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The Fracking Truth

By now you have heard the term and probably know a little bit about fracking. But here is a little summary to refresh your memory.

Fracking is the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside. Water, sand and chemicals are injected into the rock at high pressure which allows the gas to flow out to the head of the well.

Now that everyone is caught up, let’s ask the question that always gets brought up if fracking is mentioned. Is it good, or is it bad? It is up for your own interpretation. There are facts that support both. One truth is that fracking has been used commercially for 65 years. Today, the combination of advanced hydraulic fracturing and horizontal drilling, employing cutting-edge technologies, is mostly responsible for surging U.S. oil and natural gas production.

 

Pros

- There are enough fossil fuels “locked” in bedrock shale formations under North American soil to make the United States energy independent, and a net exporter of oil and gas, in the near future.

- Tapping those energy sources would make the United States less dependent, economically and politically, on unstable countries such as Venezuela and the Middle East. It would also enable the West to be less dependent on Russian natural gas, which Vladimir Putin currently uses as a political lever.

- The natural gas industry claims that fracking is safe because the shale formations lie far below the water table and pose a minimal threat to groundwater. They also claim that drilling for oil and gas is nothing new: we’ve been drilling for oil and gas for decades.

- Using natural gas to heat our homes and power our cars releases far fewer carbon emissions than coal. Proponents describe the growing natural gas industry as an environmentally pragmatic “bridge fuel” that will buy time until we can harness the power of wind, solar and hydro on a mass scale.

 

Cons

- Because fracking involves pumping a concoction of water, sand and chemicals into the ground to break apart the bedrock, environmentalists and private landowners worry that those chemicals could reach, and poison, the groundwater.

- Companies are not required to disclose the chemicals they use, or the formula of the mixture, in the process. That makes it difficult for local residents, or first responders, to prepare for an accident or emergency, and difficult for scientists to gauge the threat posed by the chemicals.

- Water for fracking is typically transported to well sites using heavy trucks, which turn pristine rural areas into industrial highways. The fracking, itself, is conducted day and night, causing both noise and light pollution for some nearby residents.

- The stakes are rising. According to environmental groups, energy companies are wanting to allow “resource play hubs”, (multiple drilling wells from the same site) which could exponentially deplete the local water supply.

 

So now that you have some facts for each side, we want to hear from you! Are you pro or anti frack? Comment below with your views, let’s get the conversation flowing!

 

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Comments

Let us look at the logic here.Yeah, but a gain of 65% off a historical low is still $3.05, still down nrlaey 50% from last year.True but trends in commodities have tendencies to run for quite some time before they turn. Besides, this has been an abnormally hot summer. Electric demand has risen due to more people running a/c, which means more demand for natural gas in the electric producing sector.Also true but don't you remember that a very warm winter cut demand for heating? Your heating bill fell mainly because of the change in temperature, not the tiny bit of the price decrease that the utilities passed on. And are you really surprised Texas natural gas production is down? Most of what is making its way to the natgas market is the byproduct stuff that comes from oil drilling. Something like 30% of rigs are producing natural gas. Can't make money at $1.50 per.That has been my argument with you and Mark. Shale gas can't make money at less than $7.50 if the Chesapeake statements were to be believed. (That is all in costs, not the costs that do not include depreciation, leasing, etc.) If prices are to remain above $3.00 (the low end of BE point), you'll probably see some rigs come back on-line, but we'll likely see this oversupply remain, simply because we have so much inventory to get through first.Why would rigs come on line when the core areas need more than $5.00 gas to have a chance of making profit and the average well is not economic under $7.50? Shale gas has been a disaster for the industry and has wound up destroying capital. Do you really think that investors are eager for another bout of capital destruction?No matter what the narrative that Mark is pushing I can't see any economic logic in having companies that do not have to in order to keep from going under by writing down their leases spending any money on new gas production. The simple fact is that there is no way for natural gas production to fill the growing demand that is added by closing of coal generation plants without a significant increase in prices. And I suspect that the next time the shale companies act they will demand fixed cost contracts from drillers and a fixed price from purchasers in order to guarantee sufficient profit to try to stave off bankruptcy.

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