Hydraulic Fracturing in the United States

Hydraulic Fracturing in the United States Student: Professor: Course title: Date: Table of Contents  TOC \o "1-3" \h \z \u  HYPERLINK \l "_Toc357691151"
1.0 Purpose and scope of the study  PAGEREF _Toc357691151 \h
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2.0 Introduction  PAGEREF _Toc357691152 \h
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2.1 Problem description  PAGEREF _Toc357691153 \h
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2.2 Why this research study is appropriate  PAGEREF _Toc357691154 \h
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2.3 Importance of the problem  PAGEREF _Toc357691155 \h
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2.4 How the results of the study will be applied  PAGEREF _Toc357691156 \h
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3.0 Methodology  PAGEREF _Toc357691157 \h
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3.1 Method and rationale used to identify and locate sources  PAGEREF _Toc357691158 \h
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4.0 Analysis and Discussion  PAGEREF _Toc357691159 \h
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4.1 Hydraulic Fracturing (HF) in the United States  PAGEREF _Toc357691160 \h
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4.2 Overall impact  PAGEREF _Toc357691161 \h
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4.2.1 Environment  PAGEREF _Toc357691162 \h
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4.2.2 Politics: Federal and State regulation of hydraulic fracturing  PAGEREF _Toc357691163 \h
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4.2.3 Media vs. The oil and gas industry  PAGEREF _Toc357691164 \h
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4.2.4 Impact Abroad  PAGEREF _Toc357691165 \h
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4.3 Benefits  PAGEREF _Toc357691166 \h
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4.3.1 Economic Impact  PAGEREF _Toc357691167 \h
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4.3.2 Global Markets  PAGEREF _Toc357691168 \h
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5.0 Conclusion  PAGEREF _Toc357691169 \h
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References  PAGEREF _Toc357691170 \h
46   1.0 Purpose and scope of the study The purpose of this paper is to analyze the subject of hydraulic fracturing (HF) in the United States. This technology is also known as fracking. The paper will investigate how the process of hydraulic fracturing has allowed once uneconomical reserves to be produced economically. The paper will also look at the overall impact that is a result of the production of these reserves in the United States. The core areas that will be focused on are (i) environment; (ii) politics; and (iii) media vs. the oil and gas industry, (iv) global markets, (v) environment impact vi) The paper will show how the unconventional gas revolution is changing the United States economy, its future energy security and the impact it is having directly and indirectly to its current energy suppliers. The paper will also look at the impact that the United States energy industry is having abroad. 2.0 Introduction 2.1 Problem description Hydraulic fracturing is a technology that employs water pressure in creating hairline fractures in rocks that are in deep underground so as to allow natural gas to stream. Hydraulic fracturing is a confirmed process of completion that allows extraction of natural gas, oil and other natural resources. This form of technology is capable of not only reducing people’s reliance on fuel imports but dramatically reducing emissions of poisonous gases such as carbon dioxide (CO2. In addition, it also accelerates the humanistic transformation to a carbon light environment. In essence, the oil formation development and natural gas is a crucial aspect not only in America but also in the global perspective in terms of solving our energy needs and economic development (ChesaPeak, n.d).In order to realize the full potential of this energy source, everyone should respond effectively to the production process in hydraulic fracturing. This means that the industry is expected to make proper management of the associated risks and clarify vividly to the policy makers and the public on how the industry is managing the risks associated with the Hydraulic fracturing production process. Valko & Economides (2005) stated that hydraulic fracturing is a process which can enhance the flow of gas or oil from a well. This procedure is typically carried out by pumping liquids down a well and into underground rock units under extremely high pressures that fracture the rock. Usually, the objective is to form a network of fractures that are interconnected, which will serve as pore spaces for the movement of natural gas and oil to the well bore. Hydraulic