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Shale gas: is it as green as the oil companies say?

At the heart of the shale gas ‘sell’ is the industry’s analysis of a European Climate Foundation report – an analysis ECF rejects

Fiona Harvey, environment correspondent: Wednesday 20 April 2011 20.49 BST

A natural gas wellhead near Montrose, Pennsylvania. Photograph: Daniel Acker/Getty

“You just wouldn’t believe you could get gas out of that, would you?” said Mark Miller, chief executive of UK gas company Cuadrilla Resources, turning over a lump of hard black rock. It is dark, extremely dense and very heavy, with a smooth and almost chalky feel, and is found buried thousands of feet beneath the surface of the earth in deposits made 300m years ago.

There are no holes, nothing to betray the fact that this shale rock can be made to yield natural gas in such quantities that it could power the globe for centuries.

Shale is being hailed as the green energy of the future because new technologies can be used to fracture the dense rock and flood it with water to release bubbles of natural gas that can be burned for electricity with – according to the gas industry – only about half of the carbon dioxide emissions of coal.

“This source of gas is revolutionary,” said Malcolm Brinded, foremost expert on the technology at Royal Dutch Shell. “It will reduce dependence on imported oil, and in practice price volatility. There is a huge pace of growth.”

Oil companies are rapidly seizing the opportunity. Within two years, predicts James Smith, outgoing UK chairman of Shell, the company will go from being an oil business to a gas producer. “Estimates show that we could have enough gas to power the world for 200 years,” he said.

But proponents of renewable energy argue that the millions spent on lobbying efforts to rebrand gas as “green” are based on questionable assumptions. They say that the oil industry’s attempt to replace renewable power as the main means to combat climate change could destroy the fledgling green energy industry and thwart attempts to stop global warming.

“Any money and investment that is going to gas is money that is not going to renewables,” said Brook Riley, campaigner at Friends of the Earth. “This is a threat to renewables.”

Gordon Edge, director of policy at Renewable UK, a trade body for wind companies, said: “We must be careful not to lock ourselves into dependence on a finite imported fuel which, while it is less carbon intensive than coal, is nevertheless much more carbon intensive than any renewable.”

Oil companies see gas as a means of recasting themselves as environmentally friendly, with government backing. Newly available forms of gas appear to offer a 50% reduction in carbon emissions compared with electricity generation from coal, meaning most countries could easily meet their 2020 emissions targets – agreed at the 2009 Copenhagen climate conference – at a fraction of the expense of investing in wind, solar and renewables.

These assumptions are backed up by an economic analysis commissioned by the European Gas Advocacy Forum (EGAF) based in part on work by McKinsey, a consultancy which found that Europe could save about €900bn by 2050 if it met its emissions targets through investment in gas rather than renewables.

“This report seems to get pulled out at every meeting,” said one European commission insider. “But what they [the lobbyists] do not say is where it came from.”

This EGAF study is now under question by the very people who helped to write it. In its original form, the study found that renewable energy was the best means of meeting Europe’s energy needs while cutting greenhouse gas emissions. The sources, methodology and conclusions of this original report were made “open source” by the European Climate Foundation (ECF), the green thinktank that commissioned the research and provided much of the material.

But these open source calculations were seized on by the gas industry, which commissioned a new report altering the original conclusions to appear to show that gas would be a cheaper and more viable form of energy than renewables.

The ECF says: “We in no way endorse this [EGAF] report. Heavy dependency on gas, as this report seems to suggest, is not a viable alternative to a low-carbon generation network with low dependence on fossil fuels in terms of cost, energy security, or climate resilience

“[This is because] it will make Europe dependent on one potentially cost-volatile solution, and the successful commercialisation of carbon capture and storage at an unrealistically large scale. It also reduces Europe’s energy security [because Europe has few shale gas reserves to exploit, unlike the US and Asia]. These are high-risk strategies indeed.”

Privately, green campaigners and officials in Brussels are furious at EGAF’s actions. “It is outrageous,” said one insider, who cannot be named. “The way in which this has been distorted by the gas industry is unbelievable.”

