Shale Gas

Memorandum submitted by the Tyndall Centre (SG 12)

Executive Summary

This report outlines both local pollution-related and global climate-related issues that collectively raise serious concerns about the use of shale gas in the UK. The former leaves little doubt that in the absence of a much improved understanding of the extraction process shale gas should not be exploited within the UK. The later suggests a more categorical conclusion that in an energy hungry world another fossil fuel will only lead to additional emissions and consequently must not be exploited if we are to meet existing climate change commitments.

· Shale gas exploitation gives rise to a range of environmental risks and hazards that have led New York State to impose a moratorium on hydraulic fracturing whilst it awaits the findings of a US EPA investigation. The main issues being considered by the EPA, and which will be equally if not more, important in the UK, are:

o High levels of water consumption necessary for hydraulic fracturing operations;

o Groundwater pollution following catastrophic failure or loss of integrity of the wellbore, or if contaminants travel from the target fracture through subsurface pathways;

o Surface pollution via leaks and spills of various contaminants held on a site;

o Noise from drilling;

o Traffic associated with construction;

o Landscape impacts of individual sites and the combined impact of sites across the country.

· The exploitation of shale gas will, in an energy hungry world, lead to an increase in carbon emissions at a time when a rapid reduction is required. There is little evidence that shale gas has played or will play a role as a transition fuel in the move to a low carbon economy and its development seriously risks directing investment away from genuine low carbon technologies. While shale gas use in the UK may not increase overall UK emissions it must be viewed in relation to impacts on global energy use and emissions. In this regard, if the UK Government is serious about avoiding dangerous climate change, the only safe place for shale gas remains in the ground.

· The extraction of shale gas is likely to release higher levels of greenhouse gases per unit of gas produced than does the extraction of conventional gas. These additional emissions are relatively small compared to overall emissions associated with combustion, however additional fugitive emissions may arise but these cannot be quantified at this time.

Introduction

1. With conventional natural gas reserves declining globally shale gas is increasingly portrayed as a potentially significant and beneficial new source of ‘unconventional gas’. In the United States production of shale gas has expanded from around 7.6billion cubic metres (bcm) in 1990 (or 1.4% of total US gas supply) to around 93bcm (14.3% of total US gas supply) in 2009 (EIA, 2010b).

2. This new availability of shale gas in the US (and potentially elsewhere) has led to huge interest in its potential. Arguments have been made about the impact on energy security and the potential for shale gas could, in principle, be used to substitute more carbon intensive fuels such as coal in electricity generation.

3. Whether shale gas is able to provide such benefits depends on a number of factors including: the greenhouse gas (GHG) intensity of the novel extraction process required in the production of shale gas: the potential impact of shale gas exploitation on carbon emissions; and the environmental risks and hazards associated with drilling and production. It is these three areas that are the focus of this submission,

What are the prospects for shale gas in the UK?

4. Prospects of shale gas in the UK will depend on the right combination of shale type, total organic content (TOC), maturity, permeability, porosity, gas saturation and formation fracturing and in addition, the right market conditions and economic incentives. Shale deposits on a global level are not a new source of gas and have been evaluated since the early 1980’s and produced with commercial viability in North America since the 1990’s (Verma et al, 2001). To assess the prospects for shale gas in the UK it will be necessary to understand what factors have a role in developing sustainable reservoirs internationally and indeed if the same resources and conditions are present in the UK. Prospects will require the right combination of "shale type, total organic content (TOC), maturity, permeability, porosity, gas saturation and formation fracturing" (Boyer et al, 2006). Equally important will be the right market conditions and economic incentives for commercial viability. Security of supply and the impact on the environment should be an integral part of any cost-benefit analysis and the latter will be the focus of this report.

5. The shale potential in the UK is not known and the only way to quantify the potential of a shale gas reservoir in terms of its producibility is to drill, core, fracture and then test the "play". According to the British Geological Survey (BGS, 2011), the UK has abundant shales at depth but their distribution and gas potential is not well known. The methodologies employed in assessing deposits such as shale gas are very different to those currently used for conventional accumulations. Traditional petrophysical well evaluation can only provide a limited means of making an assessment of the accumulations (Geny, 2010) and it is widely recognised that there is currently no way of quantifying the potential of a shale gas reservoir in terms of its producibility other than to drill, core, fracture and then test the "play".

6. The success of the Bowland shale near Blackpool will not be openly available for another four years. The first well drilled specifically to assess shale gas in the UK by Cuadrilla Resources, in the Bowland shale near Blackpool, is only due to be tested in January 2011, the results of which will not be openly available for another four years due to licensing agreements. Further ongoing preliminary exploration of deposits with a view to further development and known activity in the UK are summarised in Appendix 1.

