New Brunswick’s redoubtable energy minister, having returned from a fact-finding tour of the American southland where shale gas operations are resuscitating thousands of formerly dying communities, hopes to shred the misconceptions that plague the industry’s development in this province.
Ever since Craig Leonard’s boss, Premier David Alward, announced he would not erect unnecessary barriers to exploring the Frederick Brook formation, near Elgin (where, it is thought, as much 67 trillion standard cubic feet of gas lay trapped in sedimentary layers), opposition has been gathering a head of public steam.
The controversy concerns the technology that uses jets of water to liberate the gas from the country rock – a process called hydraulic fracturing, or hydrofracking, which many environmentalists and some geologists contend contaminates drinking wells with toxic slurry. The actual science on the subject is far from definitive, and Leonard, for one, dismisses the hyperbole out of hand.
Speaking to reporters after a speech to the Saint John Board of Trade last week, he insisted, “When the director of the [U.S.] Environmental Protection Agency states very clearly that she doesn’t know of any situations that there’s been a proven link between hydrofracking and any issues with water, that’s a pretty strong message that people have to pay attention [and] understand that hydrofracking is not the high-risk enterprise that people are trying to make it out to be.”
Fair enough. Still, there are many varieties of risk in any industrial enterprise, as a recent New York Times investigation, published in banner style on its front page yesterday, reveals. And, if the reporter Ian Urbina is even partially correct, the real problem with the shale gas boom may be more fiduciary than ecological.
In 4,000 words, The Times presents the results of its research; its findings as compelling as they are troubling. “Natural gas companies have been placing enormous bets on the wells they are drilling, saying they will deliver big profits and provide a vast new source of energy for the United States,” Urbina begins his piece. “But the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of e-mails and internal documents and an analysis of data from thousands of wells.”
On the face of it, the content of these communiques are, indeed, damning.
“Money is pouring in [from investors even though shale gas is] inherently unprofitable,” The Times quotes an unidentified analyst with PNC Wealth Management. “Reminds you of the dot coms [bubble].”
Added another from IHS Drilling Data, an energy research company, “The word in the world of the independents is that shale gas plays are just giant Ponzi schemes and the economics just do not work.”
Urbina stops short of accusing the gas companies of deliberately misleading investors and government departments, from which they hope to extract big subsidies for continued development. But one petroleum geologist and former Amoco employee he consulted suggests that six major producers in Texas are overestimating the volume of their commercially exploitable reserves by anywhere from 73 to 350 per cent. “This kind of data is making it harder and harder to deny that the shale gas revolution is being oversold,” Art Berman declared.
Of course, these putative revelations do not, in any way, attach to those companies currently exploring in New Brunswick. But they do at least suggest that provincial government’s responsibility is not limited merely to regulating hydrofracking; it’s also obliged to assess the viability of the industry, itself, especially if, as it has said, shale gas production could be just what the doctor ordered for dozens of small, struggling, rural communities.
History proves that nothing is more anathematic to long-term sustainable economic development than reliance on primary resources when commercial exploitation is not first girded by innovation, technology and, most importantly, the capacity to accurately determine the quantity and quality of the raw materials.
Without this perspicacity, plants inevitably close, unemployment balloons, tax revenues shrink, and, before you know it, we’re right back where we started: Wondering how our misconceptions had led us so depressingly astray.