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Ramifications of the Shale gas boom

Ramifications of the Shale gas boom
Boondoggle! That’s how Dick Martin explained to me the shale gas revolution in the United States of America. Boondoggle is slang for an activity that is wasteful or pointless but gives the appearance of having value. Martin, a 70 years old US Army veteran, works with Pennsylvania Forest Coalition that is raising the awareness of people about the negative impacts of shale gas drilling in forests. Martin was driving me to Loyalsock State Forest, about 300 km from Pittsburgh, where shale gas is being developed on a massive scale.

Pennsylvania’s history has been filled with natural resources booms and busts. Timber was the first resource to be extracted. It devastated the forests. The first large-scale coal mines of the US were opened in Pennsylvania. The first oil wells were drilled there. The US’ first nuclear power plant opened there. The worst commercial nuclear accident occurred in Pennsylvania in 1979. During all these resource booms, industry made money and then walked away. It is estimated that the state has more than 200,000 exhausted gas and oil wells which companies have abandoned without plugging. In between these booms and busts, this largely agricultural state has struggled economically. Shale gas is the newest natural resource that the state has put its eyes on. 

Pennsylvania is at the heart of the shale gas development in the US. It sits above three formations of shale, named Marcellus, Devonian and Utica, which contain some of the world’s largest shale gas reserves. The current proven reserve is estimated to be 44 trillion cubic feet (tcf), which is similar to natural gas reserves in India. But unlike India, every year Pennsylvania’s reserves are being revised upwardly. It was in the late 1990s that techniques to economically extract the gas from shale formations were developed. In mid-2000, the political establishment in Pennsylvania saw shale gas as a way to generate employment and boost local economies, and embraced gas drilling like a modern gold rush. The results have been startling.

From 2005 till March 2014, permits were issued to drill 13,793 wells and 7,618 wells have been drilled. Production of shale gas has soared from 1 billion cubic feet in 2008 to 4.0 tcf in 2014. To give an idea of the scale, India’s total natural gas output in 2013-14 was less than one-third of Pennsylvania’s and one-tenth of US shale gas production. Shale gas development in Pennsylvania started in state forests as the state government opened huge public forestland for it. Forests in Pennsylvania are also split estates in which the sub-surface mineral rights are vested with private individuals or companies, while the surface rights are vested with the state. In these estates, the government can do nothing to stop shale gas drilling. As a result, of the 890,000 hectares (ha) of state forests, nearly 280,000 ha have been made available for fracking and leases have been issued on 156,000 ha. Most of these are private leases. In the remaining, however, the state is making a lot of money as lease rent, taxes and royalty. But this money is coming at a huge ecological cost.

As Martin and I moved from one part of the Loyalsock State Forest to another, I saw how unplanned shale gas development was fragmenting the forest and damaging the ecology. It resembled the Wild West. There is no plan and hardly any coordination between agencies. Companies have drilled wherever it suited them. Each has separate roads and pipelines to carry water and shale gas even in the same area. Instead of transporting gas through pipelines in a predefined direction—for instance, along the roads—gas is being transported in multiple directions. Such an extensive fragmentation could have devastating implications for the forest’s ecology, but I didn’t get a sense if people cared. And I understood why. As I saw more shale gas pads, I also grew ambivalent towards shale. At every site a few hectares of forest area was clear-cut and on a concrete pad 6-12 wells were producing gas silently. No pollution was visible. A tank was collecting wastewater coming out of the wells. The sites looked much neater and cleaner than the conventional oil and gas wells I had seen in India.  

To a citizen of Pennsylvania an individual shale gas site may not give any impression of negative environmental impact. On top of it, shale drilling has bought down the prices of natural gas to historically low levels. This is why I found that even Dick had no problems with shale gas, only with the haphazard manner in which it was being done. But I soon realised that shale gas is different. When Martin showed me the aerial shots of the forest area, it struck me that a large number of shale gas pads had been gouged in a very small area. This is in stark contrast with conventional gas extraction. 

Shale v conventional gas
Shale gas is less concentrated than conventional deposits. It is trapped in low permeability rocks that impede its flow, requiring more invasive drilling and production activities. Whereas onshore conventional fields might require less than one well per 10 square kilometres (km2), shale fields might need more than 10. In addition to the smaller recoverable hydrocarbon content per unit of land, shale gas development tends to extend across a much larger geographic area, thereby affecting a larger population. 

Marcellus Shale in the US, for example, covers more than 250,000 km2, which is about 10 times the 
Hugoton Natural Gas Area in Kansas, the country’s largest conventional gas-producing zone. Another difference between shale gas and conventional gas is hydraulic fracturing or fracking. In this water mixed with chemicals is pumped into the ground to create cracks in shale rock to release the gas. While some of the conventional wells are also fracked to increase output, all shale wells must be fracked to release gas. This means shale gas production requires lots of water and chemicals and, therefore, generates a lot more waste. Shale gas, therefore, has a substantially higher environmental impact than conventional gas.

