Fracking has unleashed two major elements: natural gas and controversy. As the U.S. appears poised to start exporting one, the other naturally follows, with critics citing economic and environmental concerns.
WASHINGTON — Industry proposals that could turn the United States into a major natural gas exporter have raised concerns about an eventual fracking surge that could accelerate global warming and contaminate groundwater while undermining the economy by raising the cost of electricity from gas-fired power plants.
America could start exporting liquefied natural gas to countries overseas as soon as 2016. But those initial shipments will seem like a trickle if all the proposals for export terminals are eventually licensed.
Hydraulic fracturing, also known as fracking, is the process of fracturing shale formations — thereby releasing methane and other hydrocarbons encased by rock — with injections of water and chemicals at depths as great as 20,000 feet. Most of the fracking is occurring in a handful of states: Colorado, the Dakotas, Ohio, Pennsylvania, and Texas.
Fracking threats to water and climate
Energy developers claim that groundwater, which is much closer to the surface than the shale, is not threatened by chemicals used in fracking, but environmentalists argue that there is scientifically documented evidence to the contrary.
Moreover, as the Environmental Protection Agency points out, “natural gas and petroleum systems”account for 29 percent of all methane emissions, whose impacts on climate change are 20 times greater than those of carbon dioxide.
Concerns about the possibility of a huge fracking increase were rekindled on Aug. 15, when the Department of Energy announced a procedural change in its reviews of license applications to export LNG. The change is intended to streamline the application process somewhat, and it may be a signal that the DOE might be gearing up to pick up the pace of licensing decisions.
Under the change, applicants will be shifted to the front of the licensing queue as soon as they receive their draft Environmental Impact Statement from the Federal Energy Regulatory Commission, the agency that reviews engineering plans and issues construction permits for pipelines and terminals, among other energy facilities.
Environmental groups argue that the DOE — which reviews each EIS as part of its decision-making process for licensing requests — improperly ignored upstream impacts in the EIS issued for the Cheniere Energy proposal to convert its Sabine Pass (Louisiana) import terminal into a “bi-directional” terminal.
Sierra Club sees EIS analysis as inadequate
The EIS issued by the FERC for the Sabine Pass project was limited to the terminal site itself, leaving out any evaluation of potential impacts to the towns where fracking produces the methane that Cheniere Energy will liquefy for export.
The Sierra Club argues that the National Environmental Policy Act requires an evaluation of alternative project proposals to ease environmental impacts, while the DOE contends that it’s impossible to identify the communities whose fracking fields will supply the gas that’s sent to an export terminal.
Deb Nardone, who heads the Sierra Club’s Beyond Natural Gas Campaign, told MintPress News that the Sierra Club intends to contest this argument whenever the DOE grants the next unconditional export license.
“You can’t evaluate alternatives, as NEPA requires, if you haven’t assessed the upstream impacts in the first place,” Nardone said.
The DOE has so far issued conditional export licenses (those which still need a final EIS) to 30 companies proposing to ship LNG to countries which have signed free trade agreements with the U.S.; another seven licenses have been issued conditionally for shipments to non-FTA countries, which include such energy-ravenous nations as China, Japan, India, and all of the Western European countries.
According to a DOE chart which lists all of the license applications (as of Aug. 28) for shipments to FTA and non-FTA countries, the volume of proposed LNG shipments would be the dry-gas equivalent of 78.58 billion cubic feet per day — more than the daily gas consumption predicted for the entire country in 2014 by the U.S. Energy Information Administration.
U.S. policy still ignores fossil fuel dangers
Nardone said that she is worried by the potentially enormous volume of LNG exports, as well as the environmental damage from all the fracking that would be necessary just to satisfy export demand.
Pointing out that she was raised near the coal fields of northeastern Pennsylvania, where she acquired a less-than-welcome familiarity with “orange streams and dead rivers,” Nardone said she now lives in the midst of fracking fields developed near her home in Half Moon Township, Pennsylvania.
Those fracking operations, she said, are daily reminders that U.S. energy policy does not remotely acknowledge the perils of relentlessly strong support for “dirty, dangerous, fossil fuels.”
“Even without the methane leaks from fracking and distribution pipelines,” Nardone warned, “climate scientists are predicting a temperature increase of 6 degrees Centigrade in the next 50 years. So, all this gas development — besides dwarfing investment in wind and solar and other renewables — is a sure sign that the risks to our world are still not being taken as seriously as they have to be if we’re going to survive.”
Why do they all want to export LNG?
