Shale Gas
Memorandum submitted by
WWF-UK
(SG
22
)
Executive Summary
WWF-UK welcomes the opportunity to respond to the Energy and Climate Change Committee’s enquiry into shale gas.
There is evidence that there are a number of serious
environmental and health
risks associated with shale gas production the most serious of which is the potential for contamination of groundwater sources
, currently the subject of a US Environmental Protection Agency enquiry
. Other notable
environmental concerns
include air pollution, spillage
of hazardous substances
,
treatment and disposal of waste water,
water consumption,
well blowouts,
noise and traffic.
For these reasons
WWF-UK is opposed to the production of shale gas in the
UK
.
At the very least, g
iven the current lack of understanding of the environmental risks and hazards associated with shale gas
,
WWF considers that
no
shale gas
related
activity should be undertaken until there is a robust scientific consensus demonstrating exactly what the risks are and what, if any, practices may be adopted to minimise hazards associated with shale gas, drilling and hydraulic fracturing
.
Climate change targets
To stand a chance of reducing global greenhouse gas emissions to a level which is likely to limit global climate change to 2ºC or below, and retain some possibility of limiting temperature increases to 1.5
ºC
,
global emissions must be reduced by 80%
compared to
1990 levels by 2050.
To have any chance of achieving this goal, the majority of the world’s fossil fuel reserves need to stay in the ground
.
From a climate change perspective, whilst it makes sense to burn lower carbon fuels such as gas, rather than coal, this argument is only valid where there is evidence that gas is being used as a direct substitution, not in addition, to coal
.
At the
UK
level, we have a climate change act which commits us to
at least an
80% reduction of greenhouse gas emissions by 2050. The Committee on Climate Change recently recommended that the
UK
’s power generation should be largely decarbonised by 2030
.
Any new ‘dash for gas’ driven by the shale gas boom
could seriously undermine the
UK
’s ability to meet these targets and risks undermining investment in renewable energy both for power generation and heat.
Gas and affordability
Several analysts have demonstrated that the reason that gas prices are currently low is
that
the
increase in shale gas production has surprised investors and led to an oversupply of gas
.
There is strong
evidence that
although gas prices are currently low
they
are unlikely to remain at their
present
levels
and that
far from representing ‘a new era of cheap gas’ the impact of shale gas on global markets is one of uncertainty
.
With this in mind future gas prices may damage
,
as opposed to
enhance
,
affordability for
UK
energy consumers.
Prospects for shale gas in the UK and Europe
A recent paper by Florence Gé
ny of the
Oxford Institute for Energy Studies analyses
the market conditions in the US and Europe and concludes that t
here are limited prospects for significant production of shale gas in the UK or Europe, given the very different conditions to those prevailing in the United States.
These differences include
geological differences between US and European shales, water supply constraints and protection, spatial constraints linked to population density and site protection
. Environmental concerns are also having serious impacts on shale gas in the
US
with a moratorium on gas drilling currently in force in
New York
State
.
Risks of uncertainty in gas markets driven by the shale boom
,
coupled with
Gény’s assessment that there are limited
prospects for shale gas in the
UK
or Europe, particularly in the short term, call
into question
arguments
that shale gas can enhance
UK
security of supply.
Additional greenhouse gas emissions
Finally, although the recent Tyndall Centre report
is a significant contribution to the debate on greenhouse gas emissions resulting from shale gas, more research, including the issue of methane leakage from wells is required.
Question 1:
What are the prospects for shale gas in the
UK
, and what are the risks of rapid depletion of shale gas resources?
A
recently published in depth analysis
by Florence Gény
of the Oxford Institute for Energy Studies, which was published in December 2010, looks specifically at the potential for
unconventional sources of gas
, particularly shale gas,
in the US and Europe
.
The report
suggests that
the numerous conditions that have allowed shale gas production in the
US
to prosper are not present in Europe or the
UK
. Even in the event of significant legislative changes in favour of shale gas,
a move which WWF would oppose,
Gény does not believe that any ‘game changing’ quantity of shale gas w
ill
be produced
in
Europe
before 2020
.
Gény states that: ‘Each of the conditions behind the success of unconventional gas in the US, encounters different conditions in Europe...geological differences between US and European shales, water supply constraints and protection, spatial constraints linked to population density and site protection
’
Furthermore,
Gény
estimates that finding and development
costs in Europe are in the region of 2-3 times higher than the
US
.
