Coal seam gas may not help climate fight

www.smh.com.au
19 Nov 2011

The federal Minister for Energy, Martin Ferguson, is often criticised but he's right about this: the coal seam gas industry has grown too fast. We have not done our homework before issuing approvals for this $50 billion-plus export industry-on the possible groundwater and land-use impact, on what to do with the millions of tonnes of salt left over, or the impact on Gladstone harbour and the Great Barrier Reef. Crucially, we have rushed to develop coal seam gas reserves as a cleaner alternative to coal, assuming it will help reduce greenhouse gas emissions and tackle climate change. But will coal seam gas reduce emissions? By how much? We don't actually know.

Recent research into fugitive emissions, including peer-reviewed articles by Cornell University's Robert Howarth and the US National Centre for Atmospheric Research's Tom Wigley, both published in Climate Change Letters, have found unconventional plays like coal seam gas or shale gas may deliver no greenhouse benefit at all, or even make things worse.

If that turns out to be right, gas may be an obstacle rather than a bridge to a decarbonised future. With the International Energy Agency warning this month that the energy infrastructure we build over the next five years will determine whether the world is able to limit global warming to 2°, it's hard to think of a more critical climate policy question-or one with more money riding on it. Early this year the oil and gas industry lobby group, the Australian Petroleum Production & Exploration Association (APPEA), commissioned research by engineering consultancy WorleyParsons on the life cycle emissions of coal seam gas versus coal when exported and burned in China.

APPEA did something strange. It only released the executive summary. Why? Because, according to some of its members, there were scenarios which showed how coal seam gas might emit more greenhouse gasses than coal. At worst, if burned in the least efficient ''peaking'' open-cycle turbines, coal seam gas was up to 44% dirtier than the newest, most efficient coal-fired plant. Some inside Worley-and the better coal seam gas companies, too-were unhappy with the association's handling of the report. There was pressure to get it out. The executive director of the think tank Beyond Zero Emissions, Matthew Wright, got wind of the industry disquiet and had an idea: commission a separate study by Worley-in fact, widen its scope-and get the results into the public domain that way. A contract was drawn up and a price agreed: $50,000. Wright believes the work was done and the report drafted. Somewhere, things went off the rails.

Cold feet at Worley, perhaps? All week, starting in Monday's Age and on ABC Radio National's Breakfast program and running from there, the accusations have flown thick and fast. Worley says it and Beyond Zero mutually agreed to drop the contract, no fee being payable. Instead, the same research would be published in a peer-reviewed journal, Energies. Wright flatly denies he ever agreed to that-he still wants the report he commissioned-and claims Worley is suppressing the report to stay on side with the coal seam gas industry which gives it contracts worth hundreds of millions of dollars. Worley rejects that outright and says everything Beyond Zero commissioned-''the full box and dice'', a spokesman told me-will be in the Energies paper. How, asks Wright, when his report had a broader scope than the Australian Petroleum Production & Exploration Association's 80-odd page document, and what peer-reviewed journal would publish all that? As it happened, a fortnight ago APPEA did finally release its own full, original report by Worley. Some media took APPEA's line, saying it proved gas was cleaner; others focused on the previously unreleased information, including less flattering gas-versus-coal scenarios. It's now online.

On Tuesday the Merrill Lynch oil and gas analyst David Heard weighed in with a six-page note to clients titled: ''Green gas debate: who is hiding the fugitives?'' It pulls the APPEA report apart. For a start, the report assumes coal seam gas/liquefied natural gas projects apply best practice in greenhouse gas and environmental management, especially to prevention of venting and leaks in upstream operations. Extreme scenarios for coal seam gas venting and leakage were excluded. Extreme was defined to mean ''other than best practice''. But Heard records his personal observation of a Santos drilling operation in the Cooper Basin (not a coal seam gas well, as it happens) where after fracking and in the flow-back phase ''the well vents a mixture of fracking fluid and gas direct to atmosphere in an unconstrained manner for days''. Heard's colleagues in the US have found likewise.

Then Heard noted how our National Greenhouse and Energy Reporting System (NGERS) allowed the coal seam gas companies to rely on a 2004 US industry-derived document, the American Petroleum Institute's Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Gas Industry, which explicitly stated it was ''neither a standard nor a recommended practice for the development of emissions inventories''. The compendium contains generic assumptions, Heard noted, which may be outdated given the rapid development of unconventional gas extraction, and inapplicable in an Australian context.

