U.S. Energy Insecurity: Why Fracking for Oil and Natural Gas Is a False Solution

7/30/2019 U.S. Energy Insecurity: Why Fracking for Oil and Natural Gas Is a False Solution

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U.S. ENERGY INSECURITY

Why Fracking for Oil and

Natural Gas Is a False Solution


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About Food & Water Europe

Food & Water Europe is the European program

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organization based in the United States that works to

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accessible and sustainable. So we can all enjoy and

trust in what we eat and drink, we help people take

charge of where their food comes from, keep clean,

DRUGDEOHSXEOLFWDSZDWHURZLQJIUHHO\WRRXU

homes, protect the environmental quality of oceans,

force government to do its job protecting citizens,

and educate about the importance of keeping shared

resources under public control.

Food & Water Europe

Rue dEdimbourg, 26

1050 Bruxelles

Belgium

[email protected]

www.foodandwatereurope.org

Copyright November 2012 by Food & Water Europe.

All rights reserved.

This report can be viewed or downloaded at

www.foodandwatereurope.org.


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Execuive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Inroducion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Terms o he Debae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Decline o Convenional Oil and Naural Gas Producion . . . . . . . . . . . . . . . . 6

The Rise o Modern Drilling and Fracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Shale Gas Euphoria: Americas False Sense o Energy Securiy . . . . . . . . . . . . . . . . 9

U.S. natural gas abundance presumes that

the industry will drill and frack everywhere. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10U.S. natural gas abundance relies on highly uncertain resource estimates . . . 10

How quickly might U.S. natural gas be consumed? . . . . . . . . . . . . . . . . . . . . . . . 12

Tigh Oil Euphoria: Empy Promises o Oil Independence . . . . . . . . . . . . . . . . . . . 14

Fracking Euphoria: A Threa o Long-ermU.S. Energy Securiy and Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Conclusion and Recommendaions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Endnoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

U.S. ENERGY INSECURITYWhy Fracking for Oil and

Natural Gas Is a False Solution


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2 Food & Water Watch tXXXGPPEBOEXBUFSXBUDIPSH

Promoers o modern drilling and racking celebrae he

indusrys newound abiliy o exrac oil and naural

gas rom shale and oher igh rock ormaions, calling i

an energy revoluion, a paradigm-shifer, a rebirh

and a game changer.1 One recen repor claims ha

Norh America migh soon become he new Middle

Eas, a ne exporer o oil and naural gas.2 In April

2012, ConocoPhillipss CEO a he ime called shale gas

a blessing.3

Bu or whom is i really a blessing? Loose alk abou

domesic oil and naural gas abundance in order o

jusiy and promoe widespread drilling and racking

gives Americans a alse sense o energy securiy.

Hinging U.S. energy policy on racking, and hus

beting Americas uure on he supposed abundance o

oil and naural gas, would simply perpeuae Americas

desrucive dependence on he oil and gas indusry. The

only securiy ha would be enjoyed is he securiy o

he indusrys prois.

In his repor, Food & Waer Wach exposes he

misconcepions, alsehoods and misleading saemens

behind he claims ha modern drilling and racking or

oil and naural gas can deliver U.S. energy securiy.

Briely, Food & Waer Wach inds ha:

The popular claim ha he Unied Saes has 100

years worh o naural gas presumes no only ha

no place would be o-limis o drilling and racking,

bu also ha highly uncerain esimaes o domesic

naural gas resources are accurae; Even assuming ha he indusrys dreams o unre-

sriced drilling and racking or naural gas come

rue and ha resource esimaes prove accurae,

plans o increase he rae o consumpion o U.S.

naural gas easily cu he claim o 50 years, well

wihin he lieime o college sudens oday;

Among hese plans are 19 proposals, as o Ocober

26, 2012, o sell U.S. naural gas on oreign markes

o maximize oil and gas prois. Combined, hese

proposals alone mean ha annual naural gas

expors could reach he equivalen o over 40 percen

o oal U.S. consumpion o naural gas in 2011; and

Even i he highly uncerain esimaes o igh oil

reserves prove accurae, and even i he oil and gas

indusry wins unresriced access o drill and rack

or oil, he esimaed reserves would amoun o a

supply o less han seven years.

The Unied Saes can ransiion o o ossil uels,

bu i will require remaking he U.S. energy sysem

around proven clean energy soluions: conservaion,

eiciency and renewables. Such a remaking would

underpin broad-based and susained economic growh,circumven he environmenal and public healh coss

o exracing and burning ossil uels and usher in an

era o rue U.S. energy securiy, independence and

resilience.

The hrea is ha he ossil uel indusry empowered

by is deep pockes, armed wih increasingly inensive

exracion mehods and bolsered by enrenched inra-

srucure and demand or is produc will succeed

in delaying he necessary ransormaion or decades,

jus o proec is botom line. Now is he ime or heUnied Saes o declare independence rom he oil and

gas indusry.

Executive Summary

PHOTO DHALUZA / COMMONS.WIKIMEDIA.ORG


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U.S. Energy Insecurityt8IZ'SBDLJOHGPS0JMBOE/BUVSBM(BT*TB'BMTF4PMVUJPO 3

Introduction

Americans consume vas amouns o oil and naural

gas, and he Unied Saes aces energy insecuriy as

global demand or hese ossil uels increases. Despie

he hype, modern drilling and racking will no change

hese acs.

The only responsible way o ensure U.S. energy secu-

riy or uure generaions is o rapidly ransiion o

o ossil uels. Ye he American economy currenly

depends heavily on hese diry sources o energy, and

burns hem exremely ineicienly. (See box on page

4 and Figure 1 on page 5 or an overview o he U.S

energy sysem.) The Unied Saes can and will achieve

a ransiion o o ossil uels hrough conservaion and

hrough he deploymen o proven energy eiciency

and renewable energy echnologies. The quesion is

wheher his ransiion will ake place beore or afer

he ossil uel indusry lays wase o he waer we drink,he air we breahe, he communiies we love and he

climae on which we all depend.

O course, he rue soluions o Americas energy chal-

lenges conservaion, eiciency and renewables run

couner o he proi moives o he ossil uel indusry.

Wha is heir alse soluion? Develop increasingly inen-

sive mehods o exrac ossil uels, deny or dismiss he

ways in which exracing and burning hese uels is

negaively impacing public healh and he environmen

and coninue o rake in exraordinary prois.In he Unied Saes, high-volume hydraulic racuring,

or racking, combined wih horizonal drilling, is he

mos prominen and conroversial mehod in he oil and

gas indusrys arsenal. Afer drilling down o a argeed

rock ormaion, and hen drilling sideways hrough

he argeed layer o rock, operaors injec millions

o gallons o waer mixed wih sand and chemicals

underground, a exreme pressure, o racure he rock.4

The racures, which afer pressure is released are held

open by he injeced sand, provide pahways or oil andnaural gas o low ino he well; oherwise, he oil and

naural gas near he drilled well would remain ighly

held in he rock.5

The oil and gas indusry is engaged in a public relaions

campaign o promoe drilling and racking as good

or energy securiy and energy independence, good

or he economy and, in he case o naural gas, even

good or he environmen.6 The economic beneis o

drilling and racking are consisenly oversaed, usually

in he orm o rosy job projecions ha, among oherdeails, neglec he long-erm coss o local communi-

ies.7 And while naural gas does burn more cleanly

han oil and coal, he claims o environmenal benei

ignore harmul polluion boh during and in he wake

o drilling and racking.8 As or global climae change,

he growing scieniic consensus is ha naural gas is a

alse soluion.9

In his repor, Food & Waer Wach exposes he

misconcepions, alsehoods and misleading saemens

behind he claims ha drilling and racking or oil and

naural gas is he pah o American energy securiy andenergy independence.

Wihin he Unied Saes, oreign companies are

acquiring sakes in oil resources ha can now be

exraced wih racking,10 bu regardless o where he oil

is produced and who produces i, he price o oil is se

on he global marke.11 Such globalizaion means ha

widespread drilling and racking or oil in he Unied

Saes will do nohing or American consumers who are

paying he high price o oil. The only way ha Ameri-

cans can insulae hemselves agains high oil prices iso consume less oil. Bu doing so by using naural gas

creaes is own se o problems, and serves he oil and

gas indusrys botom line by prolonging Americas

desrucive dependence on ossil uels.


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Terms of the Debate

Wha do he erms energy securityand energy indepen-

dencemean, and how are he wo conceps relaed?

Energy security: The U.S. Congressional Budge

Oice deines U.S. energy securiy as he abiliy

o U.S. households and businesses o accommodae

disrupions o supply in energy markes.31 The CBO

goes on o explain, Households and businesses areenergy secure wih respec o a paricular source

o energy i a disrupion in he supply o ha source

would creae only limied addiional coss.32

Energy independence: Energy independence ypically

reers o U.S. independence rom oreign sources o oil,

or oil sel-suiciency, and he erm is commonly bu

misakenly equaed wih energy securiy.33

As long as large amouns o oil uel he American

economy, American consumers will be a he mercy o

growing global demand or oil and he high coss o

exracing he oil ha remains underground.34 This is

because he price o oil is se on a global marke, and

American consumers pay his price hrough gasolineand oher reined oil producs regardless o where

he oil was produced.35 Reduced oil consumpion, no

reduced oil impors, mus hereore be he ocus i he

Unied Saes is o achieve energy securiy with respect

to oil, in he sense deined by he CBO.

The U.S. Energy System

Energy SourcesPetroleum: The U.S. Energy Information Administra-tion estimates that in 2011, burning liquid fuels derivedfrom oil, such as gasoline, diesel, jet fuel and fuel oils,accounted for over 28 percent of total U.S. energyconsumption.12 Gasoline alone accounted for about 16percent of total U.S. energy consumption, not countingethanol energy content.13 The energy content of allpetroleum liquid fuels, not just those combusted, wasabout 36 percent of total U.S. energy consumption in2011.14

Natural Gas, Coal and Nuclear: Natural gas, coal andnuclear, respectively, accounted for about 26 percent,21 percent and 8 percent of the estimated total of 2011U.S. energy consumption.15 Coal and nuclear sources ofenergy are used predominantly to generate electricity,whereas only about 31 percent of U.S. natural gasconsumption in 2011 went toward electricit y genera-tion.16

Renewables: Consumption of renewable energy,such as wind and solar power, grew the fastest amongall energy sources from 2010 to 2011. Renewables,including hydropower, made up 7 percent of total U.S.

energy consumption, primarily to generate electricity,although this counts only marketed electricity fromrenewables.17

Energy Uses and Losses

Electricity: An estimated 41 percent of the total U.S.energy consumption in 2011 was used to generate elec-tricity, but about two-thirds of this energy consumed forelectricity was wasted.18 Energy content of nuclear andfossil fuels is wasted during the generation of electricitythrough heat losses as turbines are driven, for example,by steam or other pressurized gas.19 On average, U.S.

electricity generation results in the loss of about 51percent of natural gas energy content and 64 percent

of coal energy content.20 In addition to energy wastedduring electricity generation, 7 percent of generated

electricity is lost along transmission lines and throughother distribution infrastructure.21 Unlike nuclear andfossil fuels, there are no environmental or public healthcosts associated with wasted wind, solar or other renew-able sources of energy.

