Hydraulic Fracturing has been described as a “double-edged sword.” One side says that it provides new source for natural gas. This domestic energy resource is untouched by instability in unpredictable regions. Besides, it has a lower carbon footprint compared to coal. The other side contends that FRACKING presents a number of risks which are quite difficult to resolve. Among these are the prospects of groundwater contamination, amplified seismicity, and the ominous issue of methane emissions.
Hydraulic Fracturing: Boon or Curse - Expert Views
Introduction
Hydraulic fracturing or FRACKING is described as the process of cracking a rock using pressurized liquid. Induced fracturing entails the combinations of H2O with certain chemicals and sand. The mixture is infused or injected at relatively high pressure into a hole drilled for exploration or drawing out of natural resources. It is meant to create tiny ruptures measured at less than one millimeter.
The process has been described as a “double-edged sword.” One side says that it provides new source for natural gas. This domestic energy resource is untouched by instability in unpredictable regions. Besides, it has a lower carbon footprint compared to coal. The other side contends that FRACKING presents a number of risks which are quite difficult to resolve. Among these are the prospects of groundwater contamination, amplified seismicity, and the ominous issue of methane emissions.
Fortune Companies Engaged in FRACKING
Exxon Mobil is the largest publicly-traded global oil and gas company worldwide. It is also the most profitable company in the United States and obtained the number one ranking in Fortune 500 in 2012 getting past Wal-Mart with sales of $468 billion. Exxon has been using hydraulic fracturing along with novel drilling techniques to extract large quantities of natural oil and gas locked in shale (fine grain sediments) rock.
Rex Tillerson, chief executive officer of Exxon says that environmental issues are exaggerated and controllable. The industry is booming and this is very good news not only for the United States but the whole world as well. People should understand that FRACKING is a big resource opportunity right now. In fact, investments on shale will pay off within the next 25 years according to CEO Tillerson.
Other fast-growing companies of Fortune like Northern Oil and Gas are also riding on the bandwagon of hydraulic fracturing. The same goes for North Dakota Developments LLC is one of the enterprises making a fortune out of this new technology. Robert Gavin, sole owner of this company, says that his company is generating monthly sales of $6 million which will lead to total revenues of more than $200 million by the end of this year.
Some of these large corporations have even revealed prescience and initiatives to highlight said issue. These corporate giants have collaborated with environmental non-government organizations and academic researchers to conduct in-depth scientific studies about the “fugitive methane problem.” Their goal is to identify its scope and origins. The companies being alluded to are Anadarko Petroleum; Pioneer Natural Resources; Encana; South Western Energy; and, Talisman Energy.
A research initiative was organized recently by the Environmental Defense Fund. There were more than 90 participants from oil and gas firms, premier academic institutions, research facilities and scientists. The results have been published and comprise the first of a sequence of studies that will assess methane seepages along the natural gas supply group. It will only concentrate on the extraction stage.
Bright FRACKING Prospects
There is no doubt that hydraulic fracturing has gone through a windfall in the United States and North America. It is widely believed that billions of extra barrels of oil and gas can now be recovered. The truth is the Energy Information Agency made projections recently that the United States will grow to become the biggest producer of oil when 2020 comes. The country can become a net exporter of oil going towards 2030. Lastly, it hopes to become almost 100 percent energy self-sufficient around 2035. This "energy resurgence" has already considerably enhanced prospects of several U.S. energy corporations.
The point is many investors think the benefit may have been included in many of these stocks predominantly as new sources of gas supplies bring down costs. Oil prices are expected to remain near that particular level. Even then, hydraulic fracturing seems sensible enough from the economic point of view. Margins are liable to be compressed going into 2014 as developed markets grow slowly and emerging market demand goes down.
Thus, the question is where should be investors putting in their money?
Hydraulic fracturing companies may be primed for a forceful effort with operating margins. However, companies servicing the growing industry present an opportunity. FRACKING has gained a lot of adverse publicity for its effects on ecology. A large amount of wastewater generated by this process entails forcing clean water with chemicals underground to draw out oil and gas. This is pumped deep beneath the earth and seep into public water supply.
Majority of these companies have commissioned experts to move used water away from the oil and gas sites. However, the implementation of recycling technologies has held back because of the high costs. With millions of new wells estimated to emerge by 2035, recycling water will evolve from a mere environmental issue to a more strategic concern because of the scarcity of freshwater. According to a report from the Environmental Protection Agency, it takes between 70 and 140 billion gallons of water to treat 35,000 wells annually. This is the same amount of water that is used up every year by U.S. cities such as Chicago or Houston.