APPEA's report admits, on page eight, ''the large-scale CSG/LNG industry in Queensland is new and emissions are only projections subject to high uncertainties in some areas''. Under our emissions trading scheme, carbon price liability is determined according to the emissions reported under NGERS system, including fugitive emissions. Ferguson says leave it to the market, guided by the carbon price. But relying on the Compendium could lead companies to understate emissions and ignore any carbon price signal. If, for example, the coal seam gas companies just use a rule of thumb-a broad average at the end of the year by some junior accountant asked to 'multiply the number of wells we've drilled by a number in a 2004 US document'-there is no price signal.

We need better science on the emissions from coal seam gas and, ultimately, Heard's note backs Wright, expressing concern at the alleged suppression of Worley's report for Beyond Zero, and concluding such a thorough independent expert assessment of full life-cycle emissions would be worthwhile. This week Ferguson ruled out the government commissioning any such report. A spokesman for the Climate Change Minister, Greg Combet, conceded the NGERS probably relied on an estimation approach to emissions from coal seam gas extraction, but said the system allowed for annual updating of estimation methods as new science came in. Lastly, Heard's note criticises APPEA's assumption that gas substitutes for inefficient coal in baseload generation in China. This may not be correct, he writes, ''gas is not really competing with coal at all''.

Heard's concern, on his clients' behalf, is not so much that the coal seam gas companies could face higher-than-expected carbon price liabilities if we had a truer picture of emissions. Rather, it's that amid an increasingly nasty debate on the roll-out of coal seam gas in Queensland and NSW, and given these projects are on thin ice politically as they push east coast gas prices higher by linking us to international markets, the last thing the industry needs is to lose the one thing it had going for it: an apparent benefit in tackling climate change. The gas projects are counting on expansion, to build second and subsequent liquefaction ''trains'', and approvals may prove harder to come by. If the greenhouse benefit claims turn out to be false, it's bad news for the coal seam gas companies.

paddy.manning@fairfaxmedia.com.au
Twitter: @gpaddymanning

Gas prices to double in 20 years as demand explodes, Santos predicts

Canberra Times
11 Jan 2011, Page: 13

The only way to meet a tripling in natural gas demand in eastern Australia is by allowing unconventional gas projects, such as coal seam gas, oil and gas producer Santos says. Santos's eastern Australia vice-president James Baulderstone told a conference that he expected gas prices to more than double within two decades, driven by demand and linking it to oil prices. Soaring global demand for liquefied natural gas is expected to contribute to Australia's wealth and make it one of the world's biggest exporters of the commodity.

However, the use of fracking to access coal seam gas or shale gas is strongly opposed by many Australians and Americans, including farmers, who say it contaminates prime agricultural land._ Santos insists that is false and gas is a safe, low-carbon alternative to coal for providing energy, with eastern Australia potentially having enough gas to supply it for a century.

"The five LNG trains already sanctioned, with more planned, represent a quantum change in eastern Australian natural gas demand", Mr Baulderstone told the Opportunities and Challenges for Australian Gas conference yesterday. "Provided natural gas development activity is allowed to proceed at the right pace, and the market is willing to pay the increased cost of extraction, there is sufficient gas in eastern Australia to meet this demand".

But he added that it was not viable to develop much of the gas reserves to meet the new demand at current Australian gas prices of about $4 a GJ. Australian gas prices were some of the cheapest in the developed world, Mr Baulderstone said. He predicted prices would move to $6 to $9 a GJ. Santos is heavily invested in coal seam gas through the $US16 billion ($A15 billion) Gladstone Liquefied Natural Gas project it is leading and is also developing shale gas projects in the Cooper Basin in central Australia. It is also close to finalising a $924 million bid for NSW-based Eastern Star Gas, which controls NSW's largest coal seam gas resource. Santos shares were down 24¢ at $12.96 yesterday.

Shame, Premier

The Saturday Age
1 Oct 2011, Page: 21

THE brown coal industry is clearly laughing all the way into our polluted future. Our appointment with a long established solar power company was cancelled this week because it was going into receivership. So, with Premier Ted Baillieu introducing Australia's most restrictive planning laws for wind farms (The Age, 30/8), and with solar power companies closing, we are left with the joys of "fracking" (hydraulic fracturing of coal seam gass) and brown coal. Brickbats to the government for such appalling policies.

