What’s the “word”? Is “fracking” safe? Should it be allowed?
Texas Urges U.S. to Leave Gas Fracking Oversight to States
By Joe Carroll - Jun 2, 2011 11:57 AM CT
Rex Tillerson, chief executive officer of Exxon Mobil, called last week for the federal government to leave fracking oversight to the states. The top energy regulator in the biggest natural-gas producing state urged federal officials to keep their hands off drilling techniques that environmental groups say contaminate drinking water. . . .
“It’s geologically impossible for frack fluid to migrate into the water table” because the process occurs too far underground, Jones said today. . . .
Exxon, the largest U.S. gas producer, is mounting an advertising campaign to defend fracking as environmentally safe, Tillerson told reporters May 25.
http://www.bloomberg.com/news/2011-0...to-states.html
Report: Dangers of fracking greater than previously understood
By Ian Urbina - The New York Times
But the relatively new drilling method “” known as high-volume horizontal hydraulic fracturing, or hydrofracking “” carries significant environmental risks. It involves injecting huge amounts of water, mixed with sand and chemicals, at high pressures to break up rock formations and release the gas.
With hydrofracking, a well can produce over a million gallons of wastewater that is often laced with highly corrosive salts, carcinogens like benzene and radioactive elements like radium, all of which can occur naturally thousands of feet underground. Other carcinogenic materials can be added to the wastewater by the chemicals used in the hydrofracking itself.
http://www.denverpost.com/business/ci_17506714
- I B Hankering
- 06-03-2011, 06:56 AM
- WTF
- 06-03-2011, 07:37 AM
It is safe enough if you are selling the mineral rights , maybe not so much so if you are just renting the land!
- pjorourke
- 06-03-2011, 07:43 AM
Biggest Pro of Fracking? It drives the Greens nutz.
- Marshall
- 06-03-2011, 08:32 AM
Fracking Gets Cracking
Ken Fisher 07.19.10
Despite its many critics, hydraulic fracturing will change the nature of energy production. Your investments in the energy sector should reflect that fact. Fracking, as it is called by insiders, means injecting fluid at very high pressure into a well used to produce oil, water or natural gas. The most important application is in natural gas production. The injections produce tiny fissures in underground rock, allowing the gas (or whatever you are trying to extract) to seep out.
While fracking is a decades-old process, it has made great technological strides in the past few years. It will make and keep natural gas cheap for a long, long time. Gas that now costs $5 per thousand cubic feet at the wellhead could come down in price to $2. The consequence will be a large-scale displacement of competing energy sources by gas.
The losers in this technological shift will be energy sources that are either dirtier than natural gas (coal, especially) or much more expensive (wind and solar). The winners will be the suppliers of fracking technology.
Environmentalists have their misgivings about gas and about the methods used to get it out of the ground. But there's no denying that burning natural gas (methane, that is) produces less carbon dioxide per unit of energy than burning coal. The consequence is that electric power production is going to migrate from coal to gas.
Windmills and solar cells are carbon-free sources of electricity. But they are costly. If you've been investing in those, give it up. That game is effectively over.
Natural gas has the additional benefit of being a domestic energy source. Fracking opens up vast tracts of the U.S. to exploitation by gas drillers. There's enough energy under U.S. soil to last us for decades, maybe centuries.
The impact of cheap methane on the petroleum business will be less pronounced and slower in coming. That's because crude oil can be turned into very convenient transportation fuels (gasoline and diesel). You can power a truck with natural gas, but it needs an expensive retrofit. This is in contrast to the situation in electricity production, where gas-burning plants are cheaper to build than coal-burning ones.
Environmentalists should like fracking for its relative cleanliness. But they don't. They have made a bugaboo out of the chemicals in fracking fluids, which supposedly can leach into groundwater sources. I'm convinced they're dead wrong. Ultimately good technology with a cost advantage will win out over paranoia.
One pure play is Carbo Ceramics (CRR, 73), a Houston firm that makes various forms of "proppant," particles (sand or a synthetic substitute) injected along with the fracking fluid to keep the fissures propped open after the pressure is withdrawn. Carbo is also a leader in fracture design, consulting services and simulation software. Its products are made in America, China and Russia and sold worldwide. This small technology firm is about to take off. It has a great balance sheet and sells at only 18 times my estimate of 2010 earnings, with a 1% dividend yield. In two decades institutions everywhere will own this stock. Get in ahead of them.
