Just hot air?

02:39, Aug 16 2011
An illustration of what the Waiau Basin could look like if shale gas drilling went ahead. Photo illustration: JOHN HAWKINS/SHAUN YEO

Shale gas is the driving force behind an energy revolution in the United States. But the gas boom has been accompanied by allegations of contamination, poisoning and even flammable drinking water. Could western Southland become the Gasland of New Zealand? Alex Fensome investigates.

Turn on a tap, strike a match, and hold the flame to the water. You would expect the flame to go out, but in parts of the United States water can be set on fire.

On YouTube there are plenty of videos of Americans setting their tap water alight. It's the most dramatic evidence environmentalists have that "fracking'', a process used to extract natural gas from deep beneath the earth, catastrophically damages water and blights people's lives.

John Hogg
Ohai Community Development Board member John Hogg and landowner John Levett check out the coal seam gas well drilled on Levett's farm. Photo: JOHN HAWKINS/Southland Times

And the process could be coming to Southland.

It's already being done in Taranaki - and people there have become concerned enough to form a protest group, Climate Justice Taranaki.

Oil company TAG uses fracking to make its Taranaki wells flow better. Emily Bailey, a member of the newly formed protest group, says the group is worried enough to want a moratorium or even a ban because of what has happened in the United States. "Aquifers are being depleted and poisoned by the toxic chemicals,'' she says.


The chemicals Bailey is referring to, designed to help water flow through bores, are veiled in mystery. In June, Texas passed a law requiring companies to make known what chemicals were used in "fracking fluid''. It was the first state in the US to do so.

The merest hint there might be one of the so-called BTEX group - the highly carcinogenic chemicals benzene, toluene, ethylbenzene and xylene - in fracking fluid is what causes the most concern, mainly because much of the fluid returns to the surface and is held in tanks and ponds before being treated.

The Petroleum Exploration and Production Association of New Zealand (PEPANZ) has categorically denied BTEX chemicals are used in fracking in this country.

In Southland, L&M Energy, a multinational petroleum company, announced in June that it had found potentially huge shale gas deposits under the Waiau Basin. It is also planning to investigate possible shale deposits in south and Mid-Canterbury, and the Kaikoura area.

With the same company already exploiting coal seam gas in the Waiau area, if the find plays out it could change the face of western Southland.

L&M believes that what is under the basin has potential as big as the best reserves in the United States, where shale gas extraction first took off.

It has long been known that shales  bands of rock anything between 200 and 4000 metres below the surface  harbour natural gas. But it only became possible to get at it in the past decade, thanks to fracking. The technique has been used in mining for more than 40 years to "stimulate'' wells, but has only recently been used as an extraction method of its own.

From Australia to Poland, companies are rushing to find more shale, egged on by governments that see it as a big part of the solution to their energy needs.

Will Southland become part of this new frontier? "It's early days yet,'' L&M's commercial managing director, Chris McKeown,  says. "One thing we've been very careful not to do is make too large a claim for the area.''

The mere idea of shale gas in Southland is hugely exciting -  and also worrying. Previously down-on-its-luck Pennsylvania has become one of the few boom regions in the stricken United States economy.

Motels and stores do a roaring trade as drillers flood in to service the shale gas rigs scattered across the largely rural area, which happens to be atop the richest shale deposits yet discovered, known as the Marcellus play.

Craig Sautner and his wife Julie, from Dimock  in north-eastern Pennsylvania, say their water was contaminated by a gas well that was not on their property. Moreover, their whole region has had its roads torn up and trees torn down to feed the thirst for gas. "We're within 970 feet [nearly 300m] of this thing,'' Craig Sautner says. "I wish they'd never come here.''

The Sautner farm used to have a water well. In 2008, something went wrong at the drilling site.

"Something collapsed ... The gas migrated into the aquifer and got all this junk in our well,'' he says. "There's three types of uranium, barium, chlorine ... There's so much different stuff ... My daughter got in the shower and had to get out and lay on the floor; she thought she was going to pass out.''

Ohai farmer John Hogg  already has coal seam gas test wells on his land.

Extracting coal seam gas is a less controversial process than extracting shale gas.

