The Process. Fracking is a hot topic right now. It is treated as something new on Earth. In fact, two technologies – fracking and horizontal drilling – have matured at the same time. Both have been around for some time, fracking experiments since the 19th Century and horizontal drilling for decades. What has changed is that directional drilling and downhole pumps have dramatically improved. They, and the rising price of oil and gas, made it worthwhile to explore formations that had not heretofore been economically interesting, and fracking has provided a way to loosen the “tight” shale formations that were known to contain gas and oil, but had resisted exploitation. Oil exploration had been confined to more workable sandstones and limestones, and most gas production was associated with oil or extracted from other formations, but very little of it from shale. There is a lot of shale in the world, and some of it is rich in gas and oil, but they were inaccessible unless they migrated into more exploitable formations. Suddenly, the shale itself became the target of exploitation.1
Horizontal drilling is self-explanatory, though how they can do it is a mystery to me. Assume you have an oil-bearing stratum two miles long but only 20 feet deep. It would be economically impossible to exploit the oil by drilling innumerable vertical wells through that 20 feet. Drill horizontally, and you may be able to collect from the whole two miles with one well. Since most of this activity occurs at depths from one to four miles, the saving is considerable.
Fracking is the process of opening fissures in tight rock by injecting water at very high pressure. The water is thickened with chemicals so that it can carry “proppants” (a lovely word!), consisting of sand or ceramic fragments. They lodge deep in the fissures and prop them open for the gas or oil to enter when the water is withdrawn.
Voila! You now have a way to access the shale and to loosen it up to release its hydrocarbons. Horizontal drilling and fracking are so effective that most new wells, even in conventional sandstones and limestones, now exploit them.
Early Successes. After Mitchell Energy showed that the technique worked in the Barnett shale in Texas, the industry has rushed in. U.S. shale gas production was negligible in 2000, when it took off. It has grown 48% per year from 2006 to 2010. It now provides 23% of current U.S. gas production.2
The result has been a gas boom – and glut. The winter price of gas futures is a key indicator, because gas is so widely used in heating. It has dropped from $11.92 per million BTU in 2005-2006 to the present $3.86, the lowest price in a decade. Growth enthusiasts are proclaiming that fears of a fossil energy crisis were a myth. A closer look suggests a different current scenario. Shale gas is replacing traditional sources more than it is driving production up. Total U.S. gas production rose less than 5% from 2008-2010.3
Shale oil production is much less advanced than shale gas. Most current activity is taking place in the Bakken formation in the Williston basin in North Dakota. The state’s oil production has soared from negligible in 2002 to 445,000 barrels per day (b/d) in August 2011, most of it from Bakken shale. That is over 8% of total U.S. crude oil output. North Dakota has now become the fourth largest oil producing state, after Texas, Alaska and California, and has helped to arrest the decline in U.S. production, at least for the time being.4 It is booming, unlike most of the country. (Montana and Saskatchewan share the basin but have done less to exploit it.) Unlike the impact of shale gas on gas prices, this activity has not visibly affected oil prices, because, unlike gas, oil is traded on a world market, the role of fracking is much smaller, and the price of oil depends on multiple factors.
Shale gas and oil production elsewhere in the world lag behind the U.S., but other countries are joining the parade. Foreign producers are buying into U.S. gas drillers to learn the technique. Poland has proclaimed an ambitious target of freeing Europe from its dependence on gas from Russia and Central Asia by 2035.5 A Spanish company drilling in Argentina claims, perhaps hyperbolically, to have found exploitable shale gas resources comparable to the U.S. China is actively pursuing potential fields at home and abroad, as part of its ambitious program to secure energy and raw materials. Drilling was under way in France and the U.K. until interrupted by moratoria (see below.) Most world shale deposits are probably being looked at by the industry.
In short, shale gas has shaken up the industry and raised optimism about future growth and faith in the conventional wisdom that technology will always save us. Shale oil is off to a slower start, but it stirs similar hopes of energy independence – a wildly optimistic claim, as I will show later.
That much is known. Trying to predict future production and reserves is another matter, which I will return to later.
The Immediate Problems. The success of fracking has already generated problems and met resistance. Over the long term, it will generate much vaster problems if it significantly extends the fossil fuel era – which it probably will.
The immediate problems tend to be local. Fracking uses something like five million gallons of water per well, in an era of growing water scarcities.
Some of the water is re-used, but the chemicals in the fracking fluids can cause water pollution. There are many anecdotal reports of contamination, some of them well documented. The EPA has just confirmed, for the first time, that fracking has been responsible for specific groundwater pollution (in Pavillion, WY) though it claimed that the pollution of residential water supplies was “generally” within acceptable limits.6
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