By Steve Goreham
Originally published in The Washington Times.
Last Thursday, the US Department of the Interior released a draft proposal that would “establish common-sense safety standards for hydraulic fracturing on public and Indian lands.” Last Friday, the US Department of Energy (DOE) approved a Liquefied Natural Gas (LNG) terminal in Freeport, Texas. Despite opposition from environmental groups, the Obama administration apparently supports the expansion of the natural gas industry and the controversial technology of hydraulic fracturing. These events are welcome common sense from an administration that is typically deep in green ideology.
Good old Yankee ingenuity has produced a new hydrocarbon revolution. Vast quantities of oil and natural gas can now be recovered from shale rock formations, thanks to enabling technologies of hydraulic fracturing (or fracking) and horizontal drilling. US crude oil production in 2012 was up 30 percent since reaching a low in 2008. Natural gas production is up 33 percent since 2005. Bob Dudley, CEO of BP, forecasts that the United States will be “nearly self-sufficient in energy” by the year 2030.
Fracking is not new, but has been perfected over the last 20 years to allow cost-effective recovery of hydrocarbon fuels from shale. Water and sand, along with a small amount of chemicals, are injected under pressure to fracture the shale and create millions of tiny fissures, releasing the trapped gas or oil. To develop a large producing field, horizontal drilling is used to bore mile-long horizontal shafts into the shale. Fracking is typically used at depths greater than 5,000 feet.
But hydraulic fracturing is under assault from environmental organizations. According to the Sierra Club, “Fracking, a violent process that dislodges gas deposits from shale rock formations, is known to contaminate drinking water, pollute the air, and cause earthquakes.” A 2011 letter from Friends of the Earth, Greenpeace USA, Climate Protection Campaign, and other groups urged President Obama to “halt hydraulic fracturing…until and unless the environmental and health impacts of this process are well understood and the public is adequately protected.”
The draft rule released Thursday from the Department of the Interior acknowledges that hydraulic fracturing can be conducted in an environmentally safe manner. It calls for disclosure of chemicals used in fracking, assurances of well-bore integrity to prevent leakage of gas and fluid into ground water supplies, and confirmation of a water management plan for disposal of water and fluids used in the fracking process. Indeed, fracking has been used more than 500,000 times over the last 50 years without incidents of water contamination when proper safeguards were employed.
The hydrofracturing revolution has created a glut of natural gas in the US market. Prior to wide-scale use of fracking, natural gas prices reached $15 per million British thermal units (Btu), and port facilities were being constructed to import LNG. By 2011, prices had fallen to $4 per million Btu and import terminals sat idle.
Unlike crude oil, which is priced and sold in a global market, natural gas is priced and sold regionally. To date, the fracking revolution has been a US phenomenon, with other nations slow to join. While US gas prices have dropped to under $4 per million Btu, Europe’s prices remain above $10, and the price of imported LNG in Japan is above $15.
US producers now see an opportunity to liquefy the gas and ship it to Europe and Japan. Twenty applications have been filed with the Department of Energy (DOE). The approval last week of the Freeport export terminal in Texas is the first since 2011. The $10 billion terminal plans to export up to 1.4 billion cubic feet of natural gas per day, or about two percent of annual US consumption.
Environmental groups have criticized the approval. “Exporting LNG will lead to more drilling―and more drilling means more fracking, more air and water pollution, and more climate fueled weather disasters like last year’s record fires, droughts, and superstorms,” according to Deb Nardone of the Sierra Club. Nevertheless, it appears that the Obama administration will support hydraulic fracturing and the growth of the natural gas industry.
Shale gas booms in Texas, Louisiana, and Pennsylvania have created tens of thousands of jobs. Low natural gas prices are attracting global chemical firms to build plants in the US. Thousands of additional jobs and tax revenues can come from LNG exports. Sound energy policy demands that fracking and export of natural gas be allowed, if environmental safeguards are met.
Steve Goreham is Executive Director of the Climate Science Coalition of America and author of the new book The Mad, Mad, Mad World of Climatism: Mankind and Climate Change Mania.
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These events are welcome common sense from an administration that is typically deep in green ideology.
Ha!
I thought you were going to say the equally correct “…from an administration that is typically lacking common sense.”
@Matthew R. Epp
“Don’t let your fears and politics rob you of the truth. Fracing is safe virtually every time.”
