Professional Documents
Culture Documents
Investor Uprising - Shaking Out Fracking Fact From Fiction
Investor Uprising - Shaking Out Fracking Fact From Fiction
MOBILE
HOME | GLOBAL MACRO | MEDIA | TECHNOLOGY | BIOTECH | COMMODITIES | EDUCATION | IU25 INDEX | ABOUT US
Sherri Cruz
Earlier this month, the British shale gas company, Cuadrilla Resources Ltd., made an unlikely admission: It concluded the fracking it was doing in the Bowland Shale formation in Lancashire probably caused several slight earthquakes that occurred last spring.
The company stated in press release that it was likely the fracking triggered "a number of minor seismic events." The company is now taking preventive measures, including the use of an early detection system to monitor quakes. Although most energy companies tend to downplay so-called "shalequakes," the reality is hard to argue. (See Quaking Over the Search for Energy.) As Austin Holland, a seismologist at the Oklahoma Geological Survey, explained, "By definition, when fracking occurs so do 'microseismic' events, or really, really small earthquakes." Microseismic events are too slight to feel. Even "minor" earthquakes, such as Caudrilla's, which measured 2.3 on the Richter scale, or a cluster that occurred in Oklahoma earlier this year, which only ranged as high as 2.8, are felt by relatively few. The more significant question is whether hydraulic fracturing can trigger larger earthquakes -ones that measure 3 or greater, and have potential to create minor to severe property damage. Three seismologists interviewed for this post all said yes. But they also noted that the odds of such an event happening is rare, and further noted that the risk can be mitigated. "Almost all of the earthquakes that are associated with fracking are very small," Dr. Peggy Hellweg of the University of California Berkeley's Seismological Laboratory told IU. The greatest risk is from a potential large earthquake triggered by an unknown fault. "Drilling and high pressure applied on a fault could trigger an earthquake if the fault is close to failure," she says. "As far as I know, fracking isn't done on known faults, but there are undiscovered faults. There are millions of undiscovered faults." There are numerous examples of California earthquakes that happened on unknown faults, including the 1971 San Fernando earthquake, the 1983 Coalinga earthquake, and the 1994 Northridge quake. None of the three, however, was linked to fracking. But fracking involves the injection of fluid into the ground under high pressure. And generally speaking, pumping fluid into the ground can induce seismicity. Geologists blamed filling a reservoir, for example, for a large 1967 earthquake in India, says John Vidale, director of Pacific Northwest Seismic Network in Seattle. "We think you can trigger an earthquake of any size," he says. "It's just that the biggest ones are very rare." Vidale says fracking could've triggered the 5.6 quake earlier this month in Oklahoma. It might have been a quake waiting to happen, and pushed to reality by the fluid pumped into the ground. The energy industry seems to understand the concerns raised by fracking. "Every new well that has to be drilled means the company has to prove itself in front of the public," says Steve Everley, spokesman for D.C.-based Energy in Depth, the information arm of the Independent Petroleum Association of America, a trade group. "There have been incidents," Everley says. "No industry is perfect." But he maintains the industry largely owns up to accidents and learns from them, adding, "There's always room to improve." The industry founded Energy in Depth to educate people about onshore energy sources and
IU Education
Resources to help you become a better investor
The industry founded Energy in Depth to educate people about onshore energy sources and associated technologies, including fracking. "This is an increasing part of what we're doing," he says. "It's become part of our operations." Earthquakes aside, environmental groups have been focusing their muster on instances of the hydraulic fracturing process leading to contaminated water. The Environmental Protection Agency has been studying the effect of fracking on drinking water (it's not looking at shalequakes), and is expected to release another in a series of reports next year. "Natural gas plays a key role in our nation's clean energy future, and the Obama Administration is committed to ensuring that we continue to leverage this vital resource responsibly," the agency stated in a press release earlier this month. Environmental groups point to other potential environmental hazards, such as emissions, land degradation, and the disruption of wildlife habitats. The US Department of Energy released a final report Nov. 18, making several "best practices" recommendations for shale gas companies, including reducing air pollution and disclosing the exact makeup of their fracking fluids. Companies can now voluntarily reveal their fluid compositions at FracFocus.org. The industry has had some high-profile scrutiny. PBS, 60 Minutes, and the BBC have all highlighted concerns about the industry. The movie, Gasland, called attention to what it dubbed the "Halliburton loophole," which exempts the industry from being regulated under the 2005 Safe Drinking Water Act. It's called the Halliburton loophole because former Vice President Dick Cheney, who used to be chief executive of oil and gas company Halliburton Co. (NYSE: HAL), spearheaded the exemption for the energy industry. Everley says environmental groups have created mostly hysteria around the exemption, arguing that the industry is exempt because of geology rather than politics. The geology of shale sites varies in different states, so it's preferable that each site is regulated by the state in which it is located, he contends. The industry isn't exempt from other federal regulations, however, and has a slew of federal and state regulations with which it complies. While fracking has risks, it also has upsides. Fracking is creating jobs and is helping to develop a long-term supply of affordable energy. That energy is reducing our dependence on foreign oil, which in turn can help contribute to our national security. Perhaps the key question that needs to be answered is whether the risks involved with fracking outweigh rewards -- or if the rewards are greater than the risks. In truth, an accurate answer might be different in different places, depending on geology, geography, and population density.
EMAIL THIS PRINT COMMENT
RIConferences Our Portfolios' Sorry States of Affairs > @InvestUprising http://t.co/7V3j7bnD
Quick Poll
If you had the option to direct the entire amount you pay in income taxes to an IRS-recognized charity devoted to education, healthcare, social welfare, or the environment instead, would you?
