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Friday, July 6, 2012

China’s shale boom may depend on Pennsylvania

China is the world’s second largest economy with a voracious thirst for energy.  Its embrace of shale gas may depend upon how the gas industry behaves in the United States – and in particular, in the “Saudi Arabia of natural gas” – Pennsylvania.

Why? Because of the problems and the players.

Environmental impact has complicated shale gas development in China.  Water shortages are already a challenge.  Even though China’s environmental regulators are relatively weak and underfunded, China may prove to be to be stricter on water issues than U.S. regulators; the government has a history of shutting down factories or forbidding certain production practices because they use or contaminate too much water. Air pollution, already severe in China, is another complicating factor for gas production.

And then there are the players.  China’s major state-owned energy companies are new to the shale gas industry, so they are teaming up with major international companies for shale gas exploration: Chevron, Shell, BP, EOG Resources, Newfield Exploration, ConocoPhillips, Schlumberger, and Baker Hughes.  All of those companies are active in the Keystone State.  So, the industry’s performance here – particularly its consumption of water and its potential for pollution through leaks and spills (and perhaps - or not - from fracking itself) – will be closely scrutinized by Chinese officials.

What happens in Penn’s Woods does not stay here, as evidenced by the global attention being paid to how Marcellus Shale development unfolds here.  Smart gas industry players will apply that lesson and benefit our environment and their bottom lines.

Monday, July 2, 2012

Fracking curtailed because of drought - preview of coming attractions?

For the second time this year, the Susquehanna River Basin Commission (SRBC) has ordered gas drilling (and other) companies to suspend their withdrawals of water from tributaries of the Susquehanna River.  In Texas, the worst drought since record-keeping began 116 years ago has crimped gas drilling as water supplies have been rationed. Concern about fracking’s thirst is becoming a global issue.  And with water cycle intensification also happening globally, it’s all bound to get worse for drillers (and energy producers generally).

The gas industry is working to reduce its water consumption, mainly through recycling. In Pennsylvania, acid mine drainage is being eyed as an alternative water source.  Where conditons dictate, alternative fracking methods are being tried.  Waterless fracking using propane gel is in limited use.  CO2 fracking has been tried in Ohio.  Nitrogen has been used to frack wells in Kentucky and Tennessee. 

Those alternatives to water-based hydraulic fracturing have environmental advantages, but do not necessarily avoid all of the problems associated with wastewater or produced water disposal. 

Water supplies may trump all.  Fracking is a truly consumptive use of water, and more research on its impacts is needed.  But the emerging realities of climate disruption may force the gas industry to turn to alternatives.