fracturing technology along with horizontal drilling technique has transformed shales that were previously not productive into the biggest natural gas fields in the globe. In the United States, the process of hydraulic fracturing is used in 9 out of ten natural gas wells, where millions of gallons of chemicals, water and sand are pumped into the ground in order to break apart the rocks to release gas. Concerns have been raised by scientists that chemicals which are used to fracture rocks could create a threat not just underground, but also when the waste fluids are mishandled and spilled out on the surface (Yew, 2007). Even though the extraction of natural gas from unconventional sources happens to be more expensive and complex compared to conventional gas production, improvements in technology have made recovery from unconventional sources to be more viable from the economic perspective in the past five years. Particularly, the combination of HF and horizontal drilling has to a large extent enhanced the productivity of natural gas wells (Cooley & Donnelly, 2012). Therefore, the research problem is: How has the process of hydraulic fracturing allowed once uneconomical reserves to be produced economically, and what is the overall impact that is a result of the production of these reserves in the United States? 2.2 Why this research study is appropriate In the recent perspective, Hydraulic fracturing has stirred an enormous amount of controversial opinions. There have been media reports regarding this issue from different areas such as USA, Canada, Australia, South Africa, England and France. There are other media houses and practitioners hailing this entity as a game changer poised to creating more employment opportunities, increased energy dependence and reduced energy costs. On the other hand, there are those calling or for either a complete ban or a temporary moratorium on this concept owing to the concern on social, environmental and public health impact (Interstate Oil and Gas Compact Commission 2008). This research study is appropriate primarily because it will enlighten the reader on the process of hydraulic fracturing while at the same time highlighting the issues and benefits that is a direct result of the hydraulic fracturing process in the United States. It will show that the use of the hydraulic fracturing process in shale gas reserves is shifting the dynamic of world markets and how this will allow the United States to become an energy exporter rather than a net importer. In turn, this will cause a shift in the supply and demand affecting the global markets and the research will show the possible impact that this may have. 2.3 Importance of the problem Various organizations, media practitioners and researchers have reported difficult in conducting and reporting the findings of the studies or information on hydraulic fracturing (Urbina, 2011). This is partly caused by the government and industry pressure, concern over the censoring of environmental information. Scholars around the world have expressed concern that all information concerning hydraulic fracturing including, test of lives dwelling near fracturing sites, hydraulic fracturing fluids and evaluation of the environmental samples to be vividly disclosed (Ramanuja, 2012). It is a common phenomenon in US for court cases that concerns contamination of hydraulic fracturing to be sealed after they are completed. According to the American Petroleum institute, this system only helps in hiding issues and problems with gas drilling. Other Commentators have argued that it could lead to unnecessary risks to public safety and the general health The problem is important because it will aid in analyzing the subject of hydraulic fracturing in the United States. It will help to prove that the hydraulic fracturing process has enabled reserves that were once considered uneconomical to be produced economically. Additionally, it will help to prove that the use of the hydraulic fracturing process in production of oil and natural gas has a number of impacts both locally – within the United States – and globally on the world markets. The newly found great quantities of natural gas is due largely to unconventional techniques of drilling, chief among them being hydraulic fracturing. 2.4 How the results of the study will be applied The findings of this study will be applied in the expansion of knowledge about the subject of hydraulic fracturing in the United States. Specifically, the results will expand people’s knowledge of the way in which the process of hydraulic fracturing has enabled reserves that were considered uneconomical to be exploited economically. The results will also be applied to expand people’s knowledge about the overall impact that is a result of the production of these reserves in the United States. 