Pages

Thursday, February 16, 2012

Oh, for frac’s sake…

New Eyes on an Old Industry
By Hilton Price

In the upcoming edition of PennEnergy Workforce Magazine, I’ve contributed an article on why I believe public outcry and government legislation have been good for the fracking industry. It’s pretty compelling stuff. You should read it.

During the week I spent researching the piece, I learned a lot about fracking, far more than I had in the preceding 3 months I’ve been working in the industry. Amid that intense study, I realized two things. First, the theme of my submissions in this recurring blog will be my own ongoing education in the oil and gas industry. Second, no one outside the industry is ever going to be entirely comfortable with fracking. The process is too weird for normal human consumption, and the very nature of how it is performed means someone, and most likely many someones, will always oppose it.

The list of fracking chemicals is shrinking. With each unsuccessful frac (or successful legislation), the number of reliable and permissible chemicals is reduced. That’s a good thing. That means less dangerous junk is pumped underground. For instance, the first frac involved Napalm. I don’t have the list of acceptable chemicals in front of me, but I’m pretty sure that’s not on it anymore. You’d be hard pressed to find someone who would say napalm should be used in anything, expect possibly for blowing stuff up.

Even with napalm and some of the other obviously problematic chemicals removed, the permitted frac fluid list is still littered with a bevy of chemicals not familiar to most people. Unfamiliarity breeds fear. Until the bulk of mankind starts taking a personal interest in high school chemistry, almost every chemical on that list is going to be a source of fear.

Okay, I found the list. There are, admittedly, a few that don’t sound so scary. Take Isopropyl Alcohol, for example. Practically every family has at least one bottle of Isopropyl Alcohol under a bathroom counter in their home. So, seeing that name on the list might not concern everyone. Of course, the chemicals on this list aren’t just sitting on a list or hiding under a bathroom counter, they are being forced into the ground at high pressure and speeds. This brings up the other reason most people won’t ever be “okay” with fracking. It involves pumping stuff into the Earth, a concept that in itself is unsettling to the uninformed.

It’s easy to make assumptions on how people will act, and that’s largely what I’m doing here. So, allow me to add some context. I’m in Tulsa, Oklahoma as I write this. It’s where I live; I didn’t just stop here to write. Over the last few years I’ve grown accustomed to Tulsa’s unique weather anomalies. Severe thunderstorms, epic snowfall, and tornado warnings are just part of the Oklahoma life. Then last year, something else popped up with increasing frequency: earthquakes. I felt two of them, and they were pretty scary. So, I understand why people began trying to find a cause almost immediately. We’re not used to them and we want answers.

Of course, someone from Tulsa posted a story about fracking’s possible link to earthquakes on their social network page. Within minutes, everyone had strong opinions on the topic. It was very cute. Thoroughly uninformed, but very cute. It also exemplified the way people view fracking. The effect of the process isn’t fully understood by people, so the idea of some frac fluid setting off “the big one” makes a weird kind of sense. Geologists have found a connection between fracking and earthquakes, but not in the point-A-leads-to-point-B way the public has embraced. It’s more complex than that, and that complexity, a recurring theme here, is why the public just doesn’t get it.

Lucky for us, the public doesn’t understand a lot of things it discusses, and that’s why in the end we don’t really have to pay too much attention to what they say. From Federal finances to relationships in Hollywood, public discourse is common. Politicians don’t worry about my thoughts during budget debates, and celebrities have never asked for my input on their trysts. As long as the people behind the fracking industry can accept that the process will be discussed by those who aren’t fully informed, it can persevere past the hurdles mass discourse will occasionally toss in its way.

Thursday, February 2, 2012

Natural gas prices and shale estimates plummet

While many in the power industry and certainly consumers are grateful for the plummeting prices of natural gas, the news has proven far worse for gas exploration and production companies.

The drop has been attributed to the massive surge in natural gas production from the proliferation of hydraulic fracturing and the recent lull in demand created by an unusually mild winter.

Natural gas prices have slumped from above $4 per million British thermal (Btu) units to below $3 per million Btu; a game changing drop that has prompted many of the nation’s gas producers to begin scaling back operations to focus on higher value resources. All told, the country has 780 natural gas rigs in operation, a 14 percent decline from the same time last year.

Now in an interesting turn of events, the latest estimates of shale natural gas reserves in the U.S. have taken a shocking step backward.Projections released by the U.S. Department of Energy estimate that the country holds around 482 trillion cubic feet of recoverable natural gas from shale basins. That represents a 42 percent decline from the year before when estimates of shale gas reserves were placed at around 827 trillion cubic feet.

Probably the most substantial impact of the updated estimates, however, was the 66 percent reduction in recoverable reserves in the Marcellus shale formation in Pennsylvania, New York, Ohio and West Virginia.

Ironically, it’s the surge in natural gas exploration in shale deposits over the last year that has provided these revised estimates. Last year that basin was estimated to hold 410 trillion cubic feet of gas, enough to fill U.S. gas demand for 17 years at 2010 level. Now, that number has been reduced to 141 trillion cubic feet, or around 6 years.

Nevertheless, the DOE estimates natural gas production will rise even higher than previously predicted despite the smaller resource base.