What is more, the industry’s core assumption that shale gas offers a 50% reduction on burning coal has also been sharply challenged by a new academic study.

Gas, in its pure form, burns in power stations with about half the carbon dioxide produced by burning coal. But if all of the associated emissions of shale gas are taken into account, this benefit disappears, according to a newly published study from Cornell University.

The study, published in the Climatic Change Letters journal, showed that about 4-8% of the methane from shale gas production escaped to the atmosphere via leaks and venting over the lifetime of a well – much more than from conventional gas drilling. As methane is more than 20 times as powerful a greenhouse gas as carbon dioxide, shale gas is likely to prove more harmful in climate change terms than even coal, which is usually regarded as the dirtiest fossil fuel. The Cornell study concluded that shale gas used to generate electricity had about the same carbon footprint as coal, or even a slightly higher one, and when used as heating or transport fuel would be no cleaner than diesel.

The authors concluded: “The large GHG footprint of shale gas undercuts the logic of its use as a bridging fuel over coming decades, if the goal is to reduce global warming. We do not intend that our study be used to justify the continued use of either oil or coal, but rather to demonstrate that substituting shale gas for these other fossil fuels may not have the desired effect of mitigating climate warming.”

Nor does the fuel appear green when the side effects are taken into account, some of which are potentially lethal. From the US, where the fracturing – fracking – of shale rock has been pioneered, come myriad reports of disastrous gas leaks, land contaminated by the chemicals used in extraction, and drinking water rendered unsafe by pollution from the drilling. The film Gasland featured families whose homes were uninhabitable and who were suffering health problems.

Gas advocates, such as Miller of Cuadrilla, argue that the film, and many other similar reports from the US, seized upon examples from a small minority of companies that have cut corners and pursued poor practices. “There are always a few bad apples in any industry,” he said. “But it is possible to do this in a clean, responsible way that does not lead to these kind of problems.” His company, he said, was spending more than the average in order to ensure its sites did not lead to contamination or gas leaks.

Gas companies also seek to reassure governments and green campaigners that their fuel does not compete with renewables, and can even help countries to include more renewables in the energy mix because it provides flexible generation that can be turned off or on quickly to cope with the intermittency of renewable energy. Green campaigners are less optimistic. They believe that pursuing gas – which is artificially cheap outside Europe because its associated emissions are not properly taken into account – will crowd out investment in renewables, until it is too late and the world is committed to a gas-powered future.

The consequences for genuinely green forms of power, such as wind and solar, could be dire. Investment in gas is posited as an alternative to green fuels. In the US, climate change has been chiefly framed as a matter of energy security. Emissions cuts have been promoted as a way of reducing foreign oil dependence so a new domestic fuel source is very attractive.

With shale gas in plentiful supply in the US, the needs of energy security can now be met without the sharp reductions in emissions needed to avoid dangerous levels of global warming. Investment in wind and solar in the US have already been hit hard by a combination of competition from shale gas, recession and weaker government assistance. The number of wind turbines being erected has “fallen off a cliff”, according to General Electric, one of the biggest turbine manufacturers.

“In the US, it’s as if they do not have to do anything about climate change because they say ‘we have shale gas’,” said Connie Hedegaard, the EU climate chief, of her recent visit to the US. “But you have to have climate change as part of the equation … and avoid the lock-in to fossil fuels.”

That is another key point: The development of a new generation of gas-fired power stations threatens to perpetuate a long-term future of fossil fuel energy generation. Switching from coal-fired power stations to gas produces sizeable short-term reductions in greenhouse gas emissions, as the UK proved through its “dash for gas” in the 1980s and 1990s. But after the initial gains – and unlike renewable energy sources – gas-fired power stations carry on producing carbon emissions for decades. The life of a plant can stretchfrom 25 to 40 years, with the right maintenance

If a new fleet of gas-fired power stations built in the next 10 years are still producing emissions in 2050, it will be impossible for the world to halve emissions by 2050, as scientists say we must.

