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Water shortages have put the US oil and gas industry on a “collision course” with other users because of the large volumes needed for hydraulic fracturing, a group of leading investors has warned.
Almost 40 per cent of the oil and gas wells drilled since 2011 are in areas of “extremely high” water stress, according to Ceres, a network of investors that works on environmental and social issues. It highlights Texas, the heart of the US oil boom, and companies including Chesapeake Energy, EOG Resources, ExxonMobil and Anadarko Petroleum as the heaviest users of water.
Hydraulic fracturing, or fracking, is essential for extracting oil and gas from the shale formations that have been responsible for the US boom of the past decade, and it requires large volumes of water: typically 2m gallons or more per well. The water is mixed with sand and chemicals and pumped underground at high pressure to open up cracks in the rock so the oil and gas will flow more freely. The water that flows back out again is often poured away into separate disposal wells.
Water shortages can create tensions with local communities and force companies into expensive solutions such as bringing the water to the wells by truck.
Monika Freyman of Ceres said water was a risk that was often overlooked. “People don’t worry about it until it’s gone,” she said. “If you are an investor in a company that is in a water-stressed area, you have to ask questions about how it is managing their water risks.”
Shareholders including the employee pension funds of New York city and state said this week they would file resolutions for the annual meetings of companies including Exxon, Chevron, EOG and Pioneer Natural Resources, calling for more detailed disclosure of their environmental impact, including water use.
Ceres identified Anadarko, Encana, Pioneer and Apache as the companies with the greatest exposure to water risk, meaning the greatest volume of water use in areas with extremely high stress. In those areas, 80 per cent or more of the available water has been committed for other users including homes, farms and businesses.
Exxon said XTO, its shale oil and gas subsidiary, “works with local authorities to ensure there is adequate supply.” It added that coal needed ten times as much water as gas produced through fracking for an equivalent energy content, and corn-based ethanol needing up to 1,000 times as much water.
Anadarko said it was “on the leading edge” of efforts to manage and conserve water, including recycling it wherever possible, and drawing on a range of sources such as municipal effluent and produced water from oil and gas wells. It is also working with environmental groups and others to develop best practices for water use.
Fracking accounts for a relatively small proportion of US water demand: less than 1 per cent even in Texas, according to a University of Texas study, compared to 56 per cent for irrigation. However, in some areas with the greatest oil and gas activity, such as the Eagle Ford shale of south Texas, it can be much more significant.
The potential problem in Texas is exacerbated by the protracted drought that has affected the state and the growth in its population caused by the strength of its economy.
Jean-Philippe Nicot of the University of Texas said the state’s farmers were using less water for irrigation and shifting to crops that could cope with drier conditions. “More and more water is needed for urban centres, and fracking is part of the picture,” he said.
“All the Texas aquifers are heavily taxed right now.”
Wood Mackenzie, the consultancy, argued in a report last year that the industry would need to address the issue to be able to develop shale oil and gas production around the world, with many of the most promising reserves in China, Africa and the Middle East in areas of water scarcity.
Jim Matheson of Oasys Water, a company that develops water treatment technology, predicted an “inexorable but slow” movement towards recycling.
“We’re very early in the evolution, but the future is one in which we’re going to have to figure out how to clean and reuse the same water resources,” he said.
The largest, most-consistent money fueling the climate denial movement are a number of well-funded conservative foundations built with so-called “dark money,” or concealed donations, according to an analysis released Friday afternoon.
The study, by Drexel University environmental sociologist Robert Brulle, is the first academic effort to probe the organizational underpinnings and funding behind the climate denial movement.
It found that the amount of money flowing through third-party, pass-through foundations like Donors Trust and Donors Capital, whose funding cannot be traced, has risen dramatically over the past five years.
– Robert Brulle, Drexel University
In all, 140 foundations funneled $558 million to almost 100 climate denial organizations from 2003 to 2010.
Meanwhile the traceable cash flow from more traditional sources, such as Koch Industries and ExxonMobil, has disappeared.
The study was published Friday in the journal Climatic Change.
“The climate change countermovement has had a real political and ecological impact on the failure of the world to act on global warming,” Brulle said in a statement. “Like a play on Broadway, the countermovement has stars in the spotlight – often prominent contrarian scientists or conservative politicians – but behind the stars is an organizational structure of directors, script writers and producers.”
“If you want to understand what’s driving this movement, you have to look at what’s going on behind the scenes.”
To uncover that, Brulle developed a list of 118 influential climate denial organizations in the United States. He then coded data on philanthropic funding for each organization, combining information from the Foundation Center, a database of global philanthropy, with financial data submitted by organizations to the Internal Revenue Service.
According to Brulle, the largest and most consistent funders where a number of conservative foundations promoting “ultra-free-market ideas” in many realms, among them the Searle Freedom Trust, the John Williams Pope Foundation, the Howard Charitable Foundation and the Sarah Scaife Foundation.
Another key finding: From 2003 to 2007, Koch Affiliated Foundations and the ExxonMobil Foundation were “heavily involved” in funding climate change denial efforts. But Exxon hasn’t made a publically traceable contribution since 2008, and Koch’s efforts dramatically declined, Brulle said.
Coinciding with a decline in traceable funding, Brulle found a dramatic rise in the cash flowing to denial organizations from Donors Trust, a donor-directed foundation whose funders cannot be traced. This one foundation, the assessment found, now accounts for 25 percent of all traceable foundation funding used by organizations promoting the systematic denial of climate change.
