Why fracking won’t solve the global oil and gas crisis

A tsunami of oil and gas from the technique called fracking has made the United States the world’s largest producer of the two, giving the country the energy independence its leaders have sought for decades and shaking up the geopolitics of world trade. ‘energy. Now, as the world clamors for more oil and gas, American frackers are theoretically in a position to supply it. Instead, they are holding back, having changed their business models to focus on generating profits for investors rather than increasing production.

Fracking, or hydraulic fracturing, was first used commercially in 1949 in the oil and gas rich US state of Oklahoma. The technique involves forcing water mixed with sand and chemicals down a well to create cracks in underground rocks called shale so that any oil or gas trapped inside can be captured. Advances in another technique, horizontal drilling, appeared in the early 1980s and opened up access to thin layers of shale at depth. Subsequent mining of the Barnett Shale formation in Texas proved that large-scale fracturing was economically viable.

2. How has fracking changed energy trading?

U.S. oil and gas production has more than doubled in two decades, largely driven by shale-rich areas like the Permian Basin, which stretches from Texas to New Mexico and alone pumps more oil than most OPEC countries. This has allowed the world’s largest economy to export fossil fuels at a rate unthinkable just a few years ago. New American dominance is undermining OPEC’s ability to control the oil market. OPEC tried to drive North American frackers out of business from 2014 by flooding the market with crude, causing prices to plummet. Although some frackers have gone bankrupt, on the whole they have been nimble, innovative in reducing production costs and staying alive. The abundance of shale gas has helped the United States nearly halve its consumption of coal, the dirtiest fossil fuel since 2008. In addition, American gas is now available on world markets, thanks to a process that allows it to be super-cooled into liquefied natural gas and transported by ship.

3. Why are American frackers holding back now?

Recent oil crises, exacerbated by the pandemic, have driven many producers out of business. Coming out of the wreckage, investors demanded that listed producers exercise more austerity and return profits to shareholders rather than reinvesting everything in drilling. Some of the largest US producers generally keep annual production growth at 5% or less. Service providers who are hired to perform the actual fracking also benefit from the opportunity to reward their shareholders with higher returns. They are delaying ordering more equipment to avoid being stuck with excess equipment like they were at the end of previous booms.

4. Where else is fracking done?

Canada was the first country to fully embrace shale mining outside of the United States. It is also spreading in Argentina, Australia, China and Saudi Arabia. In other places, the practice is controversial, and some countries have outright banned it. In the UK, the government lifted a moratorium on new fracking permits in September amid an energy crisis sparked by Russia’s curbs on its gas exports.

5. What are the objections?

Opposition to fracking within communities often focuses on water issues. The large amount of water required for fracking – up to 16 million gallons per well in the United States – can threaten local supplies, and concerns have been raised that shale operations could contaminate water sources. ‘water. Fracking and, more commonly, the pumping of sewage into wells, has been linked to earthquakes. They have been mostly small, but tremors in China’s shale center of Sichuan province killed two people and damaged 11,000 homes in early 2019. More generally, critics of fracking say that by making more abundant oil and gas have reduced incentives to invest in a switch to renewables, even as climate scientists call for accelerating change.

6. What are the defenders saying?

They note that a growing number of companies are reusing the water used to fracture a well multiple times and are reducing emissions from their operations by using electric vehicles instead of the diesel fleets typical of the oil and gas industry. They point to the jobs created by hydraulic fracturing and the cleaner air produced by natural gas where it replaces coal. Their broader argument is that compared to coal, the gas emits half as much carbon dioxide, the most important greenhouse gas. There is vigorous debate about the extent to which carbon savings are offset by leaks of methane throughout the natural gas supply chain, a more potent greenhouse gas than carbon dioxide. Proponents tout natural gas as a “bridging fuel” that will ease the transition to renewables, providing power when wind and solar sources don’t, until enough storage capacity is built. .

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