For this reason, EGAF’s analysis assumes all gas-fired power stations will use carbon capture and storage (CCS) technology from 2030, reducing their emissions to nearly zero.

But the technology has never been used at a commercial scale. Pilot projects cost about £2bn each, running costs are unknown, and there are likely to be severe limitations to where carbon dioxide can safely be stored underground. Using the technology also reduces the amount of energy a power plant can produce.

EGAF assumes that CCS will become “economically viable” in the mid-2020s, but if these complex estimates are even slightly inaccurate, and the technology is more expensive than forecast, by then it would be too late for the renewable industry.

Prof Howarth, lead author of the Cornell study, added: “Carbon storage remains an idea that has little real-world testing. To the extent it has been tested, problems have clearly surfaced, such as leakage of carbon dioxide back to the atmosphere, and water pollution from the materials extracted from the storage due to the highly corrosive, high acidity of the storage material. It remains to be seen whether the technology can be developed in a safe, environmentally responsible way. It also remains to be seen how much this will cost.”

If CCS does not come through as EGAF predicts, then the value of shale gas in the fight against climate change becomes highly questionable.

Royal Dutch Shell plc — 2010 Annual Publications — Simon Henry, Chief Financial Officer

Shell, Brazil’s Cosan form $12 billion ethanol unit

SAO PAULO, Brazil — Anglo-Dutch energy giant Shell and Brazilian sugar-production group Cosan said Monday they were forming one of the biggest joint ethanol fuel ventures in the world, with an estimated market value of $12 billion. The new entity, to be called Raizen, will employ around 40,000 people and produce over 2.2 billion liters (580 million gallons) of ethanol per year to Brazilian and international markets, the two companies said in a statement.

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Royal Dutch Shell Reports Strong Earnings for Fourth Quarter

A version of this article will appear in print on February 4, 2011, in The International Herald Tribune.

By JULIA WERDIGIER

LONDON — Royal Dutch Shell said Thursday that its earnings had more than tripled in the fourth quarter because of higher oil and gas prices, and as investments in new projects started to pay off.

Profit at Europe’s biggest oil company rose to $6.79 billion in the last three months of 2010, compared with $1.96 billion in the same period a year earlier.

“We are making good progress against our targets, and there is more to come from Shell,” Peter Voser, Shell’s chief executive, said in a statement.

Excluding non-operating and one-off items the result was $4.1 billion, short of the $4.85 billion average estimate of analysts polled by Reuters. The shares were down 3 percent in early trading.

“Profits are somewhat shy of market estimates,” Richard Hunter, head of British equities at Hargreaves Lansdown in London, said. He added that the “setback is likely to be short-lived, however.”

Shell’s earnings follow a set of strong results from larger rivals such as Exxon Mobil, which reported its highest quarterly profit in more than two years. Earnings at BP, Shell’s closest rival, failed to meet analyst expectations, however, and the company announced the sale of assets that it said would make it a smaller and more agile company.

Unlike BP, which predicted its production would fall this year because of asset sales and the aftermath of the Gulf of Mexico rig explosion, Shell said it was confident of meeting its target of an 11 percent increase in oil and natural gas production from 2009 to 2012.

“These are ambitious targets, but we are on track,” said Mr. Voser, who managed to halt a drop in production last year with a large investment program. He also cut costs and sold less lucrative assets to improve profitability.

Shell started six key projects last year, including in Brazil and Qatar, where it started offshore gas production this year. Oil and natural gas production rose 5 percent to 3.3 million barrels of oil equivalent per day last year. The company invested $3 billion in exploration activities last year, about three times more than BP.

Mr. Voser said he expects total investments of as much as $27 billion this year, including $1.6 billion for a biofuels joint venture in Brazil with Cosan, a Brazilian company that harvests and processes sugar cane.

Shell said it would leave the dividend for the first quarter of this year unchanged at 42 cents a share.

