Don't take a bath on natural gas

Peter
Peter Jackson
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Remember Bre-X? If you sank hard-earned money into the Canadian company’s non-existent goldmine, you’ll never forget it.

Bre-X Minerals caused a global sensation in 1995 when it announced it had discovered huge gold deposits on the Indonesian island of Borneo.

Investors scrambled to get in on the action. At its peak, stocks soared to C$286. Everyone was going to be rich.

Then it unravelled. In March 1997, a Bre-X geologist died after falling out of a helicopter. Rumours swirled; was it an accident, suicide or murder? A week later, a prospective partner in the project did its own core samples and found only small traces of gold.

Investors lost their shirts.

It goes to show how risky it is to leap aboard a gold rush before the facts are in. And these days, the biggest gold rush in town is natural gas.

Now, natural gas is no Bre-X. Anything but. It’s been around in abundance long before the current craze took hold. But with the advancement of unconventional drilling practices such as fracking, natural gas is being touted as the energy source of the future.

In fact, it’s so ubiquitous that natural gas prices have fallen sharply in the past few years. Industry players say North American reserves could fuel the continent for several decades to come.

At least, that’s what they say in public. But as the New York Times pointed out in 2011, that doesn’t seem to be what they always say behind closed doors.

 

Doubts expressed

The Times got its hands on

hundreds of internal emails that suggest a higher degree of skepticism among those with a front row seat.

“In the emails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves,” The Times reported.

“Many of these emails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles.”

And so, amid all the alarms raised by environmentalists about the possible dangers of fracking, it may turn out that natural gas is not the economic wave everyone should be riding in the first place.

For now, at least, natural gas is cheaper. And it burns more

cleanly than coal and other carbon fuels.

But it’s not made of fairy dust. It’s a fossil fuel, and presents all the same dangers and limitations as any other non-renewable energy.

 

Not exactly clean

In North Dakota, for example, a task force representing hundreds of oil companies has vowed to stop flaring natural gas at wells in the Bakken shale oilfield by 2020.

Why? Because the six million tonnes of carbon dioxide they emit is equivalent to that released in a year by three medium-sized coal plants.

Critics also have grave concerns about the way “dirty” water is being disposed of, as well as the composition and transportation of chemicals used in fracking.

All these factors are likely to give rise to more stringent — and more expensive — regulations.

Natural gas may be a good bet at the moment. But there’s no guarantee the moment will last. Already, a cold snap in the U.S. last month has pushed the price up for consumers, and the price shows no signs of dropping again.

Take it from the Times exposé:

“The emails do not explicitly accuse any companies of breaking the law. But the number of emails, the seniority of the people writing them, the variety of positions they hold and the language they use — including comparisons to Ponzi schemes and attempts to ‘con’ Wall Street — suggest that questions about the shale gas industry exist in many corners.”

 

Peter Jackson is The Telegram’s commentary editor. Email: pjackson@thetelegram.com.

Organizations: Bre-X Minerals, North American, New York Times The Times

Geographic location: Indonesian island, North Dakota, U.S.

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  • Angus
    February 06, 2014 - 07:43

    Actually I am impressed by the research that is being conducted into energy storage. This is an area that goes hand in hand with renewable energy sources such as Wind Turbines, PV Solar Panels and Wave Energy Converters all of which are intermittent by the very nature of the source which from they harvest the energy. A recent development from Harvard University by a chemistry team raises the possibility of storing large amounts of energy cheaply, efficiently and in an environmentally friendly manner. Large tanks store a compound called quinone in water and act as a cathode while the other tank stores Bromide in a water solution and acts as a cathode.. When the two compounds are pumped to a carbon based membrane, there is an exchange of ions while the electrons flow though the wiring and load. To charge the tanks, electricity is added from an outside source in reverse. The beauty of organic flow batteries is that they have an unlimited number of cycles, can easily be sized to the need of the consumer and are very much cheaper than metal based flow batteries or conventional batteries. Envision a flow battery about the size of two large storage tanks about the size of 200 gallon oil drums located near your house and a consumer could buy renewable energy from windmills or solar panels, store the energy in the flow battery and use it at a later time when consumption peaks. This could well be the breakthrough which makes wind and solar viable and competitive with fossil fuels.

  • Maurice E. Adams
    February 05, 2014 - 13:31

    It is misleading, it seems to me, to say that natural gas "...presents all the same dangers and limitations as any other non-renewable energy." Natural gas is much less expensive and releases (as I understand it) only half the greenhouse gas emissions as oil. many experts consider it as the most appropriate, available, and affordable "BRIDGING" fuel to many of the still inefficient and very expensive 'renewable' sources of energy. ...How about doing an article explaining why most of the U.S. does not include large hydro generation plants, such as Muskrat Falls, as "renewable"?