Friday, July 20, 2012

The Story of Guar is a message for Climate Alarmists: Beware of what you wish for; you may actually get it!

The recent issue of the Time magazine carried a story how the US is literally praying for a good monsoon rains for India.  Almost acting on cue, Indian and global media then very predictably picked up the same story with great gusto!

Well what have we here? An extremely self-centred US actually praying for good weather for us in India???

Going beyond the headlines, we will find it is not India per se of the US focus. Their heart was found bleeding only for Rajasthan and that too, only Western Rajasthan to be specific.

US strategic interests usually revolve tightly around their commercial interests. So what could the Great Thar Desert region of Rajasthan offer the US that they are desperately praying for good rains over it? 
The answer appears an open secret. It’s because the US fracking industry relies heavily on guar beans. Every US gas well that’s fracked requires about nine metric tons of guar gum! Multiply that and you will find the profits of trading in guar is mindboggling.

It so happens that India produces 80% of Guar, in the world and Rajasthan accounts for 70% of this. Guar (scientifically called Cyamopsis tetragonaloba and Cluster Beans in English)  is so hard it can crack human teeth--a quality that makes it ideal for fracturing shale rock to extract oil and gas.
The US oil industry is expected to import at least 300,000 tonnes of guar gum, and this  accounts for 75% of India’s total guar exports this year.

The districts of Barmer, Jaisalmer, Jodhpur, Nagaur, Churu, Bikaner, Ganganagar and Hanumangarh of Western Rajasthan constitute the most significant Guar growing belt in the world. Guar is a drought hardy (suitable for dry and arid/semi-arid land) legume grown by poor farmers on marginal lands in Rajasthan, Haryana, Gujarat and Madhya Pradesh.  Bad rains mean a poor guar crop and this means less guar India is able to export to the US. 

Part of the produce in the past was eaten by farmers and the poor who could not afford anything else. It however provides highly nutritious food and dishes such as guar ki phalli were common part of the diet of Western Rajasthan, at least till recently. For use as a vegetable, pods must be picked when young, before they become hairy and woody. They are eaten most often as fried French bean or as a curry vegetable.
Partly, being leguminous, guar is also in the past ploughed back into the soil as a green manure providing an excellent source for augmenting nitrogen and organic matter in the soil.  Guar meal (mixture of husks and germ) besides is rich a source of protein. It is widely used for cattle as well as poultry feed. Toasting of guar meal improves its nutritive value. It can be used up to 10 per cent in poultry diet and can replace up to 100 per cent protein supplements, such as groundnut cake, in cattle feed.
Partly, it was also used in food products like ice cream toothpaste, pet food and sausage skin due to its excellent natural binding and thickening properties.

Despite all these multi-faceted traditional usage, till a few years back, it commanded a price pathetically low as Rs 1,000 a quintal. For these poor guar farmers, climate alarmism was probably the best thing that could happen to them. As climate hysteria touched feverish heights, the US that refused to sign the Kyoto Protocol, felt nevertheless compelled to act to curb their greenhouse emissions. They took to fracking natural shale gas in a very big way as an alternative to coal and petroleum  In a hydraulic fracturing, "fracturing fluids" or "pumping fluids" consisting primarily of water and sand are injected under high pressure into the producing formation, creating fissures that allow resources to move freely from rock pores where it is trapped.

Shale gas is natural gas produced from shale formations. Gas shales are organic-rich shale formations. In terms of its chemical makeup, shale gas is typically a dry gas primarily composed of methane. Three factors have contributed to its rapid development of US gas shales: advances in horizontal drilling, advances in hydraulic fracturing, and, perhaps most importantly, rapid increases in natural gas prices in the last several years as a result of significant supply and demand pressures.

The increasing dependence on shale gas by the US produced dramatic outcomes. US greenhouse emissions are poised to drop to 1990 levels by year end. This is an extremely impressive achievement as compared to “Green” Europe whose greenhouse emissions continue to annually increase despite switching over to renewable energy.

The fundamental economic laws of supply and demand kicked in as a result, and as supply shot up higher, energy prices fell. This enabled the US to cut drastically its import dependence on crude, which is one of major reasons why global crude prices are on the retreat. US has already saved consumers more than $100 billion as shale driven energy comes in extremely cheap. The shale gas cost has been estimated to be between $6 per mmbtu (Million British Thermal Units) to $9 to 10.

The change in the US energy mix has inbuilt into its economy, a very high capacity to bounce back as the world’s most important economic powerhouse, as its average energy costs have declined substantially boosting up is global economic competitiveness.

