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Execs Acknowledge Concerns About Gas Boom Execs Acknowledge Concerns About Gas Boom

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ENERGY

Execs Acknowledge Concerns About Gas Boom

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In this photo made on Wednesday, July 27, 2011, a worker shovels the powder used to make a mixture with water used in the hydraulic fracturing process in the Marcellus Shale layer to release natural gas b at a Range Resources site where the process was underway in Claysville, Pa.(AP Photo/Keith Srakocic)

HOUSTON—Leaders of some of the world’s biggest oil and natural gas companies are issuing a plea to their industry to do a better job managing what they call the “shale gale”—vast resources of shale natural gas recently discovered throughout the United States and in other countries.

“Let’s be honest, as an industry, we have not always done our best to engage in the public debates about these issues,” Peter Voser, CEO of Royal Dutch Shell, said on Wednesday at a speech during a major energy conference here. “This has resulted in some misconceptions taking root, especially about the impact of hydraulic fracturing, or ‘fracking.’ ”

 

Fracking is a controversial process where large amounts of water, chemicals, and sand are pumped into a well at high pressures to fracture rock and allow natural gas to escape. Environmental groups and residents who live near natural gas wells are concerned about potential water contamination.

Attendees listening to Voser’s speech at the IHS Cambridge Energy Research Associates annual conference might have felt a sense of déjà vu from just 12 hours earlier.

“We cannot ignore that parts of the public don’t trust our industry and our ability to operate safely,” Helge Lund, president and CEO of the Norwegian company Statoil, said during a dinner speech on Tuesday night. “This is a fundamental issue affecting us all. It cannot be handled only on a company-by-company basis.” Statoil operates throughout the United States and is increasingly drilling for natural gas.

 

For the first time ever, Shell expects to produce more natural gas than oil this year. That’s due in large part to the vast reserves of shale gas recently tapped in the United States. These discoveries have made the U.S. the largest natural gas producer in the world, surpassing Russia, according to 2009 numbers from the Energy Information Administration. The Marcellus shale formation, which sits atop several Appalachian states like Pennsylvania, West Virginia, and New York, is considered the second-largest gas field in the world (behind one spanning Qatar and Iran.)

Statoil is operating in the Marcellus and on shale formations in Texas.

Both Voser and Lund said Obama’s call in his State of the Union address in January to require public disclosure of chemicals used in fracking should sound the alarm for companies.

“When the president singled out this issue in his speech, we have to admit that we probably did not move quickly enough,” Lung said.

 

Many companies drilling for natural gas voluntarily disclose the chemicals they use on a website called “FracFocus,” but critics of natural gas—and the Obama administration—want it to be mandatory.

“We also support President Obama’s call for regulation to disclose chemicals used in hydraulic fracturing fluids,” Voser said.

Voser also discussed a growing concern especially among environmentalists: methane emissions from natural gas wells and their impact on climate change.

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Methane is a potent greenhouse gas that escapes during the gas production process. The Environmental Protection Agency is expected to issue rules this spring that will require companies to limit methane releases. But for some critics concerned chiefly about combating climate change, those rules can’t come quickly enough. The industry needs to take notice, Voser said.

“Some environmental groups that once supported switching from coal to gas for electricity generation are no longer doing so over concerns about methane leakage,” Voser said. “This is an issue we need to take seriously.”

Natural gas burns 50 percent more cleanly than coal, but less data is available on what impact methane emissions during production are having on climate change.

Voser said he and other companies are working with the Environmental Defense Fund to better measure methane emissions from shale natural gas production.

Lund did not explicitly mention the issue of methane emissions, but he did offer a broad call to the industry to help fight climate change.

“We don’t just have to respond to the changes in climate that we see coming,” Lund said on Tuesday. “We have to respond to what most climate scientists say is going to get worse because of human activity.”

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