3.0 Methodology 3.1 Method and rationale used to identify and locate sources Only the relevant peer-reviewed and scholarly sources will be used in this research study. These sources will be used because of a number of advantages including: (i) the sources have been evaluated by experts in the same field who ensured that the articles enhance or maintain the quality of the work in that field; (ii) the works are original, accurate, reliable, legitimate and significantly free from error. In this study, the quantitative/secondary research method will be applied. This will consist of the case studies and articles which are similar to the concerned topic – hydraulic fracturing in the United States – and that are found from various types of sources including the internet. This method is a theoretical based approach and will be analyzed by the use of empirical analysis. The secondary research data would include journals, articles, case studies and web documents. 4.0 Analysis and Discussion 4.1 Hydraulic Fracturing (HF) in the United States Generally, there is a disagreement with regard to the meaning of hydraulic fracturing, and it is imperative that this term has to be clarified. Some, such as industry representatives, define HF narrowly and they only refer to the process of injecting fluids into a well-bore. Their argument is that the challenges which include leaks, spills and wastewater disposal are common to every natural gas and oil operation and thus, are not particularly associated with the process of HF (King, 2012). Conversely, others define HF in a broader way to incorporate the impacts that are connected with construction and completion of well, the process of HF itself, as well as gas Well production and closure. For such groups, unconventional natural gas extraction is synonymous with HF for the reason that HF has made possible the development of these unconventional resources of natural gas, and without it, production of shale gas would be nonexistent or severely constrained (King, 2012). This research uses the broader definition of HF to include the impacts that are linked with construction and completion of gas well, the HF process itself together with Well production and closure. For a natural gas or oil well to be successful economically, two imperative conditions have to be present: The first is that the reservoir rock should be of good porosity. Typically, porosity is linked to the quantity of natural gas and oil trapped inside the rock’s pore spaces. Second condition is that the permeability of reservoir rocks must be good. Permeability generally relates to the way in which pore spaces are connected. In 2009, there were over 492,000 active wells of natural gas across thirty-one states in the United States, this figure nearly doubles that of 1990. Roughly 90% of these wells employed HF in order to extract more gas (Johnson, 2010). Fracturing the rock is indispensable in extracting natural gas or oil from formations in which the pore space in the rock that make up the natural gas or oil reservoir is extremely tight to facilitate the flow of gases or fluids to the well. Extraction of the natural gas or oil from such rock formations is not possible without a man-made fracture. A number of shale plays as referred to by the gas and oil industry, exist in the United States and the modern HF is done in these shales, which in most cases contain natural gas, methane in particular. A shale is a rock formation found deep underground that acts as a sponge full of either oil or natural gas, or both (Valko & Economides, 2005). Today, the process is minimally invasive and entails boring a hole of roughly 15” in diameter. This hole is then lined with several layers of steel enclosed with cement to facilitate safe production of natural gas. Pressurized water, additives and sand are then used in creating small fissures in carefully targeted parts of the shale rock. In turn, this discharges the gas from the rock and allows it to rise to the surface safely within the self-contained system (Jackson et al., 2013). The first industrial use of the process of HF was in 1903 and prior to that year, the procedure was employed at the Mt. Airy quarry in North Carolina where it was extensively employed in separating blocks of granite from bedrock (Brady, 2013). Conversely, the initial application of HF in stimulating natural gas and oil wells in the United States took place in the 1940s at the Hugoton gas field in the state of Kansas. One thousand US gallons of gelled gasoline as well as sand obtained from Arkansas River was inserted into the gas-generating limestone formation located 730 m underground for the well treatment. The procedure was successful in increasing the rates of well production and the practice then spread rapidly. In 1949, a patent on this procedure was issued and an exclusive license awarded to the company that invented it – Halliburton Oil Well Cementing Company. This company then on March 17, 1979 carried out the first two