Groundbreaking Reports Show Fracking is a Risky Short-Term Bubble
Energy Policy Forum and Post Carbon Institute have released two groundbreaking reports that belie energy industry claims of U.S. energy independence as a result of newly accessible shale gas and shale (tight) oil.
The report findings are based on an unprecedented analysis of more than 60,000 U.S. shale oil and gas wells and an investigation of the role of Wall Street investment banks in the explosive growth of fracking for natural gas.
Drill Baby Drill: Can Unconventional Fuels Usher in a New Era of Energy Independence? by J. David Hughes takes a critical look at the prospects for shale gas, shale/tight oil and other unconventional fuels.
Shale & Wall Street: Was the Decline in Natural Gas Orchestrated? by Deborah Rogers uncovers the role of Wall Street investment banks in inflating the natural gas bubble to their advantage.
"The main point for me is that the investment bankers heavily promoted shale and put pressure on the companies to meet production targets," said Rogers. "This in turn helped create a glut in the market as we didn't have demand in place. Prices then plunged which opened the door for large transactional fees for the banks. It is highly unlikely that market savvy bankers didn't recognize such an opportunity very early on. In fact, I think they created it.
"Exporting is a last ditch effort to shore up a failing balance sheet. Exportation will drive the price higher in the U.S. There's no doubt about it. The question is how high will it go. When you are producing a commodity and have produced it to such a high extent, you want to find someone who will buy it, and in this case, it will be the Asians.
"The irony of this is that we used to exploit other areas of the globe to provide energy security for the U.S. and now the U.S. is being exploited to provide energy security to Asia."
Together, the independent reports reassess current common wisdom about the tight oil and shale gas booms that are sweeping America. The reports comprise a thorough and up-to-date analysis of data on U.S. oil and gas wells, and a comprehensive review of the financial status of the companies leading the charge.
What emerges from the data:
- Overall field decline rates are so steep that 30-50 percent of shale gas production and 40 percent of shale oil production must be replaced annually to offset declines.
- High productivity shale plays are not ubiquitous. Just six plays account for 88 percent of shale gas production and two plays account for 80 percent of shale oil production. Furthermore the most productive areas constitute relatively small sweet spots within these plays.
- Maintaining production requires high rates of high-cost drilling—8,600 new wells annually for shale gas and oil. This will increase as sweet spots are drilled off.
- High drilling rates require extremely high rates of investment—$48 billion a year to maintain shale gas and oil production considering drilling costs alone—much more if full cycle costs are included. These costs will increase dramatically as plays age.
- Wall Street promoted the shale gas drilling frenzy, which resulted in prices lower than the cost of production and thereby profited [enormously] from mergers & acquisitions and other transactional fees.
- Shale gas has become one of the largest profit centers in some investment banks, in direct parallel with the decline of natural gas prices.
- Due to extreme levels of debt, stated proved undeveloped reserves (PUDs) may have been out of compliance with SEC rules at some shale companies because of the threat of collateral default for some operators.
Hughes and Rogers suggest the fracking boom may be a costly, risky, short-term “fix” for America’s long-term dependency on depleting oil and gas. Rather than offering the nation a century of cheap energy and economic prosperity, fracking may instead present us with a short-term bubble that comes with exceeding high economic and environmental costs.
For more information visit the new Shale Bubble website.
Visit EcoWatch’s FRACKING page for more related news on this topic.
- Thom Yorke of Radiohead Releases Song With Greenpeace to Help ... ›
- Patti Smith, Thom Yorke, Flea and More Featured on Just Released ... ›
- Musicians and Activists Unite at 'Pathway to Paris' - EcoWatch ›
EcoWatch Daily Newsletter
A national park in Thailand has come up with an innovative way to make sure guests clean up their own trash: mail it back to them.
- Supermarkets in Thailand and Vietnam Swap Plastic Packaging for ... ›
- Malaysia Sends Plastic Waste Back to 13 Wealthy Countries, Says It ... ›
- Thailand Begins the New Year With Plastic Bag Ban - EcoWatch ›
- Coronavirus Worsens Thailand's Plastic Waste Crisis - EcoWatch ›
- Marium, Thailand's Beloved Baby Dugong, Is the Latest Victim of ... ›
By Ilana Cohen
Four years ago, Jacob Abel cast his first presidential vote for Donald Trump. As a young conservative from Concord, North Carolina, the choice felt natural.
But this November, he plans to cast a "protest vote" for a write-in candidate or abstain from casting a ballot for president. A determining factor in his 180-degree turn? Climate change.