Cathy Humphreys, North Melbourne

Secrecy

West Australian
28 Sep 2011, Page: 22

Piers Verstegen is correct in exposing the veil of secrecy of the coal seam gas fracking industry, which is now extending its influence into WA. There is the possibility that this may cause widespread contamination of our water aquifers by toxic and cancer-inducing chemicals.

The coal seam gas promoters are not keen on providing public information. The Barnett Government is also in a rush to approve coal seam gas and other gas projects, while discouraging investment in renewable energy These fossil fuels produce less CO₂ in their combustion than coal, but their widespread use as an interim fuel will still push global warming to dangerous levels. This will be their greatest threat to our health.

Greg Glazov, Gnangara

Fracking push on hold after twin earthquakes

Australian
29 July 2011, Page: 22

MARK Miller was hoping to lead an energy revolution in Britain. Then earthquakes intervened. Mr Miller, an oil industry veteran from Pennsylvania, is one of a small band of pioneers seeking to replicate North America's shale gas boom in Europe. His company, Cuadrilla Resources, has imported a technology used to great effect in the US to try to turn Blackpool, a seaside resort on the west coast of England, into a new Klondike for gas.

The technology, called hydraulic fracturing, or 'Tracking", is controversial. It involves injecting huge volumes of water, sand and chemicals deep into porous shale rock, creating fissures or fractures that allow the gas trapped inside the rock to flow out. Critics worry that fracking can contaminate groundwater and even cause gas to leak from nearby household taps.

After months of cajoling, Mr Miller, a 57-year-old petroleum engineer, thought he had managed to persuade the locals that fracking was safe. Then, this northern spring, the area around Blackpool was shaken by two tremors. After the second, Cuadrilla Resources suspended its fracking operations, pending an investigation. Some researchers have delved into possible connections between fracking and earthquakes. But Cuadrilla Resources says no such connection has been proved, and Mr Miller says he is sceptical there is any link.

Even so, one of the most closely watched energy projects in Europe is now on hold, and the publicity has dealt a blow to the image of shale gas, already under attack from environmentalists on both sides of the Atlantic. The quakes left residents in the Blackpool area "angry and distressed", said Philip Mitchell, chairman of the local Green Party. "They have told me they feel like guinea pigs".

Some were more sanguine. "If they find gas then I don't think there's anything wrong with what they're doing", said one elderly man who lives in the village of Singleton, a stone's throw from the Cuadrilla Resources site. "I worked for years in the nuclear industry, so I'm not bothered by these things".

Fracking could bring a measure of energy independence to Europe by reducing its increased reliance on gas imported from countries such as Russia, which in the past has turned off the spigot over pricing disputes. But Cuadrilla Resources's tribulations show the challenges of developing shale gas deposits in Europe, where conventional gas reserves have declined. Europe is also more densely populated than the US, meaning a greater number of people would be likely to live near fracking sites.

Mr Miller likes to compare the county of Lancashire, where Singleton is located, to the Barnett, Marcellus and Haynesville shales in the US, where vast new gas reserves unlocked by fracking have transformed energy markets. When Cuadrilla Resources started drilling last year, "we were amazed at how thick the shale was", he says. "There was almost 1000 feet more of it than we'd expected, and the thicker the rock, the more gas there is".

The widespread use of fracking was a game-changer for the North American energy industry, allowing the US to become a net exporter of gas and, in 2009, to overtake Russia as the world's largest producer. Last year, the US pumped 4.87 trillion cubic feet of shale gas, equivalent to 23% of its total gas production. Europe, too, is thought to have huge production potential. One London think tank estimates there are enough recoverable reserves of unconventional gas in Europe to meet its gas demand "for at least another 60 years".

That potential has attracted some of the world's biggest energy companies. Exxon-Mobil has been chilling for shale gas in northern Germany. ConocoPhillips has teamed up with Britain's 3Legs Resources to explore in Poland's Baltic Basin. But there are many obstacles. Environmentalists in several countries, including Britain, are pushing to restrict fracking. And although the British government this week rejected calls for tough new controls on the practice, France last month became the first country to ban it completely.