Transportation: The transportation sector accountedfor an estimated 28 percent of total U.S. energyconsumption.22 Almost all of this consumption (aboutSHUFHQWZDVRIRLOLQWKHIRUPRIYDULRXVUHQHG

petroleum products.23 According to Lawrence LivermoreNational Laboratory, about 75 percent of all energyconsumed in the transportation sector is wasted.24

Residential, Commercial and Industrial: Electricityis consumed in large amounts by the residential,commercial and industrial sectors, but these sectorsalso directly consume varying amounts of natural gasand varying amounts of liquid fuels derived from oil. 25Electricity generation accounted for an estimated 70percent of residential energy consumption, 77 percentof commercial energy consumption and 34 percent ofindustrial energy consumption.26 In the industrial sector,direct use of liquid fuels and natural gas amounted toan estimated 26 and 27 percent, respectively, of energy

consumption.27

Meanwhile, in addition to natural gasconsumed indirectly in the form of electricity, direct useof natural gas amounted to 23 and 18 percent of totalenergy consumption within the residential and commer-cial sectors, respectively.28

Fossil Energys Consequences

Almost all U.S. greenhouse gas emissions come fromextracting and burning oil, natural gas and coal.29 TheUnited States is already experiencing the impact ofglobal climate change due to these emissions, includingepisodes of extremely hot weather, severe storm events

and changes in the timing of seasons.30

Continuingto burn fossil fuels will only worsen the future conse-quences and societal costs of global climate change.


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SOURCE: *RYHUQPHQW$FFRXQWDELOLW\2FH86&HQVXV%XUHDX

Total Consumptionby Source

petroleum liquids 36%

natural gas 26%

coal 21%

nuclear 8%

renewables 7%other 3%

Transportation Sector

Consumption by Sourcenatural

gas

3%liquid fuels 97%

Consumption By Sourcefor Electricity

liquid fuels 1%

natural gas 19%

coal 47%

nuclear 21%

renewables 11% other 1%

other 3%renewables 3%

coal 5%

natural gas 27%

liquid fuels 26%

electricity 34%

Industrial SectorConsumption by Source

renewables 1%naturalgas

18%

liquid fuels 4%

electricity 77%

Commercial SectorConsumption by Source

electricity 70%

liquid fuels 5%

naturalgas

23%

renewables 2%

Residential SectorConsumption by Source

Consumption by Sector(electricity included)

residential22%

commercial19%

industrial31%

transportation28%

Consumption by Sector(electricity separate and waste indicated)

transportation(unwasted) 7%

transportation(wasted) 21%

industrial21%

commercial 5%residential 7%

electricity(unwasted) 13%

electricity(wasted) 28%

Figure 1. 2011 U.S. Energy Consumption


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Using naural gas o displace oil or ransporaion, or

o displace coal or elecriciy, is playing a zero-sum

energy securiy game. Building he inrasrucure

necessary o displace signiican quaniies o oil

consumed by he ransporaion secor requires enor-

mous invesmens.36 Likewise, increased use o naural

gas or elecriciy generaion also requires large, long-

erm invesmens in inrasrucure.37 Such invesmens

would guaranee U.S. dependence on naural gas or

decades.

However, given large uncerainies in esimaes o

naural gas reserves,38 serious environmenal and

public healh risks posed by drilling and racking39 and

noorious volailiy in naural gas prices,40 locking-in

decades o U.S. dependence on naural gas could prove

o be a colossal misake, resuling in a ne negaive

or U.S. energy securiy wih respec o naural gas.

And such invesmens are likely o preclude he long-

erm public invesmens needed o modernize he U.S.

energy sysem and ransiion o o ossil uels.41

The Decline of Conventional Oil

and Natural Gas Production

Modern drilling and racking is bes undersood in

he conex o he oil and gas indusrys sruggle o

compensae or declining producion rom already-

discovered oil ields, and in he conex o he indusrys

need o make up or lack o access o much o he

worlds supply, abou 80 percen o which is conrolledby oreign governmens.42 Many o hese governmens

are eiher unsable or unriendly o inernaional oil

corporaions.43

I has been over 40 years since he discovery o he las

o he 40 super-gian oil ields convenional oil ields

esimaed o have beween 5 and 50 billion barrels o

echnically recoverable resources o oil (see box a lef

or basic background on oil and gas). 53 For perspecive,

he Unied Saes consumed an esimaed 6.9 billion

barrels worh o peroleum producs and crude oil in 2011alone.54

According o one peer-reviewed analysis o global oil

producion published in 2012, More han wo hirds o

curren crude oil producion capaciy may need o be

replaced by 2030, simply o keep producion consan.55

This means ha here is a growing gap beween

increasing global demand or oil and wha can be

supplied by convenional, relaively low-cos mehods

o exracing oil.56 Energy analyss have described his

new realiy as he end o cheap oil.57

In he Unied Saes and in almos all European

members o he Organisaion or Economic Co-oper-

Oil and Natural Gas BasicsThe U.S. Energy Information Administration($GHQHVFUXGHRLODVDOLTXLGPL[WXUHRI

hydrocarbons molecules composed ofhydrogen and carbon atoms.44 Natural gas issimply a mixture of these hydrocarbons in thegas phase, consisting primarily of methane.Having just one carbon atom, methane is thesimplest of hydrocarbons, and it is known to bea potent greenhouse gas contributing to globalwarming.45

Additional household names of hydrocarbonsinclude ethane (two carbon atoms), propane(three carbon atoms) and butane (four carbonatoms). Together, these and heavier hydro-carbons (i.e., more than four carbon atomsper hydrocarbon molecule) form the so-callednatural gas liquids.46 Natural gas and naturalgas liquids are commonly associated with andproduced along with crude oil.

Discussion of oil consumption is complicatedby general use of the term oil to refer to bothcrude oil and natural gas liquids.47 The EIAsestimates of total oil production, for instance,include natural gas liquids and crude oil.48 As abroader term, petroleum encompasses crudeRLOQDWXUDOJDVOLTXLGVDQGWKHUHQHGSURGXFWV

of these liquids, ranging from gasoline anddiesel to jet fuel and asphalt.49

Crude oil, natural gas liquids and natural gas arepresent in underground source rocks as theburied and broken-down remnants of organ-isms that lived hundreds of millions of yearsago. Over millennia, since the formation ofthese fossil fuels, a large amount has migratedaway from source rock, seeping through sand-stone or other permeable bedrock either to theEarths surface or to a geological trap, where itcan collect over time to form an isolated reser-voir.50

Historically, oil and gas development has reliedRQQGLQJVXFKUHVHUYRLUV1RZLQVKDUS

contrast, modern drilling and fracking allowsthe industry to extract the oil and gas straightRXWRIVRXUFHURFNVE\SDVVLQJWKHQHHGWRQG

geological traps containing any oil and gas thatleft those source rocks.51

Of course, not all of the oil or natural gas held ina source rock can be extracted. Only a fractionof the in-place resources are considered techni-cally recoverable using current technology,and this is without taking into consideration thecosts of extracting the resources.52


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aion and Developmen (OECD), he sory is similar

wih respec o naural gas.59 Convenional naural gas

producion is on he decline (see Figure 2) a he same

ime ha global demand or naural gas is expeced ogrow.60

Reduced oil and gas consumpion hrough conserva-

ion, eiciency and renewables would make Ameri-

cans less vulnerable o he economic consequences

o he growing gap beween global demand and

convenional supply. Bu he oil and gas indusrys

prescripion is o ry o bridge declines in convenional

supply wih ever-more inensive mehods o exracing

oil and naural gas, mehods ha become proiable as

prices climb. They aim o keep peak oil producion a aplaeau or as long as possible.

The Rise of Modern

Drilling and Fracking

In he Bakken ormaion beneah pars o Norh

Dakoa and Monana, in he Uica and Marcellus shale

beneah Pennsylvania and surrounding saes and in

he Barnet and Eagle Ford plays in Texas, he oil and

naural gas is held ighly, suck in place and unable o

low. Numerous oher saes rom New York o Floridao Caliornia also lie above oil and naural gas source

rock.61

When operaors drill a new shale well, hey can only

really hope o exrac he naural gas ha jus happens

o be ingrained wihin he par o he source rock ha

hey drill ino, or ha is presen in any auls or nauralracures ha he new well passes hrough. In general,

any oil and naural gas in he shale or oher igh rock

ormaion ha surrounds a well will remain suck here,

unless and unil racking creaes a pahway or i o low

ou.

Over he pas decade, relaively high naural gas

prices spurred he indusry o develop new drilling and

racking echnologies, building on decades o publicly

unded research.62 These echnologies, now also being

applied o exrac oil, make drilling and racking sourcerock poenially proiable, depending on he prices o oil

and naural gas.

Source rocks such as shale end o be much more

expansive han hey are hick.63 Now, wih new drilling

echnologies, operaors are able o drill down several

miles o reach a argeed layer o shale, and hen drill

horizonally hrough i as ar as wo miles or more.64

(See Figure 3, page 8.) Drilling horizonally hrough

shale or oher igh rock ormaions exposes much more

o he relaively hin layer o source rock o he well,compared o simply racking a well ha is drilled veri-

cally hrough his hin layer. Once drilling is inished,

Growing Dependency on Fracking: As U.S. production of natural gas from conventional sources declines, the EIA

projects that production from shale and other tight rock formations that require fracking will increase.58

SOURCE: U.S. EIA

Figure 2.Past and Projected U.S. Natural Gas Production, 19902035TRILLIONCUBICFEET

30

25

20

15

10

5

HISTORY

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

2010 PROJECTIONS

Shale gas49%

Tight gas21%

1RQDVVRFLDWHGRVKRUH7%

Coalbed methane 7%Associated with oil7%

Non-associated onshore9%

Alaska 1%

Shale gas23%

Tight gas26%

1RQDVVRFLDWHGRVKRUH9%

Coalbed methane 9%

Associated with oil 10%

Non-associated onshore 21%

Alaska 2%


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operaors have he echnology o isolae and rack

muliple secions along he horizonal leg o a well. In

he Bakken ormaion, or example, operaors are now

capable o racking he horizonal porion o a well in up

o 40 dieren sages.65

Drilling and racking or shale gas naural gas

rapped in underground shale rock ormaions has

boomed since abou 2005, resuling in signiicangrowh in naural gas producion.67 While advances in

echnology have brough down coss, modern drilling

and racking or oil and naural gas is signiicanly

more cos-inensive han convenional oil and gas

developmen.68 As a consequence, shale gas develop-

men requires higher naural gas prices in order o

acually be proiable.69 Ye, or a variey o reasons

discussed below, he shale gas indusry became

deached rom his realiy.

