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Issue No. 19 - November 1, 2013

1. European Parliament votes to require EIAs for all shale gas extraction

Impacts of shale gas and shale oil on the environment and human health
In July 2011, the Environment, Public Health and Food Safety Committee of the European Parliament published a comprehensive report, Impacts of shale gas and shale oil on the environment and human health (see left), which pointed out a number of weaknesses in the European regulatory framework with regard to shale gas. Among the report's numerous recommendations was the following: "Most importantly, the threshold for Environmental Impact Assessments to be carried out on hydraulic fracturing activities in hydrocarbon extraction is set far above any potential industrial activities of this kind and thus should be lowered substantially."

On October 9, 2013, the European Parliament voted overwhelmingly to amend the Environmental Impact Assessment (EIA Directive) so as to require mandatory EIAs for all non-conventional hydrocarbon extraction. An amendment that would have also required EIAs for all exploration activities was very narrowly defeated, but a last-minute amendment requiring an EIA for any exploration activity involving hydraulic fracturing was passed by a strong majority.

More details on the amendments and the votes of Irish MEPs can be found on the GEAI website and at

The following articles discuss the vote and its implications:
The European Commission is planning to publish a "robust" new legislative package for unconventional hydrocarbons in December or January, as EurActive reports. This speech by European Commissioner for the Environment Janez Potočnik refers to the planned legislation. According to this New York Times article, which describes the industry lobbying "bonanza" that is underway in Brussels, the industry has already been given a draft of the proposed legislation.

2. How to lose one's shirt at $4.54 per barrel

As financial expert Deborah Rogers explained to Pat Kenny when she visited Ireland in September, the oil and gas majors are making massive losses on their shale oil and gas operations. Exxon Mobil CEO Rex Tillerson stated to the US Council on Foreign Relations in June 2012: "We are all losing our shirts today. You know, we're making no money. It's all in the red." His sentiments were recently echoed by the outgoing CEO of Shell, Peter Voser, who told the Financial Times that the failure of Royal Dutch Shell’s huge bet on US shale was a big regret of his time as chief executive of the company: "Unconventionals did not exactly play out as planned." Both companies had to significantly write down their shale assets in August 2013. According to the New York Times, analysts from Bernstein Research "estimated that Shell lost $4.54 for every barrel it produced in the Americas, the location of almost one-quarter of its output."

In the presentation (see above) that Ms. Rogers gave in Carrick-on-Shannon, she made the following points:
  • The Wall Street banks are selling investments in shale in much the same way as they sold mortgage-based securities before 2008 (and pension funds are buying them). The fees from mergers and acquisitions in shale oil and gas, as companies are forced to sell off their unprofitable shale assets, are now the No. 1 profit center for the major Wall Street banks such as Goldman Sachs.
  • No investors could be found to finance a pipeline for crude from North Dakota's Bakken shale, because it is known that the production will not last -- most wells are expected to be played out by year 6. The crude is therefore being shipped by rail, three times more expensive than a pipeline.
  • Renewable energy industry jobs in the US outnumbered total oil and gas industry jobs (offshore and onshore) in 2011.
  • The growth in the renewable sector and the stable investment returns it offers are a threat to the investment prospects of the oil and gas industry, which is one reason the industry continues to promote the myth that shale oil and gas will provide an abundant and long-lasting energy supply for the US (the implication being that there is no need to invest in renewable energy). During the economic downturn, the "clean economy" in the US grew at 8.3%, twice the rate of the economy as a whole.
  • Costs to public authorities for road maintenance alone in four major shale states was significantly higher than revenues received from shale hydrocarbons. In Pennsylvania, revenue to the state was $204 million, while road maintenance costs were $3.5 billion.
  • In 2008, Fort Worth, Texas, received $50 million in revenue from 44 gas wells.
  • In 2012, the city received only $23 million for 397 wells, due to the rapid decline in well production after year 1.
  • The oil and gas industry would need to invest $50 billion annually just to keep production stable, but it does not have the money to make such massive investments.

3. Comparing renewable energy and natural gas

Comparing renewable energy and natural gas

In addition to providing better investment returns and creating more jobs than natural gas (see above), renewable energy is also turning out to be cheaper for electricity generation, even in gas-rich American states such as Texas and Colorado.

A new report from the Union of Concerned Scientists (UCS), Gas Ceiling: Assessing the Climate Risks of an Overreliance on Natural Gas for Electricity (2013), assesses the "climate risks from an overreliance on natural gas for electricity" and concludes that, although natural gas "could play a modest role in a clean energy future", it is "not an effective long-term climate strategy". According to the report, the US will need to "invest heavily in energy efficiency and increase renewable energy's share of the total power supply to 25 percent by 2025 and 80 percent by 2050", if it is to meet its climate control targets for the power sector.

Another recent article from the UCS, Disproving the Skeptics: 10x More Windpower and Solar is No Problem!, discusses a new study by US grid operator PJM and a consulting team led by GE that examines the possibility of increasing the renewable share of the US power supply to 30% by 2026 and that concludes, in effect, "Sure, we can do that".

As reported by Bloomberg News in September 2012, climate change and pollution related to CO2 emissions are reducing global GDP by 1.6% per year, or $1.2 trillion, whereas the cost of reducing emissions, notably by switching to renewable sources of energy, is estimated at only 0.5% of global GDP over the coming decade.