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Shale Gas: The True Story

February 19, 2012

As citizens of the world, consumers of energy and environmental stewards, our responsibility is to build a sustainable, environmentally friendly and economically viable energy source.  By design, few of us are in love with fossil fuels however we must be realistic. As the search continues for the best energy solution(s), time-and-time again the compass points north to Natural Gas.

Natural gas production from shale formations rich in hydrocarbons, known as “shale gas,” is one of the most rapidly expanding trends in onshore domestic oil and gas exploration and production today. Why, because, key industrial centers are sitting on vast shale gas energy opportunities. This is no longer a fantasy but a vision that can benefit the world not just tomorrow, but TODAY.

Countries including Argentina, Australia, Brazil, Canada, China, France, Mexico, Poland, South Africa and the United States have an abundant domestic resource base of technically recoverable shale gas. Secondly, natural gas is clean; in fact the cleanest of all fossil fuels (see following chart). Being an organic compound, it certainly has a carbon footprint, but natural gas emission levels of carbon dioxide (“CO2”), carbon monoxide (“CO”), nitrogen oxides, sulfur dioxide, particulates and mercury are on average 40% to 100% cleaner than coal. And with the exception of CO, natural gas is 28% to 100% cleaner than petroleum. 

Furthermore, the economic impact from developing shale gas has a multiplier effect far beyond just the supply chain from wellhead to exports. This “Shale Gale” as we call it in the U.S. has the potential to support more than 1.6 million jobs and generate more than $933 billion in federal, state and local government tax revenues over the next 25 years.

Using the U.S. as an example, natural gas has transformed the outlook of U.S.’s energy mix.
U.S. Shale Plays have:
• Created 600,000 jobs in the U.S. in 2010
• Added about $1,000 in disposable income per household
• Introduced higher paying job at about 23.00 USD per hour
• and contributed about $77 billion to the nation’s economy

Source: IHS Global Impact

When you put these benefits together you get what is called the ‘Triple Bottom Line’, an integration of values for measuring success: success in terms of social, ecological, and economic benefits. Shale gas is an endeavor of national social responsibility.
• People – in terms of an improvement towards labor and the community.
• Planet – in terms of benefits towards the ecology and the environment.
• Profits – in terms of real economic benefits enjoyed by the residential, commercial and industrial sectors.

Thus, natural gas is one of the rare resources that benefits all of these somewhat conflicting constituencies. Consequently, this sets the stage for both opportunities and challenges. Opportunities, in terms of, jobs, economic value, and government revenue! And downstream challenges in developing an adequate infrastructure and stimulating demand.

The world is at a crossroad; a crossroad of how to balance the tremendous quantity of undeveloped resources, with the complexity of developing an infrastructure to support demand, while protecting the community and the environment.

In many countries, coal is primarily used to generate electricity. It is this sector that can immediately benefit by developing shale plays. As the demand for electricity grows, new gas-fired electrical power generation stations can replace the need for coal-fired plants.  In the U.S., the Levelized cost of gas-fired stations is about 6.6 cents per kWh verses 9.5 cents for coal-fired plants. A double benefit of using natural gas – cheaper and cleaner electricity production!

Long-term opportunities to stimulate domestic demand include an infrastructure supporting natural gas fueled vehicles.

The world is proceeding with due caution to develop their shale plays. The dilemma is how best to manage the risks to the community, environment and economy while developing a valuable resource and markets.

Shale gas development has raised many concerns by industry critics and citizens. New gas developments bring change to the environmental and socio‐economic landscape, especially where gas development is a new activity. These changes have raised questions about the nature of shale gas development, and the ability of the current regulatory structure to deal with this development.

Purported issues include natural gas’s impact on:
• human health and safety
• the environment
• fresh water reserves
• air quality, and
• seismic activity.

All valid concerns to think first and drill later! To this end, regulatory agencies, policy makers, and the general public need an objective source of information by means of which they can address these issues.

Now let’s demystify a few critical aspects of development. Time to separate fact from fiction! Let’s begin with hydraulic fracturing, simply because it is essential for shale gas completion and central to many controversies over its production. 

Both horizontal drilling and hydraulic fracturing are established technologies with a significant track record; horizontal drilling dates back to the 1930’s and hydraulic fracturing has a history actually going back to the 1860’s, when nitroglycerine was used to stimulate shallow, hard-rock oil wells. It was surprisingly very successful and not so surprisingly very hazardous and often illegal. 

Fracturing fluid is a proprietary slurry comprised of at least 98% water and sand with the remaining 2%, or less, consisting of chemical additives each having a specific function. Although there are hundreds of chemicals that could be used as additives, there are typically no more than 12 used in the fracturing process.  Most of the additives are commonly used household or personal care items, which pose little or no health risks.  However, a limited number are hazardous, and only one routinely used additive, ‘ethylene glycol’, is poisonous if swallowed in sufficient quantities. It is important to note that ethylene glycol is widely used as automotive antifreeze. 

For this reason, the ingredients of the fracturing fluid must be transparent. Legislation should be put in place to have the operators disclose the makeup of the fluid.  Also, of prime importance, are the corresponding regulations to ensure proper injecting and disposal methods.