By April 2012, increased naural gas producion,combined wih lower demand due o a sputering

economy and an abnormally warm 2012 winer, had

driven he wellhead price or naural gas down rom

a recen high o over $10 per housand cubic ee (mc)

in July 2008 o under $2 per mc.70 In 2010, Exxon-

Mobil bough ino he shale gas boom, becoming he

larges producer o naural gas in he counry wih is

purchase o XTO Energy, bu by June 2012 CEO Rex

Tillerson saed ha because o low naural gas prices,

We are all losing our shirs oday. Were making no

money [on naural gas]. Is all in he red.71 Tha is

because naural gas price levels were ar below hose

needed or he indusry o break even, given he cos o

drilling and racking new shale gas wells.

The naural gas price ha a speciic company needs

o break even depends on how producive is speciic

porolio o wells will be. Well produciviy variessigniicanly boh wihin a shale gas play and beween

plays,72 and drilling coss can also vary rom play o

play due o dierences in he respecive dephs o he

argeed ormaions or oher local acors, such as land

values.73 As a consequence, break-even prices likewise

vary wihin and beween plays.

Analysis o producion rom shale wells in he Barnet,

Fayeteville and Haynesville plays has suggesed ha

he average break-even price in each play is above

$8 per mc.74

This is more han our imes wha hewellhead price o naural gas was in April 2012.

Excluding he cos o securing leases and general and

adminisraive expenses, he esimaed break-even

price or hese plays was abou $6 per mc.75 Similarly,

he Inernaional Energy Agency esimaed he cos o

producing shale gas in 2010 a beween $4 and $9 per

mc.76 Now, his does no mean ha i prices are below

$4 per mc ha no shale gas wells will be proiable; a

highly producive well drilled ino a swee spo may

be, especially i i produces naural gas liquids. Bu

i is misleading o sugges, as some analyss do, habecause o hese swee spos, he break-even price or

producing shale gas is lower han $4 per mc.77

A number o acors conribued o he indusry

coninuing o drill and rack or naural gas despie

low naural gas prices.78 A primary reason is ha he

erms o many leases required operaors o acively

drill or else hese leases would expire.79 To generae

enough money o acually pay or he drilling and

racking, some companies lipped leases hey held or

enered ino join venures wih oreign companies,who were eiher ineresed in learning modern drilling

and racking mehods or ineresed in gaining access

o U.S. naural gas resources (see box on page 9).

In a revealing call wih invesors in Ocober 2008,

Chesapeake Energy CEO Aubrey McClendon said, I

can assure you ha buying leases or X and selling

hem or 5X or 10X is a lo more proiable han rying

o produce gas a $5 or $6 mc.80 The oil and gas

indusrys hirs or hydrocarbon reserves a proxy

or uure earning poenial in he ace o declines in

convenional oil and gas may explain he eagerness o

buy such leases.81

Figure 3.Coming to a watershed near you?Fracked horizontal wells tunnel beneath Lake Saka-kawea on the Upper Missouri River, turning the land-

scape of western North Dakota into a pincushion of oilwells.66 Each dashed square is one square mile.

SOURCE: North Dakota Depart ment of Minerals Management


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Drilling and racking or igh oil, primarily in he

Bakken ormaion in Norh Dakoa and Monana

and he Eagle Ford shale in Texas, and or naural gas

liquids in so-called we shale gas plays, has allowed

he indusry o capialize on high prices o oil, as well

as apparenly buy ime unil U.S. naural gas prices

rise.95 According o Baker Hughes, rom 2000 unil

he summer o 2009, a leas hree-quarers o all

drilling rigs operaing in he Unied Saes were drilling

naural gas wells, and he res were drilling or oil.96

Bu since mid-2009, drilling rigs have led naural gas

plays o drill insead or oil.97 By lae Augus 2012, jus

25 percen are lised as drilling or naural gas and 75

percen are drilling or oil.98

Naural gas producion remains high despie reduced

drilling in he dry shale gas plays, in par because

signiican amouns o naural gas are produced along

wih igh oil and naural gas liquids.99 Locking-in

uure increases in demand or U.S. naural gas hrough increased consumpion in he ransporaion

and elecriciy secors and hrough increased expors

o oreign markes appears o be par o he indus-

rys long-erm sraegy or ensuring ha naural gas

prices are high enough o make shale gas developmen

proiable.

Shale Gas Euphoria: AmericasFalse Sense of Energy Security

The oil and gas indusrys plans o expor shale gas,Americas supposed icke o energy securiy, reveal ha

he only hing he indusry seeks o secure is is botom

line. Bu he oil and gas indusrys push o increase U.S.

dependence on naural gas in he ransporaion and

elecriciy secors is perhaps even more insidious.

Afer as much naural gas as possible is exraced rom

he Unied Saes, he counrys dependence on naural

gas o uel ransporaion and generae elecriciy would

persis. Decades rom now his dependence could leave

he counry in need o naural gas impors. Americanconsumers would hen be exposed o global demand or

naural gas jus as hey currenly are or oil. The Unied

Saes would also be lef behind hose counries ha

chose o inves, insead, in clean energy soluions.100

I is rue ha modern drilling and racking have conrib-

ued o signiican increases in he EIAs esimae o

echnically recoverable naural gas resources in he pas

decade.101 A popular claim is ha, as a resul, he Unied

Saes has enough naural gas o las i 100 years.102

However, Food & Waer Wach ook a close look a hisclaim and ound ha i assumes ha he indusry ges

is wish o compleely unresriced access hroughou

Alaska, hroughou he lower 48 saes and all along

he U.S. coasline. The claim also sweeps under he rug

signiican uncerainies ha are inheren o esimaing

echnically recoverable shale gas resources.

Noneheless, even i he oil and gas indusry ges is

wish o unresriced access and even i preliminary

esimaes o shale gas reserves prove accurae, Food

& Waer Wach calculaes ha he indusrys plans o

increase demand or U.S. naural gas could easily cu in

hal he claim o a 100-year supply.

Jusiicaion or he claim o a 100-year supply comes

rom aking he EIAs January 2012 esimae o he oal

proved and unproved amouns o echnically recov-

erable naural gas resources abou 2,214 rillion cubic

ee (c) and dividing by he amoun o naural gas

consumed in he Unied Saes in 2010, which was abou

24.1 c.103 So, assuming ha Americans consume he

same amoun each year, he EIAs esimae o 2,214 c

o naural gas would las abou 92 years.

I is imporan o realize ha shale gas accouns or only

abou a quarer o he esimaed 2,214 c o naural

gas; speciically, he EIA esimae o 2,214 c includes

60 c o proved shale gas reserves104 and 482 c o

unproved shale gas reserves,105 or a oal o 542 c.

Under he assumpion ha annual U.S. consumpion

says consan a he 2010 rae, 542 c equaes o abou

22 years worh o shale gas.

These calculaions raise hree imporan quesions:

I shale gas makes up 22 years ou o he esimaed92 years o naural gas, where is he oher 70 years

o supposed naural gas supply?

Netherlands: Royal Dutch Shell82

United Kingdom: %383

%**URXS84

Norway: Statoil85

France: Total SA86

Spain: 5HSVRO


12/23


How uncerain are unproved echnically recoverable

naural resources?

Even i all o he unproved echnically recoverable

resources o naural gas could be exraced, howlong would he naural gas acually las in ligh o

plans o expor i overseas and plans o use more o

i o uel ransporaion and generae elecriciy?

U.S. natural gas abundance presumes that

the industry will drill and frack everywhere

The oil and gas indusry dreams o unresriced drilling

access in Alaska and along he enire U.S. coasline,

no jus wihin he lower 48 saes.106 The claim o 100

years o naural gas is nohing bu a repackaging o hisdream.

Taking he EIAs esimae o 2,214 c o naural gas and

subracing is esimae o 542 c in shale gas yields

1,672 c o echnically recoverable naural gas ha is

no ied up in shale.107 According o he Naional Pero-

leum Council, here is abou 300 c in Alaska and abou

400 c rom he entireU.S. Ouer Coninenal Shel and

oher oshore areas in he lower 48 saes, including

he Grea Lakes.108 Presumably, his approximaely 700

c or abou 30 o he projeced 92 years is includedamong he 1,672 c o non-shale echnically recoverable

naural gas resources. Exracing all o i enails giving

he oil and gas indusry unresriced access o drill no

only hroughou Alaska bu also all along he Paciic,

Gul o Mexico and Alanic coass.

The Naional Peroleum Council acknowledges, The

echnical challenges o developing domesic gas

resources are compounded by urban growh, compeing

land use, and changing public values ha increasingly

consrain exising and new naural gas developmen.109The claim o abou 100 years o naural gas, however,

compleely ignores his realiy. I envisions an America

so dependen on he oil and gas indusry ha no place

is o-limis o drilling.