The
UK
has a
population density which is eight times that of the
US
and
limited land availability
which combined with the differences described above
indicate that domestic shale gas
is
unlikely to be able to compete with imports
in the foreseeable future
.
T
here has been very limited geological investigation of the
UK
’s shale gas resources.
Where shale exists there is significant uncertainty relating to its suitability for the hydraulic fracturing process due to wide variations in the geological properties of the rock. We examine some of the
se
constraints in more detail below.
Environmental impacts, regulation and costs
The environmental impact of shale gas exploitation is subject to increasing scrutiny from the public, regulators and academics in the
US
and
Canada
(a development which WWF welcomes)
where the industry has up until now been subject to very limited environmental regulation
.
Gény’s report estimates that the cost of environmental compliance in the
US
, even without stricter environmental regulations,
is set
to
increase
production costs by 5-7%
. Any shale gas production in Europe will be subject
to
Europe’s environmental and health and safety regulations which are more advanced than those in the
US
and compliance will therefore mean that production costs are higher than those in the
US
.
The shale gas production process is also very water intensive.
According to
Gény
,
t
he cost of water in Europe is ten times higher than in the
US
and
on a per capita basis, the
US
has 3 times more fresh water resources than in
Europe
. We discuss environmental concerns in more depth in our response to the question about environmental risks and hazards.
Land
use
and population density
Shale gas requires
relatively
large amount
s of land with spacing of approximately
3.1 wells per km²
.
Conc
entrations of shale gas are
far lower
at around 0.2-3.2 billion cubic metres per km² compared to
conventional gas
with a concentration of
2-5 bcm per km²
requiring
more wells to be drilled
.
A recently published report by the Tyndall Centre estimates that 2580-3000 wells would be required to produce 9bcm (billion cubic metres) per year of gas from shale
. Shale
wells
peak early and then
deplete
more rapidly than
conventional gas wells
’
.
Therefore
maintaining a significant volume of production would require regular drilling of new wells spaced over large areas of land
.
For each well drilled it would be necessary to build appropriate transport infrastructure and
storage
pits
(discussed in our response to question 3)
. Whilst the
US
has vast amounts of sparsely populated land, the
UK
by contrast is small, densely populated and has many areas of protected land.
G
iven the
many
potential
negative environmental effe
cts of shale gas
, which are of concern to WWF,
it would be reasonable to a
nticipate significant
re
sistance from local communities.
Supply chain
According to Gény there is ‘currently close to no frac
k
ing expertise nor manufacturing capacity in
Europe
...relying on international service providers will likely be the solution of choice’
. Therefore
,
it seems likely that any shale gas production in the
UK
will rely on importing both labour and equipment from overseas, probably the
US
, given
its
position as market leader. This is in stark contrast with
the potential
economic and job creation benefits
, which low-carbon technologies such as marine renewable
s
could bring
to the
UK
as highlighted by
the Committee on Climate Change
(CCC)
in its Building a Low Carbon Economy report
.
We discuss this point further in our response to question 1 of the ECC enquiry on the Electricity market reform.
To conclude, as the CEO of Cuadrilla Resources admitted in a recent ENDs report
article ‘there is no chance of a shale gas rush in
Europe
over the next few years’. Gény adds in the conclusion to her report that ‘
Europe
cannot replicate much of the American model’
.
This casts strong doubt on any speculation that shale gas may increase
UK
energy security or may play a ‘bridging’ role
as the in
the decarbonisation of the
UK
and EU power sector
s
.
Question 2: What are the implications of large discoveries of shale gas around the world for
UK
energy and climate change policy?
Overview
For there to be a reasonable chance of global temperature increases not exceeding 2 degrees
Celsius
and some possibility that they may remain below
1.5 degrees
, global greenhouse gas
(GHG)
emissions need to fall by 80%
relative to 1990 levels by 2050
.
From a climate change perspective whilst
it makes sense to burn lower carbon fuels su
ch as gas, rather than coal,
this argument
is only valid where there is evidence that gas is being used as a direct substitution
,
not in addition
,
to coal
and
also as part of a clear plan to substantially reduce the power sector’s overall dependence on fossil fuels
.