Another small Houston player is Complete Production Services (CPX, 14), which offers the full array of oilfield services necessary for fracturing and is particularly strong in Texas' Barnett Shale deposit. Its fracturing pumps operate at pressures up to 10,000 pounds per square inch. It sells at one times annual revenue, 1.5 times book value and 20 times my estimate of 2011 earnings (it has been losing money but is turning that corner right now). Don't chase the stock. The market value is only $1 billion.
In my June column I recommended both Halliburton (HAL, 23) and Baker Hughes (BHI, 38) on the theory that these broader oilfield services firms would benefit as fracturing led to more exploration and drilling. I didn't anticipate the overall market correction or the BP oil spill, which has caused peripheral damage to all drillers. The market reaction is excessive. So I'm doubling down here. If you bought, buy more. If you didn't, do it now.
Other smaller indirect fracturing beneficiaries that should do well include: Key Energy Services (KEG, 10), LUFKin Industries (LUFK, 41), RPC Inc. (RES, 14) and Unit Corp. (UNT, 43). They all boast reasonable prices, good management and strong balance sheets.
Money manager Ken Fisher's latest book is How to Smell a Rat: The Five Signs of Financial Fraud (John Wiley, 2009). Visit his homepage at www.forbes.com/fisher.
Ken Fisher 07.19.10
Despite its many critics, hydraulic fracturing will change the nature of energy production. Your investments in the energy sector should reflect that fact. Fracking, as it is called by insiders, means injecting fluid at very high pressure into a well used to produce oil, water or natural gas. The most important application is in natural gas production. The injections produce tiny fissures in underground rock, allowing the gas (or whatever you are trying to extract) to seep out.
While fracking is a decades-old process, it has made great technological strides in the past few years. It will make and keep natural gas cheap for a long, long time. Gas that now costs $5 per thousand cubic feet at the wellhead could come down in price to $2. The consequence will be a large-scale displacement of competing energy sources by gas.
The losers in this technological shift will be energy sources that are either dirtier than natural gas (coal, especially) or much more expensive (wind and solar). The winners will be the suppliers of fracking technology.
Environmentalists have their misgivings about gas and about the methods used to get it out of the ground. But there's no denying that burning natural gas (methane, that is) produces less carbon dioxide per unit of energy than burning coal. The consequence is that electric power production is going to migrate from coal to gas.
Windmills and solar cells are carbon-free sources of electricity. But they are costly. If you've been investing in those, give it up. That game is effectively over.
Natural gas has the additional benefit of being a domestic energy source. Fracking opens up vast tracts of the U.S. to exploitation by gas drillers. There's enough energy under U.S. soil to last us for decades, maybe centuries.
The impact of cheap methane on the petroleum business will be less pronounced and slower in coming. That's because crude oil can be turned into very convenient transportation fuels (gasoline and diesel). You can power a truck with natural gas, but it needs an expensive retrofit. This is in contrast to the situation in electricity production, where gas-burning plants are cheaper to build than coal-burning ones.
Environmentalists should like fracking for its relative cleanliness. But they don't. They have made a bugaboo out of the chemicals in fracking fluids, which supposedly can leach into groundwater sources. I'm convinced they're dead wrong. Ultimately good technology with a cost advantage will win out over paranoia.
One pure play is Carbo Ceramics (CRR, 73), a Houston firm that makes various forms of "proppant," particles (sand or a synthetic substitute) injected along with the fracking fluid to keep the fissures propped open after the pressure is withdrawn. Carbo is also a leader in fracture design, consulting services and simulation software. Its products are made in America, China and Russia and sold worldwide. This small technology firm is about to take off. It has a great balance sheet and sells at only 18 times my estimate of 2010 earnings, with a 1% dividend yield. In two decades institutions everywhere will own this stock. Get in ahead of them.
Another small Houston player is Complete Production Services (CPX, 14), which offers the full array of oilfield services necessary for fracturing and is particularly strong in Texas' Barnett Shale deposit. Its fracturing pumps operate at pressures up to 10,000 pounds per square inch. It sells at one times annual revenue, 1.5 times book value and 20 times my estimate of 2011 earnings (it has been losing money but is turning that corner right now). Don't chase the stock. The market value is only $1 billion.