U.S. natural gas abundance relies

on highly uncertain resource estimates

According o a 2010 Congressional Research Service

repor, proved reserves are deined as: The quaniies

o hydrocarbons esimaed wih reasonable cerainyo be commercially recoverable rom known accumula-

ions under curren economic condiions, operaing

mehods, and governmen regulaions. Curren

economic condiions include prices and coss prevailing

a he ime o he esimae.110 By conras, unproved

reserves are [q]uaniies o hydrocarbon resources

ha are assessed based on geologic and engineering

inormaion similar o ha used in developing esimaes

o proved reserves, bu echnical, conracual, economic,

or regulaory uncerainy precludes such reserves rom

being classiied as proved.111

To arrive a an esimae o he echnically recoverable

resources in an emerging shale gas or igh oil play, he

EIA uses he oal area o he play and he expeced

densiy o wells wihin he play o calculae a oal

number o expeced wells.112 This oal number o wells

is adjused by addiional parameers o accoun or he

porion o he play ha is unesed (i.e., or which here

is no producion daa), and or he porion o he play

believed o have producion poenial.113 The oal reserve

esimae hen ollows rom aking he resuling hypo-heical number o expeced wells, and muliplying by

he esimaed ulimae recovery (EUR) o oil, or naural

gas, expeced over he lieime o each well, presumed o

be 30 years.114

EUR is he primary source o uncerainy in esimaes

o oil and naural gas echnically recoverable rom shale

and oher igh rock ormaions.115 This is in large par

because here is no long-erm producion daa since

shale gas and igh oil developmen are so new, and

each shale play is dieren o serve as a basis orpredicing how rapidly shale gas or igh oil producion

will decline over ime or a collecion o wells wihin a


13/23


speciic play.116 Projecing wha gradual decline migh

look like 30 years ou, based on jus a ew iniial years

o seeply declining producion, is a highly uncerain

process.117

The EIA akes he laes daa on how much oil or naural

gas is produced rom a collecion o wells and hen

exrapolaes rom hese daa over ime, using a speciic

shape o decline given by a hyperbolic uncion.118 Theseep declines in producion o a ypical shale gas well

over he irs ew years means ha new wells mus be

drilled and racked each year jus o mainain produc-

ion his has been likened o a readmill.119

While calculaing EURs or convenional oil and gas

reserves is an esablished science,120 many o he

assumpions on which his science is based are violaed

in he conex o exracing oil and naural gas rom

shale and oher igh rock ormaions.121 The uncerainy

surrounding EUR calculaions lies a he roo o a June2011 invesigaion by he New York Times, which was ull

o revelaions, including, An inernal Energy Inorma-

ion Adminisraion documen says companies have

exaggeraed he appearance o shale gas well proi-

abiliy, are highlighing he perormance o only heir

bes wells and may be using overly opimisic models or

projecing he wells produciviy over he nex several

decades.122

As saed in he discussion o break-even prices, he

amoun o shale gas ha can be produced rom a wellvaries signiicanly wihin a shale gas play.123 As a

consequence, as swee spos in he play are ideniied,

operaors drill and rack he mos producive porions o

he play irs, leaving he less producive and hus less

proiable porions o he play or laer. Since wihin a

play, he cos o drilling and racking a well is essenially

he same, he less producive porions o plays may only

become proiable once naural gas prices rise. While

hese porions o he play hold shale gas ha is echni-

cally recoverable, he gas is no economically recover-

able.

This patern in well produciviies means ha jus o

susain a consan level o shale gas producion, he rae

o drilling and racking mus increase is an acceler-

aing readmill. And exracing all o he esimaed U.S.

shale gas resource presumes ha operaors can increase

he pace o drilling and racking indeiniely; hey mus

always be able o access and proiably ap new bu less

producive source rocks as naural gas prices rise. This

is wha widespread drilling and racking means: a uure

in which he Unied Saes is urned ino a pincushiono oil and gas wells. As hese wells age over decades, a

large racion o hem will ail o conain mehane and

oher hydrocarbon gases, in many cases puting a risk

underground sources o drinking waer.124

How quickly might

U.S. natural gas be consumed?

Even i he oil and gas indusry ges is wish o unre-

sriced access, and even i preliminary esimaes o

shale gas reserves prove accurae, drilling and rackingwill no deliver long-erm U.S. energy securiy. Food &

Waer Wach calculaes ha he EIAs baseline projec-

ion o uure domesic consumpion, curren proposals

o expor naural gas and plans o increase naural gas

demand in he ransporaion and elecriciy secors

would drasically reduce he period o ime ha esi-

maed reserves could las, urher undercuting he

indusrys claims abou U.S. energy securiy (see box).

Even assuming that the oil and gas industrywins unrestricted access to drill and frack and

assuming that estimates of unproven resourcesare accurate, increased demand for U.S. natural

gas could easily cut in half the claimof a 100-year supply.

Popular claim:

100 years

Holding consumption constant at 2010 level:

92 years

Using the EIAs projected growth

in rate consumption:

78 years

And supposing, from 2026 to 2045,

OLTXHHGQDWXUDOJDVH[SRUWVUHDFK

60 percent of currently

proposed capacity:

72 years

And supposing that, by 2025, natural gas

displaces the energy equivalent of 40

percent of 2011 demand for gasoline and

diesel:

58 years

And supposing that, by 2025, natural gas is

used to generate electricity equivalent to

50 percent of the electricity generated

by coal in 2011:50 years

100 years worth of natural gas?Not likely and no thanks


14/23


Firs, when he EIA esimaes ha here is 92 years

worh o echnically recoverable naural gas, i does no

acor in is own baseline projecion o increased naural

gas consumpion; recall ha he esimae assumes ha

naural gas consumpion would be he same each year

as i was in 2010. The EIA, however, currenly projecs

ha beween 2010 and 2035, U.S. naural gas consump-

ion will increase, on average, by 0.4 percen annu-

ally.125Incorporating this projection, and urtherassuming that consumption continues to grow

at this rate beyond 2035, Food & Water Watch

calculates that the estimated 2,214 tc o proved

and unproved technically recoverable natural gas

resources, i accurate, would last about 78 years.

Bu he 0.4 percen annual growh rae is or domesicconsumpion, and i is a baseline igure based on curren

laws and regulaions.126 For insance, i does no accoun

or he rapidly growing number o applicaions o he

U.S. Deparmen o Energy seeking auhorizaion o

expor liqueied naural gas (LNG) o oreign markes

(see able on page 13).

As opposed o oil, he supply chain or naural gas is

no ye globalized.127 Large regional price dierences

due in par o naural gas prices being linked o

oil prices in some markes explain he oil and gasindusrys recen ineres in exporing naural gas rom

he Unied Saes.128 In mid-July 2012, or example, The

Economistrepored, Whereas American gas currenly

coss abou $2.50 [per million Briish hermal unis

(mBu)], European oil-indexed pipeline gas goes or

around $12 [per] mBu, and in Asia LNG can ech

$16 [per] mBu or more.129 Noe ha 1 million Bu o

naural gas is approximaely equivalen o 1,000 cubic

ee o naural gas.130 According o The Economist,

Liqueying he gas, carrying i o is desinaion

and regasiying i can cos beween $4 and $7 [per]

mBu,131 so he indusry has an opporuniy o make

signiican prois exporing naural gas.

Such expors clearly belie he indusrys parioic

rheoric on U.S. energy securiy and energy indepen-

dence, revealing proi as he rue moive. In addiion

o oreign ineress having sakes in U.S. shale gas

plays,132 some have already signed conracs, or arepursuing conracs o impor U.S. naural gas.133 This

raises quesions abou wheher hese oreign ineress

will inluence how much naural gas ges expored

overseas. Meanwhile, American communiies would be

lef wih he poenially cosly legacy o environmenal

polluion in he wake o drilling and racking.134

As o Ocober 26, 2012, he U.S. Deparmen o Energy

had received applicaions o expor a combined oal

o 28.39 billion cubic ee o naural gas per day.135

I all applicaions were o be approved, his capaciywould amoun o abou 10 c per year, which is abou

40 percen o all U.S. naural gas consumpion in

2011.136

To demonsrae how such expors migh impac he

92 years o supply claim, Food & Waer Wach

conservaively assumes a scenario in which LNG

expors, rom 2016 o 2026, ramp up o 60 percen o

he expor capaciy proposed as o Ocober 26, 2012,

reaching abou 6 c. This o course neglecs any

addiional applicaions afer Ocober 26, 2012. Food& Waer Wach urher assumes ha LNG expors

say a 60 percen o currenly proposed capaciy or

20 years, rom 2026 hrough o 2045, ollowed by a

20-year period in which LNG expors decline seadily

down o zero o relec he likely convergence in

naural gas prices around he world.137

Food & Water Watch calculates that the estimated

2,214 tc in proved and unproved technically

recoverable natural gas resources, i accurate,

would last about 72 years under such an LNGexport scenario, along with the EIAs projection o

0.4 percent growth in annual U.S. consumption.


15/23


Finally, plans o simulae increased U.S. demand or

naural gas in he ransporaion and elecriciy secors

would urher cu ino he claimed 100 years o naural

gas.138

To illusrae he eec ha such plans migh have, Food

& Waer Wach irs assumed a scenario in which, on

op o he EIAs projeced baseline consumpion, he use

o naural gas as a ransporaion uel increases gradu-

ally unil 2025, reaching 40 percen o curren demandor moor gasoline and disillae uels, and ha he use

o naural gas in ransporaion says a his level here-

afer. Food & Water calculates that the estimated



would last about 58 years under such a scenario

o natural gas displacing oil or transportation

uels.139

As or using naural gas insead o coal o generae

elecriciy, Food & Waer Wach assumes ha naural

gas consumpion by he elecriciy secor increasesseadily over he baseline so ha, by 2025 and beyond,

50 percen o he amoun o elecriciy generaed using

Proposed LNG Export Capacity Amounts to Over

40 Percent of 2011 U.S. Natural Gas Consumption

Applications Received by the Department of Energy to Export

Domestically Produced LNG From the Lower 48 States(as of October 26, 2012)

CompanyInitial application

GDWHOHG

Proposed export capacity

(billion cubic feet per day)

Facility location

(if applicable)

6DELQH3DVV/LTXHIDFWLRQ//& August 11, 2010 2.2 &DPHURQ3DULVK/$

)UHHSRUW/1*([SDQVLRQ/3DQG)/1*/LTXHIDFWLRQ//&

December 17, 2010 1.4 Quintana Island, TX

Lake Charles Exports, LLC May 6, 2011 2.0 Lake Charles, LA

Carib Energy (USA) LLC June 6, 2011 0.04 third-party liquefaction

'RPLQLRQ&RYH3RLQW/1*/3 September 1, 2011 1.0 Calvert County, MD

-RUGDQ&RYH(QHUJ\3URMHFW/3 September 22, 2011 2.0 &RRV%D\25

Cameron LNG, LLC November 10, 2011 1.7 &DPHURQ3DULVK/$

)UHHSRUW/1*([SDQVLRQ/3DQG)/1*/LTXHIDFWLRQ//&

December 20, 2011 1.4 Quintana Island, TX

Gulf Coast LNG Export, LLC January 10, 2012 2.8 %URZQVYLOOH7;