Google auto corrects “fracing” to “fraking”. Its not the fracking at depth that’s the problem, but improper disposal of the hazardous waste water used in the process. It’s always the cheaters cutting corners to save a buck that require all the regulations/laws in an attempt to keep them in line with the threat of fines & punishment. Just imagine how efficient and inexpensive life would be without them. A primary example is the 2008 meltdown as the result of gradual dis-assembly of banking regulations (1933 Glass-Steagall Act). There are many other examples over the decades and it appears that industry suggestions as to which regulations should be removed/modified are almost always the ones that they are ready to take advantage of, many times in what would certainly be unethical but also criminal. Unfortunately (or maybe on purpose) legislators appear to have a historical loss of memory when considering regulation reduction, but I don’t suppose that political contributions have anything to do with it.
Matthew R. Epp, P.E. says:
May 23, 2013 at 5:10 am
In the KS-OK area of the shale fracking, salt water disposal is of more concern than the actual fracking.
To Arthur 4563
:
“It is spelled: F-R-A-C-I-N-G. There is no ‘K’ i the word fracturing. If you want to use our term, please use it correctly.”
It is being used correctly, and the spelling you claim is bogus in our language – a hard “C”
cannot occur when followed by an “i”. If you want a K sound, you must use a K”.
Our language, as you note, icludes MANY examples of ‘words’ which derived from industry-specific technical terms. Does your rule occur in the grammar book following “i after e except after c”?
But I should thank you for establishing the new accepted norm that an industry which invents a term is not allowed to devise its spelling, but, rather must adhere to a set of orthographic guidelines which allow for words like through, to be substituted by thru – even in public signs.
Thank you Mr. Grammar for correcting an industry which has used its own term for 60 years
Morgo and rocky road
The ‘experts’ who might disagree about the safety of fracing do not matter. First, no-one who is actually an expert in oil and gas drilling concludes there is a risk to potable groundwater supplies, but we do not need to rely on expertise. We have 60 years of hard data that document the safety of the method. Please, let’s not take the route of AGW activists and ignore the actual data in favor of ‘expert’ opinions. And while I am here, the statement that there are a lot of experts who think fracing is dangerous sounds a lot like the beginnings of yet another consensus debacle.
Please stop it and educated youself. There are public records of every well drilled and performance tests and hydraulic communication tests and potable water supply tests, and micro-seismic mapping of each frac stage in thousands of wells, and ….. ad infinitum.
Have these ‘experts’ sift the data as the industry does and publish their findings to document that there has been a single impact to potable groundwater supplies as a result of hydraulic fracturing. They won’t be able to, because such data synthesis has been and continues to be done continuously and there has been no evidence of ANY comunication from deep reservoirs to potable groundwater.
What we see so far is a pathetic parody of AGW arm-waving with no substance behind it.
The Obama administration is still sitting on the Keystone XL pipeline. Which, if he had his druthers, our current President would never allow to be built.
I’ll believe the news about fracking and LNG exports when his administration actually allows each to happen.
You would think that people like Deb Nardone would be embarrased by such a display of their ignorance, delusion and mean-spiritedness, but then the greenies have no shame, and reason and facts simply don’t play with them.
If I remember correctly the correct industry term and spelling is frac’ing (a contraction of the word fracturing). That explains the spelling and the pronunciation
The problem that nat gas producers face is that the current price is about at the break even point for conventional drilling . Hydraulic fracturing is more expensive , so producers are either losing money or just keeping their heads above water . In other words , gas is too cheap to be worth producing so production will fall and prices will rise .
P Walker says:
May 23, 2013 at 11:02 am
“The problem that nat gas producers face is that the current price is about at the break even point for conventional drilling . Hydraulic fracturing is more expensive , so producers are either losing money or just keeping their heads above water . In other words , gas is too cheap to be worth producing so production will fall and prices will rise .”
Not necessarily!
http://www.aei-ideas.org/2013/04/america-is-producing-more-natural-gas-today-with-fewer-than-400-active-rigs-than-in-2008-with-more-than-1600-rigs/
America is producing more natural gas today with fewer than 400 active rigs than in 2008 with more than 1,600 rigs
…”
5. At the same time that the number of active gas rigs has declined by more than 75%, the amount of natural gas produced has continued to increase to record levels (see red line in middle chart). The bottom chart above shows the significant increase in the amount of natural gas produced per active rig over the last five years. In the first part of 2008, there was an average of about 1.4 billion cubic feet of natural gas being produced monthly for each rig, and now about 6 billion cubic feet of gas is being produced monthly per rig. In less than five years, there has been more than a four-fold increase in the amount of gas per rig.
