Antioil agenda lies behind fights over pipelines, fracing

Jan. 23, 2012
In battles over hydraulic fracturing and the Keystone XL pipeline, the oil and gas industry must never underestimate the resolve of its opponents.

In battles over hydraulic fracturing and the Keystone XL pipeline, the oil and gas industry must never underestimate the resolve of its opponents. Groups hostile to oil and gas know they have much to lose.

Hydraulic fracturing and extension of the Keystone system between Canada and the US accommodate development of resources considered unconventional—because of low reservoir permeability in one case and high-viscosity oil in the other.

The ability to produce hydrocarbons from resources such as these is advancing rapidly. Unconventional oil and gas therefore occupy a rapidly growing share of total production, mostly at the high end of the cost spectrum.

While the additional supply affects energy markets immediately, longer-term ramifications are more important.

As unconventional production accelerates, as technologies and understanding of the subsurface improve, and as costs subside, the volume of fluid hydrocarbon eligible for future development grows.

This expansion of the development target accelerates as economic hurdles fall. This is so because unconventional oil and gas occur naturally in amounts many times greater than do their conventional counterparts. When a new increment of unconventional resource becomes economic, it tends to be bigger than its predecessors.

Rapid growth in potential oil and gas supply punctures arguments based on depletion for displacement by costlier alternatives.

For groups hostile to fossil energy—or investors financially committed to subsidized energy—this is a nightmare. Their remedy is to stymie the transition to unconventional oil and gas before economics makes it irreversible.

Antioil groups decry the supposed environmental hazards of pipelines carrying heavy oil from Alberta to Texas and the Canadian West Coast. What they really want is to cap production from oil sands.

Similarly, opposition to hydraulic fracturing relates more to dismay over the emergence of long-life supplies of oil and gas than to concern about a benign completion method.

Anyone welcoming the unconventional bounty must understand what these controversies really are about—and anticipate the desperation with which opponents will defend a political agenda facing existential threat.

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