John Hogg is excited by the natural gas opportunities in the region. As long as the environment is looked after, wells are drilled and cased properly and poisonous chemicals are not used, he would be happy to have wells on his land.
He says he has been told there could be one every 500m within the gasfield.

The thought of that has frightened some landowners, who are worried about the impact on their land price, despite the fees they will be paid for the lease.

"There has been comment from some farmers who don't want drilling because they might be going to sell the property,'' Hogg says. "One good thing about L&M Energy is that they make a good job of roading and the area is not a mess.''

At the southern end of the shale play, in Tuatapere, most people seem to have no idea their backyard could become a big-time gasfield.

Waiau Hotel owner Dorothy Donald  says L&M staff have stayed at the hotel when the company was exploring the basin.

"L&M stayed a couple of months but they don't tell you anything  they've got to keep it secret.''

Academic opinion in New Zealand is that the problems in Pennsylvania are the result of bad regulation and "cowboy'' drilling companies.

Andrew Gorman, a geologist at Otago University, says fracking takes place so far below the water table that contamination of aquifers is highly unlikely.

Industry body PEPANZ agrees. It says the US gas industry claims fracking had nothing to do with the "spectacular scenes of people lighting fire to their tapwater''.

"In these cases, official investigations found that poorly sealed water bores for the affected residents were drilled through shallow coal seams, and methane naturally occurring within the coal seams leaked from them into the drinking water.''

Southlanders have little to fear from shale or coal seam gas as long as the industry is properly regulated, Gorman says.

"There are lots of places where shale gas is being produced - I'd say 99 per cent -  where it's not causing anything. It comes down to making sure companies are doing the right thing.''

For him, poor drilling practice is the main reason for the horror stories. Bad wells leak methane and fracking fluid back up the bore hole, leading to nightmares such as flammable drinking water. "We definitely don't want that happening in Southland,'' he says.

He believes New Zealand's regulatory environment is much stronger than that in the United States, and the drilling companies are more responsible.

"The Pennsylvania example is an ecological disaster area mostly because of bad drilling techniques. In certain parts of the US, regulations and rules are not helping the environmental side at all. You get some fly-by-night company come in that's not done a good job.''

Acting Minister of Energy and Resources Hekia Parata says fracking operations are regulated through the Resource Management Act and the Health and Safety in Employment Act.

"The consent process ensures all exploration and production-related operations are undertaken within industry recognised practice,'' she says.

"Fracking near people's homes and at shallow depths where it potentially could harm aquifers is of ongoing concern to the Government. It is for this reason that the operators are required to get RMA approval.''

Gorman says that if the Waiau Basin proves to be as good as L&M thinks, extraction is inevitable. But that need not be a bad thing. "There are a lot of attractions to me. It's way cleaner than coal _ I'd much rather be producing gas than digging up hills in Kaitangata. Coal is very nasty when you burn it. Simple household heating, for example, is much better with gas.''

If there are proper controls and companies are responsible, Western Southland will not become another Pennsylvania, he says. "I'd certainly want to make sure regulations are in place to make sure shale gas is produced in an environmentally and socially responsible way. You wouldn't want to have a well on every section in the Waiau Basin ... if it turns out to be lucrative it can be a big economic boom to the area.''

John Hogg, who is also on the Ohai Community Development Board, is in no doubt the township needs that boom. All the shops in Ohai are empty. One used to be a clothes store, another the local chippie, one more a lolly shop. The tavern is gone too.

"If it creates a bit of industry and jobs, it would be good for Ohai,'' he says. "Why not use what we've got?''

L&M's next step is to find out if Waiau really has shale gas. McKeown says it will bring in technical advisers from the United States to go over the data it has already gathered.

The specialists will look for the shale's depth, potential gas content, thickness, amount of biological material inside it and maturity, which will determine whether further work is viable.

Ohai will hope L&M finds what it is looking for. But the Sautners and others like them in the United States have only dire warnings about fracking. Since the well collapse, the Sautners now have water trucked in every day. They use it for bathing, washing dishes and everything else.

The Pennsylvania Department of Environmental Protection says the levels of gases and chemicals are dropping, but Craig Sautner says he could never trust the well again.

"I am bitter about it, but I have every right to be. I hope you guys can stop them, I really do. There's no doubt the economy is much better here, but is it worth it?''

The Southland Times