Mike Markham used to hold a match under his faucet and light the tap water on fire. He’d get a small blue flame or an explosive orange fireball, depending on the day. “I had to check to see if I still had a moustache,” he says. Markham lives on an 80-acre farm in Fort Lupton, Colo. There are about eight natural gas wells within a few miles of his property, which he says are causing methane gas to migrate into his water.
The problem, which also affected about 100 of Markham’s neighbours who get water from the same aquifer, ended this year when the drilling companies changed pipe infrastructure and introduced filters and holding tanks to remove the gas before it entered household sinks. The aquifer is still contaminated, but local concerns about water quality aren’t going to stop the nearby drilling. That’s life on the front lines of what might be the biggest energy revolution in generations.
Fort Lupton is home to a handful of the more than 35,000 drilling operations in the U.S. seeking to extract natural gas from shale rock thousands of metres underground. Like Canada’s oil sands, this gas was once thought too difficult to extract—shale is far less porous than the sandstone and other types of rock from which natural gas is normally harvested. But new drilling techniques are opening up this vast energy supply. There’s thought to be about 14.4 trillion cubic metres of gas available in western Europe, or enough to meet the continent’s needs for about 30 years. The U.S. has a potential supply that could last up to 100 years, and the International Energy Agency estimates that China has a further 26 trillion cubic metres of undeveloped shale gas reserves.
With so much available, major energy companies around the world are racing to start drilling. As Markham’s tap water demonstrates, this carries some big environmental risks, but the upside is too great to ignore. Shale gas could one day lower fuel prices, rein in dependence on foreign oil and shrink carbon emissions. “A few years downstream, maybe in the next decade, there will be an energy shortage,” says Olev Trass, a chemical engineering and applied chemistry professor at the University of Toronto. “Shale gas really gives a respite to this whole crisis.”
The shot that kicked off the shale-gas rush came in the form of advancements in horizontal drilling—where a drill turns sideways after boring vertically—and hydraulic fracturing (fracking), a process that uses millions of gallons of high pressure liquid to expand cracks in rock and allow gas to leech out. The techniques have made deposits once far too expensive to access viable, and have caught the interest of fuel giants like Shell, ExxonMobil, Encana, Statoil, and smaller firms like Denver-based Forest Oil and Calgary-based Talisman Energy, both of whom are drilling on the Utica shale in southern Quebec, which is thought to hold over a trillion cubic metres of gas. Billions of dollars have also been invested in exploration and drilling projects in India, China, Australia, Russia and Germany since the mid 2000s.
Thanks to the new advancements, natural gas could potentially replace coal in power plants and, eventually, gasoline and diesel in vehicles. And it burns much cleaner than oil. “Natural gas produces lower particulate matter—that’s black smoke; it produces fewer hydrocarbons, which cause smog; and it produces a significantly lower amount of greenhouses gases (about 20-30 per cent less than diesel),” says Jonathan Burke, the vice-president of market development at Westport Innovations Inc., a Vancouver-based natural-gas engine manufacturer that’s seen its business grow by 30 per cent every year since it was founded in the mid ’90s. “We’re looking ahead to a world where oil is not our sole transportation fuel.”
The surplus has caused prices to plummet by half since the start of the decade, from US$10 per million BTUs down to about $4 (or from being roughly on par with oil to less than half its price). “When you consider inflation, natural gas is dirt cheap,” says Trass, but still profitable to extract. And the benefits go further than economics. Trass says Russia will have a hard time flexing its muscle by cutting off oil pipelines to Europe if natural gas does become the alternative to crude, while oil-rich nations like Iran may be forced to soften hardline positions as other countries lose interest in foreign imports. But experts also caution that shale gas is not going to end oil addiction. “We’re going to need all the fuels,” says Lorraine Mitchelmore, president of Shell Canada. “It’s not ‘and/or.’ It’s ‘and’—period.”
Mitchelmore says 50 per cent of Shell’s business will stem from natural gas by 2012, and the company just spent $4.7 billion buying East Resources, a private oil company that owns more than a million acres of shale gas properties. But the gas giant isn’t cutting back on oil production. It’s just expanding natural gas production at a faster rate. Plus, demand for oil is still rising and offshore drilling and oil-sands developments will continue to grow. In fact, in Canada, cheaper natural gas is only expected to help oil-sands productivity because it’s used to extract and upgrade bitumen.
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