From pages 31 & 32 of Royal Dutch Shell and its sustainability troubles Background report to the Erratum of Shells Annual Report 2010
The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.
Unconventional gas and high-volume fracking
Not only for oil, but also for gas Shell is resorting to unconventional production methods. In December 2010, Shell-CEO Peter Voser stated: In recent years, Shell has increased investment in natural gas projects in countries like Qatar, Australia, Russia, the United States and Canada, with a special focus on tight gas, shale gas and coal-bed methane together these are known as unconventional gas. Were currently exploring the potential for unconventional gas outside North America in countries like China and South Africa, as well as some European countries. The Shell-CEO proceeds: I know by 2012 Shell will be producing more gas than oil, and, I know, when it comes to natural gas supplies, a revolution is under way. (…) Shell is set for strong growth in tight gas.
Conventional natural gas is usually found trapped in the pore space of rock types like sandstone in underground geologic formations. Compared to unconventional gas, conventional gas flows rather easily to drilled wells. For unconventional gas, often high-volume fracking is used as a technique to get the gas to the surface. Fracking (or hydraulic fracturing) involves injection of water, mixed with sand and chemicals to ease production of natural gas and oil by breaking up rock formations. Fracking has been done around the world for many years. However, high- volume fracking is a rather new phenomenon and causes much more environmental damage and health risks. From this point of view, the revolution that is under way according to Shell-CEO Peter Voser, may in fact be a quite worrying revolution.
Tony Ingraffea, professor of Civil Engineering at the Cornell University in the U.S. State of New York, has conducted much research on fracking. During a radio interview in February 2011, he asked himself the question: What is high-volume fracking, compared to the traditional historical kind that no one seems to be complaining too much about? His answer was: The difference is about a factor of hundred in just about everything, predominantly the amount of fluids that are necessary to do the fracking [including the amount of chemicals; the professor mentions this later in the interview], the amount of fluids and other waste products produced from a high- volume unconventional well that’s fracked, the amount of truck traffic, the amount of energy and power that needs to be brought to a well. (….) It’s not the issue of fracking, it’s the entire system of developing gas from an unconventional resource.
Shell’s positions in unconventional gas
Shell is rapidly expanding its positions in unconventional gas (tight gas, shale gas and coal-bed methane). Below its main present positions around the world are listed:
? North America. Shells North American tight gas production amounted to some 140,000 barrels of oil equivalent per day in 2009, an increase of 62% from 2008 levels. Shell expects that its production could double from 2009 to 2015. Its activities in U.S. tight gas began in 2001, with purchases in the Pinedale Anticline in Wyoming State. More recently, Shell secured unconventional gas positions in the Haynesville play in Texas/Louisiana State and in Western Canada (Groundbirch, Deep Basin, Foothills, Klappan). Its 2010 acquisitions are mainly in the Marcellus shale, the biggest natural gas field in the United States, covering most of Pennsylvania state and parts of New York, Ohio and the Virginia states. Another 2010 acquisition was within the Eagle Ford shale play, in South Texas.
? South Africa. Shell wants to start shale gas exploration activities within the Karoo eco-region in South Africa. The exploration area would comprise 90,000 square kilometres, more than two times the surface of the Netherlands.190 Shell has applied for three exploration areas, each comprising 30,000 kilometres. In each area it wants to drill up to eight exploration wells. The formations in the Karoo that are believed to contain recoverable gas are located 1.5 to 4.5 kilometres below the surface.
? China. Shell and PetroChina operate Changbei, a tight gas field in the Shaanxi Province of China. Commercial production in Changbei began in March 2007, supplying 3 billion cubic metres of natural gas a year to Beijing and other cities in eastern China. Late 2007, Shell took over a 55% equity interest in a coal-bed methane venture in Shaanxi Province. In the Sichuan province, Shell works together with PetroChina on developing two tight/shale gas reservoirs of each 4,000 square kilometres.192 Shell provides little information about the environmental impacts of its Chinese operations.
? Australia. In August 2010, Shell and PetroChina (majority owned by the state company CNPC, China National Petroleum Corporation) completed their acquisition of the Australian company Arrow Energy. The 50/50 joint venture called CS CSG (Australia) Pty Ltd. now owns coal seam gas assets in Queensland state, domestic power businesses, and a site to build a liquefied natural gas (LNG) plant for export markets. Coal-bed methane is natural gas contained in coal seams. The new joint venture will be the operator of the coal seam gas assets. The gas production assets are in the Surat and Bowen basin. In the Surat basin, there is no fracking done. In the Bowen basin, there might be.
? Other. Shell also has unconventional gas positions in Sweden, Germany, Ukraine and Brazil.