Exploding The Fracking Hype

Summary

  • Latest government fracking announcement
  • Sparse on details, but plenty of hype
  • Wild claims regarding vast amounts of gas
  • Technical or economic aspects not addressed
  • Would require 10,000 of wells to be drilled
  • Industrialising vast area of countryside
  • Unspecified bribes for communities
  • No compensation enough for this though
  • Can look to US and Australia to see impacts
  • Communities getting organised to resist

Today’s fracking dog and pony show from the government provides an interesting study in how it is possible to create something out of nothing, if you don’t live in the real world that is. Some vague (and highly inflated) figures on how much shale gas there might be under one part of the county, combined with some even vaguer talk about tax breaks for corporations and bribes for threatened communities, have been sprinkled with a liberal dollop of media hype and served up as distraction from even more public sector cuts. Unfortunately in the real world where we actually have to live, limitless cheap energy cannot be just conjured into existence, and there are always social or environmental consequences.

sweet-spotsThe substance behind these “new” shale resource estimates is pretty thin. The British Geological Survey report does not address whether this supposed gas is technically recoverable and certainly not whether any of it would be economically viable to extract, though given the rate at which shale gas companies in the US are hemorrhaging money at present, perhaps they can be forgiven for thinking the later isn’t relevant. Beyond that, these estimates are based on extrapolating the results of core samples from a handful of wells, across a huge area of central England. A major lesson of Shale Gas in the US is that there a few sweet spots where wells are quite productive but outside those areas the picture is very different.

Of course, no thought is being given to what the consequences of extracting Shale Gas are, for communities, or the environment. Contaminated water, air pollution, huge amounts of toxic and radioactive waste, silica dust, and carbon emissions are not mentioned. Assuming that 10 percent of the 1,300 trillion cubic feet (tcf) of gas quoted could actually be extracted, over 130,000 shale gas wells would need to be drilled. Given that only 50,000 thousand shale gas wells have been drilled in the whole of the US so far, at considerable cost to the inhabitants of a country 40 times the size with a much lower population density, the insanity of what is envisaged is all too clear. Behind the well numbers lurks a much wider industrial menace including pipelines, compressor stations and processing plants.

TexasTaxTakeThe picture is no more substantial when is comes to the economics, the community benefits and tax breaks. All the treasury statement really says is that details will be published at some point in the future. Various numbers are being bandied around, £100,000 “worth” of community benefits per pad in the exploration phase and 1 percent of revenue later. However “revenue”, “community” and “benefits” are nowhere defined, and these potential bribes pale into insignificance compared to the costs that communities will face (and have faced in the US and Australia). The take home message is clear, energy companies are to given our resources to loot (on which they will not even have to pay much tax), while the communities they trash are left to carry the can.

shale-mergersTo understand what is really going on, one only has look at the jump in the share prices of fracking companies like IGas and Dart Energy. Shale Gas is a massive bubble no different from the securitised mortgage debt bubble of recent memory. Like any bubble it feeds off hype and fracking companies are busy trying to feed it, and need all help from their friends in government that they can get. That said, just because fracking is a bubble doesn’t mean that it can’t do a vast amount of damage as it plays out. We can only hope that concerted action by local communities can bring fracking companies down to earth, as has recently happened in New South Wales.

 

See below for a more detailed breakdown of the what is wrong with the direction we are heading in:

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