project, Shaanxi province, China.
Shell produces tight and shale gas at a number of projects in the USA, Canada and China, and has started to explore for tight gas in Ukraine. The abundance of natural gas in North America today has reduced gas and electricity prices in the region, with lower energy costs boosting industry against competitors in other parts of the world. It has also benefited the environment: replacing coal with cheaper gas in many power stations has contributed to a fall in the USA’s CO2 emissions. In 2012, we produced around 230,000 barrels of oil equivalent a day of tight gas in North America from four major projects.
Tight gas is natural gas trapped in dense rock in pores 100 times thinner than a human hair. It is produced with a process called hydraulic fracturing, or fracking, which uses large amounts of water – mixed with sand and small amounts of chemical additives – injected under high pressure to crack the rock deep underground and release the gas into the well. Fracking has been used for many decades. Its increased use in recent years has led to concerns among some communities about potential air and water impacts, and earth tremors.
Shell uses advanced, proven technologies and practices to make fracking safe. We have adopted a set of five global operating principles for our onshore tight oil and gas activities. The principles focus on safety, environmental safeguards, and engagement with nearby communities to address concerns and help develop local economies (see opinion below). We consider each project separately – from the geology to the surrounding environment and communities – and design our activities using the latest technology and innovative approaches best suited to local conditions.
In 2012, we worked towards making sure that our onshore operations are consistent with these principles across the world. We assessed our projects to identify any gaps and began work to bring them into alignment with our principles. We also continued to seek comment on our principles from non-governmental organisations.
Shell advocates regulations consistent with these principles that are designed to reduce risks to the environment and keep those living near operations safe. In 2012, the International Energy Agency (IEA) published similar recommendations. Many US industry organisations, shareholder coalitions and government bodies also proposed or adopted fracking guidelines in 2012, building on progress in this area in previous years. We support and encourage efforts to adopt stronger standards. We also support the strong enforcement of existing regulations.
Concerns have been raised about leaks of methane, a greenhouse gas (GHG) around 20 times more potent than CO2, from tight gas production. The IEA has found that GHG emissions from tight gas operations slightly exceed those of conventional gas. GHG emissions from gas-fired power stations – whether from conventional or tight gas sources – are around half of those from coal across the lifecycle from production to use. Shell has joined with the Environmental Defense Fund and eight other energy companies in a University of Texas study that is assessing fugitive emissions of methane at gas production sites to provide objective scientific data and to identify operational best practices. At Shell, we use proven technologies to reduce these emissions. For example, at our Pinedale operations in Wyoming, USA, infrared cameras detect any small methane leaks so we can quickly address them.
Protecting groundwater is another priority for Shell in producing tight gas. We publicly disclose the chemicals we use in fracking operations to the extent allowed by our suppliers, even where it is not locally required. We support state legislation requiring the release of this information.
Shell works with local authorities to secure enough water for our operations in ways that minimise impact on communities and the environment. For example, we reached agreement with communities in the state of New York to supply up to 5.3 million litres of water a day to our Tioga County tight gas operations in Pennsylvania, USA. The water will be transported by rail rather than road, minimising noise, truck traffic and vehicle emissions.
We work to reduce the need for fresh water in our operations, for instance by recycling. Our approach at Groundbirch in Canada is one example (see Environment). At our Marcellus project in the Appalachian region of the USA, Shell transfers water from one operation to another for recycling. In the Eagle Ford shale field of southern Texas, we set up a water recycling pilot project within the first year of operations (see Working with our neighbours at Eagle Ford). We are transferring technologies and what we learn from our experiences to other parts of the world.
We are reducing truck traffic wherever possible, which improves safety and cuts vehicle emissions. At our Pinedale operations, for example, we collect all of the water produced with gas from our wells and pipe it to a central facility for disposal. This eliminates an estimated 165,000 truck trips and 2 million litres of diesel fuel use a year – a reduction of over 85% in distances covered by truck and associated vehicle emissions. Shell has also applied advanced technologies to reduce polluting emissions from drilling rig engines and other sources.
We drill multiple wells from a single site to minimise our footprint on the land. In Alberta, Canada, we use digital maps of environmental data, with rich ecological detail supplied by local people when we identify land for potential projects. This helps us avoid sensitive areas, such as caribou migration pathways.
Shell operates major tight gas projects in China in partnership with PetroChina, and we are planning to explore for shale gas in South Africa’s Karoo region. Gas could be essential both in meeting growing energy demand in South Africa and by providing a cleaner alternative to coal, which currently supplies more than 70% of the country’s energy demand.
In Australia, the Arrow joint venture (Shell interest 50%) produces natural gas from coal seams.
Opinion
I have the opportunity to work with representatives of Shell in the Appalachian region on a number of fronts – including land development reviews, assisting the Tioga County Board of Commissioners with information gathering and working with non-profits on community development issues. Across all these sectors, Shell personnel have been responsive, willing to provide detailed information and adaptable to the rapidly changing conditions in our community. Shell is interested in raising the bar for performance of all operators and so far they have exceeded our expectations. The challenge now is continued implementation and improvement of the approach Shell is following.”
Jim Weaver
Tioga County Planner, Wellsboro, Pennsylvania, USA