7. The onshore shale gas potential of 150bcm stated in the DECC report could over-predict reserves due to the Barnett shale in the US (which was used for the analogy) being an above-average producer due to its low clay content facilitating fracture stimulation important to the producibility of a shale reservoir. Equally, it may underestimate the true reserves and more shale gas accumulations may be discovered in time. Attempts have been made at producing theoretical estimates of the shale rock volume across the UK to provide an indicator of the potential resources. According to the December 2010 report by BGS on behalf of the UK Department of Energy and Climate Change (DECC, 2010a), "the UK shale gas industry is in its infancy, and ahead of drilling, fracture stimulation and testing there are no reliable indicators of potential productivity". Applying some assumptions and applying analogies with similar producing shale gas plays in America, however, BGS estimates that UK shale gas reserve potential could be as large as 150 billion cubic meters (bcm). BGS acknowledge that the figure may be inaccurate due to the Barnett shale in the US (which was used for the analogy) being an above-average producer due to its low clay content facilitating fracture stimulation important to the producibility of a shale reservoir (Leonard et al, 2007). Equally, it may underestimate the true reserves and more shale gas accumulations may be discovered in time, as well as the techniques for making estimates developing through experience as has happened with oil & gas reserves in the UK since exploration began.

8. The UK onshore shale gas potential of 150bcm would increase proven reserve levels by just over 50%. However, at the current levels of UK consumption this represents only 2.5 years of current supply production as a standalone resource. Taking the DECC estimates of 150 bcm and putting them into the context of current UK gas supply (BP, 2010) provides a general picture of the limited impact on supply that shale gas might have. There has been a decline in conventional gas production in the last decade in the UK, with only 59.6 BCM being produced in 2009 in comparison to 102.9 bcm in 2003. Additionally, with only a marginal decrease in demand, this has resulted in an increase in imports over the same period. The UK has proven gas reserves of 290 bcm which has also declined from 910 bcm in 2003 (BP, 2010). On a national level the DECC estimate of 150 bcm of shale gas reserves would increase the proven reserves level by just over 50%, but at current levels of UK consumption this represents only 2.5 years of supply as a standalone resource. As the 6th largest consumer of gas in the world, the UK has a clearly unsustainable demand without assistance from imported supplies, or supplies from alternative sources. Onshore shale gas would only provide a short-term supplementary supply using current estimates of resources.

9. In terms of UK offshore potential, the costs associated with drilling a high density of directional wells and subsequent well stimulations would make such projects economically unviable at current market prices. There is little coverage within the current literature or the DECC (2010a) report discussing the prospects for offshore shale gas in the UK, although its existence is recognised by the DECC stating "Much larger areas are prospective offshore for shale gas, and some of these might be accessible by extended reach drilling" in reference to the US. The costs associated with drilling a high density of directional wells offshore and subsequent well stimulations would make such projects economically unviable at current market prices. Additionally, there could be more potential environmental impacts associated with such exploration. However, in relation to the UK it should be noted that over the last 10 years 99.8% of all gas production has come from offshore wells and of the 3314 wells drilled, only 299 of these were on land [1] (DECC, 2009). It is highly probable that large volumes of shale gas exist in these generally deeper accumulations.

What are the implications of large discoveries of shale gas around the world for UK energy and climate change policy?

10. As efforts begin to exploit shale gas outside of the US it is important to better understand impacts this may have on CO2 emissions and efforts to minimise impacts of climate change. To do this we have developed two sets of scenarios, one for the UK and one for the World.

11. There is little to suggest that shale gas will play a key role as a transition fuel in the move to a low carbon economy. There is little evidence from data on the US that shale gas is currently, or expected to, substitute, at any significant level for coal. Projections suggest it will continue to be used in addition to coal in order to satisfy increasing energy demand. The importance of transitional fuels is often overstated, for example, in the International Energy Agency Blue Map scenario (50% reduction in global emissions by 2050), power generation efficiency and fuel switching accounts for only 5% of required emission reductions (IEA, 2010). If carbon emissions are to reduce in line with the Copenhagen Accord’s commitment to 2°C, urgent decarbonisation of electricity supply is required. Given shale gas is yet to be exploited commercially outside the US, it is unlikely to have a major role to play even with respect to national emission reductions. If reserves were exploited in time, shale gas would still only be a low-carbon fuel source if allied with, as yet unproven, carbon capture and storage technologies. If a meaningful global carbon cap was established then the impact of a price of carbon could facilitate some substitution of coal for shale gas in industrialising (non-Annex 1) countries.