Pure, clean groundwater! Nothing can replace it. This is why fresh-water aquifers need to be protected through legislation. The concerns around groundwater contamination are primarily centered on one fundamental question: Are the fractures such, that they do not contact underground sources of drinking water?

Source: MIT Research Study, Natural Gas, Chapter 2

From the above diagram, it can be seen that protection is afforded by casing and cementing, where ‘casing’ isolates fresh water zones from inside the well and ‘cementation’ seals the annular spaces within the casing to create a hydraulic barrier to fluid migration. In addition, there are natural barriers in the rock strata that act as seals holding the gas in the target formation.  A fundamental precept of shale gas geology is to ensure sufficient separation and effective sealing between the shale layers and overlying aquifers.

It is important to mention, that credible investigations into complaints of water contamination attributed the problem to poor casing construction and cementing as well as the close proximity of the shale layers to underground water supplies. Also, inadequate Fluid Management including handling, injecting and disposal were also to blame.

In order to adequately protect the people and the planet, there needs to be a Regulatory Framework that addresses every aspect of exploration and production and takes into consideration:
• the geology,
• casing and cementation,
• contractor qualification,
• ground water testing,
• and public disclosure of chemicals.

Multi-stage fracturing is water intensive and can use up to 20 million liters of water per well. Therefore, it is critical, that large quantities of fresh water are available.

This chart shows the “Comparative Water Usage of Several Major U.S. Shale Plays” by sector.

Here we see that shale gas production, represented by the shaded column, is, in fact, the lowest consumer of water. Public systems are by far, the primary demand sector. And where heavy industry is present, industrial and mining operations, require substantial quantities of water. Even the irrigation and livestock sectors utilize more water than the shale gas industry.

Most of the water used in hydraulic fracturing comes from surface water sources such as lakes, rivers and municipal supplies.  However, groundwater can be used to augment surface water where it is available in sufficient quantities. Alternate strategies include trucking in the water, building ponds and reservoirs to capture rain, recycling water and contracting with local public works and farmers. These are some of the innovative ways the industry is obtaining, monitoring and regulating water usage. Finally with new technologies to the rescue, such as “super fracking”, it is possible to reduce water consumption in half.

Of utmost concern are natural gas emissions from production. This is driven by its effectiveness in trapping heat in the atmosphere and its corresponding impact on climate change. 

The EIA reported that total atmospheric methane emissions from all sources constitute only 10% of all other Greenhouse Gas (“GHG”) emissions. CO2 was by far the predominant greenhouse gas, at about 83%. Furthermore, not all atmospheric methane comes from natural gas systems. Only a third of the atmospheric methane emissions come from wells, pipelines and storage tanks. Other major sources of methane emissions come from fermentation, landfill and coal mines.  Therefore, shale gas contributes only about 3% of the total greenhouse gas inventory.

Similarly, MIT reported that, “according to EPA inventories released in 2010, in 2008 GHG emissions from natural gas systems were 126 Tg (Tg, one teragram is equivalent to one million metric tons) of CO2 equivalents (CO2e), less than 3% of total CO2 equivalent emissions from all energy sources and activities.” Natural gas systems include production, processing, transmission and distribution of conventional and unconventional (shale gas) natural gas.

Furthermore, many producers and pipelines have already deployed relatively inexpensive methane detection and capture technologies and are able to realize profits from the use of these techniques.

To find the right answer you first have to know the real problem. One thing we all can agree on is that doing it wrong will lead to problems.

A fair number of investigations into the complaints concluded that the problems were avoidable and, as I mentioned earlier, traced to:
 Inferior casing and cementing
 Insufficient separation between gas-bearing rock and water supplies
 And lack of oversight and adherence to best practices

Other reported problems were subsequently found to be erroneous, lacking merit, or not representative of the industry.
 MIT reported that there were only 42 complaints of contamination out of 15,000 shale wells drilled in the US – a 3 tenths of 1% problem.
 Also, Cornell University’s initial report stating that shale gas has a higher GHG footprint than coal was subsequently retracted. A new report concluded that its footprint is actually 1/3rd to ½ that of coal,
 and finally some law suits involving methane contaminated water were subsequently dismissed for lack of evidence.

The answers lie in the fact that modern shale gas development is technologically driven and must be treated as such. Unproven cost cutting measures and process deviations are unacceptable.  Sixty plus years of experience tells us that shale gas can be safely managed and controlled. When done right it is a low risk proposition.

So our quest for answers has brought us to two simple words – “BE SMART.”

Be smart and ensure:
• Adequate oversight
• Adoption of rules and codes
• Onsite safety and emergency preparedness
• Programs to train and certify workforce
• Adherence to best practices
• and Use of Qualified operators

Like it or not, renewable energy has a long way to go to make an impact on any one country’s energy mix. Natural gas, being the least disruptive fossil fuel, could serve as a ‘bridge’ to a low-carbon future. It’s a cushion, but not a complete answer.

