Marvin Odum, the president of Shell Oil, made a revealing and insightful observation at the “Shell 2011 Energy Summit” last week in Houston.
“You are only as good as the worst operator in your industry,” he said.
He could have been talking about BP. Shell wants to drill offshore in Alaska, home to some of the richest undeveloped oil and gas reserves in North America, but there’s little chance of that so long as memories of the BP Deepwater oil spill remain fresh.
Or he could have been talking about the Tokyo Electric Power Co. Last month’s accident at Fukushima has cast a cloud over hopes for a global nuclear renaissance, fueling opposition to nukes from India to Germany to Minnesota.
In fact, he was talking about hydrofracking—the technology that will allow vast amounts of natural gas to be tapped from fields around the U.S., creating a boom in the shale fields of Wyoming, Texas, Louisiana and Pennsylvania.
But fracking, as it’s called, is controversial. When wells are improperly drilled, water supplies can become polluted. Some gas drilling companies won’t say what chemicals they are injecting into the shale to drive out the gas. Just last week, an unpublished study challenged the conventional wisdom that natural gas is a cleaner fuel than coal, arguing that the release of methane during drilling could aggravate global warming.
To head off the criticism, and clean up the highly-fragmented natural gas drilling industry, Shell wants strong regulation of hydrofracking. The company says it will monitor its own wells carefully and disclose the chemicals it uses in its fracking fluids. The goal, it appears, is to engage with critics and demonstrate to them that when well managed, fracking has benefits that far outweigh any harm. [click to continue…]