Gulf LNG Liquefaction Company, LLC May 2, 2012 1.5 3DVFDJRXOD06

LNG Development Company, LLC May 3, 2012 1.25 Warrenton, OR

6%3RZHU6ROXWLRQVQF May 7, 2012 0.07 third-party liquefaction

Southern LNG Company, LLC May 15, 2012 0.5 Savannah, GA

Excelerate Liquefaction Solutions I, LLC May 25, 2012 1.38 Calhoun County, TX

*ROGHQ3DVV3URGXFWV//& August 17, 2012 2.6 6DELQH3DVV7;

Cheniere Marketing, LLC August 31, 2012 2.1 Corpus Christi, TX

0DLQ3DVV(QHUJ\+XE//& September 11, 2012 3.22 PLOHVRVKRUH/$

&()/1*//& September 21, 2012 1.07 3ODTXHPLQHV3DULVK/$

Waller LNG Services, LLC October 12, 2012 0.16 &DPHURQ3DULVK/$

Daily total (billion cubic feet per day) 28.39

Annual total (trillion cubic feet per year) 10.36

U.S. consumption of natural gas, 2011 (trillion cubic feet) 24.5

SOURCES:

([SRUWFDSDFLWLHV86'HSDUWPHQWRI(QHUJ\2FHRI)RVVLO(QHUJ\6XPPDU\RI/1*H[SRUWDSSOLFDWLRQV1RYHPEHU

2012 Applications: 2012 LNG Import/Export Authorization Applications. Available at http://www.fossil.energy.gov/programs/gasregulation/autho-

rizations/2012_Long_Term_Applications.html, accessed November 1, 2012.

2011 Applications: 2011 LNG Import/Export Authorization Applications. Available at http://www.fossil.energy.gov/programs/gasregulation/autho-

rizations/2011_Long_Term_Applications.html, accessed November 1, 2012.

2010 Applications: 2010 LNG Import/E xport Authorization Applications. Available at http://www.fossil.energy.gov/programs/gasregulation/

authorizations/2010_Long_Term_Applications.html, accessed November 1, 2012.


16/23


coal in 2011 is generaed insead using naural gas.

Adding this assumption to the above scenarios,

and accounting or diferences in eficiencies

between coal-ired and natural gas-ired elec-

tricity generation,140 such an increase in natural

gas consumption would mean that the estimated



would last about 50 years.141

This sequence o simple calculaions demonsraes ha,

even i he oil and gas indusry is graned unresriced

access o exrac any and all naural gas i can ind, he

curren esimaed supply is ar rom he energy panacea

he indusry claims. I allowed o wrie is own policies,

he oil and gas indusry will simply exrac as much as

possible, as as as possible, or maximum proi, while

ighing o prolong Americas desrucive dependence

on ossil uels. Then, once U.S. naural gas is gone, he

global oil and gas indusry will likely be well posiionedo impor oreign sources o racked naural gas o eed

his dependence; Royal Duch Shell and ExxonMobil, in

paricular, are invesed in building a global naural gas

supply chain.142 Their sraegic plans or such a global

supply chain serve as an illusraion o how Big Oil sees

an opporuniy, no a hrea, in using naural gas in

addiion o oil o uel ransporaion.143

Tight Oil Euphoria: Empty

Promises of Oil IndependenceAmid he ervor over drilling and racking or igh

oil, Americans are hearing empy promises ha U.S.

energy independence is wihin reach.144 In a 2012

repor, Ciigroup, a global inancial insiuion, wen

so ar as o sugges ha Norh America could become

he new Middle Eas by he nex decade; a growing

hydrocarbon ne exporing cener.145 Bu consider

ha oreign companies are buying sakes in U.S. igh

oil plays, esablishing join venures wih U.S. compa-

nies and providing he capial necessary o drill andrack.146 These oreign companies sand o proi, o

course, as igh oil rom he wells in which hey have a

sake is sold on he global marke. So, when American

consumers buy he gasoline or diesel rom his igh

oil, are hey really consuming domesic oil, or are hey

consuming oreign oil?

Wih respec o energy securiy, i doesn mater.

The globalized marke or oil means ha reducing oil

consumpion is he only way American consumers can

inoculae hemselves agains he high oil prices ha will

resul rom increased global demand or oil, coupled

wih increased coss o exrac he oil ha remains

underground.147 Anoher consequence o he globalized

oil marke is ha, regardless o wheher he oil Ameri-

cans consume is produced domesically or produced

abroad,

so long as Americans consume a lo o i, he Unied

Saes is likely o spend billions o dollars, i no ens

o billions o dollars, on miliary operaions o secure

Middle Eas oil shipmens in an eor o ensure sable

global oil prices.148

Bu he realiy is ha igh oil rom drilling and racking

is jus a drop in he bucke o U.S. oil consumpion. The

Unied Saes consumed abou 18.8 million barrels o

oil per day in 2011,149 ye i produced only an esimaed

0.55 million barrels o igh oil per day.150 The EIA does

projec ha igh oil producion will increase, bu o

only abou 1.2 million barrels per day beween now and

2020, peaking a 1.33 million barrels per day in 2029

beore saring o decline.151 This peak would amoun o

only abou 7 percen o he 18.8 million barrels per day

consumed in he Unied Saes in 2011.

And hen here is he realiy on he ground o wha

i would ake o achieve such levels o producion.

An analysis o hundreds o wells producing igh oil

rom he Bakken ormaion illusraes ha producion

PHOTO DAVID R. TRIBBLE / COMMONS.WIKIMEDIA.ORG


17/23


ollows he patern no jus o a readmill, bu o an

acceleraing readmill jus o susain a consan level

o producion, a larger number o new wells mus be

drilled and racked each year.152

As or reserves, he EIA esimaes ha here is 33.2

billion barrels o echnically recoverable igh oil, wih

all he caveas and uncerainies oulined above or

similar esimaes o shale gas.153 For perspecive, 33.2

billion barrels o igh oil wouldn las seven years i

consumed a a rae o 15 million barrels per day, well

below he curren rae o U.S. consumpion. In 2011, he

Unied Saes accouned or over 20 percen o global oil

consumpion, bu i conribued only abou 9 percen o

global oil producion and possessed less han 2 perceno he worlds proved oil reserves.154

Clearly, he promises are empy ha U.S. oil indepen-

dence is wihin reach, hanks o drilling and racking.

I is also clear ha widespread drilling and racking

or igh oil will do nex o nohing or American

consumers.155 In ac, while hese consumers pay

hisorically high prices a he pump, he indusry is

maximizing heir prois by exporing record amouns

o gasoline and diesel.156

Peer Orszag, ormer direcor o he Oice o Manage-men and Budge in he Obama adminisraion and

now currenly a Ciigroup, has pu orward a slighly

dieren argumen, suggesing ha he develop-

men o igh oil could push down global oil prices by

loosening concerns over declining world oil supplies.157

Leonardo Maugeri, an Ialian oil execuive currenly a

Harvards Kennedy School o Governmen as a research

ellow, has added, The U.S. shale/igh oil could be a

paradigm-shifer or he oil world, because i could aler

is eaures by allowing no only or he developmen

o he worlds sill virgin shale/igh oil ormaions, bu

also or recovering more oil rom convenional, esab-

lished oilields.158

Besowing such aih on he oil and gas indusry, and

on he global oil marke, is misguided, perhaps mos

imporanly because i ignores he hrea o global

climae change. Bu even i such speculaion abou he

poenial o igh oil proved correc, he resul would

ge he Unied Saes nowhere in is ques or energy

securiy. Faciliaed by low oil prices, high consumpion

would persis once he igh oil in he counry is gone,

and he Unied Saes would be righ back where i

sared: i would be dependen on oreign sources o

oil is jus ha he oreign oil being impored would

be igh oil, or oher oil produced by unconvenional

mehods. Meanwhile, he global oil and gas indusry

would coninue o proi rom Americas dependence

on i.

Fracking Euphoria:

A Threat to Long-term U.S. Energy

Security and IndependenceThe EIA esimaes ha exracing he echnically recov-

erable resources o shale gas and igh oil would require

drilling and racking over 630,000 new wells.159 Bu wha

happens afer ha?

Modern drilling and racking, ogeher wih deepwaer

drilling and ar sands oil, are jus he curren generaion

o he indusrys unconvenional exracion mehods.160

As oil and naural gas become increasingly valuable

on global markes, hese approaches will inensiy

and new, even more cosly exracion mehods will be

pushed by he indusry.161 Oil shale (as opposed o shale

oil), ulra-deep oshore oil, Arcic oil and mehane

hydraes are all in he oil and gas indusrys sighs.162

For he oil and gas indusry, drilling and racking simply

provide a bridge o he nex generaion o is alse solu-

ions o Americas energy challenges.

I is no oo lae or he Unied Saes o avoid going

down his sel-desrucive pah. Long-erm U.S. energy

securiy and independence can acually be achieved,

bu he counry needs o ac now o deploy exising

energy eiciency and renewable energy soluions and

inves in uure echnologies ha expand hese solu-

ions.163

These soluions will eliminae he hidden coss o

burning ossil uels, resuling in enormous environ-

menal and public healh beneis.164 Acing now will

also help o ensure ha he Unied Saes is a global

leader in supplying clean energy echnologies o he

res o he world.165 In addiion, building and main-

aining local, resilien energy sysems ha are charac-

erized by energy eiciency and ha rely on disribued

renewable power generaion insead o on cenral-


18/23


ized, waseul and polluing ossil uel power will

creae and susain local jobs.166 Such energy sysems

will also spare communiies he ineviable economic

drag ha uure oil and naural gas price increases will

cause as global demand grows and global supply is

consumed.167

Bu remaking how energy is produced and consumed in

he Unied Saes requires large invesmens in inra-

srucure and aggressive changes in policy.168 Currenly,

he ossil uel indusrys esablished inrasrucure is

pipelines, power plans and ransmission lines makes

i diicul i no impossible or clean, renewable energy

resources o compee.169 Over a rillion dollars in sunk

coss in such inrasrucure avors he saus quo o

dependence on he oil and gas indusry, serving as a

barrier o he remaking o he U.S. energy sysem.170

The oil and gas indusry has been suppored, direcly or

indirecly, by decades o ederal policies avorable o he

indusry.171 This includes billions o dollars in ax breaks

annually,172 low coss charged by he governmen when

he indusry leases public lands,173 ederal spending on

research and developmen beneicial o he indusry174

and limis on liabiliy ha allow he indusry o ois

operaional risk ono he ederal governmen.175 Such

giveaways o he oil and gas indusry dwar he oal

ederal incenives received by he renewable energy

secor.176

Oil and gas companies coninue o enjoy corporae

welare in he orm o permanen ax breaks; a he

same ime, uncerainy over wheher Congress will

renew clean energy ax incenives, or will le hemexpire, hrows a wrench in privae invesmens in clean

energy.177 This conras highlighs he exen o which

he ossil uel indusry has skewed American energy

policy o urher is botom line.178

On he one hand, he ossil uel indusry is unding

an array o groups pushing o allow renewable energy

producion ax credis o expire.179 On he oher hand,

he oil and gas indusrys generous campaign donaions

are proving o be a good invesmen, paricularly given

he oucome o he March 2012 voe in he U.S. Senaeon wheher or no o end ax subsidies o he oil and

gas indusry, which are esimaed o cos he American

public $24 billion in orgone revenues over he nex

decade.180

During he 20112012 elecion cycle alone, he oil and

gas secor gave abou $2.2 million in campaign conri-

buions o he 47 Senaors who voed o keep he ax

subsidies in place, compared o a oal o $674,160 o he

51 Senaors who voed in avor o ending he subsi-

dies (60 voes were required o end he ilibuser).