In my June column I recommended both Halliburton (HAL, 23) and Baker Hughes (BHI, 38) on the theory that these broader oilfield services firms would benefit as fracturing led to more exploration and drilling. I didn't anticipate the overall market correction or the BP oil spill, which has caused peripheral damage to all drillers. The market reaction is excessive. So I'm doubling down here. If you bought, buy more. If you didn't, do it now.
Other smaller indirect fracturing beneficiaries that should do well include: Key Energy Services (KEG, 10), LUFKin Industries (LUFK, 41), RPC Inc. (RES, 14) and Unit Corp. (UNT, 43). They all boast reasonable prices, good management and strong balance sheets.
Money manager Ken Fisher's latest book is How to Smell a Rat: The Five Signs of Financial Fraud (John Wiley, 2009). Visit his homepage at www.forbes.com/fisher.
- Marshall
- 06-03-2011, 08:36 AM
In support of fracking: the facts and the science
Condemnation of technology misguided
By THOMAS KURTH
HAYNES and BOONE, LLP
HAYNES and BOONE, LLP
Feb. 15, 2011, 9:02PM
For a technology that has been used for more than 60 years, "fracking" or more specifically, hydraulic fracturing, is attracting some alarmist headlines. The Motion Picture Academy of Arts and Science has nominated Gasland, a vaudevillian HBO-funded "documentary," for an Academy Award. "Science"?! Even in Texas, where oil and gas are a part of the state's fabric and lore, fracking has attracted attention.
Some facts and science: Fracking involves the injection of fluids into deep underground gas-filled shale formations at very high pressures to create man-made cracks, or fractures, that allow natural gas to be collected and brought to the surface. The technology, along with horizontal drilling techniques, has opened a 100-year supply of natural gas from formations that stretch across the continental U.S. The drilling provides a domestic source of a significantly cleaner form of fossil fuel — as well as new jobs and revenues to states. It has been projected to raise natural gas domestic production by at least 20 percent over the next five years and help reduce imports by more than half within 10 years.
But as the headlines would suggest, controversy rages as fracking operations expand, particularly in regards to the fluids used in the process. Fracking fluids vary, but are generally more than 99 percent water and solids such as sand or ceramic pellets that prop the cracks open and allow gas flow to the well. The remaining additives promote the fluid's flow through pores in the rock. Some states, such as Wyoming and Arkansas, require energy companies to disclose the chemicals used in fracking fluids; industry leaders are developing a voluntary registry to list the chemicals.
In 2004, an EPA study reported no confirmed instances of drinking water contamination by fracking fluids in the ground. Given that shale formations are thousands of feet below aquifers, the finding should not be surprising. However, spillage of fracking fluids has occurred and environmentalists criticized the EPA study. Congress exempted hydraulic fracturing fluids from the Safe Drinking Water Act in the energy bill of 2005 — a move that critics were quick to label the "Halliburton Loophole" to cast the statute negatively.
Before the exemption decision in 2005, diesel was indeed used for fracking — although its use has since been curbed. A congressional committee recently reported that between 2005 and 2009, fracking fluids with diesel were used in 19 states and more than 32 million gallons of fluids. During these years, complaints were filed with the EPA about well water contamination by fracking fluid. To my knowledge, there was no action undertaken by the EPA on those specific complaints, including the absence of any scientific analysis as to the cause of water contamination.
The EPA was recently goaded by environmental groups, Rep. Henry Waxman (D-Calif.) and an overabundance of junk science to study, again, hydraulic fracturing. First, the EPA conducted field hearings as a fact-gathering exercise. From my experience at the Fort Worth hearing, there was more heat (and noise) generated than light (facts). Those few who noted scientific findings discrediting alleged pollution or highlighted energy security issues were drowned out by the mob; it was mobocracy, not democracy.
Pushed by shouts, the EPA ignored its rule-making process and changed its rules this summer on the use of diesel fuel in fracking. Without public comment or a hearing, the EPA changed its oversight language and ruled diesel was subject to Safe Drinking Water regulations retroactively.