commercial HF treatments in Archer County, Texas and Stephens County, Oklahoma (Brady, 2013). Since its initial use in 1947 at a well in the state of Kansas, HF is now practiced regularly in tapping into once unrecoverable reserves of natural gas and oil. It is also widely employed in stimulating increased production from existing gas and oil wells in the United States. This process has been employed in California as a production stimulation technique for over 3 decades without any reported damage to the environment. Just as natural gas and oil extraction operations vary from one region to another in the United States, so too do the regional techniques of HF. For instance, fracturing of horizontal shale gas wells is hardly practiced in California, as most of oil and gas extraction here has been through vertical wells into the traditional gas and oil reservoirs. Other regions such as Pennsylvania, Texas and Wyoming largely use fracturing of horizontal shale gas wells. Today, the HF procedure is used worldwide each year in thousands of wells (Ehrenberg, 2012). According to Jackson et al. (2013), massive or high-volume HF treatment was first used in the United States by a firm called Pan American Petroleum in 1968 to a well in Oklahoma’s Stephens County. Five hundred thousand pounds of proppant was injected into the rock formation. Geologists from the United States in the 1960s became more and more aware of large volumes of gas-saturated rocks whose permeability happened to be very low to economically recover the natural gas. The government of the United States tried out with the use of underground nuclear explosions to fracture the rock and allow the recovery of gas from the rock. Explosions such as these were conducted in the Piceance Basin of Western Colorado and New Mexico’s San Juan Basin although the outcomes were disappointing, and therefore, halting the tests. Consequently, the petroleum industry then embraced the new massive HF method as a way of recovering tight gas from such tight rocks (Fernandez & Gunter, 2013). An oil and chemical corporation, Amoco, in early 1970s introduced massive HF to the Wattenberg field of Colorado for the sole purpose of recovering natural gas from the low permeability J Sandstone. It is notable that the Wattenberg field was not profitable before massive HF. The injected 200,000 pounds of sand proppant and 132,000 gallons were effective in recovering much higher volumes of natural gas than was impossible to recover previously (Fjaer, 2009). The success of massive HF in Wattenberg Field was followed by its application in natural gas wells drilled to tight sandstones of the Mesaverde Group of Western Colorado in the late 1970s. Beginning 1970s, a substantial number of tight-sandstone natural gas wells in the United States were stimulated using massive HF. The following are some of the areas that were made economic by the massive HF procedure; fields in the Green River Basin of Wyoming, Ohio’s Clinton-Medina Sandstone play, Cotton Valley Sandstone trend in Texas and Louisiana, and New Mexico’s San Juan Basin (Valko & Economides, 2005). The process of HF is also largely applied in coalbed methane wells, which started to be drilled in the 1980s. Ehrenberg, (2012) pointed out that coalbed methane wells are typically hydraulically fractured to increase the rates of flow to the well. Commonly, HF is employed in some coalbed methane areas, for instance the Raton Basin of Northern New Mexico and Southern Colorado and Black Warrior Basin of Northern Mississippi and Western Alabama, but not in others, for instance the Power River Basin of Northern Wyoming and Southeast Montana, as it depends on the geology of the local area. The volumes injected are much smaller compared to those of either shale gas wells or tight gas wells. The average volume injected for coalbed methane wells is 57,500 gallons (Brady, 2013). The process of HF is also extensively used in shales. In the 1970s, the government of the United States kicked off the Eastern Gas Shales Project which comprised several private-public hydro-fracturing pilot demonstration projects (Continental Economics, 2012). At the same time, a natural gas industry research consortium, Gas Research Institute, obtained endorsement for funding and research from the country’s Federal Energy Regulatory Commission. Mitchell Energy in 1997 developed the HF method called slickwater fracturing, and this was very essential in making the extraction of shale gas economical. In the United States, the shale-gas industry increased production from shale by 45% annually from 2005 to 2010, and as a percentage of America’s overall gas production, shale-gas grew to 24% in 2012 from 4% in 2005 (Continental Economics, 2012). As of 2012 in the United States, over 1.1 million jobs in HF had been done – some natural gas wells were fractured hydraulically at least twice – and nearly 90 percent of the