In the real world, outside the echo chamber of Silicon Valley's cleantech events and boardrooms, new U.S. energy is not solar power or electrochemical storage, but rather unconventional gas and oil. "Unconventional gas and oil" means horizontal drilling, fracking, and shale gas. There's an enormous amount of reserves, innovation, and investment in this roaring sector.

Extracting shale gas entails a drilling process known as hydraulic fracturing, or "fracking," which involves blasting through rock with a mix of water, sand and additives to split the shale formation and free the trapped gas.

The abundance of these new resources has been dubbed the "Shale Gale."

The questions are:

 

Vikram Rao, former CTO, Halliburton and the current Executive Director of Research Triangle Energy Consortium (RTEC) said last year that the shale gas supply "is the most important energy event in the U.S. since the discovery of Alaskan oil."

This massive market upheaval has national strategic implications, as well a sobering message for any renewable energy advocate. If you're a solar or energy storage or wind entrepreneur -- you are competing with dirt-cheap natural gas. And it looks like it will remain cheap and abundant for the time being.


The unconventional has become the conventional

Sean Ebert of energy investor Altira Group set the stage for a discussion last week at the Global New Energy Summit in Colorado Springs, CO. Ebert tends not to mince words. He told the audience that unconventional sources is where all the growth in reserves has come from in recent years and that "the unconventional has become the conventional."

"If you're an oil company, where do you look?" asked Ebert. The answer is horizontal drilling, multi-stage fracking, with the use of microseismic monitoring.

He spoke of the "shale gale" unleashed by "cowboys in Northern Texas" at the Barnett Shale. U.S. production started to increase at that moment and "has never turned back." He said, "We're not finding new oil in our typical hunting grounds," adding that we'd seen the end of easy oil, enhanced oil recovery, and oil shale.

Ebert went on to say, "As much maligned as fracking is in the press, we are the envy of the world. When you're talking about energy, you're talking about competitive advantage of nations, and this is where we lead the world."

The same "natural gas swagger" has gone to turn around U.S. oil production, and "the potential for oil is tremendous" in the Bakken, Eagle Ford, and Niobrara fields.

Natural gas already provides 21 percent of U.S. electricity right now and the figure will rise to 40 percent by 2035, according to consulting and construction giant Black & Veatch.

Dan Reicher, Executive Director of the Steyer-Taylor Center on Energy Policy and Finance at Stanford University, has said, "We need the combination of natural gas, renewable energy and energy efficiency," adding "We need to build this bridge between natural gas and renewables."

T. Boone Pickens claims that the United States has natural gas reserves that are equivalent to 700 billion barrels of oil and it is his personal crusade to move that ocean of natural gas into the American transportation sector.  He claims to have already spent $62 million on this quest, known as the Pickens Plan.
 
Carl Pope, former Chairman of The Sierra Club, has spoken of coal and how utilities have powerful incentives to hold on to coal. Pope said, "Renewables and gas are fighting for table scraps while we should go after coal."  He urged, "Make sure that the Public Utility Commissions do not allow irrational investments in upgrading 50-year-old coal-fired power plants." Pope suggested, "Run the railroads on natural gas, not diesel; [...] run fleet vehicles on natural gas," and "Replace peakers with fuel cells."  He asked, "Can we power locomotives with fuel cells or natural gas?"

Is fracking safe or dangerous?

Peter Duncan, the Executive Chairman and Founder of Microseismic, provides an enabling seismic service to frackers -- the ability to listen to and monitor fracks in real time. It's a passive "stethoscope" rather than a reflective "MRI" sensor, with geophones providing a map of fracking activity two miles below the earth's surface. Duncan said that the array of geophones just listens to the "squishy sounds" below the surface. It's this type of technology innovation that has made fracking successful in the U.S.

(See Microseismic's video below.)

According to the video narration, "The fractures are contained within a few feet hundred feet of the well bore, which is 3000 feet below the surface. This is important because it contradicts a common misconception that fractures can propagate thousands of feet toward the surface, causing water and air contamination."


