Fracking Facts: Is Our Water Supply at Risk?

April 6, 2016 Elizabeth Alford

In the debate against fracking and its impacts on the environment, there have been many concerns raised about the amount of water used in the fracking process and the potential danger to the depletion of our nation’s water supply.

But...is fracking actually using more water than the production of other energy sources?

Fracking vs. Other Conventional Extraction Methods

Before a power supply can be processed for energy use, it has to be mined or extracted from the earth. Every type of conventional energy source uses water in its extraction method, with fracking using less than the others.

Coal: According the Department of Energy, mining coal takes a minimum 230 trillion gallons of water a year.
Fracking Oil and Gas: In comparison to coal, between 2009-2014, only 240 billion gallons of water were used in fracking operations across the country.
One example is that electric generation in Pennsylvania's Susquehanna River Basin uses nearly 150 million gallons a day in the, while the projected total demand for peak Marcellus Shale activity in the same area is 8.4 million gallons per day.

Setting up a fracking well can take up to two times the amount of water than a conventional oil well, but research shows that fracked wells produce significantly less waste, making it a better alternative for the environment, especially over the lifetime of the well.

All together, the amount of water used in fracking is estimated to be at .87% of the total industrial water used and .04% of the total freshwater in the United States (Duke University). The area of the United States that consumes the most water in it’s active shale plays is Texas, however a recent study done by the University of Texas states, “ hydraulic fracturing is actually helping to shield Texas from water shortages because it is allowing the state to move away from using more water intensive energy resources.”

The Processing of Natural Gas vs. Other Energy Sources

After extracting the resource, it has to be refined and turned into electricity, and again the use of natural gas (as a direct result of fracking) uses significantly less water than other sources. The following table shows the amount of water used to generate electricity from the top three current energy sources:

Environmentalists are quick to point to the superior choice of solar or thermal energy, but it is unlikely that those sources will ever be able to provide enough energy to quench our national thirst. Natural gas, acquired through fracking, is quickly rising to the top of the playing field as an environmentally safe and economical alternative to less desirable sources.

“From a 2015 study done by Stanford University, “Fracking’s impact on both climate change and local air pollution is similar to its impact on water...Unconventional energy generates income and, done well, can reduce air pollution and even water use compared with other fossil fuels.”

Fracking Facts: Cleaner Than Coal

March 2, 2016 Elizabeth Alford

The fracking boom in the Eagle Ford and across the country, beginning around 2008, has caused a huge unexpected benefit: the shift away from using coal as a primary energy source to using the cleaner alternative of natural gas.

Related: Is Fracking Safe?

Hydraulic fracturing, better known as fracking, is the process of extracting natural gas from shale formations by use of water and chemical mixture.

Although fracking is extremely cost efficient and productive, it has remained under fire for the last eight years as some claim it causing extreme harm to the environment.

Following is a quick look at the two most important potential environmental hazards of fracking compared to the production/mining of coal.

Fracking Fact: Less Water Contamination

The number one argument against fracking by environmentalists is the concern over water contamination. But current research suggests that coal mining plants are actually much more likely to contaminate your drinking water.

A recent study by Duke University states, ‘New data from 236 domestic wells from Pennsylvania and New York states show no systematic difference in chloride, barium, chromium, boron and arsenic contents in wells located in ‘active’ zones and ‘non-active’ areas’.
‘...only 42 documented incidents of such problems (water contamination), out of tens of thousands of wells drilled.’ (MIT)
Of the 290 coal plants observed by the EPA, 132 reported contaminated surface waters and 123 contaminated surface waters.

“With respect to arsenic, boron, cadmium, iron, lead, manganese, nickel, selenium and thallium, the 290 coal plants observed by the epa put as much strain on the environment as thousands of sewage plants. “In almost each instance, coal plants are the largest source of each of these pollutants nationally.”

Fracking Fact: Fewer Emissions

A 2011 study done by Carnegie Mellon University states that ”wells in the Marcellus region emit 20 percent to 50 percent less greenhouse gases than coal used to produce electricity”.

