Friday, June 3, 2011

Shell and the economics of truth

This Press Release was issued by the TREASURE KAROO ACTION GROUP
http://hwb.co.za/media-article.php?id=423
1 June 2011



Shell and the economics of truth


Wednesday, 1 June 2011, Cape Town: The ongoing and much-welcomed debate on the safety and sensibility of using hydraulic fracturing to retrieve shale gas in the Karoo has been overshadowed by a systematic corporate strategy of being economical with the truth.


Despite the South African Cabinet's declaration of a moratorium on all applications for licences to conduct hydraulic fracturing in the exploration of shale gas reserves in the Karoo, major oil and gas corporations continue to lobby government and the population that the method—commonly referred to as "fracking"—is safe and viable.


Shell South Africa Energy Limited, a division of Royal-Dutch Shell, immediately after the moratorium announcement, ran full-page advertisements in the national weeklies and distributed flyers at Shell service stations making a number of claims about fracturing. These adverts are currently under investigation by the Advertising Standards Authority for being misleading and untruthful.


In a live debate with Jonathan Deal, Chairman of Treasure the Karoo Action Committee (TKAG) held at the UCT's Gordon Business School, the Chairman and Vice President of Shell South Africa Energy Limited, Bonang Mohale, stated that there has never been "a single case of groundwater contamination resulting from fracturing”


"In our 60 years we have never found these fractures going up to the surface. It has just never happened in 800,000 wells. What is likely that can go wrong is, again, in the construction of the well itself: these things do collapse. In the 800,000 wells we have done there is not one single bit of evidence that a well owned, managed and drilled by Shell has ever collapsed."


This is clearly not the truth. Between 19 January 2011 and 5 March 2011, a subsidiary of Shell, East Resources Management LLC (ERM), a hydraulic drilling contractor (acquired by Shell in May 2010) and operating in the Marcellus Shale area, USA, notched up six environmental violations in Marcellus. One of these is described in the report as


"Unpermitted discharge of residual waste. Pollutional substances at well site impacted groundwater. Seep expressed itself in sed [imentary] basin. Elevated chloride, barium, strontium and sodium concentrations in seep."

What Mohale also does not reveal is that the collapsing of the well wall is not the only source of contamination of aquifers and surface water sources. What is also likely that can "go wrong" is what happened with the five other serious violations. Again, the report states that Shell's offences were:


"Discharge of pollutional material to waters of the [C]ommonwealth. "

"Failure to properly store, transport process or dispose of a residual waste."


“Pit and tanks not constructed with sufficient capacity to contain pollutional substances.”


“Drilling within 100ft (30m) of surface water or wetland without variance. Constructing a site without permission.”


“Discharge of pollutional material into water of the Commonwealth of Pennsylvania. What happened: unpermitted discharge to south branch Thornbottom Creek."

In another incident in Australia, a fracking well drilled by Arrow Energy was out of control for more than 24 hours following a blowout on two weeks ago. Shell Energy Holdings Australia Ltd and PetroChina International Investment Company Ltd bought-out Arrow for $3.1-billion in 50-50 joint venture deal in March last year. The blowout spilled roughly 1 000 cubic metres of methane gas per hour into the air.


Fingers cannot be pointed at ERM or Arrow. Shell takes full responsibility. Mohale is on record as saying, when discussing, the operational behaviour of Shell, including its subsidiaries and subcontractors, that "the responsibility lies with Shell.”


"If we subcontract it [the drilling] the responsibility lies with Shell. Subcontractors are our partners and if something goes wrong we are ultimately held accountable."


One of the statements on a Shell flyer distributed at Shell service stations after the Cabinet moratorium, states:


"Shell commits to lead in the setting of global best practices and operational standards."


Six serious violations of environmental law in the space of 45 days in the United States does not speak to "global best practices and operational standards". Nor does the fracking-well blowout in Australia.


Shell's website makes the following claim about the chemicals used in fracking:

The fluids injected into the rock consist of more than 99% water and sand, with a small amount of additives similar to those found in household products."

(
http://bit.ly/mU0HSS)

And the Shell advert distributed at Shell service stations after cabinet moratorium says:

"We also commit to disclosing fracturing fluids at each drilling location."

Yet, Shell will not reveal exactly what those chemicals are when asked in a public debate. And what Mohale didn't say was that Shell, along with BP and Total refused to participate in the American Petroleum Institute's (API) Subcommittee (13) on "Drilling, Completion, and Fracturing Fluids". Nor did he reveal that Shell Oil Company (USA) provided US Senate lawmakers "with language to include in a pending climate change bill that essentially would block federal oversight of hydraulic fracturing."


Reports from the USA state that if this language is "incorporated into the climate change law, it would keep the Environmental Protection Agency (EPA) from imposing regulations on fracturing... [and] recommends that states adopt standards for disclosing the contents of hydraulic fracturing chemicals... but maintain 'the confidentiality of trade secret information' in the fluids".


This statement seems to pre-empt a stand not yet taken by Shell, Bundu, Falcon and SASOL on matters relating to hydraulic fracturing chemicals. Even its Vice President of new-business development at Shell Exploration and Production, Olivier Lazare, who has urged his company to disclose hydraulic fracturing chemicals has been ignored.


Shell's South African website makes the following claim:


"It [natural gas] burns more cleanly than any other fossil fuel, emitting 50-70% less carbon dioxide (CO2) than coal in electricity generation." ( http://www.shell.com/home/content/zaf/aboutshell/shell_businesses/e_and_p/karoo/natural_gas.html or: http://bit.ly/klt7ax)

This is not factually correct. Recent studies from Cornell University—Methane and the greenhouse-gas footprint of natural gas from shale formations by Robert W. Howarth, Renee Santoro and Anthony Ingraffea—have shown that natural gas, which is mostly methane—a much more potent greenhouse gas, "with 105 times more warming impact, pound for pound, than carbon dioxide (CO2)".


Howarth has estimated that as much as 8% of the methane in shale gas leaks into the air during the lifetime of a hydraulic shale gas well—"up to twice what escapes from conventional gas production".


"The take-home message of our study is that if you do an integration of 20 years following the development of the gas, shale gas is worse than conventional gas and is, in fact, worse than coal and worse than oil," Howarth said. "We are not advocating for more coal or oil, but rather to move to a truly green, renewable future as quickly as possible. We need to look at the true environmental consequences of shale gas."


Mohale and Graham Tiley General Manager for new ventures and international exploration at Shell are on record stating:


"Fracking is safe and poses no risk to the environment.”

This is as credible a statement as "smoking does not cause cancer". The violations of environmental regulations by Shell, the self-proclaimed market leader in hydraulic fracturing, are a matter of fact. These violations evidence that no reasonable person can possibly argue that hydraulic fracturing is safe and poses no risk to the environment.


Shell has been economical with the truth. South Africa has been misled. Our Ministers, their departments, and our regulators have been misled. Have they also been misled by the other fracking companies that maintain lower public profiles? If the offences in the US and Australia had not come to light, was our government is at risk of making fracking related decisions based on false information?


If South Africans are going to resolve the controversy surrounding fracking, we need facts, we need truthfulness, we need openess and we need transparency—things that have purposefully not been given to us.

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