Posted: 8/15/11 09:43 AM ET

One of the riskiest and most destructive extreme energy oil exploration projects on the planet is moving toward implementation without scientific understanding or technical preparedness — Shell’s oil drilling in the Arctic Ocean of Alaska.

On August 4, the US Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) conditionally approved Shell’s plan to drill up to four exploratory wells in the Beaufort Sea of Arctic Alaska starting July 2012. A Los Angeles Times editorial correctly opined, “Shell Oil’s conditional permit to drill exploratory wells off Alaska should not have been granted. The hazards of drilling in such waters are in some ways worse than operating thousands of feet underwater. … It’s too early for any approval, conditional or otherwise.” Shell still needs several more permits including an air quality permit from the Environmental Protection Agency before they can do any drilling in the Arctic seabed. We must stop it.

Soon I’ll tell you how BOEMRE is ignoring science to fast-track Shell’s dangerous drilling plan, but first here is a brief history of how we got here.

COMPLETE ARTICLE – RECOMMENDED READ

THE HUFFINGTON POST

Crossposted with ClimateStoryTellers.org

From pages 32, 33 34 & 35 of “Royal Dutch Shell and its sustainability troubles” – Background report to the Erratum of Shell’s Annual Report 2010

The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.

Shell: nothing wrong with fracking and unconventional gas

In its communication, Shell makes no difference between conventional and unconventional gas in terms of environmental and health risks. The company generally refers to natural gas as being cleaner-burning than coal in power plants and as being a bridge to a low-carbon energy future.

On fracking, Shell states on its website: “This is a safe and proven technique according to the U.S. Environmental Protection Agency (EPA), which is now carrying out a new study into hydraulic fracturing and its potential impact. Fracturing has been used by oil and gas companies for over 60 years.” The company does not mention that there are great differences between the traditional fracking and the present high-volume fracking, that the EPA has been presently accused of hiding some severe impacts of fracking, and that the U.S. government has not been able and/or willing to monitor the booming U.S. shale gas business adequately.

Environmental and health risks caused by unconventional gas extraction

In this section, the environmental and health risks of the present high-volume fracking are considered more in-depth.

1) Enormous water use

According to the U.S. Environmental Protection Agency, the volume of water needed for hydraulic fracturing varies by site and type of formation. Fifty thousand to 350,000 gallons of water may be required to fracture one well in a coal-bed formation, while two to five million gallons of water may be necessary to fracture one horizontal well in a shale formation. A gallon stands for 3.78 litres.

Shell stated in September 2010 that hydraulic fracturing requires 1 to 5 million gallons of water per well and that it re-uses some of the water. For its Groundbirch tight gas operations in British Columbia (Canada) Shell claims to use 5 to 8 million litres per well, sourced locally from the Peace River, fresh water wells and some 20-40% recycled from producing wells. As with most unconventional gas operations presently going on, the Groundbirch operations have just been starting up. As of June 2010 Shell had drilled 103 wells, with almost 3,000 wells yet to come. Shell’s future aspiration is to use reclaimed water from a waste treatment plant at Groundbirch, transported via pipelines so the present disposal by trucks can be reduced.

To explore the shale gas possibilities of the Karoo region in South Africa, Shell states it may decide to hydraulically fracture vertical and horizontal exploration wells. It expects to need up to 2.2 million litres of water for hydraulic fracturing a vertical exploration well and up to 6 million litres for an exploratory horizontal well section. Whenever Shell is allowed to explore the Karoo region, and it does find gas it could produce on an economically basis, one wonders how Shell would cope with the enormous amounts of water needed in the semi-desert Karoo region. Shell has not yet shared its thoughts about this.

2) Pollution of water resources

There are several ways in which water could be polluted through high-volume fracking. With shale gas production, the two major pathways to water contamination are activities at the surface and errors below ground: − Once in the ground, a large portion of the fracturing fluid may be trapped in the target formation. The rest, however, comes back to the surface (flowback), combined with water produced from the formation itself. Both flowback and produced water represent large waste streams. If flowback and produced water are disposed of improperly, waste water may threaten public and environmental health.

