Fracking's Vindication

Brian Hicks

Written By Brian Hicks

Posted September 20, 2013

We know the whole fracking issue has been mired in controversy – especially since the shale oil boom has overtaken North America. Governments in nations across Europe – including Poland, the U.K., and Lithuania – are also looking to jumpstart shale fracking campaigns, but officials and companies have faced opposition from local communities and environmental groups.

super frackHowever, fracking has added tremendous value to North America – it’s currently one of the primary methods to unlock tight oil and gas reserves from shale rocks. Fracking has brought in plenty of revenue to state coffers, enhanced previously impoverished areas like South Texas, and has played a role in growing the national economy by adding a surplus of jobs in and out of the energy industry. And it is the reason North Dakota has been virtually untouched by the recession.

Fracking has been a hot issue, but there are new technologies that will minimize harmful effects, and the drilling practice is not as harmful as it has been perceived.

Research by the University of Texas revealed that methane leaks from shale gas wells were lower than expected. The EPA believed 1.2 million tons of methane were leaking from wells, but the study found that 957,000 tons is a more accurate number. The EPA also measured the methane leakage rate at around 1.5 percent, but this is essentially an educated guess steeped in engineer assumptions.

In fact, methane capturing technologies, known as completion, recovered 99 percent of escaped methane from new wells. Although some companies are using completion technology, the EPA will not mandate its use until January 2015 – a measure that could convince anti-fracking states to make the plunge into shale production.

New York has a moratorium on fracking, but there are signs that the state may eventually lift its ban in order to unlock natural gas from the rich Marcellus Shale. Green completion technology could certainly be an asset in convincing states like New York, and countries like France, to adopt fracking operations.

The study itself was conducted from nine volunteer energy companies from 489 well sites, The Washington Post reports.

The study was funded by the Environmental Defense Fund, and the research has been the subject of scrutiny from the anti-fracking community. But the study was published in the Proceedings of the National Academy of Sciences – one of the most prestigious science journals.

Other sponsors of the study include Anadarko Petroleum (NYSE: APC), Chevron (NYSE: CVX), Shell (NYSE: RDS-A), and Exxon Mobil (NYSE: XOM) – some of the largest producers of shale gas in the U.S. and abroad – which is why some critics contend that this is a biased study. But the overall consensus is that the work is unbiased and independent. The nine companies allowed their test wells for study and played no role in the data or analysis.

While the study is groundbreaking for supporters of fracking and natural gas, researchers did not examine natural gas that is transported through pipelines, which is why the EDF intends to finance 16 different studies to examine natural gas infrastructure in America. And the examination of 489 wells only accounted for 2 percent of given wells in a year.

Nevertheless, this provides a new angle to the fracking debate, and it will give a boost to natural gas, which has been winning the energy battle against coal.

Coal vs. Natural Gas

In addition to fracking, the study gave positive support to the natural gas sector. However, it gave a less than stellar review of coal – stating that natural gas is a cleaner and more efficient way of burning energy. Coal has already gone through a bad rap as of late due to lower demand around the world and more stringent regulations from governments across Europe and even China.

Although natural gas is known for its methane and CO2 emissions, coal is known for dirtying the air through soot and mercury contamination, along with sulfur oxide and nitrogen oxide.

But this isn’t to say coal is never going to catch up to natural gas in the clean-burning realm. There are technologies that can produce clean coal, and researchers have found ways to burn coal without emitting harmful pollutants.

Still, the technology is years away, and it will be quite costly for coal producers to adopt these new methods. At a time when so many coal miners and companies are contending with cutbacks and layoffs, the industry is not currently suited to make drastic investments.

Some utility companies across the country are already supplanting coal with natural gas because of low prices. And because natural gas prices are at cheaper levels, there is growing demand from manufacturing facilities that need gas to fuel their power plants.

Natural gas may be a fossil fuel, but its clean-burning capacity makes it a more viable source of energy – especially in an age of harsher regulations from governments around the world.

In fact, some critics maintain that the increased use of natural gas will hamper the growth of renewable energy.

But this is actually good news for natural gas, since it means the commodity could compete with renewable sources like solar – one of the fastest growing markets in the energy field.

Who Stands to Benefit from this Study?

Shell, Chevron, and Exxon Mobil have been the most heavily involved in shale gas operations – so much so that they have faced criticism from investors and analysts for focusing too much on natural gas and not delving enough into shale oil, as smaller and local companies have done.

The study will also enhance service drilling providers like Halliburton (NYSE: HAL) – a company that has been working on well detection and completion technologies. And it could help natural gas demand, but the low price level is still an issue that could hamper production. Currently, natural gas prices are below profitable levels, hovering around $3.64.

However, the study will enhance the cause for natural gas once prices begin creeping up, and prices have been indeed inching up slowly.

In the meantime, watch out for shale oil and gas deposits like the Bakken, which is adding to North Dakota’s growing production rate of over 800,000 bpd – soon to be 1 million barrels a day. Green completion technology can certainly be useful in North Dakota – a state that burns a massive amount of flared gas into the atmosphere.

The Eagle Ford shale of South Texas is also hugely profitable, along with the Permian Basin of West Texas. Underneath the Permian is the Cline shale, which is said to be a behemoth of rich resources.

Other new shale plays to look out for are the Niobrara shale and the Mancos shale out West.

Despite the criticism, fracking is still going strong. And there are plenty of shale hotspots around the country waiting to be explored and tapped into.

If you’re looking for a worthwhile investment, domestic shale oil and gas is a great place to park your dollars.


If you liked this article, you may also enjoy:

Angel Publishing Investor Club Discord - Chat Now

Brian Hicks Premium


Hydrogen Fuel Cells: The Downfall of Tesla?

Lithium has been the front-runner in the battery technology market for years, but that is all coming to an end. Elon Musk is against them, but Jeff Bezos is investing heavily in them. Hydrogen Fuel Cells will turn the battery market upside down and we've discovered a tiny company that is going to make it happen...

Sign up to receive your free report. After signing up, you'll begin receiving the Energy and Capital e-letter daily.