Oil And Gas Industry Under Pressure

The U.S. hydraulic fracturing boom of years past sputtered in 2015 amid falling prices for natural gas and rising concerns about the extraction technique’s environmental and public health impacts. Those concerns led two U.S. states to ban hydraulic fracturing, or fracking, following similar moves in Europe and elsewhere around the world.

Fracking’s environmental record was put under the microscope in a series of long-awaited reports that emerged from federal and state agencies this year. For example, in February, the Environmental Protection Agency looked at the upswing in ground-shaking in the geologically stable midcontinental U.S., including those near fracking operations in Oklahoma and Texas. EPA concluded the clusters of small earthquakes were linked to the pressure created by the oil and gas industry’s practice of pumping its wastewater into the ground for disposal.

Meanwhile, in June, EPA released a draft of its fracking study, five years in the making, concluding that the controversial technique has had no “widespread, systemic impact” on water resources.

Groups representing the oil and gas industry took the agency’s stance as confirmation of fracking’s safety, while others called for closer scrutiny. “I think that anyone who reads this study and thinks that this issue has been put to bed is sadly mistaken,” Mark Brownstein, vice president for the climate and energy program at the Environmental Defense Fund, told C&EN.

The study is currently under review, and the panel tasked with evaluating the agency’s draft report has already suggested walking back its key message.

On the state level, New York banned fracking in July on the heels of a seven-year review by the state Department of Environmental Conservation. The state’s report revealed concerns about potential groundwater and surface-water contamination, chemicals added to fracking fluids, and climate change attributable to release of methane. The ban finalizes a moratorium on the practice that had been in effect since 2010. New York followed Maryland, which approved a two-year prohibition that went into effect on June 1.

Meanwhile, most countries in Europe remain opposed to fracking, with bans already in effect in Germany, France, and Ireland. But the U.K. broke ranks this year, introducing a series of policies, including multi-million-dollar tax windfalls, to encourage local communities to accept fracking wells.

“We are going all out for shale,” U.K. Prime Minister David Cameron said early in the year. Cameron predicts fracking could generate 74,000 jobs, attract more than $4 billion in investment, and provide cheaper energy and chemical feedstocks.

At the forefront of the U.K.’s race to begin fracking is the petrochemical giant Ineos, which is based in Switzerland but has significant operations in the U.K. In recent months, the firm has vacuumed up a series of new fracking licenses. Ineos estimates that it could start producing gas in commercial quantities by 2020.

To meet near-term requirements, Ineos has built a terminal at its Grangemouth, Scotland, chemical complex to bring in cheap ethane from the U.S. to feed its ethylene cracker there. Recently, the firm went a step further, signing a long-term agreement to supply ethane to ExxonMobil’s ethylene plant in Mossmorran, Scotland.

Ineos, like the rest of the European chemical industry, considers fracking essential if the region is to remain competitive with the U.S. and Middle East.