Cuadrilla Resources, founded in 2007, was initially focused on shale gas in the US. But by then, land prices in the likeliest areas were already too high. So it shifted its focus to Europe instead. "We knew there was similar geology there", Mr Miller said. Britain, whose untapped shale reserves are thought to be substantial, seemed to be the perfect destination. With backing from Australian mining company ASLucas and US private equity firm Riverstone Holdings, Cuadrilla Resources acquired a licence covering 280,000 acres in Lancashire's Bowland Shale in 2008.

Last year, Cuadrilla Resources made Britain' first shale gas discovery near Blackpool. In the ensuing months, it started fracking there to see if it could get the gas to flow. The company says its procedures are safe. To prevent leaks into the local aquifer, it is drilling 1000 feet below the water table, underneath rock that has held back the gas for millions of years. "It would defy physics" for any of that gas to seep into ground water, Mr Miller said. Cuadrilla Resources also puts an extra layer of steel and cement into its wells to better isolate the exposed rock formations. But in the end, the biggest threat to Cuadrilla Resources's operations came from an unexpected source: the two small earthquakes that shook Lancashire on April 1 and May 27.

In Singleton, people had been generally supportive of fracking, but some changed their minds after the tremors. "They should have investigated how it could affect the earth before they went ahead", said one local woman. Cuadrilla Resources assembled a team of independent experts to determine if there was any link between fracking and the tremors, which it stressed had caused no damage and no physical injuiy. Meanwhile, Mr Miller began a series of public meetings to try to calm local jitters. The Cuadrilla Resources chief executive said he didn't expect to be quite so much in the public eye. "I thought it would all be about well design and raising finance", he said. "Sometimes you feel you're a spokesman for the global oil and gas industry".

Hot rock energy a step closer

Adelaide Advertiser
12 July 2011, Page: 29

Fracturing work has begun at Petratherm's Paralana project in the state's north in a major milestone for the geothermal player. Fracture stimulation, or "fracking", attempts to create seismic events almost 4km underground to increase the size of a potential geothermal reservoir. With joint venture partner Beach Energy and contractor Halliburton, Petratherm has begun pumping fluid into the Paralana 2 well to create fractures in the hot rocks used to produce geothermal energy.

Achieving a successful fracture event is a major hurdle for the company to demonstrate that generating electricity from hot rocks in the state's far north is viable. The Paralana resource with multiple wells is estimated to be able to produce 13,000 MWs of power, about four times the state's current energy use. Petratherm managing director Terry Kallis said the fracture work had begun yesterday morning and was progressing well. "The fracture process that is underway is a major milestone for the project and very important for the geothermal industry", Mr Kallis said. "To be able to show you can create the reservoir is a major step in de risking the project (and) we are quietly confident we will be able to propagate fractures beyond 500 metres".

In January the company did a "minifrack" at the project that produced seismic events about 300 metres from the bottom of the well after two hours of pumping. This week the company will use 8500 horsepower pumping capacity to inject fluid at 9000 psi of pressure into the well increasing progressively over several days. "The further it goes the better it is, because it gives us more rock to access and more heat to strip from the rocks", he said. "The process involves water under pressure at increasing pumping rates, which is expected to create many more fractures than what was created during the minifrack".

The work will allow the company to determine where it drills the Paralana 3 well to create production for the geothermal system. Once the production well is drilled, the company will undertake circulation testing to confirm target flow rates as the next step towards a commercially demonstrable, enhanced geothermal system power plant. It comes as geothermal industry shares recovered yesterday on the back of the Federal Government's proposed carbon price.

Petratherm's shares closed 15% higher at 19¢, GeoDynamics 25% higher at 42¢, Torrens Energy 42% higher at 7.5¢ and Panax Geothermal 26% higher at 2.9¢. Australian Geothermal Energy Association chief executive Susan Jeanes said geothermal energy was the only baseload renewable technology on the horizon capable of replacing large coal generators. "The price on carbon provides a foundation for the development of clean energy projects into the future but other incentives must be effectively built on it to drive investment in renewable energy projects", she said.

GeoDynamics, which is developing its project at Innamincka, welcomed the Federal Government's climate change initiatives. "Clearly we are a big winner from the carbon tax and it is great news for the industry", GeoDynamics CEO Geoff Ward said yesterday. "I am also delighted for long suffering shareholders and it also augurs well for the proposed development of our pilot plant next year". Mr Ward said having a carbon price and the Clean Energy Finance Corporation and Australian Renewable Energy Agency to administer more than $13 billion of investment in renewables would be a significant boon for the sector.