12. Without a meaningful cap on emissions of global GHGs, the exploitation of shale gas is likely to increase net carbon emissions. In an energy-hungry world, where GDP growth continues to dominate political agendas and no effective and stringent constraint on total global carbon emissions is in place, the exploitation of an additional fossil fuel resource will likely increase energy use and associated emissions. Possible implications were examined through three global scenarios for shale gas exploitation. The starting point was an estimate for the global reserves of shale gas provided by the US National Petroleum Council (NPC, 2007). Three scenarios were developed assuming differing proportions of the total resource are exploited (10, 20 and 40%). Making a further assumption that 50% of this available resource was exploited by 2050, these scenarios give additional cumulative emissions associated with the shale gas of 46-183GTCO2, resulting in an additional atmospheric concentration of CO2 of 3-11ppmv by 2050. Given current growth in energy use it is very possible that exploitation could be more rapid and that these figures would increase accordingly. This will further reduce any slim possibility of maintaining global temperature changes at or below 2°C and thereby increase the risk of entering a period of ‘dangerous climate change’.

13. Carbon budgets should ensure that shale gas use in the UK should not add to UK emissions, however, it may put pressure on efforts to stick to these budgets and could have implications for global emissions. To better understand the potential implications of shale gas production in the UK, four scenarios were developed. Two assumed the amount of shale gas produced correlates with the figure provided in DECC (2010a) – 150bcm; and two assumed an amount double this. For both the 150 and 300 bcm scenarios two different rates of extraction were used; one based on a Hubbert type curve (a bell curve) that is often used as an approximation for resource extraction; the other based on the (highly uncertain) growth rates that are predicted for the US by the EIA (e.g. EIA, 2010). All four scenarios see the majority of shale gas being exploited before 2050 and the cumulative emissions associated with the use of this shale gas ranged from 284-609 MTCO2. To give this some context this amounts to between ~2-4.3% of the total emissions for the UK under the UK Domestic Action budget outlined in CCC (2010). Assuming that the carbon budget is adhered to then this should not result in additional emissions in the UK. For example, it is possible that UK produced shale gas could substitute for some imported gas. However, it is also possible that extracting additional fossil fuel resources could put pressure in efforts to adhere to our carbon budget by reducing gas process and directing investment away from renewable energy. It is also important to note that in a market led global energy system where energy demand worldwide is growing rapidly, even if shale gas were to substitute for imported gas in the UK, leading to no rise in emissions, it is likely that this gas would just be used elsewhere, resulting in a global increase in emissions.

14. Rapid carbon reductions require major investment in zero-carbon technologies and this could be delayed by exploitation of shale gas. The investment required to exploit shale gas will be substantial. In relation to reducing carbon emissions this investment would be much more effective if targeted at genuinely zero- (or very low) carbon technologies. If money is invested in shale gas then there is a real risk that this could delay the development and deployment of such technologies.

What are the risks and hazards associated with drilling for shale gas?

15. The processes and operations involved in the extraction of shale gas from wells are not without their human health and environmental implications and these have risen in prominence in the US and are now the subject of USEPA investigations.

16. When considering densely populated countries such as the UK, potential risks and hazards of drilling shale gas cover a wide range of environmental impacts including groundwater pollution, surface pollution, water consumption, noise pollution, traffic and landscape impacts. The ‘novel’ risks associated with hydraulic fracturing of wells are not the only potential drawback of shale exploration, particularly when considering relatively highly populated countries such as the UK. More ‘run of the mill’ impacts such as vehicle movements, landscape, noise and water consumption may also be of significant concern locally and more generally, especially, when one considers the scale of development required to deliver significant supplies to the UK.

17. To sustain production levels equivalent to 10% of UK gas consumption in 2008 would require around 2,500-3,000 horizontal wells spread over some 140-400km2 and some 27 to 113million tonnes of water. To set the cumulative nature of impacts in context, Table 1 provides estimates of the resources required to deliver shale gas production at a rate of 9bcm/year (equivalent to 10% of UK gas consumption in 2008).

18. Risks and impacts of shale gas and shale gas processes and development have been assessed as part of a study by the Tyndall Centre for the Co-operative Group. Key risks and impacts identified in that study are summarised below.

19. Groundwater pollution: The potential for contamination of groundwater is a key risk associated with shale gas extraction. A screening of the identity of 260 substances listed in a database of fracturing fluid additives suggests that 58 of the 260 substances have one or more properties that may give rise to concern owing to toxic, carcinogenic, mutagenic and/or reproductive effects.

