By JAMES HERRON
LONDON -- One of Europe's largest institutional
investors, Scottish Widows Investment Partnership, on Wednesday
warned the fast growing shale gas industry to do more to
prevent the release of the potent greenhouse gas methane during
drilling, which is undermining its basis as a cleaner
alternative to coal.
"By failing to control methane, the gas industry is letting
much of the [carbon emissions reduction] benefit of
switching from coal to gas slip away," said Craig Mackenzie,
head of sustainability at the asset
"As a major shareholder in the oil and gas sector, Scottish
Widows Investment Partnership wants to see the industry taking
rapid action to eliminate methane emissions."
Mackenzie's comments were directed primarily at shale gas
drilling operations in the US, but many European energy companies
participate in shale gas operations there, including BP, Royal
Dutch Shell, Statoil and Total.
Scottish Widows has GBP142 billion of funds under
management, the bulk of which is in UK equities and bonds.
The boom in shale gas production in the US does have the
potential to reduce emissions of greenhouse gas carbon dioxide because, "cheap shale
gas is closing down coal power generation," Scottish Widows
said in a research report.
The reduction in coal-fired power generation is already
equivalent to all the electricity generated in the US from wind
and solar, it said.
This is good news for carbon dioxide emissions because, "gas power
stations produce 50% less carbon emissions than coal power
stations," it said.
However, under current practices the shale gas industry is
releasing significant amounts of methane, a greenhouse gas 20
times more effective at trapping heat in the atmosphere than carbon dioxide.
"The high short-term climate impact of methane negates much
or all of the benefit of coal-gas switching for the first two
or three decades after it occurs," said the report.
Shale gas is extracted using a technique called hydraulic
fracturing, which involves pumping a mixture of water,
chemicals and sand at high pressure into fractures in the shale
The fluid grows the fractures and when it is pumped out,
methane gas that was previously trapped in the impermeable rock
Emissions occur because methane dissolves into the
fracturing fluid when it is underground and is released into
the atmosphere when the fluid is pumped back to the surface and
stored in open ponds.
This problem can be fairly easily solved by capturing gas
released from the used fracturing fluid, Mackenzie said.
"Our research indicates that technologies exist to eliminate
most methane emissions from natural gas
production quickly and at low cost, but these technologies are
not widely used," said Mackenzie.
"Scottish Widows Investment Partnership is working with
other investors to engage with oil and gas companies to
encourage implementation of best practice methane control
Dow Jones Newswires