Lawmakers seek inquiry of Natural Gas industry

www.nytimes.com
June 28, 2011

WASHINGTON — Federal lawmakers called Tuesday on several agencies, including the federal Securities and Exchange Commission, the Energy Information Administration and the Government Accountability Office, to investigate whether the natural gas industry has provided an accurate picture to investors of the long-term profitability of their wells and the amount of gas these wells can produce.

"Given the rapid growth of the shale gas industry and its growing importance for our country's energy portfolio, I urge the S.E.C. to quickly investigate whether investors have been intentionally misled," wrote Representative Maurice D. Hinchey, Democrat of New York, in one of three letters sent to the commission by four federal lawmakers, all Democrats.

The calls for investigations came amid growing questions about the environmental and financial risks surrounding natural gas drilling and especially a technique known as hydraulic fracturing, or hydropowerfracking, used to release gas trapped underground in shale formations. Members of the House Committee on Natural Resources said they hoped to hold a hearing in the next several weeks to discuss natural gas drilling.

Senator Benjamin L. Cardin, Democrat of Maryland, sent a letter to the Government Accountability Office, the investigative arm of Congress, asking it to look into questions about the environmental impacts of hydropowerfracking, the accuracy of reserves estimates, and industry regulation. State lawmakers also sought more information.

In Maryland, Delegate Heather R. Mizeur, Democrat of Montgomery County, sent a letter to the state comptroller and the attorney general calling for an investigation into disclosures related to the financial and environmental risks of drilling. In New York, Assemblywoman Barbara S. Lifton, a Democrat and longtime critic of drilling, sent a letter to the New York State comptroller, Thomas P. DiNapoli, calling for a similar investigation and citing roughly $1 billion in state pension funds invested in shale gas companies.

Officials in the office of the New York attorney general, Eric T. Schneiderman, said they had sent subpoenas to five oil and gas companies ordering them to provide documents relating to the disclosure the companies made to investors about the risks of hydropowerfracking, according to sources briefed on the investigation. A spokesman from Mr. Schneiderman's office declined to provide copies of the subpoenas.

The five companies subpoenaed — Talisman, Chesapeake Energy, E. O. G. Resources, Baker Hughes and Anadarko — all declined to comment. The calls for investigations follow articles in The New York Times describing doubts reflected in internal e-mails from federal regulators and natural gas industry officials about the costs associated with shale gas and the reliability of company reserves estimates.

Oil and gas companies and energy market analysts strongly rejected the views expressed in the industry and federal e-mails published by The Times. In an open letter to his employees, the chief executive of Chesapeake Energy, Aubrey McClendon, said the company's prospects were bright. "There is no reason to believe that shale gas wells will have shorter lives than our conventional wells — some 8,000 of which are 30 years old or older," Mr. McClendon wrote. Some financial services companies also released research notes saying they believed shale gas was now profitable for many companies.

But four federal lawmakers — Mr. Hinchey; Representative Edward J. Markey, Democrat of Massachusetts; and Representatives Carolyn B. Maloney and Jerrold Nadler, both Democrats of New York — sent letters calling for the S.E.C. to reconsider recent rule changes that allow companies to avoid disclosing details about the proprietary technology used to predict future gas production and to avoid some third-party audits of those predictions. They asked the commission whether third-party reserves audits should be made mandatory.

The lawmakers also called for an investigation into industry representatives' accusations of possible illegality or reserves overbooking. A spokesman for the S.E.C. declined to comment. In a letter to Steven Chu, the secretary of energy, Ms. Maloney and Mr. Nadler asked his department to assess how inaccuracies in production projections could affect energy policy. The federal Energy Information Administration also faced questions from Mr. Markey and Mr. Hinchey about its reports related to natural gas and its use of industry-tied contractors in writing those reports.

Voicing strong support for the natural gas industry, a bipartisan group of eight federal lawmakers from gas-producing states sent a letter to President Obama on Monday asking him to promote continued natural gas development "by any means necessary, but most specifically, by unconventional shale gas recovery." "The need for the United States to move toward energy independence becomes more crucial as the crisis in the Middle East and North Africa worsens," the letter said.

Fracking nightmare

Hobart Mercury
23 June 2011, Page: 20

I AM astonished that the Federal Government is classifying natural gas and "clean" coal as clean energy. That is absurd: both are carbon fuels that release CO₂ on burning. Further, clean coal has yet to be made and it uses a lot of energy in becoming so, if it ever does.

