News

INEOS

We’ve been able to see some of INEOS’s arguments for wanting to frack the East Midlands:

INEOS SAY
“Even with decarbonisation we will need gas for some time (e.g. for domestic central heating). Better to
get it from more environmentally and socially responsible sources in the UK than from Russia and Qatar”

WE SAY
Decarbonisation has to proceed at a sufficient rate to not overshoot climate targets. By common agreement significant production could not start much before 2025 anyway so the gas supposedly for domestic
central heating would not be supplied until 10 years in the future by which time we have would have virtually no “carbon budget space” left and it would be an urgent priority to phase out this central heating anyway.

Why is it better to get gas from the UK rather than from Qatar? Qatar is almost entirely a low barren plain covered with sand. Its not obvious why if gas is so vital that is not an appropriate kind of place to extract it. The same might be said of Siberia compared to densely populated UK. The claim of social and environmental responsibility for the UK begs the very questions we are asking. Does this mean regulation by the Environment Agency and the HSE? We don’tthink so…. Having seen the shambles of British regulation we’re not convinced. The real reason is that INEOS needs cheap gas as a chemical industry feedstock.

INEOS SAY
One of the advantages of shale gas is that wells are quickly depleted in a couple of years, so they can more quickly be turned off – unlike conventional oil and gas which will produce for 20 or 30 years and will need to carry on producing to get their investment back. So shale gas will be better for adapting to climate change than, say, drilling in the Arctic.

WE SAY
The idea that shale gas wells could be quickly turned off because it depletes so rapidly sounds like spin. Shale plays are high cost compared with conventional gas plays because you have to have a lot more of them to get out the same amount of gas. Of course individual wells could be wound down after two years but you cannot profitably develop and then close down individual gas wells producing a small amount  each – you have to develop an unconventional gas field  with multiple wells in order to pay for the whole infrastructure of pipelines, compressor stations, sources of skilled labour and huge amounts of specialised equipment. Without economies of scale and continual production an
unconventional gas field has less chance of working than a conventional field.

Take Argentina for example. It is struggling to take off as a shale area because of low profitability. Here’s an oil
and gas industry assessment of why Argentinian shale is slow to take off:

“It’s a sort of chicken and egg dilemma. Without profits, the estimated $20 billion a year needed to develop the play won’t come. And without this investment in drilling tens of thousands of wells, the economies of scale won’t be reached on the fields to cut costs.

“A reason not to rush into production — only 400 wells have been drilled — is that wells must be tested for up to two years to gauge the potential of the shale rock before a company will commit billions of dollars. This is especially the case now that low global oil prices have slimmed investment budgets for frontier plays.” (Charles Newbury, “Struggles to cut cost delay oil production in Argentina” Platts Oilgram News. August 17th 2015 at
http://blogs.platts.com/2015/08/17/cut-cost-delay-oil-play-argentina/)

INEOS SAY
We have disputed US data showing high methane emissions due to fracking – the main cause (of thermogenic methane) are vast opencast coal mines. And, of course, biogenic methane from agriculture.

WE SAY
There may indeed be high methane emissions from open cast mines and agriculture – but that is no reason to discount or ignore the plentiful supply of good quality studies of high methane emissions due to fracking as well as data about the leakage from gas distribution installations and networks.

INEOS SAY

We have disputed the artificial creation of the concept of high volume hydraulic fracturing. Fracking has been going on for decades and shale gas will be no different. The scale should be measured by how much sand is used to hold open the fractures, not how much water is used. The oil and gas industry has managed large amounts of contaminated water brought up from wells in the past – and there won’t be any more problems with produced water from shale gas fracking or coal bed methane dewatering which INEOS is proposing.

WE SAY
We don’t buy the idea that the Oil and gas industry have been managing water well. There’s the earthquakes in Oklahoma for one thing. Then there are the peer reviewed article listing actual and potential water
problems in Shonkoff and Hays in http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0154164

Even the US Geological Service are beginning to admit a problem
https://www.usgs.gov/news/evidence-unconventional-oil-and-gas-wastewater-found-surface-waters-near-underground-injection
<http://toxics.usgs.gov/highlights/2016-05-09-uog_wastes_in_streams.html>

Also why should the scale be measured by sand and not water? Why does it have to be either/or? Why can’t there be problems with both water and with sand? Take water first. This article appeared in Drill or Drop:
https://drillordrop.com/2016/05/06/waste-water-costs-could-make-fracking-uneconomic-in-the-uk-academics/

According to the article 50 UK and US academics and officials attended a conference in the USA in November and one of their conclusions was that:

“A huge uncertainty, given the immaturity of unconventional oil and gas development in the UK, is how much waste water will be produced and regulatory and technical mechanisms for cleaning it or directly reusing it.”

In the USA most produced water is injected into deep oil and gas wells which will not be an option in the UK. The oil and gas industry may have “managed large amounts of contaminated water brought up from wells in the past,” but not in the UK….In the UK according to the academics:

“Without deep well disposal, it is likely that treatment of the dissolved solids will be required and so research into cost-effective means of doing this is important to the implementation of unconventional oil and gas production in the UK.”

“There is unlikely to be sufficient industrial wastewater treatment capacity to service the needs of a mature operational industry and so there is a pressing need to address this through research and technology development.”

A diametrically opposite conclusion to that of INEOS

Now for the sand. Here are the sand dangers in this YouTube video – and it currently looks like it will be exactly the same kind of regulatory standard in the UK   https://youtu.be/-iTCRJ6I_zM   Areas in the UK under threat are   Sandringham Sand Formation in Norfolk, Woburn Sand Formation (Bedfordshire), Folkestone Formation (Surrey &
Kent), Chelford & Congleton Sands (Cheshire), Wind blown sand (North Lincolnshire).

OUR FINAL COMMENTS

Do INEOS really know what they are doing? There is a brief discussion of INEOS motivations for shale in this video of a consultant called Gundi Royle. (see youtube link below). In her argument INEOS are a chemical company operating in a global environment where they are disadvantaged by high feedstock prices in europe and their options are poor. So they are gambling. The relevant section starts at 10 minutes and 30 seconds in. Gundi Royle argues that INEOS are making a gamble with shale because they need a cheap european feedstock for their petrochemical operations. They are not in it for the energy because there is unlikely to be any profit in shale gas. But they are prepared to make a loss on the energy to get cheap feedstock for their refinery operations because the toll and transport costs when they buy US shale to use in Europe puts them at a competitive disadvantage in global
markets. However, for them it is also a gamble that they can achieve a low enough cost structure and high enough flow to equal the very best of the Marcellus shale.  If they achieve a return compared to the median US shale field they will have lost. If the gamble does not come off INEOS may fold according to Gundi Royle…..which means they will fight anything that puts the costs of fracking up, like those water treatment costs….
https://www.youtube.com/watch?v=FWNZUGKTzlM

1 comment

  1. Alison Pickard - May 24, 2016 5:41 pm

    Fracking causes earthquakes, that is proven. INEOS say it is safe. If it is actually as safe as they say, why are they not prepared to stand by that statement and accept liability for damage to property as a result of fracking.
    If fracking is as safe as they would have us believe, there won’t be any damage to pay out for.

    Reply

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