In a scenario, that envisions a worldwide momentum towards stick policies aimed at cutting greenhouse gas emissions, electric utilities and other sectors of the economy will have no other choice but to adopt natural gas as a logical alternative. Natural gas will buy time to further develop cleaner fuels. Hopefully there will be something at the other end of the rainbow, whether it’s in 25 years or at the end of the century.

In closing, the shale gas industry creates jobs, economic value, and government revenues. Additionally, it also provides broader macro-economic impacts for both households and businesses. This is especially true in industries that are intensive users of natural gas as a feedstock such as the chemical industry, and industries that significantly benefit from lower cost electricity. And along the way, society, unknowingly, becomes an environmental steward striving to sustain our environment.

Shale gas development is “SAFE”, “MANAGEABLE” and “BENEFICIAL”, now and for the future.

1. IHS Global, “The Economic and Employment Contributions of Shale Gas in the US”
2. Star-Telegram, “Report: Shale gas industry has profound economic impact in United States,”
3. U.S. Energy Information Administration, “Emissions of Greenhouse Gases Report.”
4. U.S. Department of Energy, “Modern Shale Gas Development in the United States: A Primer,”
5. ALL Consulting, “Comparative Water Usage in Major Shale Plays,”
6. MIT Energy Initiative, Interdisciplinary Study, “The Future of Natural Gas,”
7. Oil & Gas Law Brief, “Hydraulic Fracturing News: Latest Cornell Study Concludes that Greenhouse Gas Footprint of Shale Gas is Much Lower than that of Coal,”
8. Star-Telegram. Barnett Shale, “Water pollution suit against Range Resources is rejected,”
9. Hydraulic Fracturing: History of an Enduring Technology;
10. Shale Gas Plays of the Southern Appalachian Thrust Belt,   Jack C. Pashin, Geological Survey of Alabama
11. Institute of Energy Research, “Levelized Cost of New Electricity Generating Technologies,”

Barry Stevens, Ph.D.
TBD America, Inc.

5 Comments leave one →
  1. February 19, 2012 5:23 PM

    Thank you for sharing this information. As where I do think that Natural Gas is a much better fossil fuel and is locally available, what guarantees are there that the harvested gas would be comsumed in the US versus being sold overseas or to someone that would pay more for a cleaner fossil fuel. My hopes and dreams rest in renewable energies, and these renewables charging electric vehicles and appliances.

  2. February 19, 2012 6:43 PM

    Thanks for a great overview, Barry. Although you focus on the US market, I believe your story is directly applicable to most other countries in the world as well.

    Brian, I believe it would be good for the US to export some gas, after all the country does need some revenue to cover for all the expenses. What a change in the world dynamics if the US over the next years goes from major energy importer to exporter! I do share your hopes for a renewable future, and as I believe the electric way is the only way for us to get there, natural gas is the perfect bridge as the methane can be a perfect fuel for electricity production in fuel cells.

  3. February 20, 2012 4:23 PM

    I completely agree with you that Natural Gas is going to be a bridge fuel. My personal opinion is that the momentum needed to really bring alternative energy to common use won’t be reached until we hit energy crisis levels – we’ll get serious about it when we start running short of fossil fuels.

    You touched on 3 causes for groundwater contamination
     Inferior casing and cementing
     Insufficient separation between gas-bearing rock and water supplies
     And lack of oversight and adherence to best practices

    Inferior casing and cementing techniques are a big problem. It does not matter how well separated the gas bearing rock and the groundwater zone are, if cementing best practices are not religiously followed, you have a potential for groundwater contamination.

    Problem is, at the wellhead the people responsible for implementing these best practices are
    a) unfamiliar with them
    b) don’t truly understand the significance of them
    c) pushed for time
    d) pushed to save money

    If you wanted to really drill down to root cause, money is it. Many large companies will sacrifice tomorrow for the sake of another buck today – especially in O&G.

    Regulations that make sense and actually protect our water, oversight from a third party during drilling and fracturing, and relentless punishment for non-conformance at the senior executive level are needed.

    Have you read ?

    When you say “the ingredients of the fracturing fluid must be transparent”– I couldn’t agree more. THey need to abolish trade secrets. That’s where the nasty chemicals are.

    Nice article. Thanks

  4. February 21, 2012 12:53 PM

    Thank you all for your insight and support of this thesis. It’s a set of complex issues , with no best solutions. Best we can do now is risk management and move forwards.

    Please do not hesitate to contact me at:

    Also, please visit my website at:

  5. February 23, 2012 11:16 AM

    Despite what old-energy insiders have to say, natural gas it is anything but clean. Although the fossil fuel industry is working hard to misinform, natural gas is a wolf in sheep’s clothing, and it is not a suitable “bridge” energy source. Natural gas is a problem not only because of the carbon generated in combustion. The most serious problem with natural gas is due to the methane (the worst GHG) emitted during extraction. In fact natural gas may even be as bad as coal when everything is factored into the equation. Despite the double-speak of those with an agenda, natural gas is not an option for anyone who is really interested in building “a sustainable, environmentally friendly and economically viable energy source.”

    If you want to review the most up to date science see “Natural Gas is Not Clean Energy”

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