Gas opens up the nightmare of coal seam gas fracking fracturing a rock layer which destroys the water table and perfectly good farmland with it, not to mention methane release, which is worse for greenhouse than CO₂ and the health risks of the chemicals used in fracking.

The Government is heading down a nightmare scenario for all, except for the short term interests of mining companies. The Government is being disingenuous. Clean energy includes sources that leave no carbon footprint, like wind, tidal, solar and thermal. These are the way to go.

John Biggs, Sandy Bay

Lucas caught in fracking furore

Age
3 June 2011, Page: 3

LIKE BHP Billiton before it, Sydney based AJ Lucas has been snared by the international environmental furore over the gas extraction technique, hydraulic fracturing (fracking). Lucas's 41% owned Cuadrilla Resources has suspended fracking at a shale gas drilling site near Blackpool in Britain after the British Geological Survey recorded an earthquake about two kilometres from the drill site.

BGS said: 'Any process that injects pressurised water into rocks at depths will cause the rock to fracture and possibly produce earthquakes". BusinessDay last week revealed that BHP Billiton was facing class action law suits in the US over the impact of fracking in Arkansas. Arkansas landowners allege BHP Billiton's recently acquired $US4.75 billion ($A4.44 billion) Fayetteville shale gas business is causing earthquakes, poisoning their water and polluting the soil and air.

Fracking involves injecting high pressure water, sand and chemicals into shale or coal seam gass to liberate tightly held gas. The fracking of deeply buried shale beds for gas is in its infancy in Britain, with the Cuadrilla Resources well the first for the country It is also in its infancy in Australia, but it is integral to the $50 billion coal seam gas industry being developed in Queensland.

Lucas is this country's biggest drilling services provider to the Australian coal seam gas industry It has invested more than $60 million in Cuadrilla Resources, which is developing an unconventional (shale and coal seam gas) business in Britain, Poland, Czech Republic, Hungary and the Netherlands.

Cuadrilla Resources chief executive Mark Miller said the suspension of operations near Blackpool showed it took its responsibilities seriously. The BGS recorded an earthquake early on May 27 at two kilometres and with a magnitude of 1.5. It said it had installed seismic measuring equipment near the well after a 2.3 magnitude earthquake was detected on April 1.

Lucas's shares have been suspended from the ASX since May 23 while it works on a recapitalisation plan. Lucas has previously laid the blame for its financial woes on its September 2008 acquisition of Mitchell Drilling. The US shale gas industry is the most developed but it too is causing environmental concerns. The US Energy Department is under directions from President Barack Obama to develop safety and environmental guidelines for fracking.

Fracking is a hot issue in Europe. France, which does not need a new gas source because of a reliance on nuclear power, is debating banning it. But last month the Commons Energy and Climate Change Committee in Britain said there was no evidence that a ban of shale gas drilling was warranted. Queensland Treasurer Andrew Fraser has said his state's booming coal seam gas industry has its supporters.

Oil giants play loose with facts on gas

Sydney Morning Herald
23 April 2011, Page: 17

SENIOR executives in the fossil fuel industry have launched an all out assault on renewable energy, lobbying governments and business groups to reject wind and solar power in favour of gas, in a move that could choke the green energy industry.

Multinational companies including Shell, GDF Suez and Statoil are promoting gas as an alternative green fuel. These firms are among dozens worldwide investing in new technologies to exploit shale gas, a controversial form of the fuel that has rejuvenated the gas industry because it is in plentiful supply and newly accessible because of technical advances in gas extraction that are known as fracking.

Burning gas in power stations releases about half the carbon emissions of coal, allowing gas companies to claim it is a green source of fuel. For the past two months company lobbyists have been besieging governments in Europe, the US and elsewhere. Central to the lobbying effort is a report saying that the European Union could meet its 2050 carbon targets more cheaply, avoiding costs of 990 billion ($1.3 trillion), by using gas rather than investing in renewables.

However, The Guardian has established that the analysis is based on a previous report that came to the opposite conclusion: that renewables should play a much larger role. The report being pushed by the fossil fuel industry has been disowned by its original authors, who referred to it as biased in favour of gas. The new report relies on questionable assumptions about the future price of technology to capture and store carbon.