As a lack of project funding or state-level permissions could thwart many, or most, of the proposed export projects, it’s probably not very likely that the U.S. will eventually export all the LNG for which companies have requested DOE licenses.
So why are so many companies lining up for export licenses?
Deborah Rogers, executive director of the Fort Worth, Texas-based Energy Policy Forum, said that “fracking companies have to find a way to sell their gas at higher prices.”
“Their reserves of free cash have been practically nonexistent since 2009 and they’ve been bleeding money [to pay for drilling easements and infrastructure build-outs]. Meanwhile, the price of gas is around $4.50 here, but — in Europe — the price is nearly twice as high; in China it’s almost three times as high,” Rogers told MintPress.
The price spread is huge, Rogers explained, because the U.S. is the only country where the price of gas doesn’t fluctuate in step with the price of crude oil.
“The increase in gas production since fracking really took off in 2006 has kept the price low — regardless of any increase in the price of oil,” she said.
In a statement to MintPress, Ross Eisenberg, vice president of Energy and Resources Policy for the National Association of Manufacturers, said “virtually all credible economists” believe that the U.S. has enough shale gas to ensure “an affordable and abundant [gas] supply while still allowing for exports.”
Shale gas supply “wildly overstated”
But Rogers, who previously worked as an investment banker, argued that “recoverable shale gas supply has been wildly overstated. You only have to look at the downgrades issued by the U.S. Geological Survey, which has cut the estimate of Marcellus reserves and nearly all the other shale plays by 85 percent below the original claims.”
Nevertheless, when fracking fields start running dry, gas companies with export contracts would still have to deliver the gas they promised or face penalties under international trade agreements administered by the World Trade Organization, Rogers noted.
To avoid those penalties, the companies would have to keep developing more and more fields in more and more towns, where “they always promise jobs and economic growth — which is never sustained beyond the first couple of years,” Rogers said.
In fact, after crunching the Labor Department’s 2003-2010 income statistics, Rogers determined that the median household income in the four counties considered to be the “core” of the Barnett, Texas, shale activity increased by an average of 14 percent, while the rest of the state enjoyed a 21 percent increase.
At the same time, unemployment in those counties averaged 2 percent, compared to the 1.5 percent average for the state. “We see the same sort of thing in all the other fracking areas,” Rogers said. “In Susquehanna County, which is one of the most-heavily fracked areas of Pennsylvania, average income decreased from 2008 through 2010 and the unemployment rate went up.”
Rogers added that the income drops indicate “that whatever money the companies are bringing in must be leaving the local communities.” She also pointed out that some companies’ employment projections include such jobs as “strippers and prostitutes,” and that “they’re using unrealistic multipliers.”
A “credible economist,” she noted, “might use a multiplier of 1.5” to predict the number of jobs that would be created from a given investment. “ButFood and Water Watch looked at this, and they found that the companies were paying economists to come up with rosier outlooks by using much larger multipliers than 1.5,” Rogers said.
The Industrial Energy Consumers of America, an industry group, is also concerned about the impacts of LNG exports on U.S. employment, overall. In its July 21 comments on the DOE’s procedural proposal, the Washington-based group warned that $100 billion worth of recent, industrial projects might not have been funded if energy costs, especially electricity produced with gas, had been rising significantly — as they probably would, the group warned, if a huge volume of U.S. gas supply was permanently diverted to exports.
Could America become a “resource colony?”
After retiring from investment banking, Rogers left London to start an artisanal cheese company on a Fort Worth property which was previously owned by her grandfather. She has since sold the dairy operation to focus on her think tank, which evolved after some less-than-welcome neighbors — “high-impact fracking operations,” as she describes them — were built “about 600 feet from my front door.”
For her, the remnants of that operation are a daily reminder of what might be the most profound threat posed by LNG exports: turning the U.S. into “a resource colony for the rest of the world.”
More immediately, said Ted Gleichman — who heads the Oregon Sierra Club’s fight against two $7 billion LNG export terminals planned for the Oregon coast — there are steps that anti-fracking activists can take to help prevent energy companies from exploiting U.S. gas for the benefit of energy exporters.
“LNG exports and fracking are two sides of the same coin, fused by money,” Gleichman told MintPress. “For anti-fracking activists to protect their communities, they need to do two things. First, they need to make sure that new and existing electricity needs in their states are met with renewables and conservation measures — not with conversions of coal-fired plants into gas-fired plants. Second, they need to rally against LNG exports and the 20-year overseas contracts to compel them.”