A WCTA White Paper: J. Thomas Ranken, Washington Clean Technology Alliance, July 2012.
Potential Benefits and Concerns
The advent of this new source of energy presents several potential benefits and concerns. Fortune says that “…drilling activity has raced ahead of regulatory and public understanding. Fracking has become a dirty word to many…” Predictably, advocates concerned about energy, business, economics, and the environment have strong—and often conflicting opinions—about these developments.
Air Pollution and Greenhouse Gases. For most applications, greater utilization of natural gas is expected to be beneficial to the environment. While natural gas is certainly not environmentally benign, its utilization—particularly as a replacement for oil and coal—has compelling environmental advantages. Natural gas produces no solid waste. Compared to coal generated electricity, natural gas reduces nitrogen oxide emissions by 80%. Natural gas emits about 29% less carbon than oil and 453% less than coal. As a transport fuel, natural gas emits about 20-30% less lifecycle carbon than oil. In electricity generation, compared to coal, natural gas reduces emissions of sulfur dioxide by 100 percent. Coal plants today generate more than 40% of our electricity.
Amory Lovins and the Rocky Mountain Institute note in Reinventing Fire that natural gas is “generally more benign than oil or coal.” The MIT study, The Future of Natural Gas, concluded that “substitution through increased utilization of existing combined cycle natural gas power plants provides a relative low-cost, short-term opportunity to reduce U.S. power sector CO2 emissions by up to 20%, while also reducing emissions of criteria pollutants and mercury.”
Some authors are concerned that natural gas will not have sufficient impact on reducing greenhouse gases and reducing global warming. Nathan Myrhvold and Ken Caldeira note that “energy system transitions are intrinsically slow.” The long lifetime of residual CO2 results in lags before the impact of a transition on greenhouse gases can take hold. “This,” they state, “underscores the urgency in developing realistic plans for the rapid deployment of the lowest-GHG-emission electricity generation technologies. Technologies that offer only modest reductions in emissions, such as natural gas and carbon capture storage, cannot yield substantial temperature reductions this century.”
Drilling Concerns. Natural gas recovery has been widely criticized for the impact that drilling has on the environment. These concerns fall into three basic categories: Polluted waste water, the potential for earthquakes, and the risk of contaminating drinking water. Sorting through the biases of writers on this topic is difficult. Not everything is known about these and they are certainly worthy of continued scientific monitoring and research. More regulation and industry oversight may be necessary. But, to date, these concerns are hardly the cause of “devastation” that is implied by some.
- Polluted wastewater. According to Daniel Yergin, “the biggest issue has become not what goes down, but what comes back—the water that flows back to the surface.” The fracking process generates large amounts of dirty water. Water is forced underground, along with sand and chemicals, to free natural gas for extraction. This is a significant concern and waste waters need to be handled properly, managed, and disposed of safely. “Some operators have conspicuously misbehaved and some regulators have fallen short,” says the Rocky Mountain Institute’s Amory Lovins, “making fracking controversial even in normally drilling-friendly places like Texas and western Colorado.” A reliable, responsible system of industry practices, enforced by regulation, is a reasonable and achievable goal.
- Earthquakes. The Washington Post editorial board asked, “Does Fracking for Natural Gas Cause Earthquakes?” Their conclusion was “yes,” but these tiny earthquakes are “unfelt, but detectable directly above.” Earthquake concerns are raised both from the fracking process and from disposal of waste waters pumped underground. The Washington Postwriters suggest that “more study and probably more regulation will be needed” as more experience accumulates. But they note, “Of the 144,000 storage wells of this type in America, only a tiny fraction (of these wells) have been linked to earthquakes.” They cite Arthur McGarr of the U.S. Geological Survey who suggests seismic monitoring at well sites and storing waste water away from population centers as reasonable precautions.
- Contaminated drinking water aquifers. Critics warn that fracking is contaminating drinking water aquifers. Methane has been found in water wells in gas producing regions, but, according to Yergin, there is no agreement on how this can happen. He notes that this could occur for several reasons such as improperly sealed wells or naturally occurring shallow layers of methane. The industry argues that fracking occurs a mile or more below drinking water aquifers and is separated from them by thick layers of impermeable rock. Further, there are more than a million wells where fracking has been employed in the United States dating back six decades.
Continued scientific research efforts are important to determine whether this is a valid concern. Among the important research efforts is a federal E.P.A. study examining the relationship between fracking and drinking water.
“The scope of the proposed research includes study of the full life cycle of fracking water, from its acquisition to the mixing of the chemical to the fracturing and post-fracturing stages, including management of flowback and produce water and the ultimate treatment and/or disposal of the water recovered. …Initial research results are expected by the end of 2012, and a final report is expected in 2014.”