country’s new onshore natural gas and oil wells are hydraulically fractured. The United States, by 2016, will produce more oil using unconventional methods such as HF compared to conventional methods. Whereas ten years ago, natural gas from shale represented a diminutive proportion of natural gas in the United States, at present, it is estimated to constitute 30% and by 2035, it could constitute 50% of domestic supplies (Fernandez & Gunter, 2013). Despite the fact that the process of hydraulic fracturing was started over five decades ago, it was only until this process joined up with another technique known as horizontal drilling, was the technology employed in unlocking substantial reservoirs of natural gas that could not be accessed previously (Hammer & VanBriesen, 2013). Some of the shales where hydraulic fracturing technology is extensively utilized to extract natural gas from tight, low permeable rocks thousands of feet underground include the Barnett Shale, Haynesville Shale, Fayetteville Shale, Eagle Ford Shale and the Marcellus Shale. The technology is also used in California. The natural oil and gas industry has been ostensibly relying on hydraulic fracturing since 1940s. For instance, in the state of Colorado, hydraulic fracturing became a routine completion technique for most of its wells. Owing to increased public interest and the concern on the impact of hydraulic fracturing on the environment and public health, including the ground water and surface resources, the COGCC compiled documents and links on its websites that provides information to anyone concerned on hydraulic fracturing. This information is hoped to be useful in assisting the understanding on hydraulic fracturing, its definition, and its benefits, how it is regulated and the industry undertakes the protection of the environment and the public (COGCC, 2013). Hydraulic Fracturing in Barnett Shale The state of Texas pioneered slickwater fracturing, which is one of the modern techniques of fracturing mostly used in shales. With assistance from federal research, oil and gas corporations learnt in the 1990s that injecting substantial amounts of water and proppants like sand, together with smaller amounts of chemicals down a well can induce and expand fractures/cracks in shales; the proppant was mainly used to keep the fractures open, and this technique enabled the natural gas to flow from the shale (Wiseman, 2013). HF technology has been perfected for shale reservoirs in the Barnett Shale of Texas. This technique has since expanded to other states in the nation and contributed significantly to the modern energy renaissance that the International Energy Agency (IEA) declared. Hydraulic Fracturing in Haynesville Shale Haynesville Shale is a rock formation underlying large parts of East Texas, Northwest Louisiana and South-western Arkansas made-up of organic-rich mudstone. The shale is found at depths of between 10,500 – 13,000 feet underground, and is between 200 to 300 feet in thickness. The rock containing the natural gas is tight and of low permeability and requires HF to extract the gas (Johnson, 2010). The shale contains substantial quantities of natural gas and prior to 2008, this gas could not be recovered and the gas therein was considered uneconomic to extract. Nonetheless, because of improved technology in hydraulic fracturing process, it became feasible to extract the natural gas from the tight Haynesville Shale in a cost-effective and economic way. The hydraulic fracturing operation occurs at depths exceeding 2 miles or about 10,000 feet. The Haynesville Shale contains about 243 trillion ft³ of potential natural gas extraction. This makes this shale the biggest natural gas play in the country. It is equal to 18 years’ worth of oil production in the United States (Kargbo, Wilhelm, & Campbell, 2012). In 2008, increased production as a result of HF technology enabled the Haynesville Shale to pump $4.5 billion into Louisiana’s economy and created roughly $3.8 billion in household earnings. The biggest impact on household and indirect earnings was experienced by employees within the sector of mining in the same year. Moreover, it created substantial amount of money in new earnings in 7 other sectors which include: $56.7 million in health care; $46.6 million in management; $38.5 million in scientific and technical services; $35.7 in retail trade; $33.5 million in manufacturing; and $31.8 in the construction sector (King, 2012). In addition, as a result of the extraction activities that have been made possible by hydraulic fracturing technology in Louisiana, more than 33,000 jobs were created indirectly and directly, and this new jobs are dispersed widely throughout the sectors and industries. The State of Louisiana did not suffer from the effects of 2008 recession, financial crisis, unemployment or real estate that many other States suffered from primarily because of the