181

Including all campaign donaions rom 1989 o early

Sepember o 2012, he same 47 Senaors had raked in a

oal o abou $24.4 million rom he oil and gas secor,

while he 51 Senaors who voed in avor o ending he

subsidies had been given a oal o abou $6.1 million.182

Despie he enrenched advanages ha he ossil uel

indusry enjoys, wind energy can now oucompee

coal and has become compeiive wih naural gas on

a levelized cos basis or new power insallaions.183

However, he poenial expiraion o producion ax

credis, generally low elecriciy demand due o a

sruggling economy and he currenly low prices o

naural gas all combine o hreaen he domesic wind

indusry.184 In paricular, he looming end o produc-

ion ax credis is creaing a rush o inish insallaions

by he end o 2012, which could be disrupive o he

indusry in 2013.185

The ossil uel indusry urher beneis, and he clean

energy indusry suers, rom he overall ailure o he

marke, vis--vis energy prices, o accoun or he rue

socieal coss o he indusrys polluion, paricularly

he curren and uure coss o global climae change.186


19/23


Conclusion and Recommendations

Drilling and racking simply serve he myh a very

proiable myh or he oil and gas indusry, and a very

desrucive one or he American public ha he

Unied Saes can drill is way o energy securiy and

energy independence.

The popular claim o a 100-year supply o naural gas

is based on he oil and gas indusrys dream o unre-sriced access o drill and rack, and i presumes ha

highly uncerain resource esimaes prove accurae.

Furher, he claim o a cenurys worh o naural gas

ignores plans o expor large amouns o i overseas

and plans or more domesic use o naural gas o uel

ransporaion and generae elecriciy. Even i he oil

and gas indusrys dreams come rue and even i he

uncerain resource esimaes prove accurae, increasing

producion o eed global demand or expors and mee

planned increases in domesic consumpion could easilycu he 100-year-supply claim in hal.

As or oil, drilling and racking or igh oil in he Unied

Saes is jus a drop in he bucke o global oil produc-

ion, and since oil is priced on a global marke, drilling

and racking will do nex o nohing or American

consumers.

The Unied Saes can ransiion o o ossil uels, and

in he process achieve long-erm energy securiy, inde-

pendence and resilience, by remaking he U.S. energy

sysem. To his end, Food & Waer Wach urges saeand local governmens and he ederal governmen o:

Enac aggressive energy conservaion policies,

including large public ransporaion invesmens

and widespread deploymen o energy eiciency

soluions, o reduce energy demand;

Esablish ambiious programs or deploying and

incenivizing exising renewable energy echnolo-

gies o increase clean energy supply;

Modernize he U.S. elecrical grid so ha i caers

o disribued renewable power generaion;

Make sweeping invesmens in research and devel-

opmen o overcome echnological barriers o he

nex generaion o clean energy soluions; and

Terminae all public unding, including ax expen-

diures, ha no only pads he prois o he ossil

uel indusry bu also urher enrenches Americas

dependence on ossil uels.

The ime is now or Americans o end heir desrucive

dependence on he ossil uel indusry.

Endnotes1 Morse, Edward L. et al. Citigroup. Energy 2020: North America, the

QHZ0LGGOH(DVW"&LWL*36*OREDO3HUVSHFWLYHV6ROXWLRQV0DUFKDW0DXJHUL/HRQDUGR2LO7KHQH[WUHYROXWLRQ+DUYDUG8QLYHUVLW\-RKQ).HQQHG\6FKRRORI*RYHUQPHQW-XQHDWDQG%URFKXUH@6KDOHJDVDSSO\LQJWHFKQRORJ\WRVROYH$PHULFDVHQHUJ\FKDOOHQJHV0DUFKDWUnited States House of Representatives. Committee on Energy and&RPPHUFH>0LQRULW\6WDUHSRUW@&KHPLFDOVXVHGLQK\GUDXOLFIUDF-turing. April 2011 at 9.

(3$DW

9RWH(QHUJ\>$PHULFDQ3HWUROHXPQVWLWXWH@6DPSOHDGYHUWLVHPHQWVavailable at http://vote4energy.org/campaign-ads/, accessed Sep-WHPEHU(QHUJ\7RPRUURZ>$PHULFDQ3HWUROHXPQVWLWXWH@Sample advertisements available at http://energytomorrow.org/adver-WLVHPHQWVDFFHVVHG6HSWHPEHU$PHULFDV1DWXUDO*DV$OOL -ance. Sample advertisements available at http://www.anga.us/media-URRPDGYHUWLVLQJ$PHULFDV1DWXUDO*DV$OOLDQFH:K\1DWXUDO*DV"

Available at http://www.anga.us/why-natural-gas, accessed September12, 2012.

)RRG:DWHU:DWFK)DOVHSURPLVHVDQGKLGGHQFRVWV7KHLOOXVLRQRIHFRQRPLFEHQHWVIURPIUDFNLQJ0DUFK


20/23


0F.HQ]LH/LVD0HWDO+XPDQKHDOWKULVNDVVHVVPHQWRIDLUHPLVVLRQVfrom development of unconventional natural gas resources. Science ofthe Total EnvironmentYRO0D\DWWR&ROERUQ7KHRHWal. Natural gas operations from a public health perspective. Humanand Ecological Risk Assessment: An International Journal, vol. 17, iss. 5.6HSWHPEHUDWWR%DPEHUJHU0LFKHOOHDQG5REHUWE. Oswald. Impacts of gas drilling on human and animal health. NewSolutionsYROLVV-DQXDU\DWWR0\HUV7RP3RWHQWLDOcontaminant pathways from hydraulically fractured shale to aqui-fers. Ground Water$SULO2VERUQ6WHSKHQ*HWDO0HWKDQHcontamination of drinking water accompanying gas-well drilling andhydraulic fracturing. Proceedings of the National Academy of Sciences, vol.

LVV0D\DW(QWUHNLQ6DOO\HWDO5DSLGH[SDQVLRQof natural gas development poses a threat to sur face waters. Frontiersin EcologyYROLVV2FWREHUDW)RRG:DWHU:DWFK:DVWHWKHVRIWDQGGLUW\XQGHUEHOO\RIIUDFNLQJ$SULO/XVWJDU-ten, Abrahm. The trillion-gallon loophole: Lax rules for drillers thatinject pollutants into the earth. ProPublica. September 20, 2012.

9 Howarth, Robert W. et al. Venting and leaking of methane from shalegas development: response to Cathles et al. Climatic Change, vol. 113.)HEUXDU\DW0\KUYROG1DWKDQDQG.HQ&DOGHLUD*UHHQ -house gases, climate change and the transition from coal to low-carbonelectricity. Environmental Research Let tersYROLVV)HEUXDU\DWWR3WURQ*DEULHOOHHWDO+\GURFDUERQHPLVVLRQVFKDUDFWHUL]DWLRQLQWKH&RORUDGR)URQW5DQJH$SLORWVWXG\Journal of Geophysical Re-search, AtmospheresYRO)HEUXDU\:LJOH\7RP0/&RDOWRJDVWKHLQXHQFHRIPHWKDQHOHDNDJH Climatic Change, vol. 108,LVV2FWREHUDWWR+RZDUWK5REHUW:HWDO0HWKDQHand the greenhouse-gas footprint of natural gas from shale forma-

tions. Climatic ChangeYROLVV-XQHDW7\QGDOO&HQWUHfor Climate Change Research. University of Manchester. Shale gas: aprovisional assessment of climate change and environmental impacts.

Januar y 2011 at 6.

:DUOLFN'RQ%LJRYHUVHDVLQYHVWRUVVXSSO\PRPHQWXPIRU1RUWKAmerican shale growth. Oil & Gas Financial Journal. July 5, 2012.

11 Nerurkar, Neelesh. Congressional Research Service (CRS). U.S. oilimports and expor ts. April 4, 2012 at 14.

)RRG:DWHU:DWFKFDOFXODWLRQEDVHGRQ86(QHUJ\QIRUPDWLRQAdministration (EIA). Glossary. Available at ht tp://www.eia.gov/tools/JORVVDU\DFFHVVHG6HSWHPEHU($$QQXDOHQHUJ\RXWORRN2012 (AEO). June 25, 2012 at Table 2. Available at http://www.eia.gov/forecasts/aeo/data.cfm, accessed September 12, 2012. This estimate isconservative in that aviation fuels other than kerosene-type jet fuel arenot included.

)RRG:DWHU:DWFKFDOFXODWLRQEDVHGRQ($$(2DW7DEOH

Available at http://ww w.eia.gov/forecasts/aeo/data.cfm, accessedSeptember 12, 2012. Energy content from ethanol is not included in thisestimate.

)RRG:DWHU:DWFKFDOFXODWLRQEDVHGRQ($*ORVVDU\$YDLO-able at http://www.eia.gov/tools/glossary/, accessed September 12,($$(2DW7DEOH$YDLODEOHDWKWWSZZZHLDJRYIRUH -casts/aeo/data.cfm, accessed September 12, 2012.

)RRG:DWHU:DWFKFDOFXODWLRQEDVHGRQ($$(2DW7DEOHAvailable at http://ww w.eia.gov/forecasts/aeo/data.cfm, accessedSeptember 12, 2012.

