Five reasons why shale oil’s challenge to high prices for Scottish oil is only temporary

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(c) North Dakota Department of Health

Though shale oil fracking is effectively banned in Scotland and in many parts of the world, it is currently a major factor in holding down the value of crude oil. However, in contrast to the 30-year life expectancy of the North Sea and West of Shetland, it’s life expectancy is likely to be short due to five major problems – worker safety risks due to sand, lack of sand, lack of water, lack of pipelines and lack of shale oil itself.

Too much sand…..for the workers

Safety fears for those living near fracking sites have resulted in widespread bans in several US states and in many parts of Europe but, crucially, these bans have left too many gaps where fracking continues. However, more recently, health risks for workers are becoming more apparent and may lead to wider problems for the industry. See this from Oil & Gas People:

‘New research from the digital campaign group 38 Degrees says that fracking workers can be exposed to toxic chemicals. One is benzene, which the American Cancer Society links to leukaemia. If silica dust from the sand used in the fracking process is inhaled it can damage lungs and in the long term cause silicosis. The US National Institute for Occupational Safety and Health concluded there was “an inhalation health hazard” for fracking workers. Researchers from the University of Missouri examined more than 150 studies on the health effects of fracking chemicals. They concluded that there was “evidence to suggest there is cause for concern for human health.”’

This is, of course, the weakest of the threats to shale oil fracking. History tells us that workers, unions and employers will find a way to manage these risks so that profits flow and jobs are protected even at the cost of shortened and reduced lives for many workers. Safety procedures will be introduced, media representation of the risks controlled, compensation paid to families and the true scale of the damage kept hidden until the profits have been moved safely offshore or into hidden bank accounts. We’ve seen the pattern with Asbestos and contemporary European industries use 30 million tonnes of carcinogenic, mutagenic and reprotoxic substances annually. Typically, around 25% of the population is exposed to these (,_mutagenic,_reprotoxic_(CMR)_substances).

Lack of sand

You might know that desert sand is useless for construction. Dubai was built with imported sand! You might also know that fracking requires vast quantities of ‘frac sand’ to be pumped along with other materials into wells to break up shale rock and produce oil. Fracking needs a small uniform round form of sand that is not common, is rarely found anywhere near the oil basins, and it’s running out fast. Already, costs are climbing to levels that could easily send fracking from boom to bust even before the oil runs out:

‘I think people are looking at the potential demand numbers, and, for the first time, people are scared that there will not be enough sand to meet the demand…… The increased demand will push sand prices up by 60 percent, hitting the $40 per ton range over the next 18 months…..the real concern is the logistical challenges that come with moving high volumes of sand. Some producers are using a unit train – roughly 75 or more rail cars in a line – on each well…that presents some significant logistical challenges that could hamper production.’

Lack of water

Even back in 2013 water shortages for fracking were being predicted. See this:

‘The process of hyraulic fracturing (fracking) to extract oil from shale rock might have a looming problem — and it’s not the ongoing efforts by some to stop what they believe to be a harmful practice to the environment, although some studies counter these claims. It’s a water shortage. A report published by Ceres, a network of investors, companies and public interest groups focusing on sustainable business practices, said that nearly 47 percent of the 25,450 fracking wells evaluated were in areas experiencing high or extremely high water stress.’

Lack of pipelines

As you might expect in a country wedded to the idea of unconstrained free markets, not enough is being spent centrally on the US infrastructure required to enable the fracking companies to get their product to consumers or to ports where it can be exported to places like, of course, Grangemouth. See this:

‘The biggest U.S. shale region will have to shut wells within four months because there aren’t enough pipelines to get the oil to customers, the head of one of the industry’s largest producers said. The worsening bottleneck in the Permian region that straddles west Texas and New Mexico offers an unexpected fillip to OPEC and other oil producers outside the U.S., who’ve seen rampant production from America’s shale producers grab market share. “We will reach capacity in the next 3 to 4 months,” Scott Sheffield, the chairman of Pioneer Natural Resources said in an interview at an OPEC conference in Vienna. “Some companies will have to shut in production, some companies will move rigs away, and some companies will be able to continue growing because they have firm transportation.”’

Lack of shale oil

Finally, there’s this prediction from February 2017:

Shale’s best days are coming to an end. U.S. shale oil production, which reshaped the global energy equation, will begin to wane in less than a decade as reserves are drawn down and well output decreases, the Energy Department reported.’

So, even if the workers are bribed, the sand is found, and the pipelines expanded, the shale oil itself will run out long before Scotland’s North Sea or West of Shetland supplies do.

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