Hydraulic Fracturing

Hydraulic Fracturing

Name:

Instructor:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table of Contents

Introduction. 2

Legal and Environmental Issues in Hydraulic Fracturing. 3

Environmental Consequences. 3

Legal Consequences. 4

Federal and State Regulations Addressing Hydraulic Fracturing. 4

Hydraulic Fracturing in China and the United States. 5

President’s Executive Order on Hydraulic Fracturing. 6

Role of Hydraulic Fracturing In Meeting Energy Needs. 7

Economic Impacts of Hydraulic Fracturing. 8

Personal Opinion. 9

Conclusion. 10

References. 10

 

 

 

 

 

 

 

 

 

 

Hydraulic Fracturing

Introduction

Hydraulic fracturing is a process of oil and gas extraction that involves the use of hydraulic machines to apply pressure on underground rocks. Commonly referred to as fracking, hydraulic fracturing has triggered extensive controversy over its safety risks and long-term depilation of the environment. This report seeks to analyze the procedures used in hydraulic fracturing. The analysis will also involve the legal, economic and environmental consequences involved with this method of extraction. The conclusion will include individual opinions on how the issue of hydraulic fracturing is being handled in the United States and the future of the technology in the sector.

Legal and Environmental Issues in Hydraulic Fracturing

Environmental Consequences

The use of hydraulic fracturing has triggered environmental concerns and has renewed efforts into the review and amendment of the current regulatory policies. These environmental dangers include contamination of underground water and air, release of toxic gases and chemicals used in the fracturing process to the surface as well as poor waste management. While these activities can be costly on the environment, the ultimate issues arises in the probability that fracking can raise the amount of atmospheric carbon-dioxide levels significantly. Extensive research into the environmental impacts of hydraulic fracturing has been conducted in the United States due to its large investment in research on hydraulic fracturing. Research into fracking by different bodies and individuals has been hampered by different factors such interference from wealthy stakeholders within the government as well as industry reluctance to release environmental reports on the impact of fracking.

Despite these challenges, fracking has been found to have the following impacts on different aspects of the environment. In the extraction of oil using hydraulic fracturing, natural gas is also exuded during the process. These released gases included toxic ones such as hydrogen sulphide that has grave consequences on the central nervous system when inhaled by human beings. Most of these gases are flared but either way they are released as natural gas or as carbon dioxide, that has adverse effects on the atmosphere and ozone layer. Fracking also has the possibility of destabilizing natural aquifers and contaminating them with oil or gas. Industrial fracturing is also associated with radioactive and seismic activity that can both expose the population to grave health complications. Apart from environmental impacts, fracking or fracturing also has potential legal implications at the federal and state level.

Legal Consequences

Federal and State Regulations Addressing Hydraulic Fracturing

Hydraulic fracturing has been closely monitored by environmental and federal agencies such as the Ground Water Protection Council (GWPC) and the Environmental Protection Agency (EPA) and the Institute for Energy Research (IER) with efficient results (Schultz, 2012). These agencies work to improve the scientific research into safer and efficient methods of hydraulic fracturing. Similarly, these and other agencies also promote regulatory clarity concerning known risks such as contamination of drinking water and air. The disposal of hydraulic fracturing wastes is another area that is regulated by these agencies. The volume of shale gas wastewater has to be disposed in the appropriate manner and these agencies work to regulate this disposal. The federal government has also made several initiatives to regulate fracking activities including the recent effort in July 2013 by the House Natural Resources Committee to streamline fracturing regulations (Spellman, 2013).

With the realization that natural gas can indeed be a suitable substitute to coal and oil, most industries and stakeholders in the energy sector have embraced it as the ‘bridge fuel’ to the future. Consequently, hydraulic fracturing has emerged as the most efficient way to extract natural gas and has attracted legislators and policy makers from the government and private sector.        There have been numerous attempts to develop policies and rules to control the hydraulic fracturing process for several years. However, these regulatory regimes have been ineffective in handling shale gas exploitation mainly due to their light-handed approach. One of the flaws in hydraulic fracturing regulations is the existence of exemptions that are free passes for different actors in the industry. The exemption of fracturing wastes from the Resource Conservation and Recovery Act served to expose the environment to potentially toxic wastes (Gill, 2010). The reason for this exemption was based on the expensive and time-consuming bureaucracy that existed in the safe disposal of such wastes. While the Clean Water Act covers part of this oversight by regulating the disposal of wastes into water bodies, there are numerous opportunities for fracking companies to engage in environmental pollution that are not tackled by policy. Fracturing companies are also exempted from the set of laws that apply to underground injection wells that are covered in the Safe Water Drinking Act. This Act was meant to discourage the sinking of oil wells in situations that might interfere with water aquifers and consequently, clean, drinking water. While fracking wells fall squarely under this category, they were exempted by the Congress in the Energy Policy Act. From the analysis of these two policies, it is evident that the federal government has failed to propose and implement regulatory policies in the energy sector.