16 EIA. Annual energy outlook 2012 with projections to 2035. (DOE/EIA-0383(2012)). June 2012 at 134 to 135.

)RRG:DWHU:DWFKFDOFXODWLRQEDVHGRQ($$(2DW7DEOHAvailable at http://www.eia.gov/forecasts/aeo/data.cfm, accessed Sep-tember 12, 2012. Ethanol is not included, and only renewable energyplaced on electricity markets is counted.


+RQRULR/LYLRHWDO(85(/(&75&DQG9*%3RZHU7HFK(FLHQF\LQHOHFWULFLW\JHQHUDWLRQ-XO\DWDQG($)UHTXHQWO\$VNHGQuestions: How much electricity is lost in transmission and distributionin the United States? Available at ht tp://www.eia.gov/tools/faqs/faq.cfm?id=105&t=3, accessed September 12, 2012.

.ODDVVHQ(ULN(FRI\V1HWKHUODQGV>5HSRUWFRPPLVVLRQHGE\0LW-VXELVKL5HVHDUFKQVWLWXWH@QWHUQDWLRQDOFRPSDULVRQRIIRVVLOSRZHUHFLHQF\DQG&2LQWHQVLW\$XJXVWDW

+RQRULRHWDODW($)UHTXHQWO\$VNHG4XHVWLRQV+RZPXFKelectricity is lost (2012).


23 EIA AEO (2012) at 42, 94, 131, 134 to 135. '2(/DZUHQFH/LYHUPRUH1DWLRQDO/DERUDWRU\(QHUJ\RZ$YDLODEOHDWKWWSVRZFKDUWVOOQOJRYDFFHVVHG6HSWHPEHU

25 EIA. AEO (2012) at Table 2. Available at http://www.eia.gov/forecasts/aeo/data.cfm, accessed September 12, 2012.

)RRG:DWHU:DWFKFDOFXODWLRQEDVHGRQ($$(2$YDLODEOHDWhttp://www.eia.gov/forecasts/aeo/data.cfm, accessed September 12,2012.

27 Ibid.28 Ibid.

(3$QYHQWRU\RI86JUHHQKRXVHJDVHPLVVLRQVDQGVLQNV2010. April 15, 2012 at 2-3 to 2-4 and 3-1 to 3-4.

+DQVHQ-DPHVHWDO>2QOLQHSUHSXEOLFDWLRQHDUO\UHOHDVH@3HUFHS-tion of climate change. Proceedings of the National Academy of Sciences.$XJXVWDWDQG$PHULFDQ0HWHRURORJLFDO6RFLHW\>QIRUPD -WLRQ6WDWHPHQWDGRSWHGE\$06&RXQFLO@&OLPDWHFKDQJH$XJXVWDWWR86+RXVHRI5HSUHVHQWDWLYHV&RPPLWWHHRQ1DWXUDO5HVRXUFHVDQG&RPPLWWHHRQ(QHUJ\DQG&RPPHUFH>0LQRULW\6WDUHSRUW@*RLQJWRH[WUHPHVFOLPDWHFKDQJHDQGWKHLQFUHDVLQJULVNRIweather disasters. September 25, 2012 at 2 to 3.

86&RQJUHVVLRQDO%XGJHW2FH&%2(QHUJ\VHFXULW\LQWKH8QLWHGStates. May 2012 at iv and 1.

32 Ibid. (QHUJ\6HFXULW\/HDGHUVKLS&RXQFLO6HFXULQJ$PHULFDV)XWXUH(QHUJ\

(6/&7KH1HZ$PHULFDQ2LO%RRPPSOLFDWLRQVIRU(QHUJ\6HFXULW\2012 at 17.

*RUGRQ'HERUDK&DUQHJLH(QGRZPHQWIRUQWHUQDWLRQDO3HDFH8Q-GHUVWDQGLQJXQFRQYHQWLRQDORLO0D\DW(6/&DW

1HUXUNDUDW(6/&DWDQG

36 Nerurkar (2012) at 20.

&)QWHUQDWLRQDO>6XEPLWWHGWRWKH1*$$)RXQGDWLRQQF@1DWXUDOgas pipeline and storage infrastructure projections through 2030.

October 20, 2009 at 3. ($$(2DW8UELQDDQ%HKLQGYHQHHUGRXEWRQIXWXUHRI

natural gas. The New York Times-XQH%HUPDQ$UWKXU(DQG/\QQ)3LWWLQJHU86VKDOHJDVOHVVDEXQGDQFHKLJKHUFRVW The OilDrum. August 5, 2011.

0F.HQ]LHHWDODWWR&ROERUQDWWR(QWUHNLQHWDODW%DPEHUJHUDQG2VZDOGDWWR0\HUVDW2VERUQHWDODW+RZDUWKHWDODW/XVWJDUWHQ

40 Huber, Lisa. Rocky Mountain Institute. Utility-scale wind and naturalgas volatility. July 2012 at 5 to 6.

5HQHZDEOH(QHUJ\3ROLF\1HWZRUNIRUWKHVW&HQWXU\5(15H-newable energy potentials. August 2008 at 13 and 14.

%LJ2LOVELJJHUEURWKHUVThe Economist. October 29, 2011. &KD]DQ*X\%LJ2LOKHDGVEDFNKRPHThe Wall Street Journal. Decem-

ber 5, 2011.

44 EIA. Glossary (2012). 6KLQGHOO'UHZ7HWDOPSURYHG$WWULEXWLRQRI&OLPDWH)RUFLQJWR(PLV-

sions. ScienceYRO2FWREHUDW(3$DWDQG1-8.

46 EIA. Glossary (2012).

47 Sorrell, Steve et al. Shaping the global oil peak: A review of the evi-GHQFHRQHOGVL]HVUHVHUYHJURZWKGHFOLQHUDWHVDQGGHSOHWLRQUDWHVEnergy, vol. 37. 2012 at 709 and 722.

48 EIA data overview of U.S. oil consumption. Available at http://www.eia.gov/countries/index.cfm, accessed September 12, 2012.

49 EIA. Glossary (2012). 3LHUFH%UHQGDHWDO7KH1DWLRQDO3HWUROHXP&RXQFLO1RUWK$PHULFDQ

5HVRXUFH'HYHORSPHQW6WXG\2LODQGJDVJHRORJLFHQGRZPHQW3D-per #1-1). September 15, 2011 at 7 to 8.

51 Smrecak (2012) at 2.

52 EIA AEO (2012) at 56.53 Owen, Nick A. et al. The status of conventional world oil reserves hype or cause for concern? Energy PolicyYRODW6RUUHOOet al. (2012) at 710.

)RRG:DWHU:DWFKFDOFXODWLRQEDVHGRQ($GDWDRYHUYLHZRIRLOFRQ-sumption by country. Available at http://www.eia.gov/countries/index.cfm, accessed September 12, 2012.

55 Sorrell (2012) at 722. *RUGRQDWDQG1HOGHU&KULV7KHIXWXUHRIRLOSULFHVSmart-

Planet. June 13, 2012.

+DOO&KDUOHV$6HWDO3HDNRLO(52LQYHVWPHQWVDQGWKHHFRQRP\LQDQXQFHUWDLQIXWXUHQ3LPHQWHO'DYLG(G Biofuels, solar,DQGZLQGDVUHQHZDEOHHQHUJ\V\VWHPVEHQHWVDQGULVNV . Springer atQPDQ0DVRQ+DVWKHZRUOGDOUHDG\SDVVHGSHDNRLO" NationalGeographic Daily News. November 9, 2010.

58 EIA. Annual Energy Outlook 2012 Early Release Overview. 2012 at 1.

59 EIA. International energy outlook 2011. September 2011 at 50 and2UJDQLVDWLRQIRU(FRQRPLF&RRSHUDWLRQDQG'HYHORSPHQW2(&'0HPEHUVDQG3DUWQHUV&XUUHQWPHPEHUVDYDLODEOHDWKWWSZZZoecd.org/about/membersandpartners/, accessed September 12, 2012.


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60 EIA. International energy outlook 2011. September 2011 at 43 to 45, 50DQG2(&'

61 EIA. Review of emerging resources: U.S. shale gas and shale oil plays.-XO\DW86*HRORJLFDO6XU YH\$VVHVVPHQWRIXQGLVFRYHUHGRLODQGJDVUHVRXUFHVRIWKH(DVW&RDVW0HVR]RLFEDVLQVRIWKH3LHGPRQW%OXH5LGJH7KUXVW%HOW$WODQWLF&RDVWDO3ODLQDQG1HZ(QJODQG3URY -inces, 2011. June 2012 at 1.

-DH$P\0\HUVHWDO5LFH8QLYHUVLW\-DPHV$%DNHUQVWLWXWHIRU3XEOLF3ROLF\7KHVWDWXVRIZRUOGRLOUHVHUYHVFRQYHQWLRQDODQGXQFRQ-YHQWLRQDOUHVRXUFHVLQWKHIXWXUHVXSSO\PL[2FWREHUDWDQG7UHPEDWK$OH[HWDO%UHDNWKURXJKQVWLWXWH:KHUHWKHVKDOHJDVUHYR-lution came from: governments role in the development of hydraulic

fracturing in shale. May 2012 at 1 to 2. -DFRE\+HQU\'HWDO7KHLQXHQFHRIVKDOHJDVRQ86HQHUJ\DQG

environmental policy. Economics of Energy & Environmental Policy, vol. 1,LVVDW'2(>5HSRUWWR&RQJUHVV@'RPHVWLFXQFRQYHQWLRQDOfossil energy resource opportunities and technology applications.6HSWHPEHUDWDQG($$(2DW

64 Schmidt, Darren D. et al. Energy & Environmental Research Center.>3UHSDUHGIRU'2(1DWLRQDO(QHUJ\7HFKQRORJ\/DERUDWRU\@6XEWDVN(YDOXDWLRQRINH\IDFWRUVDHFWLQJVXFFHVVIXORLOSURGXFWLRQLQWKH%DNNHQIRUPDWLRQ1RUWK'DNRWD3KDVH1RYHPEHUDWWR

65 Ibid. at 30 to 31 and 34.66 North Dakota Department of Minerals Management, Oil and Gas Divi-

sion. GIS Map Server. Available at https://www.dmr.nd.gov/OaGIMS/viewer.htm, accessed September 12, 2012.