Congress has the authority to amend the law, and, as some of its members believe, enact oil and gas exploration laws governing intrastate activities. The EPA has undertaken the role, whether authorized or not, of evaluating the environmental impact of drilling operations and developing regulations. But the EPA's activities to date — based on headlines and populist noise, instead of scientific analysis — and regulating retroactively undermine the nation's energy planning and the land use rights of property owners around the country, not to mention the Constitution's requirements of due process of law and states' rights.
Kurth is a partner in the Dallas office of Haynes and Boone, LLP.
But as the headlines would suggest, controversy rages as fracking operations expand, particularly in regards to the fluids used in the process. Fracking fluids vary, but are generally more than 99 percent water and solids such as sand or ceramic pellets that prop the cracks open and allow gas flow to the well. The remaining additives promote the fluid's flow through pores in the rock. Some states, such as Wyoming and Arkansas, require energy companies to disclose the chemicals used in fracking fluids; industry leaders are developing a voluntary registry to list the chemicals.
In 2004, an EPA study reported no confirmed instances of drinking water contamination by fracking fluids in the ground. Given that shale formations are thousands of feet below aquifers, the finding should not be surprising. However, spillage of fracking fluids has occurred and environmentalists criticized the EPA study. Congress exempted hydraulic fracturing fluids from the Safe Drinking Water Act in the energy bill of 2005 — a move that critics were quick to label the "Halliburton Loophole" to cast the statute negatively.
Before the exemption decision in 2005, diesel was indeed used for fracking — although its use has since been curbed. A congressional committee recently reported that between 2005 and 2009, fracking fluids with diesel were used in 19 states and more than 32 million gallons of fluids. During these years, complaints were filed with the EPA about well water contamination by fracking fluid. To my knowledge, there was no action undertaken by the EPA on those specific complaints, including the absence of any scientific analysis as to the cause of water contamination.
The EPA was recently goaded by environmental groups, Rep. Henry Waxman (D-Calif.) and an overabundance of junk science to study, again, hydraulic fracturing. First, the EPA conducted field hearings as a fact-gathering exercise. From my experience at the Fort Worth hearing, there was more heat (and noise) generated than light (facts). Those few who noted scientific findings discrediting alleged pollution or highlighted energy security issues were drowned out by the mob; it was mobocracy, not democracy.
Pushed by shouts, the EPA ignored its rule-making process and changed its rules this summer on the use of diesel fuel in fracking. Without public comment or a hearing, the EPA changed its oversight language and ruled diesel was subject to Safe Drinking Water regulations retroactively.
Congress has the authority to amend the law, and, as some of its members believe, enact oil and gas exploration laws governing intrastate activities. The EPA has undertaken the role, whether authorized or not, of evaluating the environmental impact of drilling operations and developing regulations. But the EPA's activities to date — based on headlines and populist noise, instead of scientific analysis — and regulating retroactively undermine the nation's energy planning and the land use rights of property owners around the country, not to mention the Constitution's requirements of due process of law and states' rights.
Kurth is a partner in the Dallas office of Haynes and Boone, LLP.
- Can I Play Too???
- 06-03-2011, 08:55 AM
Courtesy of the documentary, Gasland.
- Taint
- 06-03-2011, 04:13 PM
If done properly with respect to the aquifers and native hydrology, should be safe. If performed by idiots who don't care about what they leave behind, not so much. This is not unlike deep well injection - it requires some finesse and knowledge of the subsurface, not just where the pay zones are.
- Meiji
- 06-03-2011, 11:16 PM
- Marcus Aurelius
- 06-04-2011, 02:14 AM
- DragonTongue
- 06-04-2011, 04:44 AM
Fracing has been around for decades. The pros of it are it allows companies to produce hydrocarbons from formations that would otherwise be uneconomical to produce unless gas and oil were several multiples higher in price. As far as contaminating drinking water, the fracing process is done AFTER the drilling is completed. This involves several strings of casing, cemented in place, and pressure tested prior to perforating and fracing. When you read about the huge volumes of fluids injected into the well for the fracing procedure, what they fail to mention is that for each well, zones are isolated and sometimes 100 different frac stages are preformed. That fluid is not pumped down into one massive fracture, it is pumped into fractures that are spaced to optimize production and return on investment.
