A cure for the energy crisis - Macleans.ca

A cure for the energy crisis

Shale gas could one day replace coal in power plants and gasoline and diesel for cars and trucks


Getty Images/ MetroWest Newspapers

Mike Markham used to hold a match under his faucet and light the tap water on fire. He’d get a small blue flame or an explosive orange fireball, depending on the day. “I had to check to see if I still had a moustache,” he says. Markham lives on an 80-acre farm in Fort Lupton, Colo. There are about eight natural gas wells within a few miles of his property, which he says are causing methane gas to migrate into his water.

The problem, which also affected about 100 of Markham’s neighbours who get water from the same aquifer, ended this year when the drilling companies changed pipe infrastructure and introduced filters and holding tanks to remove the gas before it entered household sinks. The aquifer is still contaminated, but local concerns about water quality aren’t going to stop the nearby drilling. That’s life on the front lines of what might be the biggest energy revolution in generations.

Fort Lupton is home to a handful of the more than 35,000 drilling operations in the U.S. seeking to extract natural gas from shale rock thousands of metres underground. Like Canada’s oil sands, this gas was once thought too difficult to extract—shale is far less porous than the sandstone and other types of rock from which natural gas is normally harvested. But new drilling techniques are opening up this vast energy supply. There’s thought to be about 14.4 trillion cubic metres of gas available in western Europe, or enough to meet the continent’s needs for about 30 years. The U.S. has a potential supply that could last up to 100 years, and the International Energy Agency estimates that China has a further 26 trillion cubic metres of undeveloped shale gas reserves.

With so much available, major energy companies around the world are racing to start drilling. As Markham’s tap water demonstrates, this carries some big environmental risks, but the upside is too great to ignore. Shale gas could one day lower fuel prices, rein in dependence on foreign oil and shrink carbon emissions. “A few years downstream, maybe in the next decade, there will be an energy shortage,” says Olev Trass, a chemical engineering and applied chemistry professor at the University of Toronto. “Shale gas really gives a respite to this whole crisis.”

The shot that kicked off the shale-gas rush came in the form of advancements in horizontal drilling—where a drill turns sideways after boring vertically—and hydraulic fracturing (fracking), a process that uses millions of gallons of high pressure liquid to expand cracks in rock and allow gas to leech out. The techniques have made deposits once far too expensive to access viable, and have caught the interest of fuel giants like Shell, ExxonMobil, Encana, Statoil, and smaller firms like Denver-based Forest Oil and Calgary-based Talisman Energy, both of whom are drilling on the Utica shale in southern Quebec, which is thought to hold over a trillion cubic metres of gas. Billions of dollars have also been invested in exploration and drilling projects in India, China, Australia, Russia and Germany since the mid 2000s.

Thanks to the new advancements, natural gas could potentially replace coal in power plants and, eventually, gasoline and diesel in vehicles. And it burns much cleaner than oil. “Natural gas produces lower particulate matter—that’s black smoke; it produces fewer hydrocarbons, which cause smog; and it produces a significantly lower amount of greenhouses gases (about 20-30 per cent less than diesel),” says Jonathan Burke, the vice-president of market development at Westport Innovations Inc., a Vancouver-based natural-gas engine manufacturer that’s seen its business grow by 30 per cent every year since it was founded in the mid ’90s. “We’re looking ahead to a world where oil is not our sole transportation fuel.”

The surplus has caused prices to plummet by half since the start of the decade, from US$10 per million BTUs down to about $4 (or from being roughly on par with oil to less than half its price). “When you consider inflation, natural gas is dirt cheap,” says Trass, but still profitable to extract. And the benefits go further than economics. Trass says Russia will have a hard time flexing its muscle by cutting off oil pipelines to Europe if natural gas does become the alternative to crude, while oil-rich nations like Iran may be forced to soften hardline positions as other countries lose interest in foreign imports. But experts also caution that shale gas is not going to end oil addiction. “We’re going to need all the fuels,” says Lorraine Mitchelmore, president of Shell Canada. “It’s not ‘and/or.’ It’s ‘and’—period.”

Mitchelmore says 50 per cent of Shell’s business will stem from natural gas by 2012, and the company just spent $4.7 billion buying East Resources, a private oil company that owns more than a million acres of shale gas properties. But the gas giant isn’t cutting back on oil production. It’s just expanding natural gas production at a faster rate. Plus, demand for oil is still rising and offshore drilling and oil-sands developments will continue to grow. In fact, in Canada, cheaper natural gas is only expected to help oil-sands productivity because it’s used to extract and upgrade bitumen.

Ultimately, natural gas may be a second helping of non-renewable resources to sustain the ravenous human appetite for energy. And even though it may burn cleaner than oil, extracting it from the ground is fraught with environmental risks. “While we have the technology, we might not have the wherewithal to avoid the environmental problems,” says David Burnett, director of technology at the Global Petroleum Research Institute.

It’s expected that 32,000 wells will be drilled annually in the U.S. over the next two years. Each operation needs 11 to 26 million litres of water, which is mixed with toxic chemicals for fracking. On that scale, experts say serious environmental damage is all but inevitable.

“There are always threats to water and other resources. There’s always room for spills. You can’t remove all the risk,” says Stephanie Merrill, project coordinator in water governance with the Conservation Council of New Brunswick, where several companies including Alberta-based PetroWorth Resources Inc. have already drilled 65 wells across about a million acres of land. (The province could hold more than 2.4 trillion cubic metres of shale gas.)

If wells aren’t perfectly constructed, fracking fluid can leach into the earth, and while much of it can be recycled, millions of gallons still need to be dumped underground or in tailing ponds. Fracking also can widen cracks in the ground far away from wells, causing pockets of gas, undrinkable water or salt and other minerals to contaminate aquifers. This is a big problem in areas with water tables supplying millions of people, such as the Marcellus Shale extending through New York, Pennsylvania and West Virginia—one of the largest drilling developments in the U.S. The industry says water wells are not being contaminated by drilling. But it’s difficult to pinpoint blame when fracking’s seismic impact can crack earth miles away. A study by Penn State University examining 200 gas wells found that about eight per cent had contaminated nearby drinking water.

And then there’s communities like Fort Lupton. Colorado regulators say the town’s flaming water is a result of bacteria eating coal deposits and producing methane, but Markham and his neighbours place the blame squarely on drilling. Another drilling project, in Dimock, Penn., caused methane to migrate into a residential well where it detonated, destroying the well and contaminating the water at other houses.

The mad rush to develop shale gas has created an unregulated Wild West atmosphere, say critics. “We do not have the appropriate laws in place to protect public health and safety, and we’re moving too slow to implement them,” says Pennsylvania state Representative Phyllis Mundy, who sponsored a bill calling for a one-year moratorium on drilling in her state.

The U.S. Environmental Protection Agency is conducting a study on the impact of fracking, but it won’t be finished for another two years. In the U.S., there’s no national policy on shale-gas development. And in Canada, where Shell is already producing about six trillion BTUs of shale gas a year and exploration is ongoing in New Brunswick, Alberta, Quebec and B.C., laws vary from province to province, and a debate is raging about what needs to be done to ensure the safety of water supplies. Shell’s Mitchelmore says, “it’s near impossible to hurt the water table, and we think it is impossible with the controls we have in place.”

New Brunswick’s Merrill sees the appeal of developing this local gas industry—it’s a potential boon for provinces with next to no fossil-fuel production. But she wonders if the benefits will outweigh the potential problems. “At the end of the day, if there’s no drinking water or our rivers and streams are dry or contaminated, then there is no community. [People] have to decide if they’re willing to take those risks.”