67 EIA AEO (2012) at 57 and 93.

68 Nelder, Chris. The cost of new oil supply. SmartPlanet$SULO

6NUHERZVNL&KULV$EULHIHFRQRPLFH[SODQDWLRQRI3HDN2LO ODACNewsletter6HSWHPEHUDWQWHUQDWLRQDO(QHUJ\$JHQF\($(QHUJ\7HFKQRORJ\6\VWHPV$QDO\VLV3URJUDP(76$38QFRQYHQWLRQDOoil and gas production. May 2010 at 1.

1HOGHU$SULO6NUHERZVNLDWWR($(76$3DW1.

70 EIA. Natural gas data: natural gas prices. Available at http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm, accessed September 12,($7RGD\LQHQHUJ\86GU\QDWXUDOJDVSURGXFWLRQJURZWKOHYHOVRIROORZLQJGHFOLQHLQQDWXUDOJDVSULFHV-XQH

'LFROR-HUU\$DQG7RP)RZOHU([[RQORVLQJRXUVKLUWVRQQDWXUDOgas. The Wall Street Journal. June 27, 2012.

72 EIA AEO (2012) at 57. 0DJ\DU5REHUW6KDOHJDVGULOOLQJGHSWKVDUJXHDJDLQVW3HQQV\OYDQLDV

Marcellus. The Examiner. July 26, 2012 %HUPDQDQG3LWWLQJHU

75 Ibid. ($(76$3DW&DQDGD1DWLRQDO(QHUJ\%RDUG(QHUJ\FRQYHU-

sion tables. Available at http://ww w.neb.gc.ca/clf-nsi/rnrgynfmtn/sttstc/st tstc-eng.html, accessed September 14, 2012.

3KLOLSV0DWWKHZVQDWXUDOJDVWRRFKHDSWRGULOO"Bloomberg Business-week$SULO($$(2DW

78 Nelder, Chris. The questionable economics of shale gas. SmartPlanet.December 14, 2011.

79 Ibid.

80 Documents: Leaked industry emails and reports. The New York Times.Drilling Down Document Viewer at 58.

1HOGHU'HFHPEHU0F.LEEHQ%LOO:K\WKHHQHUJ\LQGXVWU\LVso invested in climate change denial. The Guardian)HEUXDU\

)O\QQ$OH[LV6KHOODGYDQFHVRLOULFKVKDOHGULYHZLWKGHDOThe WallStreet Journal6HSWHPEHU1LFKROVRQ&KULV96KHOOEX\V86

shale gas assets for $4.7 billion. May 28, 2010. %3>3UHVVUHOHDVH@%3WRVHOO7H[DVPLGVWUHDPJDVDVVHWV$XJXVW2012.

*RXJK3DXO-%**URXSFXWVULJVLQMarcellus Shale. Pittsburgh BusinessTimes. July 30, 2012.

85 Crooks, Ed. Statoil looks to tap into US shale boom. Financial Times.June 20, 2012.

&URRNV(GHWDO&KLQDDQG)UDQFHFKDVH86VKDOHDVVHWVFinancialTimes-DQXDU\'H]HPEHU5\DQDQG-DPHV7$UHGG\&KLQDfoothold in U.S. energy. The Wall Street Journal. March 6, 2012.

87 Dezember, Ryan. SandRidge inks $1 billion drilling pact with Repsol.The Wall Street Journal. December 22, 2011.

&DUUL]R2LO*DVQF>3UHVVUHOHDVH@&DUUL]R2LO*DVQFDQQRXQFHV$95 million joint venture agreement with GAIL (INDIA) LIMITED.6HSWHPEHU'XWWD6DQMD\DQGQGUDQL%DJFKLQGLDQFVHHNVwaiver from US to import fuel, acquire assets. The Times of India. June

19, 2012.89 Crooks et al. (2012).

90 Dezember and Areddy (2012).91 Stynes, Tess. Devon sells shale stake to Sumitomo for $1.4 bln. Market-

watch. August 2, 2012.

92 Ibid.93 Ibid.

.HU3HWHU0RUHSDLQIRU%+3ZLWKVHFRQG86ORVVThe Sydney MorningHerald$XJXVW+XPH1HLO%+3WDNHVEQZULWHGRZQRQshale gas. Financial Times. August 3, 2012.

($7KLVZHHNLQSHWUROHXP0DUFK1HUXUNDUDW)RZOHU7RPDQG%HQ/HIHEYUH)RU(QHUJ\3URGXFHUV1DWXUDO*DV0D\1RW%HWKH2QO\6RXUFHRID*OXW The Wall Street Journal-XQH86$JDVXLGPDUNHWV>(FRQRPLVWQWHOOLJHQFH8QLW@ The Economist.

July 20, 2012. ($0DUFK%DNHU+XJKHV1RUWK$PHULFD5RWDU\5LJ&RXQW

(Jan 2000 Current). September 14, 2012.

97 Ibid.98 Ibid. +XJKHV'DYLG3RVW&DUERQQVWLWXWH:LWKJDVVRFKHDSDQGZHOOGULOO-

ing down, why is gas production high? January 19, 2012.0DGULG-RUJHHWDO&HQWHUIRU$PHULFDQ3URJUHVV$PHULFDVIXWXUH

under drill, baby, drill. May 2012 at 10.101 EIA AEO (2012) at 56 to 59.

7KHQGHSHQGHQW3HWUROHXP$VVRFLDWLRQRI$PHULFD>%URFKXUH@*DPHFKDQJLQJXSGDWHRQQDWXUDOJDV1DWLRQDO3HWUROHXP&RXQFLO3UXGHQW'HYHORSPHQW5HDOL]LQJWKH3RWHQWLDORI1RUWK$PHULFDV$EXQGDQW1DWXUDO*DVDQG2LO5HVRXUFHVDW2EDPD%DUDFN6WDWHRIWKH8QLRQ$GGUHVV-DQXDU\6FKZDUW]6KHOO\.&DQWKHQDWXUDOJDVVHFWRUVDYHWKH86HFRQRP\&1%&-XQH/H9LQH6WHYH)LYHZD\VDQHZDJHRIFKHDSHQHUJ\FRXOGVKLIWWKHpower balance on the planet. Quartz6HSWHPEHU2.HHIH%ULDQ([[RQVELJEHWRQVKDOHJDVCNN Money. April16, 2012.

*UXHQVSHFKW+RZDUG($>3UHVHQWDWLRQGHOLYHUHGDW3DXO+1LW]H6FKRRORI$GYDQFHGQWHUQDWLRQDO6WXGLHV-RKQ+RSNLQV8QLYHUVLW\@Annual Energy Outlook 2012: Early Release Reference Case. JanuaryDWVOLGH($)UHTXHQWO\$VNHG4XHVWLRQV+RZPXFKQDWX -ral gas does the United States have and how long will it last? Availableat http://www.eia.gov/tools/faqs/faq.cfm?id=58&t=8, accessed August21, 2012.

($)UHTXHQWO\$VNHG4XHVWLRQV+RZPXFKQDWXUDOJDV(Note: the 2,214 Tcf estimate incorporates 60 Tcf in proved shale gas,not the most recent estimate of about 97 Tcf in proved shale gas. See:EIA. Crude oil, natural gas and natural gas liquids proved reserves,2010. August 2012 at 11.).

($$(2DW*UXHQVSHFKWDWVOLGH

:RRG0DF.HQ]LH$PHULFDQ3HWUROHXPQVWLWXWH866XSSO\)RUHFDVWDQG3RWHQWLDO-REVDQG(FRQRPLFPSDFWV6HSWHPEHU2011 at 12 to 13.

107 Gruenspecht (2012) at slide 10.1DWLRQDO3HWUROHXP&RXQFLO)DFLQJWKH+DUG7UXWKV$ERXW(QHUJ\

2007 at 134.109 Ibid. at 133.

:KLWQH\*HQHHWDO&5686)RVVLO)XHOV5HVRXUFHV7HUPLQRORJ\Reporting, and Summary. November 30, 2010 at 20.

111 Ibid.112 EIA AEO (2012) at 56.

113 Ibid.114 Ibid. at 56 and 68.

115 Ibid. at 59.116 Ibid. at 56 to 57.

117 Ibid. at 56 to 58.118 Ibid. at 57.

119 Nelder, Chris. Every thing you know about shale gas is wrong. Smart-Planet)HEUXDU\

&ODUN$DURQ->0DVWHUVWKHVLV8QLYHUVLW\RI7H[DVDW$XVWLQ@'HFOLQHcurve analysis in unconventional resource plays using logistic growthmodels. 2011 at 1 to 11 and 31.

121 Ibid. at 31 to 34.122 Urbina (2011).

123 EIA AEO (2012) at 57.0\HUV%UXDWR&ODXGLRHWDO)URPPXGWRFHPHQWEXLOGLQJ

gas wells. 2LOHOG5HYLHZ. Autumn 2003 at 65.125 EIA AEO (2012) at Table 13. Available at http://www.eia.gov/forecasts/

aeo/data.cfm, accessed September 12, 2012.126 EIA AEO (2012) at 18.

($(HFWRILQFUHDVHGQDWXUDOJDVH[SRUWVRQGRPHVWLFHQHUJ\PDU-NHWV-DQXDU\DWWR($>3UHVVUHOHDVH@($UHSRUWVHHVEULJKWfuture for natural gas over next 5 years. June 5, 2012.

128 Ratner, Michael et al. U.S. natural gas exports: New oppor tunities, un-FHUWDLQRXWFRPHV&561RYHPEHUDW0H\HU*UHJRU\/1*US weighs the cost of gas exports to economy. Financial Times. July 17,$OLTXLGPDUNHWThe Economist. July 14, 2012.

129 A liquid market (2012).


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130 EIA AEO (2012) at Table 76. Available at http://ww w.eia.gov/ forecas ts/aeo/data.cfm, accessed September 12, 2012.

131 A liquid market (2012).132 Warlick (2012).

'XWWDDQG%DJFKL$OGUHG6WHSKHQ&&*&MRLQWO\LQYHVWPLO-lion in U.S. Chenieres LNG plant: source. Reuters$XJXVW&KR0HH\RXQJ6RXWK.RUHDV.12&H\HV86VKDOHJDVFRPSDQLHVDVVHWVexecutive. Reuters. May 14, 2012.

134 Christopherson, Susan and Ned Rightor. How shale gas extractionDHFWVGULOOLQJORFDOLWLHV/HVVRQVIRUUHJLRQDODQGFLW\SROLF\PDNHUVInternational Journal of Town and City Management, vol. 2, iss. 4. March-0D\DWDQG5XPEDFK$QGUHZ>3UHSDUHGIRUWKH

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