− Errors below ground can endanger water resources as well. Improperly cased wells may contaminate penetrated aquifers. Potential shallow pockets of natural gas in formations above the target layer may enter into ground water.

− Trucks transporting water to the site for fracturing and from the site for disposal may stress nearby stream banks, contributing to erosion and adding sediment to surface water.

Experiences in Pennsylvania, United States

In February and March 2011, the New York Times published several articles about the pollution caused by drilling in Pennsylvania State, USA. During nine months the newspaper had obtained more than 30,000 pages of documents from state and federal agencies/officials.

The shale gas business is booming in Pennsylvania, sitting atop the enormous reserve called the Marcellus Shale. In 2010, drilling companies were issued roughly 3,300 Marcellus gas-well permits in Pennsylvania, up from just 117 in 2007.

The New York Times estimated that more than 1.3 billion gallons of wastewater was produced by Pennsylvania wells over the past three years. Based on the obtained documents, the newspaper estimated that some 10 to 40 percent of the water sent down the well during hydrofracking returns to the surface, carrying drilling chemicals, carcinogenic materials, corrosive salts and, at times, naturally occurring radioactive material. Most of the wastewater was sent by trucks to treatment plants not equipped to remove many of the materials, and ended up in rivers providing drinking water for millions of people. The U.S. Environmental Protection Agency states that it is dangerous when radioactive wastewater contaminates drinking water or enters the food chain through fish or farming. Once radium enters a person’s body, by eating, drinking or breathing, it can cause cancer and other health problems, many federal studies show.

The newspaper was able to map the wastewater released from 149 wells. The federal drinking water standards were exceeded for the carcinogenic benzene (41 wells), gross alpha (128 wells, gross alpha is a type of radiation caused by emissions from uranium and radium), uranium (4 wells), and radium (42 wells).203 At least 116 wells produced wastewater exceeding the federal standards for radium or other radioactive materials in drinking water more than 100 times.

3) Greenhouse gas emissions

The three main greenhouse gases (GHGs) that are relevant to the petroleum and natural gas industry are methane (CH4), carbon dioxide (CO2), and nitrous oxide (N2O). Methane’s chemical lifetime in the atmosphere is approximately 12 years. Its relatively short atmospheric lifetime, coupled with its potency as a greenhouse gas, makes methane a candidate for mitigating global warming over the near-term (25 years or so). Methane is about 33 and 105 times more powerful at warming the atmosphere than carbon dioxide (CO2) by weight, for a 100-year and 20-year horizon respectively.

New estimates U.S. Environmental Protection Agency

Recently, the U.S. Environmental Protection Agency (EPA) has re-estimated the GHG emissions from the petroleum and natural gas industry. It’s earlier estimations were from 1996. At that stage methane emissions were not considered to be so powerful at warming the atmosphere. In its new study, published in November 2010, the EPA found that CH4-emissions had been significantly underestimated. In its new estimate, the U.S. petroleum and natural gas industry emitted 317 million tonnes of greenhouse gases (measured in CO2 equivalents) in 2006. This is a 57% increase compared to the outdated calculation method. Of the total 317 million tonnes, the natural gas industry accounted for 261 million tonnes CH4 (measured in CO2 equivalents). The EPA had revised four emission sources that were believed to be significantly underestimated: well venting for liquids unloading; gas well venting during well completions; gas well venting during well workovers; centrifugal compressor wet seal degassing venting.

The EPA also made a distinction between the GHG emissions of conventional gas wells and unconventional gas wells. For unconventional wells, it estimated that the emission factors for venting during well completions and well workovers exceed emission factors of conventional wells by a factor 200. It was assumed that all unconventional wells were completed with hydraulic fracturing of tight sand, shale or coal bed methane formations. The water that is returning to the surface is accompanied by large quantities of methane. This is the main cause of the greater methane emissions than conventional wells.

Study Cornell University

In a study published in the journal Climatic Change, the Cornell University in New York assesses the likely GHG footprint of natural gas in comparison to coal.208 The study builds, among other, upon the recent findings of the EPA. The study acknowledges that natural gas produces less greenhouse gas emissions than coal when burned. However, the authors also take into account the GHG emissions that occur during the production of coal and natural gas. This lifecycle approach of GHG emissions from coal and natural gas presents a different picture. The authors compare the lifecycle GHG emissions of shale gas, conventional natural gas (both with low and high estimates for methane emissions to the atmosphere), coal from surface mines, coal from deep mines and diesel oil.