The team at the European Climate Foundation that produced the original report described the new version, commissioned by the European Gas Advocacy Forum, as "biased to one preferential outcome in support of gas advocacy". It warns that adopting its conclusions would expose the European economy to volatile gas prices.

Further doubt has been thrown on the industry's claims by an academic study from Cornell University which found that generating electricity from shale gas produced at least as much CO₂ as coalfired power, and perhaps more, because of the difficulty in extracting the gas. James Smith, outgoing British chairman of Royal Dutch Shell, one of the leaders in the lobbying effort, said switching to gas would offer the world a "breathing space" in the battle against climate change.

This view was challenged by David Mackay, chief scientific adviser to Britain's Department of Climate Change and Energy Efficiency. He said: "You can't reach the [climate] targets like this. There is no way that switching to gas would solve the problem. I don't think it's really credible that gas is the only future". Nobuo Tanaka, executive director of the International Energy Agency, said gas was "complementary to renewables, as it could be turned on and off quickly, could be baseload power and [avoid use of] coal".

The French public says no to 'Le Fracking'

www.businessweek.com
March 31, 2011

Natural gas may be poised for a post Fukushima boom, but even it faces hurdles. In the U.S, and Europe, concerns have been growing about the environmental impact of drilling for gas trapped in shale formations. And in France, Jose Bove the French environmental activist, farmer, McDonald's (MCD) antagonist, and onetime Presidential candidate has brought the nascent search for shale gas and oil to a halt.

As Total (TOT) and other energy companies readied rigs outside Paris and started to plan for drilling in southern France, local environmental groups began raising concerns about damage to water tables from the hunt for hydrocarbons locked in shale rock. On Jan. 22, Bove started a petition that now has about 100,000 signatures; within weeks the government ordered an exploration moratorium. On Mar. 11, Prime Minister Francois Fillon extended the ban until June, when parliamentary and ministry reports on the environmental and economic effects are due.

"Opposition is building because people are shocked by the way the state pushed through drilling permits without any debate", says Bove, a Green party deputy with the European Parliament. "It shows disdain for the population and elected representatives". On Mar. 23, French Environment Minister Nathalie Kosciusko Morizet briefed Parliament on plans to modify rules and allow public consultation when awarding permits for oil and gas exploration.

Total and Dallas based Schuepbach Energy were awarded permits a year ago to explore for shale gas, which is produced in the U.S, using hydraulic fracturing, or "fracking", to shoot water, sand, and chemicals into the ground and extract oil or natural gas. Opponents of fracking fear harmful chemicals could seep into groundwater.

Toreador Resources and Canada's Vermilion Energy also received permits to drill in the Paris Basin outside the capital. The geology of the saucer shaped rock formation, which extends more than 140,000 square kilometers, is similar to the Bakken Shale formation in North America, where oil production has surged with the increased use of hydraulic fracturing, the companies say. In a Radio Monte Carlo interview on Mar. 16, French Industry Minister Eric Besson said that while chemicals used in fracturing "have caused considerable damage in the U.S, and Canada,.. some industry representatives say that there may be clean technology that would permit production of shale gas without causing what we have seen in the U.S".

Riding out the political storm will be easier for diversified global producer and refiner Total than for Toreador, which moved its headquarters from Dallas to Paris in 2009 and partnered with New York based Hess (HES). Toreador had planned to start drilling a series of wells this month. It won't proceed until the government studies are done. Vermilion will also hold off on hydraulic fracturing in three existing Paris Basin wells. It's already carried out fracturing at two wells.

France produces about 1% of its crude oil needs from wells near Paris and Bordeaux. The areas stirred excitement in the '80s when finds by Total and Exxon-Mobil spurred a rush that slowed after dry wells and a drop in oil prices. While the Paris Basin may hold 100 billion barrels, it's unclear how much is recoverable using new techniques. Toreador Chief Executive Officer Craig McKenzie puts the number at about 300 million barrels. "If the geological potential is there, it would be a shame for France to pass up this source of energy", says Jean Louis Schilansky, head of the Union Francaise des Industries Petrolieres, an association of oil companies operating in France.

Bove doesn't agree and is taking his battle to the European Parliament. Even exploration shouldn't be allowed, he says. "The best solution would be for [Total CEO Christophe] de Margerie to cancel his permit". Says de Margerie: "We are going to wait until things calm down. I'm not in a hurry".