Discussion - Oil & Gas

DISCUSSION: How will the fracking wars end?

Fracking is not a new technology, but the technological advances that have expanded its application to vast, previously unrecoverable reserves, have exposed it to significant new scrutiny. Since 2005, shale gas production has already reached 23% of United States total gas production, and that number is projected to continue to increase to 49% by 2035.

Concerns about the environmental impacts of fracking are much discussed. Consternation focuses in particular on the hydraulic fluid pumped into wells—a potential threat to drinking water supplies if it leaks or leeches. In 2012 alone 280 billion gallons of waste-water were generated.

This worry has prompted efforts to see fracking regulated or banned. At a Federal level, fracking is exempt from the requirements of the Safe Water Drinking Act, so movement against the industry have focused on state legislators. The result is a fragmented mix of approaches. Disclosure requirements (particularly relating to chemical use), restrictions on siting and access provisions all differ significantly by State (Figure 1).

Figure 1: Overview of requirements per US state to disclose chemical mix by drillers

Figure 1: Overview of requirements per US state to disclose chemical mix by drillers

Different approaches are evolving internationally too. Across the Atlantic hydraulic fracking is completely banned in France, while in China a goal has been set to meet ten percent of the country’s energy needs from shale gas by 2020.

DISCUSSION: Clearly, many continue to disagree on the best course for fracking in the United States and abroad. What are the future developments in this topic that will inform the debate one way or another? Is it conceivable that the proponents or opponents of fracking will gain a comprehensive victory, or will the development of fracking continue in its current piecemeal trajectory?

 Written by : Daniel Clifton/ Edited by: Celine Rottier

  1. http://www.slate.com/articles/health_and_science/climate_desk/2012/08/fracking_laws_by_state_wastewater_notifications_and_chemical_mixes.html
  2. http://www.huffingtonpost.com/2013/10/11/fracking-by-the-numbers-report_n_4037295.html
  3. http://thediplomat.com/2013/03/the-fracking-revolution-comes-to-china/
  4. http://www.environmentamerica.org/sites/environment/files/reports/EA_FrackingNumbers_scrn.pdf


7 replies »

  1. Thanks for that succinct breakdown on fracking regulation, very helpful.

    The development of fracking will continue in its current piecemeal trajectory for so long as natural gas is offsetting coal. The proponents of fracking typically argue that the environmental cost of fracked natural gas is minimal when compared to coal. The opponents of fracking typically argue that natural gas is more detrimental or on par with coal.

    Practically, in the near term, the real question is the choice between fracked gas and dirty coal. For so long as this question remains, there will not be serious movement on this question. The political environment on the federal level will not allow for a reversal of the exemption that fracking enjoys from the Safe Water Drinking Act any time soon. This means that fracking regulation will remain on the state level for the foreseeable future and therefore there will be no sweeping nation-wide changes on the issue. Each side will have its minor wins (and setbacks), such as finding some a water well that has been contaminated by frac-fluids or a new report that methane leakage is lower than had been previously estimated. However, these wins (and losses) will not significantly inform the debate one way or the other.

    Only when there is a fundamental shift in the energy landscape will this debate get really interesting and are we likely to see serious movement on the issue. An interesting item to look out for is that point in the future when fracked gas is forced to compete with large scale electricity generation that is cleaner and cheaper than coal (ie. renewables).

    • “there will be no sweeping nation-wide changes on the issue.”

      I believe that this only holds under the assumption that there are no major “fracking incidents”. The picture could change very rapidly, as we have seen with the GOM, if any incident occurred.

      • The GOM drilling moratorium was issued on the federal level by the Dept. of Interior (no state or congressional involvement). Fracking regulations would require either state-by-state or congressional action, much more difficult to coordinate and less likely to succeed on a national level.

        Another item to consider is that we have seen other disasters (crude-by-rail) that do lend themselves to federal regulation (DOT/Federal Railroad Administration has jurisdiction) and even there, little has been done.

        Celine, what type of “fracking incidents” do you envision could change the picture?

  2. Hi Chaim,

    I’m inclined to agree with all of your analysis! Your characterisation of a “fundamental shift in the energy landscape” raises a couple of interesting questions for me. Namely:

    1. What could be the tipping factors for such a shift? (I wonder, for instance, what the impact of potential LNG exports has on this issue. If gas is headed for export, then the comparison to local alternative energy production options is no longer as pertinent)

    2. Given the impact that natural gas is having on electricity prices, how quickly will renewables be cost-competitive with it? Would cost-parity even matter given the other differences between these generation options (i.e. flexibility of location, intermittency, dispatchability)

    • Thanks, Daniel.

      The fundamental shift to which I was referring is more to the tune of a breakthrough in renewable energy production and storage technology (must be readily and easily deployable). I imagine that the place that we are most likely to see this sort of breakthrough is solar. If abundant clean energy can be produced at lower LCOE than from conventional sources, the US will have the luxury of regulating fracking, coal and petroleum in such a way that is impossible today (and may even take that liberty).

      With regards to LNG exports, the amounts that will be exported are likely to be limited by both federal permitting and global LNG market appetite (meaning that the lion’s share will be left for US consumption and the US energy landscape will not be significantly altered).

      As far as the question of when renewables will begin to compete with natural gas at scale; that will depend on breakthroughs that can be predicted with the same amount of ease as predicting the shale energy boom of recent years. Solving issues related to intermittency, dispatchability, flexibility of location, storage, and efficiency will be dependent on continuing technological R&D that I can hardly predict.

  3. I believe that although the environmental risks of tracking are latent and exists, fracking will continue to develop and expand not only in the US but also globally. To address one issue regarding the impact of the fluids, companies are already innovating and developing a generation of fluids that are environmental-friendly. For instance, in the case of the EU, such innovation could be the deal breaker to open the market and improve along side the public opinion on fracking.

    For more about this innovation, please direct to an article recently published in the Financial Times.


  4. One thing to remember is that national policy isn’t all that important here, given how concentrated the production is – basically Marcellus, Haynesville, Eagle Ford, and Bakken. A single state changing its policy (such as Pennsylvania’s recent granting of local say over fracking rules http://tinyurl.com/l8c8ph7 ) could have major impacts.

    Other issues, such as local air quality are rising (Texas for example – http://tinyurl.com/ky6jzv3 ). And more repercussions will follow.

    And to Middoni’s point, public sentiment is a double-edged sword, and I think right now the sentiment is positive in the US – which gives it a downside bias.

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