Most authorities conclude that increased natural gas extractions including fracking for shale involves manageable risks. Most also note the need for continued vigilance and research. They warn that the industry needs to create its own standards for safe and responsible practices. In some cases, particularly in dealing with waste water, additional monitoring and regulation may be prudent. To date, these technologies are well established, have been used for decades, and the safety concerns have been minimal. As a 178-page MIT study (also cited by Amory Lovins and the Rocky Mountain Institute) notes: “The environmental impacts of shale development are challenging but manageable. Research and regulation, both state and Federal, are needed to minimize the environmental consequences.”
Energy Security. The United States continues to rely on imported oil for much of its petroleum utilization. In 2010, 49% of the oil used by the U.S. was imported.
Nearly half of those imports now come from the Western Hemisphere. The Persian Gulf states account for eighteen percent of crude oil and petroleum products. Canada (25%) and Saudi Arabia (12%) are our largest suppliers.
U.S. dependence on imported oil has dramatically declined since peaking in 2005. This is due to a number of factors including the economy, improvements in efficiency, and changes in consumer behavior. Competing energy sources (domestic biofuels, natural gas, and domestic production of oil) also have reduced the demand for imports.
It is likely that increased utilization of natural gas, along with other factors, will reduce our dependence on imported oil from unfriendly sources. While this is a positive development, “this market penetration will not be so large that the security concerns of the United States and other oil importers about dependence on foreign oil will disappear.” Still, “the past image of the United States as helplessly dependent on imported oil and gas from politically unstable and unfriendly regions of the world no longer holds,” (says) former Central Intelligence Agency Director John Deutch.
Impact on the Economy. There can be little doubt that a significant reduction in the export of U.S. dollars to foreign nations to pay for energy imports will be a very positive development. It is likely to reduce the nation’s trade deficit and enhance the value of the dollar. It is likely that new jobs and investments will develop in the creation of enhanced energy infrastructure to support growing utilization of natural gas.
Alternative Energy. Energy systems that are more expensive than natural gas are likely to become more difficult to develop and maintain. In some cases, such as coal and petroleum, this will be a welcomed change. In other cases, this change poses difficulties. The Seattle Times notes: “The drop in natural-gas prices is also making the use of alternative energy sources such as solar, wind, and nuclear power less attractive, threatening to link the United States’s future even more to hydrocarbons to run the world’s largest economy.”
Juliet Eilperin, Washington Post national environmental reporter, wrote recently in a story entitled Why the Clean Tech Boom Went Bust, “Perhaps the biggest force working against not just Solyndra but clean energy in general is this: Because natural gas has gotten so cheap, there is no longer a financial incentive to go with renewables.”
Investors can be expected to make decisions on energy investments that are driven by maximizing their potential for returns and keep costs as low as possible.
“Wind, on its own without incentives, is far from economic unless gas is north of $6.50,” according to Morningstar utility analyst Travis Miller. Indeed, NextEra Energy has dropped plans for wind projects in the U.S. next year.
And even though the costs of solar power have dropped, both coal and natural gas are currently cheaper.
 Op.Cit., O’Keefe, p. 79.
 Op. Cit., Bryce, Ten, p. 7.
 Ibid., p. 8.
 Amory B. Lovins and Rocky Mountain Institute, Reinventing Fire: Bold Business Solutions for the New Energy Era (White River Junction, Vermont: Chelsea Green Publishing Company, 2011) p. 233.
 Op. Cit., Bryce, Ten, p. 8.
 Op. Cit., Yergin, interview, p. 95.
 Op. Cit., Lovins, p. 233.
 Op. Cit., Massachusetts Institute of Technology Energy Initiative, p. xi.
 Nathan P. Myhrvold and Ken Caldeira, “Greenhouse Gases, Climate Change, and the Transition from Coal to Low-Carbon Electricity,” Environmental Research Letters 7 (2012), p. 7.
Roberta Brandes Gratz, “The Fracking Truth: Natural Gas Devastates Communities,” Crosscut (2 February 2012).
 Op. Cit., Yergin, pp. 330-1.
 Op. Cit., Lovins, p. 233.
 Op. Cit., Yergin, p. 330-1.
 Op. Cit., International Energy Outlook 2011, p. 53.
 Op. Cit., Deutch, p. 86.
 Bryce, “How.”
 Massachusetts Institute of Technology Energy Initiative, p. xi.
 U.S. Energy Information Administration. Energy in Brief (24 June 2011).
 Op. Cit., Deutch, p. 93.
 Op. Cit., Miller, p. A3.
 Op. Cit., Miller, p. A3.
 Eilperin, Juliet. “Why the Clean Tech Boom Went Bust.” Wired, 20 January 2012.
 Op. Cit., Yergin, interview, p. 95.