August, 04 2011, 11:35am EDT
For Immediate Release
Contact:
Kate Fried, Food & Water Watch, (202) 683-2500, kfried(at)fwwatch(dot)org
Shaky U.S. Economy Won't Benefit from Natural Gas Expansion
Food & Water Watch Analysis Reveals Industry Plans to Send Fracked Gas and Profits Overseas
WASHINGTON
As the federal government prepares to gut key programs to protect water and other natural resources through this week's debt agreement, the Department of Energy (DOE) has announced plans to invest $12.4 million on programs to support shale gas development. Yet new analysis released today by the national consumer advocacy group Food & Water Watch casts additional doubt on the viability of natural gas obtained through hydraulic fracturing. Pipe Dreams: What the Gas Industry Doesn't Want you to Know about Fracking and U.S. Energy Independence shows that gas leases are not only generating less energy than once forecast, but also a significant portion of U.S. fracked gas will be exported overseas and the industry's revenues will benefit foreign economies.
According to recent trade publication accounts, DOE will invest $1.6 million, outspending General Electric 4 to 1, on a project designed to remove radioactive material from wastewater from fracking operations in New York State. It will spend additional funds on projects to improve natural gas well performance in Colorado, Texas, California and New Mexico.
"For the past several weeks Americans have been bombarded by news of our government's apparent financial struggles, yet the federal government is spending money to prop up the inherently unprofitable natural gas industry," said Food & Water Watch Executive Director Wenonah Hauter. "Why cut money from resources to protect the environment while spending money in other places to support an industry that notoriously compromises the integrity of essential water resources? Meanwhile, a substantial portion of the gas and industry profits will actually flow overseas--blowing holes in the myth that gas will make the U.S. economically and energy secure."
While U.S. natural gas consumption is actually expected to decline through 2015, it is expected to increase overseas--as much as 44 percent by 2035, with China and India leading that demand. Liquefied natural gas (LNG) facilities once conceptualized for importing gas are now being converted to export terminals to feed the Chinese and Indian markets; Chesapeake Energy is exploring selling some of its natural gas to the India-based Cheniere Energy. Included in this plan is a liquefaction plant in the Gulf of Mexico. Natural gas from the U.S. is attractive to foreign markets because it is less expensive than that from Asia.
As U.S. companies sell or lease their own holdings, many international players are increasing their share of the U.S. natural gas market:
-Reliance Industries (India): In 2010 announced the purchase of a 40 percent stake in Atlas Energy's Marcellus Shale operation for $1.7 billion; also acquired a 45 percent stake in Eagle Ford shale from Pioneer Natural Resources for $1.36 billion, including $210 million to Pioneer's other partner Newpek LLC, a subsidiary of Mexican company ALFA SAB de CV.
-China National Offshore Oil Corp (China, government-owned): Agreed to pay $2.2 billion for access to a shale play in south Texas in October 2010; agreed to pay $570 million in cash for a third of Chesapeake's Niobrara shale basin in Colorado and Wyoming in January 2011.
-BP (United Kingdom): In 2008, invested more than $3.6 billion in U.S. shale, including $1.9 billion for 25 percent of Chesapeake's Fayetteville shale operations and $1.75 billion for all of Chesapeake's Woodford Shale operations in Oklahoma.
-Royal Dutch Shell (Netherlands): Paid $4.7 billion for East Resources and its Marcellus Shale assets in 2010.
After rising and falling in 2008, natural gas prices plateaued in 2010 and have remained steady since. Moreover, many gas wells are producing less gas than once expected, and some U.S.-based companies such as Chesapeake Energy have resorted to selling the land their wells are situated on as a means of generating revenues.
Further adding to doubts of the natural gas industry's ability to generate ample energy, news surfaced earlier this week that the Security and Exchange Commission (SEC) is investigating the accuracy of the industry's claims regarding the performance of shale gas wells.
"Rural communities across the U.S. are literally being torn apart by the natural gas industry, and for what? So the gas can be exported? So foreign-held corporations can turn a profit? It's simply not worth the cost to our health and natural resources. Natural gas won't bolster the U.S. economy and it won't serve as a panacea to our energy woes. The only parties benefiting from it are foreign economies and multinational corporations, said Hauter."
Pipe Dreams: What the Gas Industry Doesn't Want you to Know about Fracking and U.S. Energy Independence is available here.
Food & Water Watch mobilizes regular people to build political power to move bold and uncompromised solutions to the most pressing food, water, and climate problems of our time. We work to protect people's health, communities, and democracy from the growing destructive power of the most powerful economic interests.
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[image or embed]
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