So great is the fracking boom in the US that it has created a “world of infinite gas” according to Tony Hayward, the disgraced ex-boss of BP.
BP’s estimate is that, due to fracking and the dirty tar sands, North America will be self-sufficient in energy by 2030.
And according to a special report on energy in today’s Financial Times’, the fracking revolution is going global.
The paper highlights once again how the world is moving away from the “easy oil” of the Middle East to the highly expensive, dirty unconventional oil and gas, such as the tar sands and shale gas in North America to the pre-salt deep water plays off Brazil
This new revolution is exciting the oil boys: “I haven’t seen Calgary, Houston and Aberdeen more revved up in my 30-odd years in the industry,” Tony Fountain, head of refining at Indian oil group Reliance, tells the FT.
But are these new reserves enough to satisfy our fossil fuel addiction? It all depends on depletion rates – a hotly contested topic in the oil industry.
Whether these unconventional reserves can be found faster than the depletion rates of older fields is explored by the newspaper. “Existing reservoirs are depleting three times faster than 20 years ago. The world is squeezing these reserves at a faster rate,” Claudi Santiago, chief operating officer of First Reserve Corp, the energy-focused private equity group, tells the paper.
Santiago is said to be “sceptical” about the talk of oil and gas abundance, as espoused by Tony Hayward and others, predicting that supply will barely be able to keep up with rising demand, particularly from fast-growing Asian economies.
“If you assume 1 per cent GDP growth per year, then by 2020 the world will need to find about 40m barrels a day of oil,” he says. “So in less than 10 years we need to bring on four times what Saudi Arabia produces today.”
The other huge player in the debate is growing environmental, community and social opposition to the industry trashing the planet in order to find every last drop of the black stuff. Everywhere the industry goes to exploit these reserves it is meeting opposition – from Shell in the Arctic, to the activists fighting tar sands, KXL and the Northern Gateway, to communities across North America fighting fracking.
Patrick Daniel, chief executive of Canadian pipeline company Enbridge, tells the Financial Times that the biggest challenge facing the industry is this growing opposition and the industry’s “social licence”.
This social license of fracking will be inflamed by a new Holywood film starring Matt Damon, called “’Promised Land”.
Damon is a dodgy gas-company salesman who uses a number of unethical practices to buy leases. Although still months away from release, the industry is gearing up to trash the film by “bombarding film reviewers with scientific studies, distributing leaflets to moviegoers and mounting a “truth-squad” effort on Twitter and Facebook”, according to the WSJ.
“We’ve been surprised at the emergence of what looks like a concerted campaign targeting the film even before anyone’s seen it,” said James Schamus, chief executive of Focus Features, which produced and will distribute “Promised Land”.
Expect more dirty tricks from the industry, as they try to show that their vision of the promised land is one of infinite gas. It is one we can never achieve though, despite all the hype.