America’s oil and natural gas revolution is running into new public opposition to hydraulic fracturing that could slow development unless the industry gets a better handle on the environmental challenges.
The battle is currently focused on Colorado, where activists are attempting to have a referendum this fall that would allow local municipalities to ban hydraulic fracturing – or fracking, as it is known.
The Colorado fight is only the latest to flare up, as fracking for shale gas is banned in New York State and Quebec, and has sparked battles in places such as New Brunswick and Pennsylvania over perceived threats to water supplies.
“Unless the industry gets out in front of these concerns, the future of this great opportunity for this country is at risk,” said John Deutch, a professor at Massachusetts Institute of Technology and chair of a Department of Energy panel on the environmental risks from shale gas. If the Colorado referendum passes, “it will be an absolute catastrophe for this great technology,” he said.
Public opposition to fracking and drilling is a concern for the energy industry as it rides a wave of growing production from shale gas and tight oil reserves previously seen as inaccessible or uneconomic. Though opposition to fracking isn’t likely to snuff out the boom, it could limit the industry’s ability to boost production.
A fracking backlash could also add costs if the opposition results in onerous regulation.
Mr. Deutch is no activist who opposes fossil fuel use. A former head of the Central Intelligence Agency, he served as a senior official in the Energy Department and the Defence Department, and he called the boom in unconventional oil and gas “one of the greatest benefits” to North America that has occurred in his lifetime.
He said the industry needs to adhere to a set of best practices – and accept regulation – for managing the entire water impact, from withdrawals, to well construction, to disposal of waste water. And it needs to work with government to get a better understanding of methane emissions.
Industry officials acknowledged that the opposition that threatens the industry in the North American is even more daunting in other countries looking to copy this continent’s success.
In the United Kingdom, local councils are often determined to block fracking operations, said Chris Finlayson, chief executive officer at BG Group. “I think it will never get off the ground in the way it potentially could,” Mr. Finlayson said. “And it is even more challenged across western Europe.”
U.S. Secretary of Energy Ernest Moniz said the Obama administration is committed to expanding the shale gas and tight oil boom. But he acknowledged the public remains skeptical, especially in some regions that are facing industrial scale development.
“We can mitigate these to a certain extent” through water recycling, the use of natural gas rather than diesel engines in the field, and disclosure of chemicals, Mr. Moniz said.
“I don’t think the industry did enough – and maybe even today isn’t doing enough – on disclosure of frack fluids … Companies still need to be aggressive on getting out in front and do everything they can to minimize the environmental footprint,” he said.
The Canadian Association of Petroleum Producers has published voluntary standards to best practices for the industry. And U.S.-based Environmental Defense Fund (EDF) is working with companies such as Royal Dutch Shell PLC and Chevron Corp. on similar voluntary standards.
The oil and gas boom “is a huge blessing and bounty for our country,” EDF president Fred Krupp said during a panel discussion. “But when it is not done right, there are big environmental costs which create a problem for social license to operate.”
EDF also worked with the State of Colorado and industry officials – including Calgary-based Encana Corp. – there to pass regulation to reduce air emissions from oil and gas drilling operations.
But that hasn’t stopped critics for mounting opposition with a drive for a fall ballot initiative to hand permitting authority to local governments.
If it passed, “the lack of certainly would be difficult for anyone to manage. And I could see capital leaving the state rapidly and dramatically,” Colorado Governor John Hickenlooper said, though he added he does not expect such a ballot initiative to pass.