Smil: No imminent danger of peak oil, but will peak oilers admit it?

Michael Giberson

Vaclav Smil wonders, now that 2012 appears to have yielded a new record level of global oil output, will “some catastrophists and peak-oil cultists” have to back off their gloomy outlooks? See Smil, “Memories of Peak Oil,” in The American.

Here is my prediction: No peak oiler will find 2012 oil production data as reason to move away from peak oil gloom.

We can even operationalize my prediction by adding some parameters: I predict that no blogger at The Oil Drum who is on record as believing world oil production peaked sometime between 2004 and 2010 will post on that site within one year an updated claim concluding peak oil will not happen until after 2030.

EPA backs off “imminent and substantial endangerment” claim in Texas hydraulic fracturing case

Michael Giberson

On December 7, 2010, the Environmental Protection Agency dropped a bomb on Range Resources Corporation. From the EPA news release:

(DALLAS – December 7, 2010) Today, the U.S. Environmental Protection Agency (EPA) has ordered a natural gas company in Forth Worth, Texas, to take immediate action to protect homeowners living near one of its drilling operations who have complained about flammable and bubbling drinking water coming out of their tap. EPA testing has confirmed that extremely high levels of methane in their water pose an imminent and substantial risk of explosion or fire. EPA has also found other contaminants including benzene, which can cause cancer, in their drinking water.

EPA has determined that natural gas drilling near the homes by Range Resources in Parker County, Texas, has caused or contributed to the contamination of at least two residential drinking water wells. Therefore, today, EPA has ordered the company to step in immediately to stop the contamination, provide drinking water and provide methane gas monitors to the homeowners. EPA has issued an imminent and substantial endangerment order under Section 1431 of the Safe Drinking Water Act.

The endangerment order threatened Range Resources with thousands of dollars a day in fines if they did not take immediate action in response to EPA’s administrative order. Range Resources denied responsibility for methane in complainants groundwater and objected to being subjected to either fines or expensive remediation efforts without a hearing on the evidence. Range Resources went to court to bar enforcement of the order.

Fast forward to last Thursday, some 15 months after EPA’s order to take immediate action, and EPA has decided to withdraw its endangerment order  in order to “shift the agency’s focus in this particular case away from litigation and toward a joint effort on the science and safety of energy extraction.” Range Resources agreed to collect quarterly groundwater samples from 20 wells for one year, have the samples analyzed, and share the analysis with the EPA. (See also the Bloomberg story and WSJ coverage.)

The industry-side spin is that this is vindication for Range Resources and another black eye for the EPA. From Energy in Depth, “a troubling trend for EPA: Every time EPA intervenes in a high-profile case – generating scads of maligning headlines about shale and hydraulic fracturing in the process – the agency ends up getting it wrong.”  Texas Railroad Commissioner David Porter takes the same position.

At least one fracking critic says “not so fast” with the pro-Range Resource conclusions, apparently inferring from Range’s willingness to conduct groundwater sampling some sort of tacit concession on the company’s part.

My guess is that Range was tacitly admitting they’d rather collect groundwater samples than continue to pay lawyers and operate under the cloud of uncertainty created by the EPA endangerment order. After all, the scientific analysis is probably cheaper than the lawyers, and if the samples turn out the way Range expects, then the data becomes more evidence for the industry and against the EPA in the battle for public opinion.

I’m on board with the industry-side spin: this is vindication for Range Resources and another black eye for the EPA.

RELATED: We first posted on Knowledge Problem about the Range Resources case soon after the initial endangerment order.

Legal action continues. The initial complainants, Steve and Shyla Lipsky have sued Range Resources in civil courts, seeking $6.5 million in damages. Range Resources have counter-sued the Lipskys and their environmental consultant Alisa Rich for $4.2 million plus additional damages. In February of this year a judge refused a motion by the Lipskys and Rich to dismiss the countersuit, with the judge ruling that Lipskys had worked with Rich to create a deceptive video intended to give the impression they could light their groundwater on fire. (Here is the video as annotated by blogger “Texas Sharon.”)


Did the federal government invent the shale gas boom?