Fractures Among Young Climate Conservatives<p>While young conservatives have united around the urgency of climate change, they remain divided over how to bring their concerns to the ballot box. Some embrace right-wing <a href="https://www.washingtonpost.com/politics/biden-attacks-republican-convention/2020/08/24/434e5b46-e66d-11ea-970a-64c73a1c2392_story.html" target="_blank">attacks</a> painting Biden as a "tool of the left" and find his climate agenda "radical." Others can't find a way to justify voting for Trump, even if it means breaking with their party.</p><p>Patrick Mann from Orange County, California, voted for Trump in 2016. But today, he's leading Aggies for Joe at Texas A&M University and is co-founder of Texas Students for Biden. </p><p>Mann grew up watching wildfires ravage his home state, nearly forcing his family to evacuate in 2017. The GOP is failing to "meet the moment" for climate action, Mann said. He's hoping Biden will deliver on a promise to "<a href="https://www.desmoinesregister.com/story/opinion/columnists/caucus/2020/01/06/joe-biden-democrat-president-iowa-caucus-restore-soul-our-nation/2806422001/" target="_blank">restore the soul of our nation</a>." </p><p>Taylor Walker from Pensacola, Florida, is also determined to make her voice heard on climate, including by casting her first-ever vote for president—but not for Biden.</p>
A False Equivalency<p>Young climate conservatives may fear climate denial and delayed climate action, but more than that, they fear the growing political momentum around the Green New Deal, the massive spending it entails and <a href="https://joebiden.com/climate-plan/" target="_blank">Biden's citing of it</a> as a "crucial framing for meeting the climate challenges we face."</p><p>Many don't want to split with their party to support a Democrat whose <a href="https://www.npr.org/2019/09/03/757220130/joe-biden-on-bipartisanship-gun-control-and-regrets-over-inaction-after-a-traged" target="_blank">allegedly bipartisan intentions</a> they doubt. If stymieing what they consider a radical green agenda means re-electing a climate change denying president, so be it. </p><p>"I'm scared of climate change, but I'm also scared of the Green New Deal and what it means for America," said Ben Mutolo, a republicEN spokesperson and junior at SUNY College of Environmental Science and Forestry. </p><p>Mutolo felt encouraged by former Ohio Governor John Kasich's <a href="https://www.rollcall.com/2020/08/17/kasich-speech-to-democratic-convention-follows-years-of-building-conservative-credentials/" target="_blank" rel="noopener noreferrer">appearance</a> at the Democratic National Convention, but he still struggles to see himself voting for Biden. Though the candidate paints himself as a <a href="https://www.latimes.com/politics/story/2020-08-12/harris-biden-different-generation-similar-political-instinct" target="_blank" rel="noopener noreferrer">centrist,</a> Mutolo believes he's "cozying up to the ultra-progressive left." </p><p>Mutolo, who wants to see market-based climate solutions like a carbon tax, feels torn between a candidate whose climate plan relies on taking an "<a href="https://joebiden.com/environmental-justice-plan/#" target="_blank" rel="noopener noreferrer">All-of-Government approach</a>," and one with no efforts to reign in global warming at all. <span></span></p><p>Leiserowitz said he appreciated how a conservative might feel Biden's climate plan "doesn't jive with their limited government, free-market approach."</p><p>But he sees a strong distinction between voting for a presidential candidate with a <a href="https://www.nytimes.com/2020/07/14/us/politics/biden-climate-plan.html" target="_blank">$2 trillion climate plan</a> that includes large renewable energy investments, which have <a href="https://climatecommunication.yale.edu/publications/politics-global-warming-april-2020/" target="_blank" rel="noopener noreferrer">bipartisan support</a>, and a candidate trying "to take the country in the opposite direction, towards more fossil fuels."</p>
- 7 Republicans Joined Senate Democrats in Vote to Fight Climate ... ›
- Climate Change Acknowledged by Increasing Number of ... ›
The World Health Organization (WHO) announced Monday that 64 high-income nations have joined an effort to distribute a COVID-19 vaccine fairly, prioritizing the most vulnerable citizens, as Science reported. The program is called the COVID-19 Vaccines Global Access Facility, or Covax, and it is a joint effort led by the WHO, the Coalition for Epidemic Preparedness Innovations (CEPI) and Gavi, the Vaccine Alliance.
- Trump Denies CDC Director's 2021 Timeline for Coronavirus Vaccine ›
- CDC Tells States to Prepare for a Vaccine Before November Election ›
- Fauci Warns Pre-Pandemic Normalcy Not Likely Until Late 2021 ... ›
By Gloria Oladipo
In the face of dangerous heat waves this summer, Americans have taken shelter in air conditioned cooling centers. Normally, that would be a wise choice, but during a pandemic, indoor shelters present new risks. The same air conditioning systems that keep us cool recirculate air around us, potentially spreading the coronavirus.