There is a risk that the lower emissions argument is used to mask the fact that increased supplies of gas from shale result in a net increase in global emissions and serve to undermine the much needed transition to renewables.
The m
ajority of the world’s fossil fuel reserves need to stay in the ground if we are to avoid catastrophic climate change.
In the
UK
context, t
he 2008
Climate Change Act commits the
UK
to
at least
an 80% reduction in domes
tic GHG
emissions by 2050. The
CCC
, tasked with setting out recommendations on carbon budgets, recommends in its 4
th
budget report that the
UK
power sector should be close to decarbonised by 2030 with an average carbon intensity of 50gC
O2/kWh compared to
approximately
50
0gCO2/kwh today
.
The same report also advises that to be on track to meet the 2050 target,
GHG
emissions
should be 60% below 1990 levels by 2030. To achieve its targets, the
UK
needs to reduce its dependence on both gas and coal
and move towards rapid
decarbonisation of the power sector.
Shale gas, prices and global markets
A key focus for
UK
energy policy should be to deliver a near-decarbonised power sector over the next 20 years, whilst ensuring continued security of supply in a way that minimises increases to consumer bills.
There is strong evidence, which we outline below, that uncertainty over the future contribution of shale to global gas supplies may threaten
UK
security of supply and lead to significantly higher and fluctuating gas prices.
There has recently been speculation that the world may be entering a new era of cheap gas due to the
US
‘shale’ revolution. We have seen a delinking of oil and gas prices for the first time in decades. Gas prices
are
therefore
currently
relatively
low due to a combination of unforeseen rapid expansion in
US
shale gas production and overinvestment in Liquid Natural Gas (LNG) and other conventional gas capacity.
There is however, strong evidence that current low gas prices may be temporary and therefore
any
second ‘dash for gas’ could harm not only the UK’s prospects for meeting climate change targets but also affordability and potentially security of supply. For example, i
n a 2010 Chatham House report, Paul Stevens notes that ‘given investor uncertainty, investment in future gas supplies will be lower than would have been required had the shale gas revolution not happened…if it fails to deliver on current expectations…in ten years or so gas supplies will face serious constraints’
. Stevens then expresses doubt over whether the shale gas ‘revolution’ can spread beyond the
US
, or even be maintained within it.
Furthermore, even if shale gas production does expand it is highly unlikely that gas prices will remain low. Frank Harris of Wood Mackenzie is recently quoted in The Economist saying that some of the downward pressure on price will ease. ‘Despite sedate growth, the LNG glut should dissipate, probably by 2014, says Mr Harris; and low prices will kill more projects, clearing the inventory’. This is echoed in Gény’s report where she says that ‘we believe it is only a question of time before costs drive up prices or drilling slows down significantly and production falls’
.
Gas prices
therefore appear to be low,
because the increase in shale gas production has surprised investors and led to an oversupply of gas. Therefore as the market corrects itself prices are likely to rise
, possibly leading to a shortage of gas.
Policy implications and recommendations
Given
the impacts
of shale on gas markets
described above,
and the doubts raised in our response to the previous question regarding
limited
prospects for shale gas in the UK,
it
is clear that any expectation that shale gas will necessarily enhance UK security of gas supply or guarantee lower prices for consumers is seriously flawed.
As highlighted throughout this paper any change to UK energy policy due to either temporary low gas prices or future shale gas production in the UK would be extremely risky and probably delay investment in low carbon technologies
. This
could risk
damag
ing
the
UK
’s ability to meet
its
climate change and
energy security
targets
. The
UK
government
has recognised that the current structure of the
UK
’s energy market is not fit for purpose
if the
UK
is to substantially decarbonise its power sector, which has led to
the
current
Electricity Market Reform (EMR)
consultation
. WWF-UK is strongly of the view that the principal purpose of the EMR should be to deliver a near-decarbonised power sector by 2030. The EMR should aim to deliver this objective in the most environmentally sustainable way possible, by relying as much as possible on sources of energy that have the fewest environmental side effects, such as renewables.
Whilst
the CO2 emissions from burning natural gas from shale are almost certainly
lower than those from coal, the average emissions from a new gas CCGT power station are around eight times higher than the CCC’s recommended target of 50gCO2/kWh by 2030
.
Any new gas power stations built today will continue to run for around
25-30
years
.
