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Authors: Richard Heinberg
Snake Oil: How Fracking's False Promise of Plenty Imperils Our Future
Praise for Snake Oil
Those who think fracked gas is a panacea for our energy future would do well to read this cautionary account—it has an undeniable whiff of reality about it.
— Bill McKibben, founder of 350.org and author of
Oil and Honey: The Education of an Unlikely Activist
Many long-time observers of the world energy scene have been wondering whether claims being made for US shale gas and tight oil are “too good to be true.” Here is hard evidence that they are indeed. America will achieve real, long-term energy independence and security only by doing two things: reducing energy demand and developing distributed renewable energy sources.
— Michael Klare, Director of Five College Program in Peace and World Security Studies at Hampshire College, author of
The Race for What’s Left
Snake Oil
exposes the unsustainable economics behind the so-called fracking boom, giving the lie to industry claims that natural gas will bring great economic benefits and long-term energy security to the United States. In clear, hard-hitting language, Heinberg reveals that communities where fracking has taken place are actually being hurt economically. For those who want to know the truth about why natural gas is a gangplank, not a bridge,
Snake Oil
is a must-read.
— Michael Brune, Executive Director of the Sierra Club and author of
Coming Clean
Unconventional production from shales has been hyped mercilessly by the oil and gas industry. Richard Heinberg does an outstanding job of purging the myths and bringing sensibility to a dialogue which, unfortunately, has been driven by a brand of thinking on the part of energy producers that closely mimics the mentality of Wall Street.
— Deborah Rogers, founder of Energy Policy Forum, former Wall Street financial analyst
We are already living with the false promise that fracking would not harm the environment. Now read the facts about the false promise that it will provide an energy-secure future and lots of jobs.
Snake Oil
debunks all the myths. It is a must-read for our elected leaders.
— Maude Barlow, Board Chair of Food & Water Watch and author of
Blue Covenant
It always sounded too good to be true . . . Richard Heinberg authoritatively explains the fine print beneath the hype—sure enough, fracking is the 21st-century version of snake oil. The real deal is energy efficiency along with solar and wind power. It’s time for a sober and honest debate about our energy future. That’s why
Snake Oil
is essential reading.
— David W. Orr, Paul Sears Distinguished Professor of Environmental Studies and Politics at Oberlin College, author of
Down to the Wire
In
Snake Oil
, Richard Heinberg reveals two key themes everyone should understand: The promise of shale oil and gas abundance is exaggerated and misleading, and the cost of producing the shale oil supply has reached a level that is inconsistent with economic growth.
— Arthur Berman, consulting geologist and Director of Labyrinth Consulting Services, Inc.
The shale “revolution” might be over sooner than you think.
Snake Oil
does what the mainstream media have failed to do: ask the tough questions—particularly about the economics—and closely examine the real potential of fracking for oil and gas. This book is an important counterpoint to what has been little more than regurgitated industry press releases thus far and is an essential read for investors and policy makers.
— Chris Nelder, energy analyst and author of
Profit from the Peak
When some things are too hard or painful to understand, it takes a heroic effort to even try to get a message across. Richard Heinberg is a beacon of light cutting through the fog of wishful thinking to illuminate the critical issues by which the human project may stand or fall: energy and economy.
— James Howard Kunstler, author of
Too Much Magic
and
The Long Emergency
SNAKE OIL
How Fracking's False Promise of Plenty Imperils Our Future
Richard Heinberg
Copyright © 2013 by Richard Heinberg
All rights reserved.
No part of this book may be transmitted or reproduced in any form by any means without permission in writing from the publisher.
Cover design by Luke Massman-Johnson
Cover photo of bottle copyright © iStockphoto / Lebazele
Snake head illustration copyright © Moustyk / Dreamstime.com
Printed in the United States of America
First printing July 2013
10 9 8 7 6 5 4 3 2 1
ISBN-13: 978-0976751090
ISBN-10: 0976751097
Post Carbon Institute
613 Fourth Street, Suite 208
Santa Rosa, CA 95404
(707) 823-8700
www.postcarbon.org
This book is dedicated to those activists working to create an energy system where people, places, and the future matter.
Contents
Introduction:
A Front-Row Seat at the Peak Oil Games
1. This Is What Peak Oil Looks Like
Peak Oil: What the Fuss Is About
Okay, When?
It Gets Worse
Making Sense of History as We Live It
Depletionist Economics
A Brief History of Fracking
How to Frack a Shale Gas (or Tight Oil) Well
The Shale Gas Boom, Play by Play
Tight Oil by the Numbers
The Claims Rush
The Boom That Fizzled
Shale Gas: The Evidence Is In
Bakken Boom, Bakken Bust
Will the Rest of the World Get Fracked?
Why Do Official Agencies So Often Get It Wrong?