SOURCE ARTICLE

Shell Says Has Plans in Beaufort to Limit Effect on Polar Bears

By Kari Lundgren – Nov 25, 2010 2:57 PM GMT+0000

Royal Dutch Shell Plc said it has plans to limit the effect on wildlife from exploration in the Beaufort and Chukchi seas off Alaska after the U.S. designated some areas as “critical” for polar bears.

“Shell’s plans for exploring in the Beaufort and Chukchi Seas analyze and mitigate any potential impacts to polar bears and other marine and terrestrial species,” the Hague-based company said today in a statement.

The U.S. Fish and Wildlife Service yesterday designated more than 187,000 squares miles (448,000 square kilometers) of onshore barrier islands, denning areas and offshore ice as “critical habitat” for polar bears. Shell, Europe’s biggest oil company, plans drilling in the Beaufort Sea next year.

“This critical habitat designation enables us to work with federal partners to ensure their actions within its boundaries do not harm polar bear populations,” Tom Strickland, assistant secretary for fish and wildlife and parks, said in a statement.

The Beaufort Sea is estimated to hold as many as 7 billion barrels of oil and as much as 20 trillion cubic feet (566 billion cubic meters) of natural gas, according to the Interior Department. The Chukchi Sea may hold as many as 12 billion barrels of crude and as much as 54 trillion cubic feet of the heating and power plant fuel.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

SOURCE ARTICLE

Shell sees 2011 as “year of choices” on biofuels

By Scott Malone

CAMBRIDGE, Massachusetts Wed Oct 13, 2010 (Reuters) – Royal Dutch Shell, which is investigating about 10 second-generation biofuel technologies that would use nonfood raw materials, expects to narrow its research to about five options next year, its top scientist said.

“I am putting a lot of time and energy into sustainable biofuels, second-generation biofuels, in essence, the conversion of redundant material, straw, into ethanol,” Gerald Schotman, the Anglo-Dutch oil company’s chief technology officer said on Wednesday. “We’re also playing with ideas on algae, growing algae and then converting algae directly into gasoline and diesel.”

While ethanol has won praise for being a sustainable fuel, today it is largely made from corn and has also drawn criticism for diverting resources that could otherwise be used to feed people.

Shell’s second-generation efforts could work around that problem by converting either agricultural byproducts or algae to liquid fuel, either ethanol or a diesel-like fuel.

The company aims to focus its efforts on about five developing technologies next year, Schotman said in an interview: “2011 is going to be the year of choices.”

Schotman was in Cambridge, just outside Boston, to disclose that Shell had agreed to fund $25 million in Massachusetts Institute of Technology research projects focused on energy over the next five years.

He warned that it will be quite some time before biofuels and other renewable sources of energy, like wind and solar power, displace fossil fuels. By 2050, it’s possible that the world will generate 30 percent of its energy from renewable sources, but that leaves 70 percent in traditional fossil fuels, he said.

“This is a long-distance horse race,” he said of the development process. “The world estimated that it was going to take three laps, but it’s going to take six or seven laps.”

(Reporting by Scott Malone; Editing by Steve Orlofsky)

REUTERS ARTICLE

Shell gives MIT $25m for gas, oil research

Royal Dutch Shell PLC will give the Massachusetts Institute of Technology $25 million to research new, efficient technologies to help find and deliver oil and natural gas, officials are expected to announce today.

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Energy source of the future won’t be a fossil fuel

IS THIS A HOAX?

Comment by Arend Lammertink, MSc. (right) on “Shell CEO: Nat Gas To Play Prominent Global Energy Role

Posted on Sep 14th, 2010 at 12:27 pm

I think these guys may be in for a little surprise about what will be the energy source of the future. It won’t be a fossil fuel. It will be the electric field, available for free all across the universe.

Let me first mention that I hold a Masters degree in Electrical Engineering. I never believed any claims that there would be such thing as “free energy”. Energy that is basically free for the taking for virtually nuts. Sure, you have solar energy, but solar panels are that expensive to make that they are not interesting from an economic point of view.

