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Thursday, November 8, 2012

What the frack? Coal seam gas development in NZ

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NZ oil & gas producer Todd Energy has responded to criticisms that its fracking process used to extract coal-seam methane is a threat to life. ‘Fracking’ or hydraulic fracturing has emerged as a controversial process on the basis of claims made from mature producing basins around the world. Todd Energy argues that its operations are at “great depth and away from freshwater aquifers”. You can view the company’s 177-page submission to the Parliamentary Commissioner for the Environment, Jan Wright, who is due to report by year-end. It is important to acknowledge that the legitimate concerns to fracking need to focus upon the particular application of the user. Broad generalisations cannot be made. For instance, Todd Energy is drilling to a depth of 3.5km (see presentation), so there is little prospect of any waters at these depths contaminating human ‘surface’ activity. Having said that, it would be preferable to avoid any contamination by:
1. Minimising the use of chemicals which can contaminate
2. Using chemicals which have a benign impact on the environment, or which otherwise are so chemically unstable that they breakdown in the natural environment
The problem is that Todd’s approach is conventional oil & gas exploration; even if it uses fracking methods to increase recover. The problem is that relatively shallow methods have a different impact because:
1. Their impact has an effect on the near-surface hydrological system
2. Their chemicals are coming into contact with near-surface fluids
3. The number of holes being drilled is far different
4. The amount of water released into surface runoff
The implication is that it’s really a ‘straw argument’ to package all fracking as ‘akin to Todd’s’, just as its inappropriate for the green movement to castigate the use of all fracking. Sadly, there appears to be a propensity for vested interests to polarise the debate. In fairness to Todd; they do make the disclosure that their position will differ from other users of fracking technique. We might expect them to distance themselves from practices and practitioners which they would regard as ‘unsafe’ for legal reasons.

There are several different applications of near-surface fracking:
1. Methane extraction from shallow coal measures
2. Hydrocarbon extraction from shallow oil shale deposits

The Todd suggests that the industry is in the process of developing ‘non-toxic alternatives’ that will have a benign impact on the environment. That would have to strike people as entirely unsatisfactory because these chemicals might be retained in groundwater. It matters little whether they account for 1% or 10% of the water used; if they are toxic, then they need to be better assessed before they are used in the environment.
The arguments that fracking can cause earthquakes is a moot point because any such ‘stimulation’ could only have averted a bigger event; and for that reason, any ‘dubious impact’ is more likely to be beneficial rather than adverse, since it would be entail releasing energy build up prematurely. 
The argument by Todd that “oil and gas explorers seek to avoid seismic faults, partly because they could lose hydrocarbons they are targeting into such faults”, strikes me as a dubious argument when explorers generally have a poor understanding of the location of fault structures, as the Canterbury earthquake recently demonstrated. This is not to say that major faults cannot be identified; but that methods of detecting faults rests largely on the application of geophysical seismic surveys, and such surveys will only detect faults where there is a significant offset indicated by offsetting ‘reflector beds’ in survey profiles. 
Attacks upon critics as ‘vested interests’ is silly because the oil & gas industry is just as ‘vested’; and as I have shown, their lack of critical, objective thinking upon their own arguments is a testament to their ‘shared’ lack of respect for facts, along with opponents in the green movement. We cannot under-estimate the significance of fracking in terms of boosting the oil and gas extraction from existing fields. This however is not reason to contaminate areas if there are alternative options. Clearly conventional exploration at 3,000-4,000m doesn’t present an immediate threat, but neither is it a compelling argument for contamination. In the defence of these companies, the 1-3% chemical mix will be further diluted at depth. It might be prudent however to avoid contaminating these deeper reservoirs, for are they not the intended destination for future CO2? The implication is that rupture of these deep reservoirs due to CO2 emplacement for global warming mitigation might result in these contaminated waters coming to the surface. We need to know the toxicity of these chemicals. My own view at this time is that there is a lack of compelling evidence for significant anthropogenic global warming at this time; so carbon sequestration is not justified. Matters might change in future.
The fact that well-casings fracture and release their contents into the environment is reason for concern. The question is – is it significant. We must acknowledge that oil & gas producers don’t want pressure loss; so one would expect them to fix any leakage. The question is whether they tolerate leakage. We might well argue that Todd’s activities are more dangerous because there is the possibility of its casing failing over a longer distance, and might the stresses be greater upon casings at 1500-2000m as opposed to 300m. The secrecy with respect to drilling fluids is also a reason for concern; though it may simply reflect the extortive influence that the green movement has over industry. Todd argues that deep fracking has not resulted in any evidence of groundwater contamination in the last 20 years. It strikes me as likely that no one is looking for such contamination, so such empirical evidence is misleading. The question is whether it drilled any holes in the 300m near-surface environment to attempt to detect contamination. I doubt it because it had no reason to look. i.e. No motive to hold itself accountable. In fairness, the contamination may or may not be there, and need only be explored, if in fact a casing ruptured and released large amounts of drilling fluids. I wonder at which point these fracking chemicals are added? Have they demonstrated that the well retains integrity before they add the chemicals?
We might want to consider the following news given the fact that coal seam gas industry is a huge business in the USA, accounting for about 12% of the nation’s gas production. That is a lot of holes. The USA has mature experience with fracking and the nation has a large population; so the muted and belated criticism of the industry might speak to the safety of contemporary practices. Doesn't the sourcing of domestic water supplies from groundwater not raise a safety concern; both now and in the future? In man Are US pastures contaminated by the chemicals used in drilling fluids? This should be the first question given the size of the US industry. 
If there is ever a nuclear war which poisons all surface water with nuclear fall-out; the spectre of deep pure water might be a compelling value proposition....do we really want to contaminate it today because we cannot find a current application for that water. The world changes; and we need foresight to anticipate the implications of our actions. I'm just as worried by the green arguments as the corporate arguments.



'Buying NZ Property – Download the free sample readings!

NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.


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