Here's a simplified theoretical well:
150 ft from surface - casing is driven into the ground
3500 ft form surface - hole drilled and another string of casing set to isolate fresh water as well as different pressured zones to prevent well control issues. Cement is circulated completely to surface, and tested prior to drilling out the bottom of the string.
10000 ft from surface (nearly 2 miles) - Directional work is performed to turn the well from vertical to horizontal - and then the horizontal is drilled, sometimes as much as 3 additional miles!
Casing can be ran before, during, or after the directional work, and cemented in place.
Once the horizontal is completed, it is then lined with another string of casing or a liner and that is ALSO cemented.
This is when the company comes in and punches holes in the casing, and isolates each zone (typically 500 ft apart) to perform a fracture stimulation. (Picture a fish skeleton, with the spine being the horizontal well, and the ribs the fractures going out each side).
Each one of these stages is used to open up a little bit more gas / oil flow. The end result is a huge total of fluid pumped down-hole, but never in large enough quantities to cause problems.
I will agree however that certain operators can be lazy, and going for the lowest bidder on a project like this is asking for trouble - Just look at Mocando. Halliburton has to operate at different standards than some small Mom-and-Pop company with a 1 truck yard - but they are still operated by people, and people f things up.
My 2 cents...
Here's a simplified theoretical well:
150 ft from surface - casing is driven into the ground
3500 ft form surface - hole drilled and another string of casing set to isolate fresh water as well as different pressured zones to prevent well control issues. Cement is circulated completely to surface, and tested prior to drilling out the bottom of the string.
10000 ft from surface (nearly 2 miles) - Directional work is performed to turn the well from vertical to horizontal - and then the horizontal is drilled, sometimes as much as 3 additional miles!
Casing can be ran before, during, or after the directional work, and cemented in place.
Once the horizontal is completed, it is then lined with another string of casing or a liner and that is ALSO cemented.
This is when the company comes in and punches holes in the casing, and isolates each zone (typically 500 ft apart) to perform a fracture stimulation. (Picture a fish skeleton, with the spine being the horizontal well, and the ribs the fractures going out each side).
Each one of these stages is used to open up a little bit more gas / oil flow. The end result is a huge total of fluid pumped down-hole, but never in large enough quantities to cause problems.
I will agree however that certain operators can be lazy, and going for the lowest bidder on a project like this is asking for trouble - Just look at Mocando. Halliburton has to operate at different standards than some small Mom-and-Pop company with a 1 truck yard - but they are still operated by people, and people f things up.
My 2 cents...
- TexTushHog
- 06-04-2011, 11:36 PM
Taint hit the nail on the head. But all too many service companies fuck things up because 1)they don't know what the fuck the are doing; 2) they don't give a shit; or 3) the cut corners. 2 and 3 are generally more common than 1. When I sign a lease, I have a requirement that an environmental test well be drilled before drilling and get a water sample. Then it's periodically sampled thereafter. Some companies won't agree to that and I'm delighted not to do business with them. When the drilling, fracing, etc contractors know that well is there, they generally take better care of their business.
- Karl Hungus
- 06-04-2011, 11:58 PM
I'm guessing this one is going to be worked out in litigation. Good drillers will be fine, but still sued. Bad drillers will be sued out of business, but then again they are probably in bankruptcy before the judgment anyway.
But I expect that regardless of the litigation, fracking will continue (and not just in Texas) because when you look at peak oil, the Asian demand for energy, post-Fukushima nuclear jitters, and the resultant energy inflation and civil unrest it will cause, the politicos are rightly scared. We have faced similar crises before, and technology always finds an answer. The big question is whether fracking is the next answer or a distraction along the way.
But I expect that regardless of the litigation, fracking will continue (and not just in Texas) because when you look at peak oil, the Asian demand for energy, post-Fukushima nuclear jitters, and the resultant energy inflation and civil unrest it will cause, the politicos are rightly scared. We have faced similar crises before, and technology always finds an answer. The big question is whether fracking is the next answer or a distraction along the way.
- KatieKatie
- 06-05-2011, 12:12 AM
Darn it! I thought this was a misspelled Battlestar reference. Frak!
- gnadfly
- 06-05-2011, 09:41 AM
- Carrie Hillcrest
- 06-05-2011, 12:00 PM