Categories
Select Country
Follow Us
Perspectives

Diversity and Divergence at Play in Natural Gas Boom

Companies, using technologies like horizontal drilling and fracking, are responding to the world’s massive and growing demand for natural gas when there is the right combination of geology, finance, technology, regulatory framework and public acceptance.

These factors are not universally present. We have diversity and divergence – and an absolute requirement to reduce greenhouse gas emissions worldwide – at play.

There is cause for caution because, as in all complex processes, there is risk.

Risk
There may be problems with water resources, and fracking is an increasingly thirsty process. There may also be problems with gas leakage. A two-to-three percent leakage of methane would make gas no better from a carbon point of view than coal, and could, in rare circumstances, cause harm directly to people and livestock. And there could be public exasperation, especially in crowded countries such as the U.K., at the amount of paraphernalia that surrounds the drilling and moving of equipment and gas.

Land ownership is different throughout the world, which affects who benefits directly from the drilling. Here in the U.K., to produce a meaningful supply – in terms of security of supply and effect on consumer bills – we are going to have drill a lot of holes. As pressure drops in a well, you have to drill again, and U.K. geology means there is less benefit from horizontal drilling. U.K. gas is deep, blocked by other rocks, and therefore not at all like, say, the Texas basin. In a small country, this will be more noticeable putting pressure on public acceptance and willingness to put up with the nuisance.

The drilling rig of Cuadrilla Resources explores the Bowland shale for gas, four miles from Blackpool in Blackpool, England. The rig was the first in the
U.K. boring exploration holes 4000 feet deep to see if it is economically viable to extract the reported substantial natural gas from the shale deposits beneath the Lancashire coast line. Photo: Christopher Furlong/Getty Images

Environment
While focus has been on the economic benefit of cheaper energy, some have championed fracking as an environmental benefit. Of course, gas is still a fossil fuel. There is a relative gain in environmental terms provided it replaces dirtier forms of energy, like coal. However, if it’s not replacing coal, it could end up reducing the need – or desire – for renewable energy sources.

This should not be a gas versus renewables debate. In the long term, fracking gas is not an answer to tackling climate change but, with large quantitates of renewables and a huge increase in efficiency in every thing and every process that converts primary energy into usable energy, it can be part of the journey. It has to be well regulated, technologically advanced, and well managed.

Coal Question
As we set priorities and weigh our energy alternatives, we are right to focus on coal.
Anything that reduces the consumption of coal in favor of something cleaner is welcome and could be the catalyst for change. Now perhaps is the time for the setting up of big clean energy enterprises that could combine gas and renewables, big enough so that their marketing and influencing power can be directed to building a new energy infrastructure. These enterprises would not be encumbered with the baggage of the past. They would be focused and forward looking.

These energy enterprises could be big enough to take “territory” away from those who want no change – those who benefit from the current energy status quo that cannot be maintained if we are to respond properly to climate change.

A price for carbon helps this. The signal that carbon is valued favors gas against a dirtier incumbent, as well as renewables and energy efficiency. The net result is a more resource efficient economy.

Institutional investors are beginning to question the valuation of fossil fuel companies and are concerned about the costs of fossil fuel exploitation. Ultimately clean energy, including the relatively cleaner natural gas, must win on cost anyway you look at it. Cost in both economic and environmental terms, if there is any hope of reaching a sustainable planet and an energy efficient world.

James Cameron is non-executive chairman of Climate Change Capital.

Diversity and Divergence at Play in Natural Gas Boom was originally published on Ideas Lab

Subscribe to our GE Brief