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The New ‘Golden Age of Oil’ That Wasn’t

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Posted on Oct 5, 2012
AdamSelwood (CC BY 2.0)

By Michael T. Klare, TomDispatch

(Page 2)

Shell’s problems began early and picked up pace as the summer wore on.  On September 10th, its Noble Discoverer drill ship was forced to abandon operations at the Burger Prospect, about 70 miles offshore in the Chukchi Sea, when floating sea ice threatened the safety of the ship.  A more serious setback occurred later in the month when a containment dome designed to cover any leak that developed at an undersea well malfunctioned during tests in Puget Sound in Washington State.  As Clifford Krauss noted in the New York Times, “Shell’s inability to control its containment equipment in calm waters under predictable test conditions suggested that the company would not be able to effectively stop a sudden leak in treacherous Arctic waters, where powerful ice floes and gusty winds would complicate any spill response.”

Shell’s effort was also impeded by persistent opposition from environmentalists and native groups.  They have repeatedly brought suit to block its operations on the grounds that Arctic drilling will threaten the survival of marine life essential to native livelihoods and culture.  Only after promising to take immensely costly protective measures and winning the support of the Obama administration—fearful of appearing to block “job creation” or “energy independence” during a presidential campaign—did the company obtain the necessary permits to proceed.  But some lawsuits remain in play and, with this latest delay, Shell’s opponents will have added time and ammunition.

Officials from Shell insist that the company will overcome all these hurdles and be ready to drill next summer.  But many observers view its experience as a deterrent to future drilling in the Arctic.  “As long as Shell has not been able to show that they can get the permits and start to drill, we’re a bit skeptical about moving forward,” said Tim Dodson of Norway’s Statoil.  That company also owns licenses for drilling in the Chukchi Sea, but has now decided to postpone operations until 2015 at the earliest.

Extreme Water

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Another unexpected impediment to the arrival of energy’s next “golden age” in North America emerged even more unexpectedly from this summer’s record-breaking drought, which still has 80% of U.S. agricultural land in its grip.  The energy angle on all this was, however, a surprise.

Any increase in U.S. hydrocarbon output will require greater extraction of oil and gas from shale rock, which can only be accomplished via hydro-fracking.  More fracking, in turn, means more water consumption.  With the planet warming thanks to climate change, such intensive droughts are expected to intensify in many regions, which means rising agricultural demand for less water, including potentially in prime fracking locations like the Bakken formation of North Dakota, the Eagle Ford area of West Texas, and the Marcellus formation in Pennsylvania.

The drought’s impact on hydro-fracking became strikingly evident when, in June and July, wells and streams started drying up in many drought-stricken areas and drillers suddenly found themselves competing with hard-pressed food-producers for whatever water was available.  “The amount of water needed for drilling is a double whammy,” Chris Faulkner, the president and chief executive officer of Breitling Oil & Gas, told Oil & Gas Journal in July.  “We’re getting pushback from farmers, and my fear is that it’s going to get worse.”  In July, in fact, the situation became so dire in Pennsylvania that the Susquehanna River Basin Commission suspended permits for water withdrawals from the Susquehanna River and its tributaries, forcing some drillers to suspend operations.

If this year’s “endless summer” of unrelenting drought were just a fluke, and we could expect abundant water in the future, the golden age scenario might still be viable.  But most climate scientists suggest that severe drought is likely to become the “new normal” in many parts of the United States, putting the fracking boom very much into question.  “Bakken and Eagle Ford are our big keys to energy independence,” Faulkner noted.  “Without water, drilling shale gas and oil wells is not possible.  A continuing drought could cause our domestic production to decline and derail our road to energy independence in a hurry.”

And then there are those Canadian tar sands.  Turning them into “oil” also requires vast amounts of water, and climate-change-related shortages of that vital commodity are also likely in Alberta, Canada, their heartland.  In addition, tar sands production releases far more greenhouse gas emissions than conventional oil production, which has sparked its own fiercely determined opposition in Canada, the United States, and Europe.

In the U.S., opposition to tar sands has until now largely focused on the construction of the Keystone XL pipeline, a $7 billion, 2,000-mile conduit that would carry diluted tar sands oil from Hardisty, Alberta, to refineries on the U.S. Gulf Coast, thousands of miles away.  Parts of the Keystone system are already in place.  If completed, the pipeline is designed to carry 1.1 million barrels a day of unrefined liquid across the United States.


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