Here are the top four emissions that make coal so fatal:

Sulfur Dioxide- Coal plants are the number one source of SO2 pollution in the U.S. causing acid parties that can penetrate the human lungs and acid rain.
Nitrogen Oxide: NOx is the number one contributor to smog pollution.
Particulate Matter(soot)- Causes a wide array of breathing problems ranging from asthma, recurrent bronchitis and death.
Mercury- Coal plants cause over half of the U.S. mercury emissions (caused by humans).

In today’s world, vast amounts of energy are needed to sustain our quality of life and as we collectively look at which energy sources are the safest for our world, the shift to natural gas over coal is a step in the right direction.

Eagle Ford Shale Year in Review 2015

December 30, 2015 Elizabeth Alford

Boom. Bust. Risk. Reward. Opportunity. Crisis.

All of these are words used to describe life in the oil and gas industry. 2015 has been one wild ride for the Eagle Ford as crude prices plummeted, people lost jobs and companies failed.

After topping $100 a barrel in 2014, crude prices began a descent that is still in play with prices falling below $35 earlier this month, a seven-year low that is wreaking havoc on operators and local economies.

In January, evidence of the crude crash become obvious as producers began reporting big losses for the last quarter of 2014. Operators slashed their projected spending for the new year, sometimes as much as 70%, as the reality of the situation sunk in.

As many people became nervous, some industry leaders early in the year expressed optimism and called for perspective. At NAPE in February, Bob Fryklund (IHS) encouraged participants not to push the panic button too quickly. He acknowledged that the conversation has changed in recent months but was quick to remind participants of the cyclical nature of the industry and that history indicated we would weather this storm.

Eagle Ford Rig Counts & Production

The slide in oil prices in 2015 was reflected in the number of drilling rigs in the Eagle Ford as producers began to sideline rigs as a tactic to wait out the low prices. Rig counts across the country and in the Eagle Ford fell steadily for most of 2015, but stabilized in the last quarter.

Many believe that once oil prices rise, the U.S. will be in a prime position because of the thousands of wells that have been drilled, but not yet completed. This ‘fracklog’ holds a lot of potential production with likely more than 1.5 billion barrels of oil just being held back, ready to go. In the Eagle Ford it is estimated that there are 1400 wells that have yet to be completed.

Despite the reduced rigs, production in the Eagle Ford hit record amounts for most of the year. In January, Texas led the worldby producing 18.81 billion cubic feet of natural gas per day, more than more than any member of OPEC. Karnes, Dimmet and McMullen Counties topped U.S. production with Karnes accounting for 30% of all Eagle Ford activity. Even though production began to sow in April, the region still produces an average of 1.5 million barrels per day, a year-to-year increase of nearly 40,000 incremental barrels per day (3%) from November 2014.

Companies Struggle to Survive

Oil producers have used every tactic in the book to try and squeeze out more oil for less this year. They have become more efficient, increased technologies and reduced costs, including one CEO who slashed his own salary.

It took a little time for the reality of the low oil prices to finally trickle down, but after months of plummeting crude, the boom became a bust for many when companies started handing out pink slips. By October, the industry lost an estimated 200,000 jobs with around 60,000 in Texas alone.

For some companies, decreasing budgets and laying off workers wasn’t enough to stay afloat and over 18 Eagle Ford producers filed for chapter 11 in 2015 including Energy & Exploration Partners, Sabine, American Eagle Energy, Quicksilver Resources, BPZ Resources, WBH Energy and Walter Energy. By mid December Haynes and Boone, LLP released a report that showed there were 36 bankruptcies nationwide totaling about $13 billion in debt.

New Rules & Regulations

Another challenge facing the Eagle Ford in 2015 was the increased reach of the government to regulate the oil and gas industry.

After Denton officials outlawed fracking, Texas Governor Greg Abbott signed legislation in May that allows state authority to override local decisions about oil and gas regulations. State officials were also vocal in their opposition of other federal guidelines for fracking and methane emissions, calling them a blatant attack on the industry that will kill Texas jobs. In July, Texas’ Attorney General Ken Paxton even filed a lawsuit, accusing the Obama Administration of illegally attempting to expand the jurisdiction and regulatory power of the EPA in such a way as to threatens private property ownership.