But, curious as I am, I did investigate some of the systems that claimed to produce energy out of seemingly nothing. What I found out is that when you look at the dirty details of what we know as electricity, it is the electric field that really powers our circuits. While it seems like we convert mechanical energy into electrical energy by turning the shaft of a generator, in reality it is the electric field that powers our circuits.

Each and every charge carrier in the universe emits an electric field for free, 4/7, 7 days a week, 365 days a year, indefinately. And that electric field contains energy, as has been shown without a shadow of a doubt by the German Prof. Claus Turtur:

http://www.wbabin.net/physics/turtur1e.pdf

In the chapter “A circulation of energy of the electrostatic field” (pages 10-14) he makes a straightforward calculation of the energy density of the static electric field surrounding a point charge using nothing more than Coulombs law and the known propagation speed of the electric field, the speed of light, and shows that there must be some kind of energy circulation between the vacuum and charge carriers, which eventually leads to the conclusion that the electric field is a wonderful and free energy source. And that means it it not a question of if but how to use this energy source to give us as much clean, non polluting energy as we like, for free.

So, with this knowledge I investigated three independent inventions that claimed to be able to power cars seemingly out of nothing. And to my own surprise they all turned out the use the same basic principle, a principle that can be explained from the bottom up without any difficulty using nothing but hard electrical engineering theory.

So, there we are. We know the electric field is an clean energy source that is free for the taking and we know how three independent inventions, of which two have been shown to work in public, used this energy source using the exact same set of tricks. So, it is only a matter of time now before all the oil companies will be out of business and fossil fuel will be a thing of the past.

If you are interested, you can read all about how to pull this off, in principle, over here:
http://peswiki.com/index.php/Article:Free_Electric_Energy_in_Theory_and_Practice

I must stress that this is a work in progress, but the basic stuff is there for everyone to see, for free. No strings attached.

COMMENT RECEIVED FROM ONE OF OUR CONTRIBUTORS:

If this guy was really on to something his life wouldn’t be worth a ‘bucket full of warm spit’. Too many large companies and national economies depend upon the ‘system’ the way it is.

I think that in concept he is correct about electrical fields. However, there are two of them, positive and negative, and they counteract the effects of each other. That is why all objects are essentially ‘neutrally charged’. I think the fellow has a great imagination but that he needs to keep working on the idea. But he also needs to keep his mouth shut. If his idea worked people would swarm all over it in a heartbeat. He couldn’t keep the wolves at bay. Everybody and their uncle would be trying to steal his ideas and technology. If his idea worked someone would have kidnapped him already and would be torturing the crap out of him to get him to talk. Furthermore, OPEC and BIG OIL would put a price on his head. If this guy was really on to something his life wouldn’t be worth a ‘bucket full of warm spit’. Too many large companies and national economies depend upon the ‘system’ the way it is.

RIGHT OF REPLY: Response from Arend Lammertink, MSc.

Shell CEO Voser claims technology is key to energy security

LONDON, July 27 (UPI) — The world is facing drastic energy shortages unless investors back technological advancements in all forms of energy, executives said in London.

Peter Voser, the chief executive officer at Royal Dutch Shell, told an audience in London that the global community needed to look for new ways to exploit renewable and fossil fuels.

“Even assuming heroic steps to use energy more efficiently, the world will need to develop all energy types,” he said.

Scientists at Shell said that without new ways to increase energy supplies, the world could face looming energy shortages in the coming decades even as new sources of energy such as Iraqi oil come on stream.

The world, Voser said, would need to replace 40 million barrels of oil in daily production by 2020 to make up for declining reserves. This, he said, was about four times what Saudi Arabia is producing currently.

Renewable resources, meanwhile, could supply 30 percent of the world’s energy needs by 2050.

“I’m convinced that technology will help us double our energy supply, while at the same time tackling the threat of climate change,” he said.

UPI ARTICLE

Cosan Trades Like Investment Grade on Shell Accord Speculation

June 16 (Bloomberg) — Cosan SA Industria & Comercio’s bonds are trading like investment-grade assets on speculation the world’s largest sugar-cane processor will complete a $12 billion joint venture with Royal Dutch Shell Plc.

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