Jason Bryant, the Environment Solutions Tenet Manager at Halliburton, spoke on the topic of hydraulic fracking fluid. Halliburton is a service provider to the hydraulic fracking industry and made the case that the fluid injected into these reservoirs is safe for the environment and peoples' health -- despite the claims of the media and Hollywood.

Bryant said, "There are a couple of reasons why we are able to produce from these reservoirs: directional drilling and multiple zones of hydraulic fracturing to supply more flow paths to the well." The other enabler of the fracking process is the fluid itself, which Bryant claimed was made up of 99 percent water and sand. The remaining one percent can include a gelling agent, a breaker, a crosslinker, a surfactant, and a biocide. The biocide is used to inhibit microbial growth at the gelling agent and is considered safe for contact with skin. However, the firm is looking to "remove the biocide from the equation," perhaps with an ultraviolet treatment.

He claimed that Halliburton had "tried to create a hydraulic fracturing fluid with tight environmental constraints," adding that they "looked to the food industry" for ingredients you "can find in ice cream, candy, and bread." By this, Bryant was talking about the guar gum typically used as gelling agent. (As a side note, the price of the guar gelling agent, an Indian import, has shot through the roof, prompting Texas farmers to enter the guar market.)

Halliburton continues to look for methods to stimulate the reservoir with less energy and less chemical intensity, with more efficient ways of recycling the water and minimizing waste.

Former Clinton CIA Director and pioneering electric car advocate R. James Woolsey has said, “The complexity is the fracking water," adding, "There are good ways to do it and there are technologies. But the companies haven’t done a decent job of educating the public or the environmentalists,” which threatens, he said, natural gas’s potential as “a great transitional fuel for moving toward renewables.”

Janie M. Chermak, Professor of Economics at the University of New Mexico, noted that "horizontal wells behave very differently from vertical wells," adding, "As we go forward, we need better information on the topic -- and more accurate information." She observed that if you read a newspaper article about hydraulic fracturing. "It's either for or against." She recommended a UT Austin report on the facts and fictions of fracking amidst the 67 percent negative impression the public has of the process.

The study by UT Austin finds that the process isn't to blame, but rather that the operators aren't doing it right. The report has found that fracking itself does not contaminate, but doesn't address the returned water. (ConocoPhillips has made grant contributions to UT Austin's energy research.)

There is a large anti-fracking sentiment, recently expressed in the movie Gasland. According to Dr. Ronald Bishop in Affirming Gasland, the additives such as crosslinkers and breakers are "extremely toxic." Guar gum is sometimes mixed with “hydrotreated light petroleum distillates” or deodorized kerosene.

Arguments against fracking for environmental and health reasons abound. Some evidence points to the fouling of aquifers and drinking water, as well as the environmental impacts of the often undisclosed chemical additives. Here is a link to an anti-fracking Facebook page calling for a global ban.

Here's a trailer from Natural Gas Exxposed:

 

According to The Oil Drum, the water needed for hydraulic fracturing and the disposal of produced load water are both becoming serious obstacles for Marcellus Shale development. The problem with water sourcing is not availability, but getting water management plans approved for the high-volume withdrawals (drilling requires about 100,000 gallons and completions use another 3 million to 4 million gallons). There are few waste treatment plants, and the cost of transporting disposal water from the well may add $250,000 to the cost.

The politicians are getting involved

President Obama just signed "Executive Order -- Supporting Safe and Responsible Development of Unconventional Domestic Natural Gas Resources," which acknowledges the importance of natural gas but seeks to provide oversight over the unconventional fuel and the controversial mining methods.

New York State has a moratorium on fracking, although efforts to use liquid propane gas as the active fluid might get around the moratorium. France has banned the practice.

There are thousands of active shale gas wells in the U.S. and thousands more being added each year. That translates to billions of gallons of water and tons of additives used in the fracking process, along with millions of lives touched positively and negatively by this new -- and not fully vetted -- technology.

Tags: altira, clinton, complex offshore, conoco, fracking, gnes, haliburton, horizontal drilling, microseismic monitoring, natural gas, oil, unconventional gas and oil, woolsey