The Bottom Line on Fracking’s Potential to Revolutionize Oil and Gas Production
4. Fracking Wars, Fracking Casualties
Water
Air
Land
Climate
5. The Economics of Fracking: Who Benefits?
Communities
The Nation
The Oil and Gas Industry
Wall Street
Other Unconventional Hydrocarbons
Geology versus Technology
Renewable Energy
Energy Scenarios
A Mirage Distracts Us from Hydrocarbon Rehab
Acknowledgments
T
his book relies heavily on the research of many scientists, analysts, and activists. I owe a debt of gratitude first and foremost to my colleague David Hughes, upon whose research much of this book is based, along with Deborah Rogers and Art Berman.
The quick development of such a time-sensitive book was made possible by a community engagement model of publishing. Thanks to the many generous individuals who participated as benefactors and real-time editors. Special thanks to our “Snake Charmers”: Ed Adamthwaite, Ruben Bakker, Diane Blust, Brian Bucktin, Clinton Callahan of nextculture.org, Clare Conry, Leonard Edmondson, David J. Fleming, Greg Fox, Felipe Garcia, Peter Gendel, Christopher Gerwin, John B. Howe, Leo Immonen, Kelly Kellogg, John Kretsinger, Richard Larson, Gary Marshall, Chris May, Stephen Miller, Dan Miner, Charles W. Nuckolls, John Parry, Markus Schellenberg, Dennis Schulinck, Richard Seymour, Patti Michelle Sheaffer, Edgar Shepherd, Gary H. Stroy, Nathan Surendran, Jeffrey Tomasi, Richard Turcotte, David Watters, and Matt Wilson. Thanks also to the over three hundred sponsors who joined our “Merry Band of Editors” and provided critical feedback on early drafts; their names are listed at the back of this book.
Many thanks to our lightning-fast production team: Girl Friday Productions, cover artist Luke Massman-Johnson, map designer John Van Hoesen, and research assistant Chris Takahashi. And words of appreciation are in order for Tod Brilliant, for having the initial idea for a new and unique publication model and making it happen; Daniel Lerch, for shepherding the book through our independent publishing process; and Asher Miller, for his editorial suggestions and overall project coordination.
Finally, sincere
thanks
as always to PJ and LH for their constant and generous support.
Introduction
A Front-Row Seat at the Peak Oil Games
F
or the past decade I’ve been a participant in a high-stakes energy policy debate—writing books, giving lectures, and appearing on radio and television to point out how downright dumb it is for America to continue relying on fossil fuels. Oil, coal, and natural gas are finite and depleting, and burning them changes Earth’s climate and compromises our future, so you might think that curtailing their use would be simple common sense. But there are major players in the debate who want to keep us burning more.
In the past two or three years this debate has reached a significant turning point, and that’s what this book is about. Evidence that climate change is real and caused by human activity has become irrefutable, and serious climate impacts (such as the melting of the Arctic ice cap) have begun appearing sooner, and with greater severity, than had been forecast. Yet at the same time, the notion that fossil fuels are supply-constrained has gone from being generally dismissed, to being partially accepted, to being
vociferously
dismissed. The increasingly dire climate story has achieved widespread (though still insufficient) coverage, but the puzzling reversals of public perception regarding fossil fuel scarcity or abundance have received little analysis outside the specialist literature. Yet, as I will argue, claims of abundance are being used by the fossil fuel industry to change the public conversation about energy and climate, especially in the United States, from one of, “How shall we reduce our carbon emissions?” to “How shall we spend our newfound energy wealth?”
I will argue that this is an insidious and misleading tactic, and that the abundance argument is based not so much on solid data (though oil and gas production figures have indeed surged in the United States), as on exaggerations about future production potential, and on a pattern of denial regarding steep costs to the environment and human health.
The change in our public conversation about energy is predicated on new drilling technology and its ability to access previously off-limits supplies of crude oil and natural gas. In the chapters ahead, we will explore this technology—its history, its impacts, and its potential to deliver on the promises being made about it. As we will see, horizontal drilling and hydrofracturing (“fracking”) for oil and gas pose a danger not just to local water and air quality, but also to sound energy policy, and therefore to our collective ability to avert the greatest human-made economic and environmental catastrophe in history.
* * *
Permit me to use a metaphor to further frame the discussion we’ll be having about fossil fuel abundance or scarcity. Since all debates are contests, at least superficially, it’s possible to summarize this one as if it were a game—like a soccer match or a bowling tournament. Of course, it is far more than just a game; the stakes, after all, may amount to the survival or failure of industrial civilization. But games are fun, and it’s easy to keep track of the score. So . . . let the metaphor begin!
First, who are the teams? On one side we have the oil and gas industry, its public relations minions and its bankers, as well as a few official agencies—including the US Energy Information Administration (EIA) and the International Energy Agency (IEA)—that tend to parrot industry statistics and forecasts. This team is respected and well funded. For reasons that will become apparent in a moment, we’ll call this team “the Cornucopians” (after the mythical horn of plenty, an endless source of good things).