[updated Dec. 24] Jeffrey Zysik, chief financial officer for DonorsTrust, said in an email that neither DonorsTrust nor Donors Capital Fund “take positions with respect to any issue advocated by its grantees.”
“As with all donor-advised fund programs, grant recommendations are received from account holders,” he said. “DonorsTrust and Donors Capital Fund ensure that recommended grantees are IRS-approved public charities and also require that the grantee charities do not rely on significant amounts of revenue from government sources. DonorsTrust and Donors Capital Fund do not otherwise drive the selection of grantees, nor conduct in-depth analyses of projects or grantees unless an account holder specifically requests that service.” [end update]
Matter of democracy
In the end, Brulle concluded public records identify only a fraction of the hundreds of millions of dollars supporting climate denial efforts. Some 75 percent of the income of those organizations, he said, comes via unidentifiable sources.
And for Brulle, that’s a matter of democracy. “Without a free flow of accurate information, democratic politics and government accountability become impossible,” he said. “Money amplifies certain voices above others and, in effect, gives them a megaphone in the public square.”
Powerful funders, he added, are supporting the campaign to deny scientific findings about global warming and raise doubts about the “roots and remedies” of a threat on which the science is clear.
“At the very least, American voters deserve to know who is behind these efforts.”
Originally published at the Daily Climate. The Daily Climate is an independent, foundation-funded news service that covers climate change. Find us on Twitter @TheDailyClimate or email editor Douglas Fischer at dfischer [at] DailyClimate.org.
– Douglas Fischer, the Daily Climate
There is a currently a window of opportunity open for Canada to set up shipping of natural gas to Asia, says former federal industry minister Jim Prentice, but it will have to move quickly to stay abreast of U.S. competition.
Prentice, now a vice-president at CIBC, says there is some urgency for Canada to adjust to the new reality of the North American energy market, in which the U.S. is a major producer.
“We’ve gone from being a comfortable natural gas producer to the U.S., to now competing with the U.S.,” he in an interview with CBC’s Lang & O’Leary Exchange.
“The changes that have driven all this, the technological changes have taken place so quickly, I think it caught people off guard,” he said.
There is now considered to be a glut of natural gas production in North America because of new technology that allows the capture of shale gas.
‘We are going from being a continental energy producer to being a global energy player. And in order to do that we have to secure market access’– Jim Prentice
There are severalproposals for liquefied natural gas terminals to export from British Columbia to markets in China, Japan and India, but nothing is near being realized.
Prentice acknowledged that the projects require multi-billion-dollar financial commitments, but says Canada risks losing out to the U.S., which has moved faster on buiiding natural gas shipping terminals.
“People are only going to launch those kinds of projects if they have the certainty they require and that relates to the royalty regime, that relates to the fiscal regime, that relates to their capacity to export. These are all things we’re good at as Canadians, but we need to make sure we’re focused on it,” he said.
His comments came the same day that Exxon Mobile Corp is predicting worldwide demand for natural gas will jump 65 per cent over the next 25 years.
Exxon issued its annual review of energy supply and demand, a closely watched report that sets the course for production and alerts policymakers to the changes they might have to prepare for.
Exxon, the U.S. largest gas producer, is preparing for surging demand from developing countries, even as developed countries embrace emissions controls and greater energy efficiency.
Natural gas prices fall
Natural gas prices have been falling as the U.S. production of shale gas surges. That has prompted some Canadian energy firms to reduce their exposure to natural gas.
Prentice said Canada has to be prepared to invest in the opportunities for Canadian energy opening up overseas.
“The world is awash in natural gas, what it doesn’t have is an ample supply of stable nation states that can fulfill contracts over a 50 year period – that’s what’s needed,” he said.
“We are going from being a continental energy producer to being a global energy player. And in order to do that we have to secure market access,” he added.
Prentice said he is optimistic that the correct groundwork is being laid to complete projects such as LNG terminals on the West Coast and the Northern Gateway pipeline. He has urged the federal government to continue to engage with First Nations in communities that will be affected by the projects.
The long-term outlook by Exxon predicts that world energy demand will grow 35 per cent by 2040.
“People want a warm home, a refrigerator, a TV, someday a car, and a cellphone,” said William Colton, Exxon’s vice-president for corporate strategic planning.
Among its predictions:
- Oil demand will rise 25 per cent by 2040 as it will remain “the fuel of choice for transportation.”
- Deepwater, oilsands and shale oil production will be necessary to meet demand.
- Demand for coal will rise until 2015, but fall by 2040 as countries abandon coal-fired power.
- Nuclear power will see “solid growth.”
- Supplies of renewable energy will increase nearly 60 per cent by 2040, led by increases in hydro, wind and solar.
Exxon prefaced its long-term outlook report with a call to lift the U.S. ban on exporting domestic crude oil, which dates back to the 1973 oil crisis.
Ken Cohen, Exxon’s vice president of public and government affairs, told the Wall Street Journal the ban no longer makes sense because the U.S. is “dealing with a situation of abundance.”
- WATCH: Oil Runs Through Streets After Spill (huffingtonpost.com)
- Duncan Firm Files Class Action Lawsuit Against ExxonMobil (arkansasmatters.com)
- Clean-up or cover-up? Latest in Exxon oil spill reveals AG hired firm with oil industry ties, residents are ill and workers misinformed. (treehugger.com)
- The Exxon Pipeline Spill: QUESTIONS THAT SHOULD BE ASKED (texasvox.org)