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.
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: firstname.lastname@example.org.