The other team consists of an informal association of retired and independent petroleum geologists and energy analysts. This team has little funding, is poorly organized, and hardly even existed as a recognizable entity a decade ago. This is my team; let’s call us “the Peakists” (in reference to the observation that rates of extraction of nonrenewable resources tend to peak and then decline).
These two teams have very different views of the energy world. Back in 2003, the Cornucopians were saying that global oil production would continue to increase in the years and decades ahead to meet rising demand, which would in turn grow at historic rates of about 3% per year (about the same rate at which the economy was expanding). Meanwhile oil prices would stay at approximately their then-current level of $20 to $25 per barrel.
1
The Cornucopians’ message could be summarized as “There’s nothing to worry about, folks. Just keep driving.”
Figure 1. World Oil Production Forecast to 2030 (Cornucopians).
Source: International Energy Agency,
World Energy Outlook 2003
.
Figure 2. World Oil Production Forecast to 2050 (Peakists).
Source: Colin Campbell, Association for the Study of Peak Oil and Gas, July 2003.
This view was in stark contrast to that of us Peakists, who, based on geological evidence from around the world (depleting older supergiant oil fields, declining rates of discovery of new fields, and increasing costs to develop them), were saying that rates of global oil production would soon reach a maximum and start to diminish, while petroleum prices would soar.
2
The Peakists’ argument wasn’t that the world would suddenly
run out
of oil anytime soon, but that the end of
cheap
oil and
expanding rates of production
was approaching. Since oil price spikes have had severe economic impacts in recent decades, the implication was clearly that societies would be better off weaning themselves from oil as quickly as possible.
Well, what has actually happened? How has the game progressed so far?
In 2005, world crude oil extraction rates effectively stopped growing. In that year the average global production rate was 73.8 million barrels per day (mb/d); in 2012, that rate had only increased to 75.0 mb/d—a relatively insignificant bump of less than 1.5 mb/d in seven years (a 0.3% average annual rate of growth). This was completely counter to the forecasts of the Cornucopians, but it fit the views of the supply pessimists well. Point for the Peakists.
Figure 3. World Crude Oil Production, 1995–2012.
World oil production growth tapered off markedly after 2005.
Source: Energy Information Administration, 2013. Data include lease condensates and exclude natural gas plant liquids, refinery process gain, and biofuels.
With oil supply rates stagnant, prices went up—soaring from a yearly (inflation adjusted) average of $35 per barrel in 2003 to a yearly average of $110 in 2012. Again, this development was completely unforeseen by Cornucopians but had been clearly and repeatedly forecast by Peakists. Point for my side.
Figure 4. Brent Crude Oil Price, 1995–2012.
Oil prices started surging past historic highs just prior to 2005.
Source: http://www.indexmundi.com.
When the world oil price briefly shot up to nearly $150 per barrel in the summer of 2008, the global economy shuddered and swooned. Thus began the worst recession since the 1930s. Of course, other factors contributed to the crash—most notably, a bursting housing bubble in the United States and an unsustainable buildup of debt in nearly all the world’s industrial economies.
But it’s clear both that high oil prices added to financial instability, and that the oil price spike
of 2008 provided a sudden gust that helped bring down the house of cards. Peakists had been warning of the economy’s vulnerability to high oil prices for years; here was dramatic confirmation. Another point for my team.
Now we’ve arrived at the period 2008–2009; at that stage of the game, the score was Peakists 3, Cornucopians zip. Despite the fact that we Peakists had virtually no funding and limited media access, we were seriously in danger of winning the debate. The term
peak oil
went from being unknown, to being associated with conspiracy theorists, to being broadly familiar to those who followed energy issues.
The Cornucopians, however, were not about to throw in the towel. In fact, they were just shaking off the complacency that accompanied their status as reigning champs. And they were about to deploy a significant new game strategy.
The “peak” issue was not limited to oil. US conventional natural gas production had been declining for years, and prices were soaring. Peakists said this was evidence of an approaching natural gas supply crisis.
3
Instead, high prices provided an incentive for drillers to refine and deploy costly hydraulic fracturing technology (commonly referred to as “fracking”) to extract gas trapped in otherwise forbidding shale reservoirs. Small- to medium-sized companies crowded into shale gas plays in Texas, Louisiana, Arkansas, and Pennsylvania, borrowed money, bought leases, and drilled tens of thousands of wells in short order. The result was an enormous plume of new natural gas production. As US gas supplies ballooned, TV talking heads (reading scripts provided by the industry) and politicians all began crowing over America’s “game changing” new prospect of “a hundred years of natural gas.” We Peakists hadn’t foreseen any of this. Point to the Cornucopians.
