America's natural gas revolution isn't all it's 'fracked' up to be

Americans are being subjected to a massive public relations assault attempting to persuade them that “fracking” for natural gas and oil is the key to America’s energy future and that this change will free them forever from the bondage of oil imports.

What has really changed is the nation’s energy conversation. Until recently, it was about how the United States should reduce its dependency on climate-changing fossil fuels. Now the “conversation” has become a harangue about the energy, jobs, and tax revenues the industry insists will flow from fracking and how these outweigh environmental concerns.

The data do not adequately support these claims. Though the fracking revolution is only a few years old, it’s already losing steam. There are several reasons why.

Fracking, or hydraulic fracturing, is a method of extracting natural gas and oil from low-permeability (usually shale) rock formations that don’t yield to conventional technologies. In the process, water, sand, and various chemicals are injected into shale rock at high pressure to open fractures in the rock and release gas or oil.

A few years ago, fracking for shale gas or tight oil was still novel and confined to small regions, but now tens of thousands of wells have been drilled. Millions of Americans have personal experience with the noise, truck traffic, fumes, and local political turmoil that seem inevitably to follow in fracking’s wake. Hundreds of anti-fracking citizen groups have formed, public sentiment seems to be turning, and communities have begun seeking bans or moratoriums on the practice.

Environmental problems can’t be swept under the carpet any longer. The image of a home-owner lighting his tap water on fire in Josh Fox’s documentary film “Gasland” has become a cliché; still, for a while the natural gas industry successfully argued that adverse effects from fracking on water, air, soil, wildlife, livestock, and human health are negligible.

Industry-funded studies declared the practice safe, and the Environmental Protection Agency appeared to back them up. Drilling companies tended to target economically depressed regions, where poverty forced most townsfolk to take whatever short-term jobs and production royalties were offered. Meanwhile, citizens who have suffered ill health effects or property damage that they link to fracking were led to sign non-disclosure agreements in order to receive settlement payoffs (including two children ages 7 and 10 who have been given lifetime bans from speaking about fracking).

But the bad news just keeps leaking, like methane through a bad well casing. Former Mobil Oil vice president, Louis W. Allstadt, who spent his career running oil production operations and company mergers, now speaks on behalf of anti-fracking resistance groups. He points to studies revealing that compromised casings (and resulting instances of water contamination) are far more common than the industry claims.

Meanwhile the Los Angeles Times has uncovered documents suggesting that the EPA has ignored evidence of environmental harms from fracking, choosing not to publicize or act on data collected by its own staff.

Wayne County, Pa., activists are currently celebrating the cancellation of 1,500 drilling leases covering 100,000 acres of land. New York State’s moratorium on fracking remains in effect, despite massive industry efforts to end it. Meanwhile the Colorado city of Longmont has voted to ban fracking altogether, and the State of Colorado is suing the city in an attempt to overturn the ban.

But fracking has another problem that is even bigger than environmental and health problems or shifting public opinion, though less publicized: Its production potential seems to have been oversold.

Everyone who pays attention to energy issues has heard that America has a hundred years or more of natural gas thanks to the application of fracking to shale reservoirs, and that the US is on track to outproduce Saudi Arabia now that oil is flowing from fracked fields in North Dakota and Texas. To most, the news at first sounded hopeful and reassuring. Yet as actual production numbers accumulate, it appears that claims made for fracking were simply too good to be true.

It turns out there are only a few geological formations in the US from which shale gas is being produced. In virtually all of them, except the Marcellus (in Pennsylvania and West Virginia), studies such as one from the Post Carbon Institute show that production rates have plateaued or are in decline.

Why so soon? A major challenge bedeviling drillers is the high variability within shale. Each tight oil or shale gas-bearing geologic formation tends to be characterized by a small core area (usually a few counties) where production is profitable and plentiful, surrounded by a much larger region where per-well production rates are lower to start with and drop fast – often falling 60 percent during the first year.

Given the expense of horizontal drilling and fracking, it’s hard to make money in noncore areas unless oil and gas prices are stratospheric. As the “sweet spots” get drilled to capacity, producers are being forced to the fringes, taking on more debt because sales of product don’t cover operating expenses.

With decline rates so high, promised production volumes are turning out to be more hype than reality. America’s hundred years of natural gas, heralded by President Obama as a national energy game changer, is based on unrealistic estimates – the amount of gas the Energy Information Administration says is “technically recoverable.” But this quantity includes resources that will never be produced for economic reasons. Some estimate that shale gas and tight oil production will top out and start to decline before 2020.

In August, Shell took a $2 billion write-down on its liquids-rich shale assets in North America. While no details were released, it’s likely the company was simply acknowledging the unprofitability of leases in noncore regions. It could be that the oil industry itself is starting to learn that the shale revolution just ain’t all it was fracked up to be.

It is highly important that we return America’s energy focus to the most critical imperative of our time – the necessary and inevitable transition away from our current dependence on fossil fuels.

Richard Heinberg is senior fellow of the Post Carbon Institute and author of 11 books, most recently “Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future.”