Shale tempts India
Interest in natural gas is growing world over because it is the cleanest burning fossil fuel. The global consumption of natural gas has increased by 30 per cent in the past 10 years. The International Energy Agency (IEA) has even predicted a golden age for natural gas in which the global gas demand rises by more than 50 per cent between 2010 and 2035, and natural gas overtakes coal to become the second-largest primary energy source after oil. IEA’s golden age for natural gas is based on the assumption of unlocking the world’s vast resources of shale gas.

Natural gas is a scarce commodity in India. The gap between demand and supply of natural gas is about 40 per cent. On top of this, India imports about 30 per cent of its natural gas consumption at a very high price. India will face a shortfall of more than 3.8 tcf of natural gas by 2015-16, up from 3.2 tcf in 2013-14, according to the petroleum ministry. Short supply and high prices of natural gas have led to significant negative environmental and social impacts in the country. 

India is not able to provide natural gas for cooking to a large proportion of its population. Only about 12 per cent of its rural households and 65 per cent of the urban households use liquefied petroleum gas as a main source of cooking energy. Indoor air pollution from traditional cooking fuels such as firewood is leading to large-scale premature deaths and diseases. India is not able to supply natural gas to the urban transport sector either. Thirteen of the world’s top 20 air polluted cities are in India. Gas can play a big role in reducing urban air pollution. Gas power plants of the combined capacity of 10,000 MW are idle due to gas shortage. Adequate supply of gas to these plants can reduce coal consumption in India significantly, thereby reducing both local pollution and carbon emissions.
India is, therefore, looking for an affordable and secure supply of natural gas. It is planning to bring gas from Central Asia, the Gulf countries as well as from the US. It is also looking to explore shale gas. 

Shale gas resource in India is not very high. The present technically recoverable shale gas resource is about 100 tcf, spread over four on-land sedimentary basins, namely Cambay in Gujarat; Krishna-Godavari in Andhra Pradesh; Cauvery in Tamil Nadu; and Damodar basin in Jharkhand and West Bengal. These resources are sufficient to meet India’s gas demand at the current level for about 25 years. However, India has a vast sedimentary area and many more shale gas basins can be found. So far the development of shale gas in India is limited to drilling of a few exploratory wells in Jambusar (Gujarat), Durgapur (West Bengal) and Hazaribagh (Jharkhand). Initial results indicate that shale gas basins in India are also not as prolific as those in the US. Besides, since India does not have a good service sector for the oil and gas industry as in the US, shale gas extraction will be difficult and more expensive. 

In 2013, India finalised its policy for exploration and exploitation of shale gas. The policy has adopted a cautionary approach and has allowed only national oil companies to carry out exploration and exploitation; private companies are not allowed. But this could change very quickly as has happened in the US.

What should India do?
With higher population density, lower per capita water resources and higher proportion of arable and forest land, the impacts of fracking on the ecosystems and communities in India would be higher than in the US. But the question is how high. It is obvious that shale gas is more damaging than conventional gas, but is it more damaging than coal? From my travel in the US and familiarity with coal mining practices in India, I would prefer shale gas any day to coal. Shale gas development has lower impacts on the local environment compared to coal mines, including impacts on water and especially on the local community. The only rider is that we should not do the mistakes that the US has done like not putting in place stringent environmental norms and practices. I also believe that shale gas is not a solution for climate change. It is not a “bridge fuel” between coal and renewable energy. On climate change the world needs to take action in the next 20-30 years and methane is hugely damaging to climate over a 20-year period. So, should India go for shale gas?

I could take a moral high ground and say that India should not go for shale gas. But, considering the scarcity of gas and benefits it can provide to vast sections of the population, including the health of women and improved air quality in cities, this would be a hypocritical position, especially in light of the large-scale shale gas use in the US and potentially in China, Australia and other countries that have more responsibility towards climate change. I, therefore, think that India should go ahead with shale gas development but cautiously. 

India should be clear why it wants to develop shale gas. India should do it to meet its essential gas demand, but not portray it as a solution to climate change as the US is doing. India, therefore, needs to strike a balance between its local imperatives and its responsibility towards global environmental challenges. At the global level, India should work with other countries to set national and global goals for renewable energy and energy efficiency so that we do not lose focus on climate change. At the local and national level, we should put the following environmental and social safeguards without any compromise: Undertake a detailed investigation of basins to understand issues like water requirements; quality and quantity of wastewater generation; characteristics of wastes and air emissions. This information should be out in the public domain for taking a democratic decision. 

The existing environmental rules and regulations on natural gas are not suitable for shale gas. India should draft new stringent rules and regulations covering the life cycle of shale gas development. This should include requirements for a detailed environmental impact assessment, stringent water use and pollution control standards, standards for air pollution (including methane) and safe disposal of wastes. Have a “no-go” policy for shale gas development in areas with high ecological value, important watershed or areas with water stress.  Put in place a highly advanced waste management infrastructure to deal with toxic and potentially radioactive wastes. Till we develop these, we should put a moratorium on shale gas development.  Consent of the community, regular consultation with them and information disclosure are very important, so is sharing benefits with them. The question is not whether India should go ahead with shale exploitation but how and where. India will have to reinvent its regulatory regime. DOWN TO EARTH
Chandra Bhushan

Chandra Bhushan

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