Largely based upon the recent EPA-study, the authors estimate that 3.6% to 7.9% of the methane from shale gas production escapes to the atmosphere through venting and leaks. This is 1.3 to 2.1 times more than from conventional gas operations. The higher emissions from shale gas occur when wells are hydraulically fractured – as methane escapes from flowback return fluids – and during drill out following the fracturing.

Calculated on the basis of a 20-year horizon, the authors conclude that the lifecycle GHG emissions of shale gas are at least 20% greater than the lifecycle GHG emissions of coal. For conventional natural gas, the emissions of coal fall between the high and low estimate.

The 20-year approach by the authors reflects the need to mitigate climate change in the near- term. As methane is known to have a relative short lifetime in the atmosphere, it especially causes climate change on a short-term. The authors also calculated the lifecycle GHG emissions for a 100-year horizon. Over the 100-year frame, the GHG footprint is comparable to that for coal: the low-end shale-gas emissions are 18% lower than deep-mined coal, and the high-end shale-gas emissions are 15% greater than surface-mined coal emissions.

As for Shell, it is not known how many GHG emissions it releases in the air due to venting and leaking CH4. The company promotes natural gas (including unconventional gas) as a replacement for coal. Natural gas is seen by Shell as a bridge to a low-carbon energy future, something for the near-term. However, for unconventional gas the opposite seems true: the GHG emissions increase compared to coal in the near-term.

A further extract from this section of the report will be published in the coming days.

THE COMPLETE 73 PAGE REPORT (with reference sources)

By Ehren Goossens and Jeremy van Loon – Jun 24, 2011 9:46 PM GMT+0100

Royal Dutch Shell Plc (RDSA) will receive C$865 million ($876 million) from the governments of Alberta and Canada to fund a carbon capture and storage project.

Shell and its partners will receive the money over 15 years, based on meeting certain performance targets, according to a statement today on the Government of Alberta’s website. The province of Alberta will contribute C$745 million and Canada will provide the remainder.

Shell’s Quest project would be the first oil-sands operation to capture the greenhouse gas for an upgrading plant, Shell said. Development of Canada’s bitumen reserves has contributed most of the nation’s increase in carbon emissions since 1990 when output was supposed to begin to decline under the Kyoto Protocol.

“This is the second of four grants finalized by the Alberta government for CCS, so the committed funds are starting to flow to developers,”said Cheryl Wilson, carbon capture and storage analyst at Bloomberg New Energy Finance in Washington.

“Quest is Shell’s main carbon capture project after its Barendrecht project near Rotterdam was canceled in November,” Wilson said. The Canadian authorities pledged their support for the project in October 2009.

Alberta has committed C$2 billion to fund four carbon capture and storage projects including Quest, which it says will reduce greenhouse gas emissions by 5 million tons a year starting in 2015.

Slowing Carbon Emissions

Alberta, home to Canada’s oil and gas industry, is counting on carbon capture and storage technology to help slow its output of the gas amid criticism from environmental groups and politicians in the U.S. and the European Union. Greenpeace has said the technology is too expensive to rely on for reducing carbon output on the scale needed to tackle climate change.

Shell and its competitors in the oil and gas industry are not only counting on the technology to allow them to continue exploiting fossil fuel reserves, they also expect governments to help pay for development of carbon capture and storage.

“CCS is recognized as one of the most promising technologies to reduce greenhouse gas emissions from fossil fuels,” said John Abbott, Shell’s executive vice president of Heavy Oil in today’s statement. “Government support in this important demonstration phase is essential.”

To contact the reporters on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net Ehren Goossens in New York at egoossens1@bloomberg.net

To contact the editor responsible for this story: Will Wade at wwade4@bloomberg.net

SOURCE ARTICLE

By Ayesha Daya – Jan 17, 2011 4:17 PM GMT+0000

Royal Dutch Shell Plc’s chief said the implementation of climate change agreements made at Cancun last month “won’t happen overnight”, and policymakers must take action now “because the clock is ticking.”

