Obama
has been careful to avoid referring to it directly.
Speaking in Nevada on Jan 26 on "American-made energy", the
president would say only "because of new technologies, because
we can now access natural gas that we couldn't access before in
an economic way, we've got a supply of natural gas under our
feet that can last America nearly a hundred years".
In his State of the Union address, the president referred to
"technologies to extract all this natural gas out of shale
If fracking has negative connotations, shale gas is more
neutral, and "new technologies" has a positive ring that is
increasingly favoured by the administration and governments in
other countries. Fracking is out. Shale gas and unconventional
supplies are in.
STRESS THE SAFEGUARDS
Obama has stressed the importance of developing shale gas
safely. "We will develop this resources without putting the
health and safety of our citizens at risk," the president
insisted in his address. He promised companies drilling on
public lands would be forced to disclose publicly the chemicals
Regulators and industry appear to be reaching a consensus on
safeguards to reassure voters the technology is safe.
"If [shale gas, tight oil, deepwater offshore and oil sands]
are to be available and economic for development, continuous
attention to reducing risks is essential to ensure pollution
prevention, public safety and health, and environmental
protection. These outcomes are important in their own right but
also in order to enjoy access to the resources for extraction,"
wrote the U.S. National Petroleum Council ("Prudent Development:
Realising the potential of North America's abundant natural gas
and oil resources", Sep 2011).
Royal Dutch Shell Chief Executive Peter Voser has
acknowledged the industry must be more open about its operations
- for example dropping its insistence the constituents of
fracking cocktails were commercially confidential ("Shell
targets North American tight oil", Sep 22, Financial Times).
The U.S. Environmental Protection Agency is studying the
environmental impact of fracturing, and the European Union has
commissioned its own study of the current safeguards surrounding
The EU report concluded "neither on the European level nor
on the national level have we noticed significant gaps in the
current legislative framework when it comes to regulating the
current level of shale gas activities...the activities relating
to exploration/exploitation of shale gas are already subject to
EU and national laws and regulations" including directives on
drinking water and chemicals ("Final Report on Unconventional
Gas in Europe", Nov 2011).
Nonetheless, the International Energy Agency (IEA) has
convened a meeting in March to discuss shale safeguards and
plans to publish "golden rules for the gold age of gas" in May,
the agency's chief economist Fatih Birol told reporters at the
World Economic Forum in Davos.
The agency's report to the G20 will make recommendations for
governments, regulators and the industry. "The good news is that
(problems with drinking water and chemicals) can be addressed by
best technologies and practices," according to Birol.
The emphasis on sharing and enforcing best practice is in
line with the industry's own thinking and is unlikely to change
practices much. A cynical observer might conclude this rush of
studies and initiatives are less about developing new
restrictions and are more of an assurance exercise to reinforce
public confidence in existing safeguards by giving them
increasingly high-level endorsement.
GAS CLEANER THAN COAL
Fracking advocates must still tackle concerns about the
global-warming potential of extracting all that extra gas and
Here regulators and the industry are increasingly making
twin environmental and national-security arguments: (1)
cleaner-burning gas will increasingly displace dirty coal in
power generation with a fraction of the carbon emissions; and
(2) domestic gas and oil will displace reliance on unreliable
oil imports from unstable countries.
Obama encapsulated the arguments with his usual rhetorical
brilliance "We've got to keep at it. We've got to take advantage
of this incredible natural resource. And think about what could
happen if we do. Think about an America where more cars and
trucks are running on domestic natural gas than on foreign oil."
He went on to observe "And by the way, natural gas burns
cleaner than oil does, so it's also potentially good for our
environment as we make this shift."
The claim clean gas will displace coal is one reason why the
president is more comfortable talking about the impact of new
technology drilling for gas, and has been much quieter about the
potential for fracking to unlock new oil reserves.
Whether this is all enough to make widespread fracking
politically and socially acceptable is unclear. But most
governments and the industry are pulling out all the stops to
win acceptance for the most promising hydrocarbon technology to
emerge in the last few decades and ensure it does not go the way
of the nuclear industry.
(Editing by Anthony Barker)