Whilst WWF accepts that some gas generation will be required as flexible back up to the UK’s power system in the future and that some gas with CCS may be part of the supply mix,
we are concerned that future large discoveries of shale gas could have the impact of delaying investment in areas where it is really needed,
in particular
marine renewables, co-ordinated grid, energy efficiency and interconnection infrastructure.
Question 3: What are the risks and hazards associated with drilling for shale gas?
There are many negative environmental impacts and serious health and safety concerns associated with shale gas production.
Due to the rapid expansion of the shale gas industry in the
US
and
Canada
, against a backdrop of weak environmental regulation, many implications are currently poorly understood, carry huge risk and require significant further investigation.
Contamination
There is
strong evidence that shale gas production can cause contamination of water sources such as aquifers.
Aquifers provide 30% of the
UK
’s water
and significantly more than this in the south east
.
This contamination is mainly from methane but there are also
serious
concerns about the other substances and chemicals (inclu
ding known carcinogens such as b
enzene
) used in the fracking process.
Some in i
ndustry claim that contamination is not possible because shale gas drilling takes place beneath the deepest fresh water zones and special casing in the drill hole is used to isolate fresh water zones from contamination
. However, there is a substantial and growing body of evidence to indicate that contamination is occurring and that it is caused by the drilling and fracking processes.
According to Abrahm Lustgarten of ProPublica ‘more than 1,000 cases of contamination have been documented by courts and state and local governments in
Colorado
,
New Mexico
,
Alabama
,
Ohio
and
Pennsylvania
’
.
These are only five of the many states where shale gas production is currently underway.
There are several ways in which it is thought that contamination may occur.
Whilst it is not possible to go into
much
detail here, there is evidence that the drilling process itself, inadequate casing of drill holes, unintended ‘communication’ between separate wells
(where fracking fluids from one
well
have shown up in another up to 715m away
)
and pathways opened up through the fracking process which join up with natural cracks in the rock are all potential sources of contamination.
Anthony Ingraffea, a professor of civil and environmental engineering at Cornell University and a member of the Cornell Fracture Group, is quoted in a paper by Ben Parfitt saying that ‘
it is possible that the fracking process could open up a pathway upwards to freshwater...it is not right to say that thousands of feet of impermeable rock between where the shale formation is fracked and points higher up prevents such an occurrence’
.
As a result
of
growing concern about contamination and public opposition to shale gas, the US Environmental Protection Agency is currently investigating the links
between hydraulic fracturing,
drinking water quality and potential impacts on public health to inform potential new regulations. The results of this study are due in 2012. In addition
,
draft legislation called the FRAC act has been proposed to congress.
Well Blowouts
According to Gé
ny
, there have been two recent consecutive well blowouts in the
Marcellus shale area in the
US
.
One such incident occurred in
Clearfield County
,
Pennsylvania
at a well operated by EOG Resources Inc
where natural gas and drilling fluids were shot 23 metres into the air
.
Water Consumption
Shale gas production is known to be very water intensive.
Estimates for the volume of water
required from start to finish of
the fracking operation vary significantly
probably due to lack of reliable data and differences in depth and geology
of shale plays
.
For example
an
estimate
in
Parfitt’s paper
states that
hydraulic frac
turing of 10 shale gas wells
require
s
circa 910,00
0 cubic metres of water
which equates to 91
,
000m³ per well
.
However, according to the recent Tyndall Centre report ‘the entire multi-stage fracturing operation for a single well requires around 9,000-29,000m³’. More research is needed on the actual quantities required and the impact of site specific variables on final water requirement.
According to the Environment Agency’s Catchment Abstraction Management Strategies (CAMS) ‘there are considerable pressures on water resources throughout England and Wales’.
Disposal and Treatment of fracture fluids
Of the large volume of water used in the fracking process around 60% ‘flows-back’
(although flow back rates appear to vary significantly)
as contaminated wastewater which must be disposed of. This wastewater is highly saline with a high mineral content and
is
contaminated with chemicals
used in the fracking process
, including known carcinogens in the
US
context,
and heavy metals
. Assuming
Gé
ny’s figure that c91,000
cubic metres of water are required for each well this equates to around 54,
600
cubic metres of wastewater per well.
It is possible to recycle wastewater and should shale gas production take place in the
UK
this should be mandatory.