In a previous CD post, a recent Forbes article was quoted that explained why we’re getting more gas from fewer rigs – because energy companies are “getting better over time at maximizing recoveries from each well” and those efficiency gains translate into the significant increases in gas output per active rig illustrated in the chart above. Increased gas output with fewer rigs also translates into lower production costs for domestic producers and helps to offset some of the loss of revenue from lower gas prices. The fact that we’re able to continue to produce record amounts of natural gas with only 389 active rigs (which is 25% of the active rigs that were in use at the peak in 2008, and 1,217 fewer) is another part of the amazing energy story in America, which came about because of the breakthrough drilling technologies and the many “petropreneurs” who used those revolutionary techniques to rejuvenate US oil and gas production”
Dave Wendt
@ur momisugly 11:41 am
That’s not what my general partners and my royalty checks tell me . Check the comments at the end of your link .
Finally something sensible out of the Obama administration.
Money talks / its the economy stupid / etc. People vote with their pocketbooks. No doubt the US energy boom has made the Great Recession less worse. Politicians are slimy but are normally also wily.
To Dave Wendt: Quite right. In our production area, at each of our successive wells we get better yields than we did at the previous wells within the same uni -twe learn to maximize recovery at each locale. We are operating at the cutting edge of technology optimization. The technology has been proven safe, and we are now working to increase the yield per linear foot of well drilled – and the results are impressive.
P Walker says:
May 23, 2013 at 12:09 pm
Dave Wendt
@ur momisugly 11:41 am
That’s not what my general partners and my royalty checks tell me . Check the comments at the end of your link .
Well I did say “not necessarily”. That zerohedge post does seem to make a devastating case, but I find some rather glaring weaknesses in his analysis. Primarily because he bases most of it on a break-even price for gas production of over $8 from several years ago. More up to date numbers I’ve seen suggest somewhat different numbers
http://www.businessweek.com/articles/2013-03-22/natural-gas-prices-and-profits-have-come-roaring-back
…”This new pipeline infrastructure means that Pennsylvania’s Marcellus shale is now the largest-producing formation in the country, pushing it past the Haynesville formation in Texas, according to a report from IHS (IHS). It’s also made Marcellus more profitable to operate in than Haynesville. According to calculations by Laurent Key, a natural gas analyst at Société Générale (GLE), the average break-even price for Marcellus dry gas (as opposed to wet, which contains ethane and propane) is $3.08, vs. $3.21 in Haynesville.”
It sounds like you definitely have a much better personal knowledge of what is going on in this area than I do, so I would certainly grant a strong possibility that you are correct. But I have been around for a while and although nothing in life is ever 100%(except death and that other thing) one thing that has been very consistent throughout my life is that doomsayers about energy production have almost always been wrong.
If, as this post suggests, The Bamster and his minions are actually going to get out of the way, even a little bit, it can’t help but improve the situation. Although I’ll believe that when I see it. Actually it will probably be quite some time after they really take action on this before I’ll truly be willing to grant any credence to this announcement.
Oil and gas production are marginal commodity businesses (most of the time). Once you have sunk the cost, it is really, really hard to shut your well off – at that point it doesn’t really matter if you are making money or not, you just about have to pump, unless the well barely marginal (stripper wells, etc). What a low price does is slow down drilling. You saw that last year with Chesapeake shifting drilling resources away from gas to oil when NG briefly to $2 a therm. What these LNG export terminals mean is the price should reflect world demand and stay high enough to keep the producers profitable. You want the oil companies to make money. They won’t be in business if they aren’t.
Here’s another interesting column about drilling efficiency improvements
http://oilandgas-investments.com/2013/investing/drilling-efficiency-lowering-price-natural-gas/
…”But the big reason is drilling efficiency. When I go to conferences, I tell the crowd—fracking isn’t improving every year. It’s not improving every quarter. It’s improving every month. That shows up in the reduced time it takes to drill a well now, thanks to improvements in horizontal drilling techniques, and in the amount of gas each well is able get out of the formation—thanks to improvements in hydraulic fracturing.”…
“In one of his blog posts last year, industry expert Rusty Braziel of RBN Energy published some statistics from Southwestern Energy, which provided in-depth numbers on its drilling operations in the Fayetteville shale in Arkansas and Oklahoma.