Texans fought hard to end the 40 yr old oil export ban. A 2015 study from Rice University revealed that the ban had the greatest impact on producers in the Eagle Ford Shale since its sweet crude should attract a higher price on the international market. The ban was recently repealed, opening markets for Eagle Ford producers. Also last month, the U.S. Department of Commerce opened the door for a limited amount of oil to be exported to Mexico through an exchange program that will allow the U.S. to ‘swap’ its light sweet crude for Mexican heavy sour crude.

Tighter regulations were also suggested over concerns about the connection between fracking and earthquakes. A study led by researchers at SMU concluded that earthquakes in the north Texas communities of Azle and Reno were likely triggered by the wastewater disposal methods used by fracking companies and asked the Railroad Commission to consider additional regulatory changes to ensure that oil and gas continues to be developed safely yet with minimal economic impact in Texas.

Effects on Texas Economy

As the value of the oil and gas being pumped from the ground dwindled, the shrinking tax base for local governments have affected local and state economies. There is now less money to run schools, police departments, road crews and other important infrastructure. Research director, Thomas Tunstall says that communities that avoided immediately spending their newfound oil and gas wealth are doing better than those who did not, and that those that diversified are doing best of all.

The latest numbers produced monthly by Comerica Bank show that the Texas Economic Activity Index continues to decline. The Index measures such variables as non-farm payrolls, exports, hotel occupancy rates, unemployment insurance claims, housing starts, sales tax revenues, home prices, and the state rig count.

In the following video, Mine K. Yücel, Dallas Fed senior vice president and director of research, provides updates on the Texas economy.

Birthday of 2014 Oil Crash

June 23, 2015 Elizabeth Alford

This week marks the birth of the 2014 oil crash and a closer look suggests that things aren't as bad as some predicted.

What started as a slow decline in June 2014 accelerated into a full-blown crash throughout the fall. When prices finally bottomed out in March, they had dropped by more than half from over $105.00 to $48.00.

By last December, uncertainty fueled the news machines and cries of doom became commonplace. Some analysts predicted possible economic ruin for oil-dependent states and others warned of the crippling of the industry.

But many seasoned oilmen saw the downturn as a wake up call of sorts and an opportunity for producers to take a hard look at their systems, processes, personnel, technology and strategies outside of the frenetic pace the boom required.

Cutting Costs: Over the last few month, producers have been forced to tighten their budgets and change their strategies in order to stay competitive. These tactics have worked well and first quarter results show many companies have been able to stay the course and gain strength by slashing costs associated with drilling through greater efficiencies and supplier reductions.

Sanchez reported Q1 costs at 30 to 40% below fourth quarter 2014
Matador reduced operating costs 30% to 40% for Q1
Continental’s drilling and completion costs fell by 15%
EOG announced it has benefitted greatly from the pull-back in activity and progress is being made to lowering cost in each phase of their operations

Innovation: Cutting edge producers are pushing the science and technology to new levels as they work to get the most out of their resources. These include advancements in 3-D seismic research, telemetry, remote guidance and innovations in CO2 or nitrogen-style completions.

“Oil production is becoming a modern manufacturing process. The frackers are engaged in ‘just-in-time’ production, analogous to the methods pioneered by Japanese manufacturers in the 1970s and 1980s, which led directly to hyper-efficient global supply-chain management perfected by Wal-Mart in the 1990s.”

— Wall Street Journal

Economic Impact: Thousands of jobs have been cut across all sectors of the industry, but both Texas and North Dakota report that the oil crisis has had minimal impact on their states. Data shows that Texas dipped in the first quarter but is already showing signs of a rebound and the North Dakota Department of Commerce boasts that the ND economy is still booming.

Dropping Rig Counts: The national and regional rig counts took a big hit this year as producers pulled rigs offline to save money. Many report that these wells are waiting in the wings and are ready to be put back into production later this year.

Record Production: Even in light of the price drop, production over the last 12 months has been at record levels. The EIA data published this month shows that global petroleum oversupply has more than doubled to 2.6 million bpd since the end of the second quarter last year and they expect the oversupply to last at least until 2017.

Memorial Day 2015

May 25, 2015 Elizabeth Alford

Wishing you a safe and happy Memorial Day.

Please take a minute today to remember those who sacrificed so much for our quality of life.