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Shale Gas Isn't Actually Evil. But the Shale Gas Industry is Behaving Stupidly.

Author: Michael A. Levi, David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the Program on Energy Security and Climate Change
July 18, 2011
The New Republic

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In the marquee scene from the 2010 documentary Gasland, nominated earlier this year for an Academy Award, a man is shown warily holding a lighter underneath his running kitchen faucet. The flame quickly ignites the tapwater, briefly producing a fireball in the sink. Something appears to have gone wrong—and the culprit, the film inveighs, is the sinister local shale gas industry.

Gasland's incredulous depiction of flammable drinking water is but one expression of the anti-shale gas sentiment that is increasingly permeating American popular consciousness. A series of articles in The New York Times has depicted an industry eager to bend both the truth and the law (one anonymous source was quoted calling shale gas a “Ponzi scheme”). In pop culture, too, the shale industry is increasingly synonymous with insidious motives: On an episode last November of the CBS crime show “CSI,” detectives were to investigate the suspicious deaths of a group of shale gas whistleblowers. It's no wonder that the industry has come under public fire in some areas, with communities in Pennsylvania and New York now resisting development of their gas deposits.

Many of the attacks have been unfair—but their impact is real. The burden now falls on the shale industry to restore the public's confidence. Rather than denying or bemoaning their woes, shale gas producers should be calling for firm but sensible oversight of their activities, both at the state and the federal level. Otherwise, public antagonism may put a big damper on the industry—an outcome that not only producers but also the broader public should want to avoid.

The problem with the attacks on shale gas isn't that the gas producers need our sympathy; it's that we're in need of their product. Shale gas has been increasingly and rightly recognized as a game-changing source of energy for the United States. President Obama has called the resource “terrific,” asking, “Are we doing everything we can to develop [it]?” Economic experts have hailed the advent of a cheap source of domestic fuel; security strategists have talked about undermining gas powers such as Russia and Iran; even climate campaigners, normally wary of the fossil fuel industry, have become enamored of its potential as a cleaner alternative to coal.

Shale skeptics have since tried to dim the resource's glow, and, while some of their criticisms ring true, many of their most explosive arguments don't hold up. In its series, The New York Times quoted several people, for example, who suggest that shale gas will never make economic sense. But while it's almost certainly true that current gas prices make little economic sense, most independent analysts agree that slightly higher gas prices would make extraction work just fine while preserving the social benefits of shale development. (If it's impossible for anyone to make a profit at present prices, those prices will inevitably go up.) And, while some environmental advocates have argued prominently that shale gas is worse for climate change than coal, their numbers simply don't add up. Analysts at the Department of Energy's National Energy Technology Laboratory have found that, while shale is slightly worse for the climate than other domestic sources of natural gas, both are far superior to coal.

Some of the arguments about local environmental impacts of shale gas development are, however, on stronger ground. Natural gas production entails real risks, not least to drinking water supplies. In order to access shale gas, developers need to perform “hydrofracturing” (or “fracking,” in industry parlance), which involves blasting a mix of water, sand, and chemicals into wells that have been dug thousands of feet deep. That fractures the surrounding shale, allowing gas to flow into the well. People have claimed that the chemicals used in the process can contaminate water supplies, but there is no evidence of that having occurred. Nonetheless, depending on how well the developers have “cased” the hole they've created (i.e., how strong a barrier they've created between the well and the surrounding earth), gas can seep into surrounding aquifers, leading to the sort of pyrotechnics that almost won an Oscar. The industry will be quick to point out that gas in water is not hazardous, and that gas has been found in water supplies well before shale development started, but, once you find yourself explaining away flaming tap water, you've already lost.

Policymakers and industry also have relatively poor understanding of the risks entailed in disposing of the fluids used in fracking after their use. What they do know for certain is that, if irresponsible drillers cut corners in disposing of chemical-laced wastewater, the risks to peoples' health—just as in any other case of toxic chemicals mismanagement—is intolerable. Alas, the shale gas industry is so diverse that there will inevitably be bad apples.

There are also issues that go beyond the environment: Shale gas development can be a social nuisance. Gas development is an industrial process that's often pursued in near-urban areas; it can involve large crews of people driving heavy equipment around 24 hours a day, seven days a week. That tends to sit poorly with the neighbors—particularly those who don't own gas rich land.

Some of these concerns are overblown by anti-shale partisans. But many are legitimate, or at least contain legitimate elements. And, when public worries of this sort become entrenched, as they have in many cases, they have the potential of curtailing reasonable debate—and necessary industrial progress.

Yet, for too long, the shale industry has failed to recognize the significance of the hostility it faces. And, as it increasingly wakes up to it, it is being overly defensive. In a letter published in late June responding to The New York Times series, the head of the independent gas producers' lobby, known as ANGA, chose to ignore the substantive issues raised by the newspaper, arguing instead that “The New York Times has proved itself to be firmly against the opportunities that clean, domestic, abundant natural gas provides” and demanding that the paper disclose its “agenda”. (The article in question was without doubt deeply flawed—I've criticized it myself in pretty strong words—but that does not mean that an ad hominem response was wisest.) Where the responses haven't been defensive, they've been irredeemably amateurish. Talisman Energy, a developer active in Pennsylvania, recently tried to calm public worries by releasing a children's coloring book, complete with a hardhat-wearing dinosaur that it dubbed the “Friendly Frackasaurus.” (On June 15, the company yanked PDFs of the book from the Web after being savaged by Stephen Colbert.)

This sort of talk is cheap. At best, it does little if anything to assuage public fears; at worst, it insults the public's intelligence. Had the industry woken up to public worries a year or two ago, it might have gotten out in front of the bad press and real risks. But it did not. If it wants to win back the public trust and address the risks people fear, it will need to embrace an option it largely hates: It should turn to the states and the federal government to strengthen supervision of its activities.

Many in the industry will retort that they are already tightly regulated at the state level, and, in many ways, that's true. But the current state of regulation is clearly insufficient to address existing, and often legitimate, public concerns. Detractors will also argue that geological, economic, and cultural conditions vary drastically from state to state, making federal regulation in particular both difficult (Washington is in no place, for example, to prescribe zoning regulations for Pennsylvania) and unwise. But the federal government ultimately does have a legitimate role to play, since accidents in one state can easily mar the reputation of shale gas in others, and the nation as a whole.

The best compromise would involve minimum standards from the federal government combined with detailed implementation at the state level. These standards might usefully focus on at least three areas: well casing, wastewater disposal, and monitoring of impacts on local water supplies. Studies currently underway at the Environmental Protection Agency and the Department of Energy might reveal other matters deserving of oversight. That should be combined with federal support for state and local governments that are new to gas development and need assistance in crafting effective regulations. The industry should also end its opposition to closing the loophole in the federal Safe Drinking Water Act that allows it to avoid disclosing chemicals in its fracking fluids. Regardless of the substantive merits of the case against disclosure, opposing something that is supposed to promote safe drinking water is a political loser.

The bigger shale gas players like Shell and Exxon Mobil have already been moving beyond public relations ploys and are starting to promote tougher regulation and stronger industry codes of conduct (though they have still opposed a meaningfully enlarged federal role). But most of the industry is still dragging its feet. This is awfully shortsighted. Too much regulation may kill the shale gas industry—but too little will let the industry kill itself.

Michael Levi is the David M. Rubenstein senior fellow for energy and the environment at the Council on Foreign Relations.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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