A Shale Bubble?

After many violations of regulations, the first marjor undeniable hydraulic fracturing incident happened last week in Pennsylvania. A Marcellus shale well that Chesapeake Energy was hydraulically fracturing blew out, ironically enough on the first anniversary of the BP Deepwater Horizon blowout. Many words that the latter added to our vocabulary - such as 'top kill' and 'junk shot' - could be heard again. Although it remains to be seen what the damage will be, thousands of gallons of fracking fluid have spilled on the surrounding ground. It wouldn't surprise me if the industry's response follows the familiar pattern: they'll say that this is an 'incident', that many thousands of wells have been 'successfully fractured' in the past and that we should not ban a practice that for decades has produced 'clean, American, job-creating gas' based on one incident. It's a repeating pattern, but one that alienates the industry from the people, I believe, and does the business more harm than good. Following reports of violations, incidents and bad PR, public opposition has spread rapidly around the world. With their missteps and aggressive opposition against any new regulations could American companies spoil it for the rest? For Europe, for instance, it becomes much harder to reduce its ever-growing dependence on Russian gas and shut its coal plants if its people won’t allow exploitation of its shale resources. For the American industry itself it means its practices are unqualified for the more complex environments overseas. Some companies, Shell for instance, seem to realize this and have started calling for raising standards and disclosure of the chemicals used for fracturing. For other companies it is in their own interest to follow that example and lobby for stricter regulations and better oversight, as well as incentives for switching to gas for electricity generation and for renewable energy sources. That's how natural gas can earn its label as a bridge fuel to a low-carbon economy. For lawmakers, it is in the interest of American businesses to adopt such measures, starting with the FRAC Act. With stricter regulations may come higher direct costs. Does the Chesapeake well blowout tell us that abundant cheap shale gas is a myth, based on extraordinarily favorable circumstances that only apply in few areas? Have we been living in a shale bubble? Let’s get our feet back on the ground and raise that bar together.