Yes, eagerly. I would pay the equivalent of 50% or more of my income tax to a charity. I would pay the equivalent of up to 50% of my income tax to a charity. No, I trust the government completely to spend my tax dollars wisely. Other. Tell us on the message boards. Submit
POLL ARCHIVE
follow us
COMMENTS
VIEW COMMENTS: NEWEST FIRST | OLDEST FIRST | THREADED VIEW
PAGE 1 / 3 > >>
writenoreen "Our Portfolios' Sorry States of Affairs" http://t.co/paY674O2 #iuprising RIConferences So What if the Internet Goes Dark? > @InvestUprising http://t.co/FBjWgE3b InvestUprising So What if the Internet Goes Dark? http://t.co/1HbPzXWd
The overall liability of fracking is too much for some commercial insurance companies to bear. They won't sell operators any coverage. Other insurers, of course, are jumping on the business (cautiously they say).
REPLY POST MESSAGE MESSAGES LIST START A BOARD
Like Us on Facebook
NO RATINGS LOGIN TO RATE
I agree @Broadway. In California, earthquake insurance is definitely a rider that has to be purchased separately from standard homeowner coverage. And it's extremely expensive and not a given that one will qualify. It's hard to imagine how a fracking operation could begin to carry liability insurance against the massive damage it might cause. We had some blasting done in our neighborhood recently, and the demolition company really wasn't even covered to any great degree for major seismic damage had any occurred.
REPLY POST MESSAGE MESSAGES LIST START A BOARD
Hin
Irobeyde
Reginald
Shirley
Angela
Heather
Mike
Karen
Rodney
Cynthia
I've done some research into insurance for fracking, and my best guess is that the operators would NOT have insurance, unless they specifically bought coverage for third-party liability for quakes. Generally, for first-party property insurance, quake is a special coverage that needs to be bought separate from standard property insurance. The same would hold for liability insurance.
REPLY POST MESSAGE MESSAGES LIST START A BOARD
You are right, these two are really thought provoking pieces. Thanks goes to Sherri. And thank you for coming up this detailed list for fliud. I have a question, is fracking done on lnad only, or it has been applied in ocean? If it's done in ocean, is there any difference, like fluid used? Again, this is an informative article. I didn't understand what those enironmental protesters shouting for. Now I start to get the idea. I am not sure if this fracking will destroy our environment, but it's a thing we shall pay attention.
Re: Insured ? tokyogai 11/27/2011 1:06:31 PM Really good list. It takes the mystery out of it.
USER RANK PLATINUM REPLY POST MESSAGE MESSAGES LIST START A BOARD
Re: Insured ? Noreen Seebacher 11/26/2011 12:08:58 PM Maybe more than you want to know...
USER RANK BLOGGER
99.5% water and sand 80.5% water 19.0% proppant plus 0.5% chemicals (What kind of chemicals? See below for more details) Fresh Water 80.5% Proppant 19.0% Allows the fractures to remain open so the oil and gas can escape Common use: Drinking water filtration, play ground sand Acids - 0.12% Help dissolve minerals and initiate fractures in rock (pre-fracture) Common use: Swimming pool cleaner Petroleum distillates 0.088% Dissolve polymers and minimize friction Make-up remover, laxatives, and candy Isopropanol 0.081% Increases the viscosity of the fracture fluid Glass cleaner, antiperspirant, and hair color Potassium chloride 0.06% Creates a brine carrier fluid Low-sodium table salt substitute Guar gum 0.056% Thickens the water to suspend the sand Thickener used in cosmetics, baked goods, ice cream, toothpaste, sauces, and salad dressing Ethylene glycol 0.043% Prevents scale deposits in the pipe
Automotive antifreeze, household cleansers, deicing, and caulk Sodium or potassium carbonate 0.011% Improves the effectiveness of other components, such as cross-linkers Washing soda, detergents, soap, water softeners, glass and ceramics Sodium Chloride 0.01% Delays break down of the gel polymer chains Table Salt Polyacrylamide 0.009% Minimizes friction between fluid and pipe Water treatment, soil conditioner Ammonium bisulfite 0.008% Removes oxygen from the water to protect the pipe from corrosion Cosmetics, food and beverage processing, water treatment Borate salts 0.007% Maintain fluid viscosity as temperature increases Used in laundry detergents, hand soaps and cosmetics Citric Acid 0.004% Prevents precipitation of metal oxides Food additive; food and beverages; lemon juice N, n-Dimethyl formamide 0.002% Prevents the corrosion of the pipe Used in pharmaceuticals, acrylic fibers and plastics Glutaraldehyde 0.001% Eliminates bacteria in the water Disinfectant; Sterilizer for medical and dental equipment
Re: Insured ? Dex 11/26/2011 12:06:57 PM Anyone know what's in frac fluid?
USER RANK IRON REPLY POST MESSAGE MESSAGES LIST START A BOARD
It will be especially interesting in North Dakota, a place that I seem to recall as being relatively immune to earthquakes.
USER RANK PLATINUM REPLY POST MESSAGE MESSAGES LIST START A BOARD
Yes, I'm intrigued. I'm going to be watching this over the coming months to see how it all shakes out
USER RANK PLATINUM REPLY POST MESSAGE MESSAGES LIST START A BOARD
Re: Insured ? Noreen Seebacher 11/25/2011 5:08:33 PM Interesting and thought provoking stuff Sherri
USER RANK BLOGGER REPLY POST MESSAGE MESSAGES LIST START A BOARD
The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
PR Newswire's Terms of Use Apply | Privacy | Contact Us Copyright 1996-2012 PR Newswire Association LLC. All Rights Reserved. A UBM plc company.