Wednesday, April 29, 2015

Tony Abbott aims for fracking boom

A new report on unconventional gas development from the federal Department of Industry and Science has been released.

Its stated aim is “to ensure the responsible development of coal seam, shale and tight gas resources for the benefit of Australians and position Australia to remain an energy superpower”.

In order to achieve this, the report notes at the outset that state governments, and Indigenous landowners will need to be dealt with – though the report uses prettier words.

Currently, the report notes, Tasmania, Victoria and NSW have moratoriums on various aspects of the unconventional gas extraction process. Further, large areas of remote Australia, especially in the NT, where industry is seeking to expand are on Aboriginal land.

The report includes goals such as “streamlining regulation across governments” and notes that “community engagement is the responsibility of industry, but the Australian Government can assist by providing information”, suggesting the federal government will fill a PR assistance role.

“Shale and tight gas will be the next wave of unconventional gas resources to be developed” according to the report, underlining what we already know about the industry's plans to open up vast new gas fields in the NT, South Australia, Victoria and elsewhere.

The optimism and narrow fossil fuel mindset of the report is in the tradition of a long line of Energy White Papers from successive federal governments.

There are good reasons to be sceptical of this fossil fuel optimism. A November 2014 report from think-tank Beyond Zero Emissions highlighted the economic risk to Australia of focusing on fossil fuel exports. Their Fossil Economy report suggests that official projections of coal, gas and iron ore exports will fall short by $100 billion per year by 2030, due to the climate change mitigation efforts of trading partners.

Climate change is one of the biggest reasons to abandon the growth in unconventional gas. The energy used to compress and ship liquefied natural gas (LNG) to international markets raises the greenhouse gas footprint of LNG to something similar to coal.

But leaks in the production process – due to porous ground, or leaky infrastructure – can very quickly add up to an even larger footprint for the complete life cycle of unconventional gas, compared to combustion of coal.

“Unconventional” or onshore gas is typically obtained by drilling and fracturing (“fracking”) gas-containing rock layers such as coal, shale or sandstone (respectively known as coal-seam, shale and tight gas).

The process is not new, but its wide scale use has only happened since traditional, large gas deposits began to run out. There is no shortage of gas trapped in underground rocks: the only limitation is its accessibility.

The depletion of conventional gas resources should logically signal an exodus of investment from the gas industry. Yet with the support of governments and investors, unconventional gas is instead expanding in Australia to become a major export industry. What are the risks in this gamble?

Unconventional gas is a risky investment for the same reason as natural gas: it carries a risk of contaminating aquifers and the surface with toxic by-products or leaking gas. The strata of rock in which the gas is trapped are not necessarily regular, consistent formations.

Test drilling at regular distances can give an estimate, but cannot with absolute certainty predict the geologic conditions between drill holes. Not only does this mean accidental leaks are likely, but also the expected gas reserve may fall short.

This overestimating of the resource is more likely than not to happen, because the industry has a clear financial interest in exaggerating its supplies. Share prices are heavily influenced by projections of the size of resource available to the company. Imagine a 10% profit is expected on a gasfield.

If the projected life of the wells is 10 years, but they run out on average after only nine years, there goes a lot of profit. But as unconventional gasfields are intended to roll on from one locality to the next, sinking new wells as old ones dry up, it may be possible to disguise previous underperformance amid promises of new reserves just over the next hill. This dynamic has been described as the “gas Ponzi scheme”.

In 2004, US journalist Ron Suskind related a conversation with an aide to then president George W. Bush. ''We're an empire now, and when we act, we create our own reality” the aide purportedly said.
A combination of corporate wealth and government power can “make reality” for a time, long enough to make a few corporate high-fliers and retired politicians very rich whether in rebuilding the devastation inflicted on Iraq, or on a more mundane level, producing LNG for export.

As the descent of the US occupation of Iraq into chaos and the GFC’s impact on the housing and banking sectors show, this kind of forced march can only go on so long before it is overextended and unsustainable.

In the case of unconventional gas, the combination of an inherently risky industry and growing competition from far more secure renewable energy technology will almost inevitably cause a faltering if not a crash in the unconventional gas industry at some point.

Modern capitalism could continue like this forever, in theory: pumping up bubbles and state-industrial power plays before lurching back into the basic state of crisis when they fall flat --while the culprits make a quick getaway with as much loot as they can sequester in offshore tax havens.

But whether humanity can endure much more of it, as climate tipping-points are already being triggered by our atmosphere's rapidly rising greenhouse gas concentrations, is another question. We could wait for the unconventional gas industry to crash, but how much damage will it do before then?

We are running out of time, and it is vital to do everything we can to stop the unconventional gas boom dead in its tracks. Increasingly, it seems, that will mean campaigns such as Lock the Gate will need to fight on the federal front as well as the state for regulation of the fracking industry.

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