Haynesville Shale (Kargbo, Wilhelm, & Campbell, 2012). Hydraulic Fracturing in Fayetteville Shale The Fayetteville Shale is an organic-rich and tight black rock of Mississippian age underlying much of northern parts of Arkansas and nearby states that requires hydraulic fracturing technology to extract the natural gas contained within. The shale is an unconventional gas reservoir whose thickness ranges between 50 – 550 feet. This shale produces gas in the mid portion of the Arkoma basin. Wells are drilled at depths of between 1,600 to 7,100 feet underground (Jackson et al., 2013). For a number of decades, vertical wells have been drilled to just above the shale. They are then turned and drilled horizontally through the rock. Many vertical fractures are intersected by these horizontal wells, in turn bringing a flow of gas into the gas well and drain the adjacent rocks. Hammer and VanBriesen (2013) stated that HF technology is employed extensively here to induce fractures whereby pressurized fluids are pumped down the wellbore in order to fracture the rock unit. These extra fractures serve to enhance Fayetteville Shale’s permeability allowing more efficient production of natural gas. HF has enhanced and developed secondary fracture permeability and porosity and facilitated successful extraction of natural gas from the reservoir. Hydraulic Fracturing in Eagle Ford Shale Other than the Barnett Shale, the state of Texas also has the Eagle Ford Shale, which is an oil and natural gas producing site located in South Texas discovered in 2008. This shale is 50 miles wide and 400 miles long, touching the border with Mexico and reaches all the way to East Texas. The Eagle Ford Shale is extraordinary since it produces both gas and oil. Seventy-percent of the rocks that produce natural gas and oil here are naturally brittle and therefore, ideal for fracking (Wiseman, 2013). Typically, HF technology is employed in the Eagle Ford Shale, where wells are vertically drilled very deep underground. They are then moved horizontally into the shale beds. From that point, a mixture of chemicals, sand and water is pressure-blasted into the rock formation in order to discharge natural gas and oil deposits. As a result of HF technology, this shale produced over 13.5 million oil barrels in 2011 and its economic output may be as high as $22 billion. Moreover, because of hydraulic fracturing, the Eagle Ford Shale is currently the centre of economic activity in the state of Texas. By 2022, there will be nearly 5,100 new wells here and this may add roughly 70,000 full-time jobs in Texas (Hammer & VanBriesen, 2013). The natural gas and oil in this shale are trapped in tight rock and if it were not for HF and its horizontal drilling technique, it could not have been possible to extract these natural resources. Hydraulic Fracturing in the Marcellus Shale The Marcellus Shale refers to a black shale formation that extends deep subsurface from Ohio and West Virginia in the Northeast and into Pennsylvania and Southern parts of state of New York. Even though it is exposed at the ground surface in a few locations in the northern Finger Lakes region, Marcellus Shale is as deep as 6, 900 feet underground or even more along the Pennsylvania border in the Delaware River valley (Kargbo, Wilhelm, & Campbell, 2012). Low-yield wells of natural gas have been drilled in the Marcellus Shale for over 5 decades, but the process of HF has exposed the possibility of more profitability tapping the shale for natural gas. HF activities focus in locations where the Marcellus Shale is more than 2,000 feet deep. Across its entire extent, it is estimated that this shale could contain about 489 trillion cubic feet of natural gas. The state of New York alone uses roughly 1.1 trillion cubic feet of natural gas annually. Even though geologists have for long been aware of Marcellus Shale’s natural gas resources, its tightness and depth made exploration and production of gas extremely difficult and costly. However, enhancements to gas Well development technology, particularly hydraulic fracturing has increased extraction of this resource (Kargbo, Wilhelm & Campbell, 2012). Hydraulic fracturing process in New York State’s portion of the Marcellus Shale has been used since the 1950s but has been especially helpful in recent years in production from the shale tight rocks. No explosions or blasts are created by this process. Because of HF technology employed in Pennsylvania’s portion of the Marcellus Shale, it is projected that the drilling of natural gas will generate $14 billion to this state and create roughly 97,000 jobs and bring in $900 million in local and state tax revenue in 2015 (King, 2012). Hydraulic Fracturing In California California’s HF occurs in a very different way compared to how the process is done in other states. This process has been employed in California as a production stimulation technique f...