20. Groundwater pollution can occur if there is a catastrophic failure or loss of integrity of the wellbore, or if contaminants can travel from the target fracture through subsurface pathways. There are a number of documented incidents in the US with principal causes being improper construction and/or operator error. Amoung these incidents are consequences including high levels of pollutants (such as benzene, iron and manganese) in groundwater, and a number of explosions resulting from accumulation of gas in groundwater.

21. Surface pollution: There are a number of potential sources of pollution including: well cuttings and drilling mud; chemical additives for the fracturing liquid; and flowback fluid – the liquid containing toxic chemicals that returns to the surface after fracturing. There numerous routes by which these potential sources can cause pollution incidents including failure of equipment and operator error. Unsurprisingly, a number of incidents have been reported in the US.

22. Water consumption: Shale gas extraction requires very significant amounts of water. To carry out all fracturing operations on a six well pad takes between 54-174million litres of water, which is equivalent to about 22-69 Olympic size swimming pools.

23. Noise pollution: Given the high population density and the likelihood that any shale gas extraction may be located relatively close to population centres, noise pollution may be an important consideration. Activities such as drilling mean that each well pad requires around 500-1500days (and nights) of noisy surface activity.

24. Traffic: It is estimated that the construction of each well head would require between 4300-6500 truck visits. This could have a local impact on roads and traffic in the locality of shale gas well heads. Damage to roads not suited to the levels of truck traffic associated with gas drilling has been an issue in the US.

25. Landscape impacts: The construction of well pads is an industrial activity and requires access roads, storage pits, tanks, drilling equipment, trucks etc. Well pads take up around 1.5-2ha and the well pads will be spaced between 1.25-3/km2. To produce 9bcm of gas annually in the UK over 20 years would require 430-500 well pads and would need to cover an area of 140-400km2. For comparison 400km2 is about equivalent to the Isle of Wight.

How does the carbon footprint of shale gas compare to other fossil fuels?

26. The key difference between the footprint for shale gas and conventional natural gas is the extraction process [2] . These additional sources include: horizontal drilling; hydraulic fracturing; the transportation of fracturing fluids; and waste treatment of the fracturing fluids after use.

27. There is limited data available with which to estimate the carbon impact of shale gas extraction in the UK. Using limited data from non-peer reviewed US reports CO2 emissions associated with shale gas extraction could account for an additional 0.14-1.63tonnes CO2/TJ of gas energy extracted. The combination of emissions from these processes based on data from US Shale sites and UK transportation and waste disposal provides an estimate per well for a fracturing process of 348-438tonnes CO2.(using data sourced from: ALL, 2008; New York State 2009; Water UK 2006; DECC, 2010b); DECC’s recent report suggests that refracturing could happen every 4-5 years for successful wells. Using examples of expected total production for shale basins in the US we estimate that, on average, the additional CO2 emissions associated with the additional extraction processes associated with fracturing account for between 0.14-1.63tonnes CO2/TJ of gas energy extracted assuming two fracturing processes during the lifetime of the well (using assumptions on production rate per well from Wagman (2006). However, it should be noted that the estimates presented here are not based on fully peer reviewed emissions data.

28. The larger the amount of natural gas that can be extracted from a shale well, the lower the contribution the fracturing process makes to the emissions/TJ of extracted energy. DECC’s reserve potential for the UK of 150 bcm is based on analogy with shale gas plays of similar geology in the US. The rate of return per well is not available for UK basins, the rate will determine the relative carbon intensity per unit of energy extracted per well associated with the additional emissions from fracturing etc.

29. Further emissions may arise from differences in shale gas composition and leaking of fugitive methane emissions during extraction. These will not be quantifiable until sites have been drilled and levels could vary between sites. Additional differences may occur due to the difference in the composition of gas extracted from shale sources which may potentially require further processing and clean up before the source is suitable for entry to the gas distribution network. This is well dependent and it should be noted that conventionally sourced gas will also vary in its processing requirements. Further emissions may arise from methane leakage during extraction; we have found no evidence to indicate whether shale and conventional sites differ in this aspect.

30. These relatively low levels of additional emissions suggest that there would be benefits in terms of reduced carbon emissions if shale gas were to substitute for coal. However, rapid carbon reductions require major investment in zero-carbon technologies and this could be delayed by exploitation of shale gas. Combustion of coal produces around 93tonnes CO2/TJ compared to 57tonnes CO2/TJ for gas. Clearly even with additional emissions associated with the extraction of shale gas, the emissions from gas would be considerably lower. The benefits increase when the higher efficiencies of gas fired power stations compared to coal fired power stations are considered.

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Appendix 1