OUR GREAT MINDS

    by Bennett Resnik

    A Global Scale: Weighing Hydraulic Fracturing As Future Energy Security

    The use of hydraulic fracturing in unconventional gas production has raised environmental concerns over air, groundwater, and soil contamination. This has prompted environmental groups and government regulators to demand further inspection. Though there are inherent risks to consider in the pursuit of all energy sources, the natural gas industry has natural incentives to mitigate the risk of hydraulic fracturing to maximize the utility of substantial and existing sources of natural gas from shale. Given the economic, industrial, and geopolitical benefits that exist, national governments and their citizens must consider the risks and benefits of pursuing development of shale energy sources to achieve energy security.

    Hydraulic fracturing (popularly known as “fracking”) is an industry employed for over 60 years. Outside of natural gas, fracking is responsible for bringing geothermal heat wells into commercial viability and enhancing the flow of water in wells. During hydraulic fracturing, the operator injects water, a small proppant (typically sand), and a chemical mixture underground at a high pressure to access these difficult to reach, geo-physically tight shale formations. This process creates small fissures in deep underground shale rock formations, releasing oil and natural gas for capture. These fracking fluids, composed of approximately 99% water and proppant and about 1% chemical additive are essential to the process of releasing gas deposits from shale and other deep underground formations.

    As the United States’ energy market becomes increasingly reliant on domestic and neighboring natural gas production, any American regulatory and legal changes will have rippling effects on international systems. Ensuring high standards and best practices in production through efficient monitoring and strict regulation can mitigate these potential environmental risks; including but not limited to issues of contamination, excessive pollutants, and water use.

    Modern hydraulic fracturing is a highly sophisticated, engineered, and controlled process. Any opportunity is associated with risk, but mitigating these risks makes hydraulic fracturing a viable process in obtaining resources from tight shale formations. With any energy source there exists potential environmental and community impacts. The application of reliable and sensible well design and construction, alongside responsible surface operations effectively limits many of these risks. The global community should take note of the state and federal laws in the United States in order to duplicate a similar regulatory regime.

    Countries around the world, including Russia, China, South Africa, and the United Kingdom are looking to shale resource development as the key to unlocking energy security and independence (or less dependence on energy imports). The European Commission has reported that the 28 member states’ energy dependency rate has increased from 47.1% in 2001 to 65.8% in 2012. The percentage is calculated by dividing net imports by the sum of gross inland energy consumption plus fuel storage containers. This percentage illustrates the degree to which an economy depends upon imports so as to meet its energy requirements. The European Union (EU) is increasingly reliant on primary energy imports in order to satisfy demand, receiving imports from Russia and South Africa. The European Commission published a recommendation to member states on January 22, 2014, recommending “minimum principles for the exploration and production of hydrocarbons (such as shale gas) using high-volume hydraulic fracturing.” A future in using hydraulic fracturing in more EU member states is more likely pursuant to the publication of the commission’s recommendations.

    Though ample resources and studies have been dedicated to understanding the impacts of the hydraulic fracturing process, illustrating its safety when properly managed, the debate persists globally as to whether these reserves can be safely acquired. The main question asked by citizens and government officials alike is whether potential environmental damage as a result of hydraulic fracturing outweighs the gains in retrieving the resource (energy security, autonomy, and economic benefits).

    According to the U.S. Energy Information Agency, technically recoverable shale oil and gas resources account for 345 billion barrels and 7,299 trillion cubic feet respectively. In 2013 the United States surpassed Russia in oil and natural gas production; however, the U.S. currently accounts for only 17% of global crude oil shale reserves and 9% of natural gas reserves. Russia has the largest technically recoverable shale oil resource at 75 billion barrels and China with the most recoverable shale gas resource at 1,115 trillion cubic feet. To compete with U.S. production and exportation, Russia recently liberalized liquefied natural gas (LNG) exports.

    Supply and demand trends strongly indicate that unconventional natural gas will play a larger role in the future global energy portfolio. Natural gas has and will continue to aid in diversifying global energy supplies and improving energy security. This resource base is immense and extensively distributed geographically, with large shale formations in the United States, Canada, Russia, China, Australia, Brazil, Italy, Morocco, and smaller resources in other locations worldwide. Current estimates indicate that total recoverable resources in shale deposits could sustain today’s production rates for over 250 years with all regions having recoverable resources equal to no less than 75 years of current consumption.

    Many countries could benefit from increased energy production as a result of accessing their existing shale resources. Some countries, such as the United States, Turkey, Ukraine, and Morocco, see their shale resources as a geopolitical advantage, reducing their dependence on Organization of the Petroleum Exporting Countries (OPEC) and other conventional gas exporter countries like Russia. With more than half of the world’s shale oil resources located in Russia, China, Argentina, and Libya, the geopolitical advantage gained from shale resources is extremely valuable.

    Some countries in Europe have been hesitant to take advantage of their shale gas resources due to environmental concerns. In 2011, France banned hydraulic fracturing due to public pressure over concerns of potential dangers to water supplies. Though France has upheld their ban on hydraulic fracturing after an October 2013 Constitutional Council ruling, the shale revolution shown in the United States will inevitably be rivaled overseas by Russia, China, and other countries. The Chancellor of Germany, Angela Merkel, announced regulation in February 2013 allowing for the exploitation of shale gas using hydraulic fracturing. The prize of energy independence is on the minds of leaders across the globe, bringing economic benefits and national security advantages.

    Many elements are involved in energy security and there exist a large array of benefits stemming from this Holy Grail: technological, economic, and political. As pointed out by Daniel Yergin, founder of Cambridge Energy Research Associates, “the world’s global oil map is already being redrawn–not by politicians, but by technology.” The future of energy wealth is not in its overall quantity but in the amount of energy than can be produced from a small amount of a given resource: oil, gas, electricity, solar, wind, water, etc.

    Yergin explains that “to maintain energy security, one needs a supply system that provides a buffer against shocks…it needs large, flexible markets…and it’s important to acknowledge the fact that the entire energy supply chain needs to be protected.” Energy security will not be obtained merely by implementing hydraulic fracturing; a larger system of protections ought to be established and put into place to maintain a secure system and account for externalities. Hydraulic fracturing, however, is a substantial weight that will tip the scale of energy production and security around the world, bringing nations on a steady course towards a future of self-sufficiency, economic prosperity, and geopolitical stability.

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