 

 

Hydraulic Fracturing in China and the United States

It is imperative to understand that in China, shale gas exploration is still in its early stages. There has been discovery of shale gas in several locations but most of these reservoirs have not been exploited at all. These reservoirs are located deeper in the ground due to the hilly terrain typical to China. China started its first attempts at shale gas exploration in 2011 with successful results that were almost as much as the United States. Lastly, natural gas exploration in the country still lacks the relevant and comprehensive policies to support the commercial extraction of shale gas. Most of the policies in place are mostly coordinative and preparatory rather than regulatory in nature. In contrast, the United States discovered shale gas in 1821 and after two decades of research and development, started a full-fledged exploration and commercialization of conventional oil and gas products.

Advanced technology is another major difference that exists between hydraulic fracking in China and the United States. In China, the engineers have not yet fully grasped the technology used in extraction and waste management. In contrast, the United States has invested a lot of time and resources in developing fracturing equipment that would be used in the extraction process. This research and development started in the 1970s with basic horizontal wells that used multi-stage fracturing technology (Montgomery & Smith, 2010). Currently, the United States has the best equipment and engineers in the world. Conversely, China has complex geological conditions that require more demanding studies and research into shale gas extraction. Economic conditions are also different between the two regions. China has a weak natural gas and oil market when compared to the United States. The Easter Asia country has a limited length of pipeline in shale gas regions in the western and central areas in the mountains. This makes it difficult for shale gas and oil to be transported to the urban centers and to locations of export. In America, numerous SME’s and technology companies have invested in the natural products. Furthermore, tertiary companies such as insurance firms and banks have also developed products to cater for the financial needs of these extraction companies. Examples include AON, Barclays and Standard Chartered that have developed financial products for international companies. The American market also uses products that are powered by natural gas (Holloway & Rudd, 2013).

President’s Executive Order on Hydraulic Fracturing

In 2011, the issue of hydraulic fracturing gained political attention when President Obama officially released the Executive Order 1363 that provided guidelines into the regulation of the industrial use of the particular technique. The Order demanded that all organizations that used hydraulic fracturing were expected to use it in a way that would protect the safety and health of all American citizens. Calling for the reduction of burdensome requirements and regulations, Obama was in essence proposing a review of the regulation system to ensure that the negative effects of hydraulic fracturing did not affect the citizen in any way (Holloway & Rudd, 2013). While acknowledging that shale oil deposits were an untapped natural oil sources, the President was also quick to mention that with such significant growth, there was an accompanied responsibility to handle the new resources carefully.

Role of Hydraulic Fracturing In Meeting Energy Needs

Estimates by oil exploration companies and other regulatory bodies such as The National Petroleum Council project that hydraulic fracturing contributes about 60% of the total natural gas extraction within the United States. The magnitude of the natural resources being extracted by hydraulic means is a clear indicator that fracking has the ability to meet the energy needs of the Americans and beyond. This is because the technique makes use of the latest technology to lower drilling and extraction costs in order to obtain economically valuable oil and natural gas. On the other side, there are numerous arguments on the environmental disadvantages of engaging in large-scale hydraulic fracturing within the United States. It is important to set the facts straight within the public with the view of demystifying the process of fracking. While it is true that fracking results in toxic content in water sources, the poor construction of oil wells rather than the actual fracking causes this contamination (Fink, 2013).

However, the emerging possibility of shale gas as the future answer to U.S. energy needs cannot be ignored. Prediction by the Energy Information Administration placed shale gas as the dominant source of natural gas by 2035. In turn, this production will be able to produce approximately 60% of the electrical energy to meet the industrial and domestic demands in the year 2035 (Laubach, Reed, Olson, Lander, & Bonnell, 2004). Hydraulic fracturing as an advanced drilling technology was invented with the main purpose of handling the energy demands of an emergent contemporary American society. This type of fracturing also addresses the past concerns of environmental stakeholders that centered on hazardous oil and natural gas extraction. One method of hydraulic fracturing is horizontal drilling that started about two decades ago that has enabled exploiters to lower the risky activities associated with conventional oil and natural gas extraction such as pipeline routes and well pads. Therefore, hydraulic fracturing holds the potential to minimize habitat destruction, exposure or toxic material to the public, and a reduction in the carbon footprint globally (Cipolla, Williams, Weng, Mack & Maxwell, 2010).