Michael Giberson

In the Washington Post the folks at the Breakthrough Institute try to learn us some history about the shale gas boom. Maybe you think the shale gas boom was some big surprise suddenly made real after the decades-long work of a hard-headed oil and gas guy – George Mitchell – willing to spend millions of dollars on the crazy idea that hydrocarbons stuck in a rock could be produced economically, once the right mix of technologies could be brought to bear.

Wrong, says the Breakthrough Institute, credit the shale gas boom to the federal government.

They have their reasons:

  • “Slick-water fracking, the technology that Mitchell used to crack the shale gas code, was adapted from massive hydraulic fracturing, a technology first demonstrated by the Energy Department in 1977.”
  • “Mitchell learned of shale’s potential from the Eastern Gas Shales Project, a partnership begun in 1976 between the Energy Department’s Morgantown Energy Research Center and dozens of companies and universities ….”
  • “Mitchell’s success depended on a revolution in monitoring and mapping technologies driven largely by government labs.”
  • In 1991, Mitchell asked the publicly funded Gas Research Institute, then funded by a tax on gas production, and the Energy Department for help.”
  • “Sandia National Labs provided Mitchell with many critical microseismic tools.”
  • “Mitchell also benefited from 3-D imaging, which the Energy Department had long supported.”
  • “The third critical technology was horizontal drilling and well installation …. In 1976, two government engineers … patented an early-stage directional drilling technology that became the precursor to horizontal drilling.”
  • “A joint venture between the Energy Department and industry drilled the first horizontal Devonian shale well….

There are a few more similar points. The article pursues a larger goal – some statement concerning current energy policy support – but today I just want to consider how to assess the credit for technological advancement. (See tomorrow for part II.)

A fair analysis of credit and blame requires more than just a recounting of history, such as provided in the article, we need also to construct a counterfactual history for comparison. Should we reasonably believe that but-for the energy technology programs of the Department of Energy, we’d be unable to produce natural gas from shale? It would be difficult to do this analysis well, and the authors don’t attempt it here, but a full assessment calls for it.

A sketch of technology developments may be helpful. Note that fracturing as a well-stimulation technology started in Pennsylvania in the early 1860s. A few clever folk discovered dropping gunpowder down a well, later liquid nitroglycerin,  often brought marvelous returns. Edward A. L. Roberts submitted a patent application for the process in 1864. Hydraulic fracturing technology was first developed by Standard Oil (Indiana) in the late 1940s.  In the 1960s, Project Gasbuggy had the federal government collaborating with the oil and gas industry to test a nuclear-weapon based fracturing technology on federal land in New Mexico. The Breakthrough Institute’s story picks up in the 1970s, but what the backstory reveals is a history of efforts to develop fracturing technology, funded privately in some cases and publicly in others. Department of Energy involvement may have shaped the direction of research, but I suspect its pool of research funds was merely convenient to technological advancement and not necessary. (More recently, GasFrac Energy Services of Alberta has pioneered a propane-based fracturing technology.)

Directional drilling, a precursor to horizontal drilling, first became practiced in the industry in the 1920s – well before “two government engineers … patented an early-stage directional drilling technology” in 1976. (See “Slanted Oil Wells,” published in Popular Science magazine in 1931.) As with hydraulic fracturing,  the industry found the technology quite useful in application and companies pursued technological advancements. Taxpayer funding may have been convenient support for the oil and gas industry, government research involvement may have shaped the direction of directional-drilling research, but the industry would have pursued the technology in any case.

So possibly the federal government’s involvement advanced by a few years the technologies that were finally blended in a sufficiently promising mix by George Mitchell. Even if we grant as much, it isn’t the whole of the shale gas boom that federal involvement gains credit for, just the added value that comes from shifting shale gas production forward by a few years. Of course possibly the whole of the federal government’s involvement in the industry – tax policies, regulatory policies, antitrust policies, federal lands policy, and so on – could reasonably be counted as delaying technological advancement when compared against what would have happened under some more rational regime.

Admittedly, they were just writing an op-ed and I’m complaining that they didn’t do a dissertation’s worth of work to support it. Maybe my complaints are a little unfair.

Okay, here is an offer: I’ll admit my complaints are unfair if they admit that their analysis was insufficient to justify their conclusions.