“In the short term, we should focus on areas where we can get the cheapest and quickest carbon dioxide reductions,” Chief Executive Officer Peter Voser said at a renewable energy conference in Abu Dhabi today. “It will take a while for international standards to be implemented, but we are of the opinion that we have to move now.”

Voser offered four ways for policymakers to begin reducing CO2 emissions: energy efficiency, increased use of natural gas, carbon capture and storage projects, and biofuels.

Energy efficiency, such as fuel-efficient vehicles and insulation of buildings, will need government mandates and regulation, he said.

Increased use of natural gas, which would cut emissions by 60-70 percent if it was used in place of coal, will also require government policy to support the switch in fuel type. China has already pledged to obtain 8 percent of its energy consumption from gas by 2020, compared with 4 percent now, he said.

“There’s a revolution in the U.S. now, and also in China with unconventional gas,” Voser said. “So there is ample gas available, and it is cheaper than nuclear power, so it is clearly something in which we can invest.”

Carbon capture and storage projects are yet to be deployed in a big way, and pilot projects require government funding to drive the technology.

Biofuels offer “the only fast transport fuel option” and can be developed in a sustainable way if the correct standards are set, Voser said.

To contact the reporter on this story: Ayesha Daya in Dubai at adaya1@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

BLOOMBERG ARTICLE

So why has Shell Oil Co. remained an active member of this important organization?

THE WALL STREET JOURNAL

MARCH 8, 2010

Peter Voser of Royal Dutch Shell talks about the kind of energy legislation he’d like to see

These days, giant oil companies find themselves trying to balance two big pressures on their business. Governments are trying to slash carbon emissions—but the world’s thirst for oil is growing by leaps and bounds. Peter Voser, chief executive officer of Royal Dutch Shell PLC, is navigating the situation by joining a business-backed effort to push for global-warming laws, and making sure Shell has a strong exposure to natural gas and alternative fuels.

Mr. Voser sat down with The Wall Street Journal’s Alan Murray and Kimberley Strassel to talk about the future of climate-change legislation, the company’s push beyond oil, the prospects for electric vehicles and more.

Here are edited excerpts of their discussion.

Chief Executive of Royal Dutch Shell, Peter Voser talks about what kind of a future oil based energy can have in an environmentally conscious world.

ALAN MURRAY: I’d like to start by asking you about U.S. CAP [the U.S. Climate Action Partnership], the business effort to push for global-warming legislation. You are the last oil company there. Many of the other majors never joined to begin with. BP joined and then pulled out because it didn’t like the direction that it was going in. Why is Shell alone among the oil companies in continuing to push for this?

PETER VOSER: We have a belief that we need a market-based energy legislation in this country. And by the way, in all the other countries as well. We feel that we can do more by being inside U.S. CAP together with the other stakeholders represented there in order to actually achieve the right outcome.

KIMBERLEY STRASSEL: What kind of bill could you want or expect that would actually be good for your industry?

MR. VOSER: What we want is energy legislation that drives supply security in this country, which drives the country to lower fuel emissions, which generates new jobs but also preserves old jobs.

To then go further down, we are a keen proponent of market-based energy legislation. We will quite clearly look out for natural-gas developments, which we see as a long-term source of energy that has a lot of positives.

And in general, I think our industry is facing an interesting challenge that the demand in the world will double, but we have to provide that energy at a much lower cost to the environment. This will drive technology developments, innovation developments, etc., and that’s normally where our industry has always been in a leading position. And that’s what we want to see in the legislation so that we have certainty on the carbon price, certainty on, let’s say, legislation that will stay for a while so that we can operate.

MS. STRASSEL: What odds do you give passage of a cap-and-trade bill this year?

MR. VOSER: I’m still hopeful that we get something passed. I know the timing will be longer than what we expected maybe 12 months ago, but we will do our part in order to make sure that we get something that the industry and the country can take forward. But I think we are in for a longer period before we get something.

New in the Pipeline

MR. MURRAY: We talk about Shell as an oil company, but you’re very close to becoming a predominantly natural-gas company, aren’t you?