Economic Impacts of Hydraulic Fracturing

            The discovery of hydraulic fracturing as an extraction method in the United States has resulted in lower gas prices to about a third of its original price while the price of natural gas dropped by about a fifth. This drop in natural gas prices has prompted the switch in most industries from coal-powered to gas-powered systems. Within the United States, several companies have acquired export licenses to ship natural gas into the rest of Asia and Europe especially Korea and China. This involved the development of a proposal to construct a pipeline from Maryland to Pennsylvania to transport LPG.

            The discovery and implementation of hydraulic fracturing in shale gas extraction has had significant positive and negative impacts on the economy of the United States. The process of hydraulic fracturing is faster and more efficient when compared to the other mining and extraction methods. This has resulted in an exponential increase in job opportunities and business in the oil mining industry. However, it should be noted that these are not jobs offered directly but through the different tasks involved in fracturing, people are able to earn a living. The prominence of hydraulic fracturing has had a positive impact on the hosing industry, as many property owners sell plots that sit on shall oil reservoirs (Brown, 2007). Apart from outright selling, other owners also lease out these plots to energy companies in return for regular payments. There has been concern over the effect of these leases on the mortgage payment and calculation but it is clear that fracturing has raised the value of most properties. Consequently, insurance companies have released information that damages resulting form hydraulic fracturing and related activity is not covered in their packages.

Personal Opinion

In my opinion, the current fracturing regulations in place in the United States do very little in providing enough cover to the citizens. Oil and gas extraction companies still engage in unethical behavior with little control from the government and the private sector. These regulations should be revised and all the penalties in the regulations should be intensified to discourage extraction companies from pollution the environment. These penalties should include revoking of licenses for companies that violate these environmental laws. Hydraulic fracturing is a very risky endeavor when conducted under unsupervised conditions that are the norm in the private sector. The federal government should also increase its efforts to supervise these companies through its various agencies.

Conclusion

The current energy crisis in the global arena has triggered increased efforts into innovative and cost-effective methods and sources of producing energy to meet the demands of the ever-growing number of individual and industrial consumers. In addition, stakeholders concerned with environmental conservation have increasingly placed pressure on oil and gas extraction to streamline their extraction activities including the type of equipment and techniques used to mine natural resources. The issue of regulating hydraulic fracturing has been very challenging for the United States federal government since it introduction and adoption of the technique as the primary method of oil and gas extraction. Hydraulic fracturing exposes the public to several environmental risks such as contaminated water, polluted soil and air. However, it has had several benefits on the economy.

 

 

 

 

 

 

 

 

References

Brown, Valerie J. (2007). Industry Issues: Putting the Heat on Gas. National Institute of Environmental Health Sciences.

Cipolla, C. L., Williams, M. J., Weng, X., Mack & M., Maxwell, S. (2010). Hydraulic fracture monitoring to reservoir simulation: Maximizing value. Proceedings – SPE Annual Technical Conference and Exhibition, 2, 1377-1402.

Fink, Johannes. (2013). Hydraulic Fracturing Chemicals and Fluids Technology. Gulf Professional Pub.

Gill, R. (2010). Igneous rocks and processes: A practical guide. Chichester, West Sussex, UK: Wiley-Blackwell.

Holloway, M. D., & Rudd, O. (2013). Fracking: The operations and environmental consequences of hydraulic fracturing. Hoboken, NJ: John Wiley & Sons, Inc.

Laubach, S. E., Reed, R. M., Olson, J. E., Lander, R. H., & Bonnell, L. M. (2004). Coevolution of crack-seal texture and fracture porosity in sedimentary rocks: cathodoluminescence observations of regional fractures. Journal of Structural Geology, 26, 5, 967-982.

Montgomery, C. T., & Smith, M. B. (2010). Hydraulic fracturing: History of an enduring technology. Jpt, Journal of Petroleum Technology, 62, 12, 26-32.

Schultz, A. (2012). Hydraulic fracturing and natural gas drilling: Questions and concerns. New York: Nova Science Publishers.

Spellman, F. R. (2013). Environmental impacts of hydraulic fracturing. Boca Raton, FL: CRC Press.