The global shale gas reserves are estimated about 16,110 TCF or 456 TCM, compared to 187 TCM for conventional gas. It is assumed that nearly 40% of this would be economically recoverable. The United States Geological Survey (USGS), had estimated the potential shale gas reserves in India at 63 tcf's (trillion cubic feet) out of which 50% is probably recoverable. This makes India perhaps the 4th largest reserve in the world. The reserve could be found across the Gangetic plain, Assam, Rajasthan and many coastal areas. The size of this estimated reserve could meet a huge chunk of our energy needs for hundreds of years, at current consumption rates.
The primary differences between modern shale gas development and conventional natural gas development are the extensive uses of horizontal drilling and high-volume hydraulic fracturing. The hydraulic fracturing mixture is 95 percent water, 4.5 percent sand and 0.5 percent chemical additives formulated to promote gelling and cleaning. Gelling agents, based on water-soluble polymers, adjust fracturing fluid viscosity. The most cost-effective solution is Guar.
The dramatic rise of guar powder, which has climbed from $US4 / $US5 per kilo to $US30 within 18 months, and a limited supply of beans are creating a headache for the oil industry. Several American oil companies have been forced to halt drilling because of guar shortages.  It said that guar gum now represented as much as 30 per cent of the cost of fracking, or hydraulic fracturing. About nine tonnes of the material is needed per well. India's National Commodity and Derivatives Exchange (NCDEX) banned trading of guar futures in March this year after prices rallied nine-fold to a record US$1,680 per 100 kilograms. Despite this, prices still continued to shoot up. 

The worry is that guar production in Rajasthan depends entirely on a good monsoon. So far this year rains have been deficient. Currently, the rainfall deficiency stands at 40% of its long period average (LPA). However, farmers have until mid-August to catch up and they plan to sow a third more land with guar this year than they did in 2011.

Guar has its place in the range of water soluble polymers, however, it is neither unique nor the only solution. The industry is already desperately looking for substitutes. Still, the U.S. energy industry remains heavily dependent on Indian imports since guar substitutes - such as cellulose gum derived from cotton fibre -- have not proven as successful. Some 98 percent of U.S. guar imports come from India. Calvin Trostle, an expert on the legume with the Texas AgriLife Research & Extension Center in Lubbock, Texas told the media:
"Nobody has come up with something synthetic that works as well.”
Technology could change to eliminate or reduce dependence on guar but not much has come out of it.  Trican Wells Services of Calgary, for example, is looking to introduce a new hybrid fluid system that will reduce its guar usage.
“We have started to see a reduction in guar prices and we expect guar prices to continue to decrease throughout the remainder of 2012 as a result of the development of hybrid systems and guar substitutes, and the new guar crop that is expected to increase supply later in 2012.”
Beware of what you wish for; you may actually get it!

Climate alarmists have been long clamouring for reduction of greenhouse gases and been highlighting that earth has long passed its “tipping point”. Never mind that they had been continuously raising the bar of what actually constitute the “tipping point”. It is now considered by them as 350 ppm of CO2 in the atmosphere, this when we are very near the 400 ppm mark. Except for the US who are actually succeeding in reversing their greenhouse gases to 1990 levels, no other country on earth has similarly done so. At the most, they may have slowed down their greenhouse emission growth rates.

So instead of celebrating US achievement, we find climate alarmists are united in their condemnation of the US and their fracking solution. What are their grouses? We review:


The flip-side is that US has brought down energy costs that is a boon for consumers and makes their economy more globally competitive; significantly reduced their dependence on expensive imported crude and natural gas that has a softening effect on global prices for these energy resources; and in the process reduced their greenhouses to 1990 levels. 