Over the course of five years, the company’s average drilling time per well plunged from 17 days in 2007 to only 8 days in 2011, falling by more than half. In just one year from 2010 to 2011, drilling time dropped more than 27 percent. Over the same five-year period, the later length of wells grew by 82 percent, and initial production more than doubled, rising from 1.65 million cubic feet per day in 2007 to 3.3 million cubic feet per day in 2011.
All the while, the cost per well hovered around the same level, dipping 4 percent from 2007 levels.
So for the same costs, drilling rigs were producing more than twice as many wells, with more than double the initial production. That means the initial production additions per rig grew by 338 percent in half a decade. If the rest of the energy industry saw the same kinds of improvement over the same period, even while cutting rig counts by three-quarters from their 2008 peak, we would expect to see a modest rise in production from simple efficiency.”
arthur4563 says:
May 23, 2013 at 5:33 am
“It is spelled: F-R-A-C-I-N-G. There is no ‘K’ i the word fracturing. If you want to use our term, please use it correctly.”
It is being used correctly, and the spelling you claim is bogus in our language – a hard “C”
cannot occur when followed by an “i”. If you want a K sound, you must use a K.
__________________
Let’s go ask Jean Luc what he thinks.
Come out to the oilpatch and see Tom and Bill’s Excellent Frac Service and Tiny’s Frac Tank Rentals, etc. Ouch, did that rib just fracture from laughing so hard?
Dave ,
The price I was referring to is about four bucks per mcf , so eight dollars is way high . Also , I believe that four dollars is the break even price for conventional drilling – coal bed methane is a little less . It is my understanding that hydraulic fracturing is more expensive , although it sounds like it’s coming down . Even so , over production leads to a glut with an attendant drop in price . Hence , production must eventually slow or demand must increase to insure that the boom doesn’t go bust .
Actually it was more like “Prove it or shut up”, but the result was much the same.
@Luther Wu: The argument wasn’t over “frac,” which would normally take a hard C sound, but over “fracking,” because “a hard “C” cannot occur when followed by an “i”.”
Oops–I meant “… over ‘fracing’ …”because “a hard “C” cannot occur when followed by an “i”.”
Here’s an article posted today that describes sharply rowing worldwide interest in natural gas for transportation and cites a recent official US report that projects a tremendous growth in LNG for heavy trucks in the US.
And here’s the link: http://seekingalpha.com/article/1458181-natural-gas-the-fastest-growing-transportation-fuel-in-the-u-s
WOO HOO!
The other shoe just dropped!
Remember Chris Horner’s articles??? Gore’s Inconvenient Enron and Lessons from the global warming industry
Another article: Enron Sought Global Warming Regulation, Not Free Markets
So now that the EPA has shut down 10% or more of the electric generating capacity, the 2015 auction price has sky rocketed. The market-clearing price for new 2015 capacity – almost all natural gas – was $136 per megawatt. That’s eight times higher than the price for 2012, which was just $16 per megawatt… For the northern Ohio territory served by FirstEnergy, the price is a shocking $357 per megawatt….These are the actual prices that electric distributors have agreed to pay for new capacity
The actual plan was to put in place smart meters:
And the Financiers were jumping for joy:
However the EPA and Department of Energy drastically underestimated the effects of the new EPA rulings. Many more plants are closing than anticipated.
To keep the grid stable (Wind and solar DESTABILIZE THE GRID) electric companies were going to use ‘smart meters’ to shut down residential and small business electricity with ‘rolling blackouts’ so Factories can have a constant supply of power.
ERCOT is in Texas where there is a lot of solar and wind power and is already using that type of system because of rolling blackouts.
Demand Response is the code words for Smart Grid. What they neglect to say is the way this is Demand Response works is with Smart Meters This allows residential electricity to be turned off so the system can be balanced. However customers that figured out exactly what Smart Meters do have raised a big stink.
It gets a bit rough for a politician trying to keep the necessary image that you “Represent the interests of the people” while passing laws that not only rip them of but then skewer them and roast them over a fire. Sooner or later people figure it out, and it is the politician that is in line for a introduction to Madame Guillotine not the guys pulling his strings.
@Tom G(ologist):
As I don’t want to offend “the industry”, yet find the clear visual of your spelling looks like it would be pronounced “frassing”, given normal English pronunciation rules, I shall start adopting the term:
Fraquing
as a less visually confusing alternative… that doesn’t have a “k” in it either …
😉