Like the actual dri
lling and fracking process,
wastewater has been linked to incidents of water contamination
. The treatment and disposal of this contaminated wastewater is a contentious issue. Wastewater is usually stored in open pits or tanks prior to treatment. Gény states that ‘Because of the large quantities of waste to be handled, the risks of contaminating surface water and soil during storage, transport and disposal are very high
’. Concerns have also been expressed in the
US
over contaminated wastewater being sent to municipal facilities.
According to the website for the
shale gas
documentary Gaslands, whilst the wastewater is being stored in pits or tanks, Volatile Organic Compounds (VOCs), a known health risk, are ‘evaporated’. ‘As the VOCs are evaporated and come into contact with diesel exhaust from trucks and generators at the well site, ground level ozone is produced. Ozone plumes can travel up to 250 miles
’. The transportation
of
such large volumes of water requiring treatment also puts additional strain on local infrastructure.
Infrastructure and
impacts on
local communities
The drilling process requires large volumes of water, sand and chemicals as well as heavy industrial equipment to be transported to the site. Waste products such as drilling mud and wastewater much of which is likely to be classed as hazardous waste will then need to be removed. Wells are often arranged in ‘pads’ of 6 wells grouped together. Each well will therefore require access roads to be built placing unforeseen demands on local transport infrastructure. The Tyndall Centre’s report demonstrates that 4,315-6,590 truck journeys to each well pad will be required in the pre-production phase, of which 90% are associated with the fracking process.
Noise pollution is also likely to be an issue both from trucks travelling to and from the site and pre-production activities, which the Tyndall Centre report indicates could be expected to last 500-1500 days, including several weeks of 24 hour drilling per well, for each 6 well pad.
The UK is far more densely populated than North America. Even without taking into account possible contamination issues, shale gas production is clearly likely to be highly disruptive to local communities and have a negative impact on local roads, buildings adjacent to access roads, noise levels and air quality.
Regulation
UK
and EU regulation of the oil and gas industries is more stringent than that of the
US
. However, according to a recent ENDS report article fracking is not mentioned in
UK
regulations. A spokesperson from the Environment Agency told WWF that ‘the Environment Agency is currently developing policy at the national level on shale gas permitting’ and that ‘fracking
’
will probably not be able to go ahead without a permit’.
It is clear that there are significant risks associated with allowing any shale gas production to take place in the
UK
.
L
arge scale shale gas production has been allowed to take place in the
US
prior to any impartial research over its impacts on human health and the surround
ing environment being conducted.
New York
State
has recently imposed a moratorium on any new drilling of shale gas wells pending the outcome of the current US EPA investigation.
T
here is
therefore
considerable uncertainty as to the full extent of the environmental impact of shale gas exploration in the
US
.
Conclusion
Taking into account all the environmental impacts described above WWF does not believe that shale gas production should be allowed to take place in the
UK
.
At the very least, WWF considers that
no per
mits
should be
granted
for shale gas activity in the UK
u
ntil
there is a robust scientific consensus demonstrating
exactly what the risks are and what, if any, practices may be adopted to minimise hazards associated with shale gas, drilling
and hydraulic fracturing
.
Question 4: How does the carbon footprint of shale gas compare to other fossil fuels?
There is very limited publicly available information on the carbon footprint of shale gas in relation to other fossil fuels. Emissions may be higher than those associated with conventional gas due to methane leakage or the additional energy requirements of unconventional sources of gas such as shale. It is therefore important to take into account the full lifecycle emissions of the use of shale gas before drawing any conclusions as to its carbon intensity.
The Tyndall report estimates additional carbon footprint of shale gas and production and draws the conclusion that additional emissions would be around 0.2-2.9% higher than those associated with gas from conventional sources. However, it is highlighted that the impact of fugitive emissions, for example leakage of methane gas during production, were not taken into account in this estimate. This is significant because these emissions are cited in a preliminary review paper by Robert Howarth which suggests that there is approximately a 1.5% methane leakage rate for the oil and gas industry and that therefore emissions from coal may be similar to those from natural gas.
Howarth’s is only a preliminary paper which has not been peer reviewed but it highlights the urgent need for a comprehensive assessment of the full range of emissions of greenhouse gases from using natural gas obtained by ‘hydrofracking’. Clearly, this information must be independent and subject to unbiased peer review.
January 2011
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