MR. VOSER: That’s absolutely correct. Shell started quite a while back, actually, to put a lot of emphasis on gas. And by 2012, we will have more gas production world-wide than we have oil.

So this has been a journey of 20, 30 years that we have used our technology and innovation in order to drive the gas development on a world-wide basis because, let’s face it, it has 50%, 70% less CO2 than coal, for example, and that’s exactly where we see the long-term benefit.

MR. MURRAY: And in your view, is that the big answer to our environmental problems for the next 50-plus years?

MR. VOSER: I don’t think there is one answer.

On a global perspective, the energy demand will double—this is pretty much proved now—by 2050. So we will need most of the energy forms that we know today.

MR. MURRAY: What percentage of your capital spending goes to renewable energy sources, roughly?

MR. VOSER: It is not the capital intensity that drives renewable energies and alternative energies. It’s what you spend in technologies and in innovation. Roughly 25% of our budget at this stage goes into what we call alternative energies from an R&D point of view.

MR. MURRAY: And of the 25% of your R&D budget that you spend on renewables, what in that portfolio do you personally think is the most promising?

MR. VOSER: We are focusing a lot on biofuels at this stage. We just announced a few weeks ago a big joint venture in Brazil where we are bringing our first- and second-generation biofuels technologies together with Cosan, a sugar ethanol producer there, in order to speed up the second-generation capabilities because we need to speed up that process. So biofuels is one.

We are in wind. We have gone out of solar. We tried both silicon and thin-film solar, but we can’t see that as being something that we can scale up globally and get the economies of scale. So we leave that. It’s a technology that will be developed, no doubt, but we leave that to a smaller, medium-sized players.

Driving Ahead

MR. MURRAY: For your oil business, transportation is obviously a key to the future. How long do you think it will take for electric cars to become a significant part of the vehicle fleet?

MR. VOSER: We think between now and 2050 we will go from one billion cars to two billion cars world-wide. So it’s quite a growth there. We think by 2050 that roughly 40% of those two billion cars will be electric cars.

But there is a but to this. Which means in the meantime we will need all [types of environmentally friendly cars]. So we will need low-carbon-fuels cars, more-efficient engines. We will need the hybrids. There will be more electrical cars coming in. There will be fuel cells, there will be hydrogen. So I think there will be room and space to develop all of them.

Looking to the Market

MS. STRASSEL: You talked about how you wanted legislation here in the U.S. to help with the certainty. But as a global company you already operate in regions that do have climate restrictions. How has that affected your business?

MR. VOSER: I would like to have a market-based system that actually works on the global environment. Because the world, the trade flow today, is a global trade flow, so you cannot cut between frontiers, boundaries, countries, etc.

So while I think it is OK to start country or regionally, we need governments working together, and that’s where I think Copenhagen would have been a good way to achieve a global agreement. We didn’t get it. I’m not too disappointed because I think this is a journey. We will need more time.

The politicians or the governments also have to learn to bring some reality into the discussion from time to time. So we get biofuels legislation, for example, and two years later they change because they realize technically it’s not possible. I think that’s where governments, companies, NGOs can work together to set the right frames.

MS. STRASSEL: Some people say instead of all the negotiations and the offsets and the carbon trading, just put a carbon tax, in particular a gas tax, and see where that goes.

MR. VOSER: I would say you need a market-based system where you can actually give the right incentives for those industries that are affected to make sure that they can lower the CO2 over time and they can lower the costs to achieve that over time. You need an incentive there, and I just struggle to see that a tax is an incentive.

WSJ ARTICLE

BP, Europe’s biggest oil company, has pulled out of the leading business group lobbying for curbs on US greenhouse gas emissions, a sign of fragmentation in the campaign for climate and energy legislation.

ConocoPhillips and Caterpillar of the US have also dropped out of USCAP, the group revealed on Tuesday. Royal Dutch Shell is now the only large oil company still a member.

Copyright The Financial Times Limited 2010.

FULL FT ARTICLE (Subscription)

Peter Voser, Shell’s chief executive, has pledged to concentrate on developing biofuels and clean coal, as part of the company’s attempt to reduce its carbon dioxide emissions.