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Issue No. 14 - August 15, 2013

1. Shale profit hopes go up in smoke

Up in Smoke "The shale revolution is 'a little bit overhyped,' Shell CEO Peter Voser said last week as his company announced a $2.1 billion write-down, mostly owing to the poor performance of its fracking adventures in U.S. 'liquids-rich shales.' Which of its shale properties have underperformed, Shell didn’t say, but CFO Simon Henry admitted that 'the production curve is less positive than we originally expected.'..."
The rest of this article, by energy analyst and consultant Chris Nelder, is here

The Financial Times has recently published a number of articles about the current financial situation of the US shale gas and tight oil sector and the likelihood of US-style shale gas development being replicated elsewhere.
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One of the consequences of the current low prices for shale gas is that companies extracting unconventional oil in North Dakota's Bakken Shale now find it more economical to flare off the gas produced from their operations than to invest in the infrastructure necessary to bring the gas to the market.

A new report, Flaring Up: North Dakota Natural Gas Flaring More Than Doubles in Two Years, based on recent data from the North Dakota Industrial Commission, has been published by Ceres, a US organisation promoting sustainable business practices. According to this report, natural gas worth approximately $1 billion was flared in North Dakota in 2012, emitting 4.5 million metric tons of carbon dioxide, equivalent to the annual emissions of approximately one million cars.
The following articles summarise the report's findings:

Deborah Rogers, one of the first financial experts to express scepticism about the financial viability of unconventional gas and oil extraction (see SGBI Nos. 1 and 4), is coming to Ireland. Good Energies Alliance Ireland is organising a conference entitled The Future of Energy in Ireland at which Ms. Rogers will be one of the speakers. The conference will take place September 19 in Carrick-on-Shannon.

2. The truth will out...

EPA Conclusions

The shale gas industry has been known to go to extraordinary lengths
to keep secret the environmental contamination and associated health problems caused by hydraulic fracturing. Examples from Pennsylvania include a legal settlement imposing a lifetime gag order on a 7-year-old child and legislation to prevent doctors from sharing information about fracking chemicals with their patients.

Thanks in part to such measures, the gas industry was for a time able to claim that there was no evidence of groundwater contamination caused by hydraulic fracturing, and especially that any methane found in tap water was naturally occurring.

However, a suppressed US EPA report (see Conclusions above) has now emerged, thanks to two whistleblowers, which confirms that hydraulic fracturing caused the methane migration that contaminated groundwater in Dimock, Pennsylvania. Instead of publishing these findings, which came to light during the 2012 presidential campaign, the EPA published this press release stating that the water in Dimock was safe, even while acknowledging that the "EPA found hazardous substances, specifically arsenic, barium or manganese, all of which are also naturally occurring substances, in well water at five homes at levels that could present a health concern." The suppressed report, in the form of a Power Point presentation, is here. This article, from DeSmog Blog, summarises its findings. See also this Los Angeles Times article.

As John Hofmeister, former president of Shell Oil, recently admitted: "Everybody knows some fracking wells go bad."

3. NOAA report on methane emissions

Natural Gas Makes Climate Change Worse
As noted in SGBI Issue No. 3, the National Oceanic and Atmospheric Administration (NOAA) reported in January 2013 that methane escaping into the atmosphere from gas installations in Colorado was 9% of total production.

The NOAA has now published a new peer-reviewed study, Methane emissions estimate from airborne measurements over a western United States natural gas field which reveals that methane emissions from gas installations are as high as 12%.

The findings are outlined in the following three articles:
Greater focus needed on methane leakage from natural gas infrastructure, a peer-reviewed study published by the US National Academy of Sciences in February 2012, concluded that shale gas can only be considered an acceptable substitute for coal in terms of climate change as long as methane emissions are kept below 3.2% of production.
(For more on methane and climate change, see SGBI Nos. 3, 9, and 12.)

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