US Shale Industry: "We Have Seen the Light"

On several occasions, we at Natural Gas for Europe have written that transparency and community engagement is critical for the shale gas industry to have success in Europe. Slowly, it seems to be that industry to taking steps in right direction.

Recently, Exxon's unconventional chief Jack Williams, admitted that the industry in the United States had done a poor job of assuring the public that shale gas can be developed in a safe and responsible manner (Read: We Need To and Will Be Better).

Our thoughts are echoed in the below blog post by our colleague, Steve LeVine at The Oil and the Glory .

Wiil shale gas be a shake or a mere stir?

In Texas, the shale gas industry has banded together to try to halt the terrible PR that threatens it in the United States and elsewhere globally — last Friday, Gov. Rick Perry signed a law requiring industry disclosure of many of the chemicals used to extract the gas. “We have seen the light,” Aubrey McClendon, CEO of Chesapeake Energy and probably the loudest critic of shale gas critics, said earlier this month. Coming in the birthplace and home of modern-day fracking, the move ought to quiet shale gas doubters. Right?

From China to eastern Europe to the United States, shale gas has seemed poised to shake up the economic and geopolitical status quo. It’s seemed clear that this hitherto out-of-reach, relatively clean fuel could help reduce China’s future reliance on choking coal. It could break Russia’s monopoly hold on the natural gas market in some parts of Eastern Europe. As for the United States, a shale gas glut has already much-bettered the prospect of lowering projected emissions of heat-trapping CO2.

Yet there has been popular concern regarding how the gas is extracted. Called hydraulic fracturing, or fracking, the method sends intense jets of a water, sand and chemical mixture into underground shale, thus breaking it up and allowing encased gas to be drawn out. Residents of some communities where the process has been carried out have complained of possible groundwater contamination, air pollution and general disruption.

In response, France has outlawed fracking. So has the city of Pittsburgh. Quebec and the state of New York have issued moratoria. Over the weekend, a group of protesters concluded a month-long march to Montreal seeking to extend Quebec’s moratorium to 20 years. Meanwhile the U.S. Environmental Protection Agency is studying whether fracking should be regulated from Washington.

The Texas law is meant as an attempt to halt the global anti-fracking movement. The open disclosure of fracking chemicals — which industry players have argued are proprietary and necessarily secret — has been seen as a way of demonstrating good faith. Companies would show that they are not poisoning groundwater; next on the agenda could be a convincing demonstration that all companies are building and lining the wells properly — an area in which a couple of bad actors have slipped in Pennsylvania and elsewhere.

Yet one suspects that the Texas law is at least in part an attempt to game the system. The law allows industry players to decline to disclose unspecified chemicals, hence largely undermining the PR benefit of showing one has nothing to hide. You cannot pull just one hand from behind your back and say, “See, no weapons!” One needs to see both. A signal of this gaming is the remarks of Texas’ main oil and gas regulator, Elizabeth Ames Jones, chairwoman of the Texas Railroad Commission. All chemicals won’t be disclosed, Jones said, because “that’s sacred ground as far as I’m concerned, and I don’t think that’s at all the direction we want to go in.”

“Sacred ground”? Actually, it is the direction that you want to go in, that is if the industry wants to fully develop.

The fracking boom has been one matter — though the general process has been around for decades, it’s become a phenomenon only in the last two years or so, so the public is only now scrutinizing it. The arguably more important issue has been the industry’s instinct for retreating into an angry and defensive crouch. A couple of years ago, I myself witnessed McClendon turning purple while sitting in the same room with green-lobbyists who outrageously suggested that he and they join forces in climate-change legislation — he could sell more gas, and they could get coal emissions reduced. Though McClendon is an extreme case, many of the industry’s leaders simply cannot abide such touchy-feely discourse. They get ornery at outsiders suggesting how they should work.

McClendon and the rest of the industry will have to adapt or the shale gas shakeup will be more like a stir.

Source: The Oil and the Glory with thanks to Steve LeVine