The flop-side is that fracking arouses the wrath of environmentalists and others, who appear to have all sorts of misgivings of its impact on the environment:
1.  They claim that in more and more areas across America, families are discovering to their astonishment that their “water” has turned “combustible”.
2.   Up to seven million gallons of water are needed to frack a single well. In areas of shortages and drought (increasing in scale and frequency all across our country), this accentuates water shortages.
3.  Also, getting water to the wells from distant sources requires trucking or pipelines, which create their own sets of environmental, public nuisance, and other costs.
4.  Chemicals used can contaminate groundwater and soil in the neighbourhood of the well. This amounts to water wastage. One well can recover more than a million gallons of the water shot down its pipe. It comes back up contaminated not only with heavy doses of chemicals that were added to the fracking fluid, but also with cancer-causing chemicals and radioactive elements that occur naturally deep in the Earth, surfacing as a result of the fracking process. This is despite industry’s clarification that the chemical cocktail in fracking fluid, is a mere one-half of one percent of the mix, with the rest consisting of water and sand.
5.  Among the cancer-causing and environmental toxins mixed into fracking fluid are acrylamide, benzene, naphthalene, ethylbenzene, toluene, and xylene. In addition, the deep-earth contaminants brought to the surface in wastewater include arsenic, lead, chromium, barium, and strontium (plus radium-226 and other radioactive materials).
6. Environmentalists have also linked earthquakes to increased fracking though scientific evidence to base this claim is still lacking.

The flip-side is that in India's northern desert states, farmers are scrambling to harvest as much as they can of a bean with the power to lift them out of poverty. Farmers could get as much as Rs 300,000 ($5,400) - five times more than his average seasonal income - from selling the beans he planted on five acres (two hectares) of sandy soil in Rajasthan state. And the new prosperity is visible in form of brand new houses construction; purchases of vehicles, including tractors and increased disposable income that spurs rural consumer spending.
The flop-side is that it has created new socio-economic problems:
1.   Guar meal is less available, adversely impacting cattle and poultry products

2.   Production costs for guar cultivation have significantly increased with traders buying guar seed at 305 rupees ($5.5) a kg, a 10-fold increase from a year ago.

3.   New hybrids have been developed and being rushed to be adopted in farmer fields whose impact on the environment is uncertain. However, guar being a leguminous plant, it should logically should not have any adverse effect. Hybrids usually are more water dependent so its adoption may increase ground water depletion in arid and semi-arid regions of the country where it is grown. 

Guar requires to be watered twice and the pesticide usage is not more than double, depending on humidity levels. Further, being a leguminous crop, it improves soil fertility by nitrogen fixation. By using 500 grams of seed per bigha, one can get up to 3 quintals of guar yield per bigha. Guar can be harvested by a machine in a day, thereby saving precious time for timely sowing of the next crop.

4.   Industries that traditional use guar, such as paper, food processing and textiles, have already turned to alternative but these are relatively costlier than what guar used to cost, and as such brings with it a certain degree of inflationary impact.

Higher prices are inducing farmers in India and Pakistan to plant more guar. Despite the expanding supply, however, many analysts believe that guar prices will remain high for the foreseeable future. The demand will increase not only from the US but all over the world, with country after country scurrying to enter fracking to meet their energy needs. Very shortly, we can expect India also enter this race. 

The net impact is that it can reduce food crop cultivation area drastically and create food commodity inflation. Crops vulnerable to be displaced by guar include cotton, jeera, groundnuts etc

Why guar did not in the past eat into food crop land could be attributed to the fact that guar flourishes in poor soils in arid and semi-arid climates where other more crops will not succeed. Because of its low price for its produce in the past if the land is improved with irrigation, then cash crops such as cotton, soybeans, and other grains will displace guar, since these crops use to have a higher value. But this is no longer true anymore. Provide irrigation and the chances are that guar farmers will grow even more guar for still higher profits. 

To cash in on the guar rush, Vikas WSP, India's largest producer of guar gum, is distributing, free of charge, seeds worth more than 900 million rupees to 100,000 farmers and giving them guaranteed returns, said B.D. Agrawal, its chairman and managing director to the media. The net result is that guar is expanding outside its traditional cultivation areas such as Punjab, Andhra Pradesh and Haryana - the granaries of the country.

5.   Maybe you think this doesn’t affect you, because you don’t see any fracking activity in India. With the government shortly permitting international bids for the shale fields in the country, the process has been initiated for the entry of fracking into the country. The Oil & National Gas Corporation (ONGC) has already succeeded pilot fracking on one well in Mumbai Highs. The US has presently the state of art fracking technology and India has signed a bi-lateral treaty with the US on cooperation on this front.
Fracking can be expected to emerge as one of the top environmental problems within the country and it joins the long list of “climate solutions” including biofuels, renewable energy etc that have blown back on the faces of climate alarmists - the cure being worse than the disease. 

It looks as if they are not aware of the wisdom of the old adage - Beware of what you wish for; you may actually get it!

1 comment:

  1. Thanks for informative report .
    I have doubt regarding the demand for guar gum used in oil fracturing.It is far less than estimated 3000000 tonnes

    Mahendra kawar