Reaction of Industry Stakeholders
Gas industry leaders hype the advantages of natural gas compared to other sources. On the other hand, public health supporters are anxious about this process and its supposedly ill effects. There should be more regulatory policies that should come from federal and state lawmakers. On the other hand, research from the United States Supply Forecast/Potential Jobs and Economic Impacts as well as Economic and Employment Contributions of Shale Gas revealed that more than 9 million jobs are sustained by the oil and gas sectors.
Some experts claim that FRACKING has led to the discovery of enormous oil supply and natural gas coming from concentrated deposits of shale (compressed mud or clay). This is very beneficial because it increases energy security, boosts the capability to produce electricity, heat up homes, and provide power to motor vehicles for a sustained period. Hydraulic fracturing can also improve economies. It generates royalty payments for property owners and provides tax revenues for governments.
Methane and Climate Change
There are factors that should be considered when it comes to global-warming hazards. Methane is dangerous once it is released into the atmosphere. Once natural gas is extracted and transported, a considerable amount of methane leaks along the way. Certain people maintain that it renders carbon savings useless if people try to veer away from the use of coal. Moreover, natural gas and petroleum systems are still the biggest contributors to methane discharge. This could cause a problem to the natural gas industry when contribution to climate change is tackled.
Controversial Issue
Despite the multiple benefits, hydraulic fracturing has been a very debatable issue recently as environmental groups and health advocates questioned the effects on wellbeing and safety. Public health supporters, scientists and environmental campaigners are not really convinced that the advantages can outweigh the potential hazards. Some sectors are worried that the insufficiency of proven research about chemicals used in this technique. There are also questionable areas in regulations in this industry.
Even industry practitioners admit the lack of regulatory controls. Public health industry officials are worried about the untried long-term consequences on residents with houses near the hydraulic fracturing sites because of the possible adverse effects of chemicals on the environment and the creation of air pollution and water contamination. The general public has not been informed properly about the advantages and disadvantages of this approach. The result is that there are overstated concerns regarding the effects of hydraulic fracturing. The primary question is what will be the cause of FRACKING in the long term? Is it a boon or a bane for the people?
The relatively devastating effects arising from alternative development of gas on water supply, air quality and the ecology warrant more studies as well as scrutiny. The gray areas raised by scientific experts conducting research on dangers caused by unconventional gas indicate that a deterrent is necessary. One thing is very clear that regardless of uncertainties, this irregular gas industry in the country seems excused from the needed transparency, control, monitoring, and enforcement policies that can protect public health and people’s safety.
Positive Impact
Do not forget the positive impacts. The United States has embarked on an avant-garde transformation in oil and gas which has gone beyond the aspect of energy. You may not be aware but this industry currently supports almost 2 million jobs. This is considered an achievement given that the technology is untested. This figure can go up to more than 3 million six years from now. Last year, hydraulic fracturing contributed $62 billion to the revenues of federal and state governments. Hence, it can be projected that by 2020, this can increase to as much as $113 billion.
It has brought about a manufacturing re-growth in the United States. In the same way, it is enhancing the competitive position of the United States in the international market and gradually shaping world geopolitics. Natural gas may not be an absolute solution that will stop importation of crude oil from OPEC. Yet, it hopes to reduce the nation’s oil dependence on other governments while new technologies are developed to eventually take the place of fossil transportation fuel. FRACKING appears to be the vital piece of the puzzle at present.
It is meant to help save from $350 to $450 billion allocated for imported oil annually at home where it may strengthen economy and answer for investments. With this technique, the nation can minimize its reliance on oil coming from the Organization of Petroleum Exporting Countries. Finally, it develops the advanced know-how to make this technology workable.
About the Author
Antonio Bhardwaj is a successful leader and investor with over 28 years of expertise in building businesses. Antonio Bhardwaj is published author in area of strategy, economy, trade and technology. Antonio Bhardwaj is an expert global economist, strategist, technologist and futurist.
Antonio Bhardwaj is a subject matter expert in energy, retail and public sector verticals. Antonio has been involved in several mergers & acquisitions, which has over the years given him a strategic edge in his successful career. Antonio is a executive board member for Global International Sellers and a Executive Vice President at a TOP SAP Partner.
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Antonio Bhardwaj is a candidate for U.S Congress.
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