Tyler Hamilton at Clean Break has a post noting that relatively cheap shale gas in North America is helping to spur rapid expansion of tar sands projects in Canada - Dirty shale gas = lower gas prices = oilsands boom = double-barrelled emissions increase. This is a classic example of the peak oil driven lurch towards alternative (dirtier and lower EROI) fossil fuel alternatives exacerbates global warming and other forms of environmental damage.

For a generation that’s supposed to start cleaning up its energy mix, I find it disturbing that the big money is flowing toward dirtier and dirtier sources instead. Take the case of shale gas, which is plentiful and now economical to develop in North America. Shale gas, at the point of combustion, is no cleaner or dirtier than conventional natural gas, and a heck of a lot better than coal.

But it’s the way we get the shale gas that’s the problem. The hydraulic fracturing process used to release methane from shale rock formations disrupts and pollutes local water tables by contaminating them with a nasty chemical cocktail. Now, as recently reported in the news (and what you’ll hear more about from me tomorrow), there’s rising concern that the methane leaks that result during shale-gas development are substantial and that this makes shale gas just as bad, or worse, than coal with respect to its climate impacts. But the picture gets a whole lot worse.

Let me explain: Because shale gas is plentiful and an increasing amount of it is filling market demand for natural gas, it has kept natural gas prices low. This is expected to be the case for the foreseeable future. By 2035, shale gas will represent nearly half of all U.S. natural gas production, according to the U.S. Energy Information Administration. The low prices are great if you’re a business or consumer, and wonderful if you’re an oilsands developer. That’s because natural gas is the single-largest operational cost for many oilsands projects, particularly steam-assisted gravity drainage (SAGD) projects and other in situ developments that require enormous amounts of the gas to make steam.

In fact, it’s never been so good for them. Gas is about $4.50 per million BTU and oil is at about $106 a barrel right now on NYMEX — that’s a 24-1 spread! Now think about the spread at the height of the 2008 oilsands boom. Oil peaked at $147 a barrel and gas bounced between $11 and $12 per MBTU, giving a spread of 13-1.

So what am I getting at here? Oilsands developers are more profitable than they’ve ever been, and as a result there has been a burst of development activity likely to lead to a sustained boom. (I get into more detail in this story I wrote for MIT Technology Review). I’m also hearing that things are so good that oil companies are starting to throw more money into shale oil development. We’re going down a dirtier path, folks.

Bottom line: a dirty form of natural gas is helping spur development of a dirty form of oil.

The Guardian has an interesting article about using microbes to generate gas from heavy oil deposits like the tar sands of Alberta. Probably bad news from a global warming point of view (though they speculate microbes could also be used to process carbon dioxide), but good news from the point of view of localised environmental devastation.

A tiny oil-eating bug that lives deep underground may allow the world's oil industry to unlock energy trapped in trillions of barrels of heavy crude, which is costly and dirty to produce using today's methods. British, Canadian and Norwegian researchers have shown how microbes in oil reservoirs break down crude and release methane gas, a discovery that could spur much more environmentally friendly energy production as resources get more scarce.

The trick now will be to pump up the organisms with the equivalent of steroids so they can perform their task in 10 years instead of 10 million, said University of Calgary geologist Steve Larter, who led the team's Canadian contingent. The study is published in the science journal Nature.

The result: the ability to produce natural gas from oil reservoirs, rather than burning it from conventional sources to aid production of gooey heavy crude. "If it can be done economically, that's a game-changer, because the average heavy oil recovery worldwide is 17 percent," Larter said. "If you can suddenly liberate a tiny additional fraction of that as methane rather than as heavy oil, with all of its environmental and cost footprint, then it's a huge thing."

The process of "feeding" the microbes nutrients works in the laboratory, but it is not known yet if it can be done over the expanse of an oil field, he said. Still, some major oil companies, faced with spiraling costs and environmental headaches as they try to coax more of the poorer quality, cheaper crude from the ground, are taking notice, Larter said. He declined to name them.

Over the years, the industry has come close to exhausting reserves of easy-to-find and valuable light oil, which needs the least refining to turn it into gasoline and other fuels. Now, companies are faced with having to pump, or even mine, an estimated 6 trillion barrels of thick heavy oil and oil sands crude, which is far more costly and ecologically damaging to produce but sells for a discount in the market.

It is conceivable that converting 20 percent of a giant, billion-barrel heavy oil field could yield one trillion cubic feet of methane, which would rival some of the largest recent conventional gas finds in size, Larter said.


The team, which includes petroleum geologists, microbiologists and organic geochemists from the University of Newcastle in England and Norway's StatoilHydro ASA , is aiming for field tests within the next year. The western Canadian province of Alberta, with its vast deposits of heavy oil and oil sands, is a prime target.

Scientists have known for decades about the microbes in oil reservoirs, and some researchers have believed biodegradation was caused by aerobic bacteria, which use oxygen. ... The scientists also discovered a step midway through the biodegradation process, in which a separate family of microbes produces carbon dioxide and hydrogen from partly degraded crude, before they turn it into methane. That may lead to using microbes to capture the CO2, which is blamed for global warming, and recycling it into methane fuel in a closed-loop energy system, they said.