What the Frack!

I am not talking about the universal curse word from Battlestar Galactica, I am talking about the widely discussed drilling technology calling hydraulic fracturing, aka, “fracking” now being used throughout large parts of the U.S. to foster extraction of natural gas and oil from heretofore non-economically exploitable, but substantial rock formations, such as the Marcellus shale, which extends through the east central portion of the U.S. and into New York, or the Bakken formation, which underlies states in the far west, like Wyoming and the Dakotas.

You may have heard the fracas (pun intended) about the possibility that the oil and gas drilling boom fostered by the new fracking technology may be coming to Massachusetts. If you have friends or family out in central Massachusetts, you may know what I am talking about. More likely, you are sitting there in front of your computer saying “Huh?”

A recent brief summary report written by the U.S. Geological Survey discussed in very general terms, the possibility that this area of the state may contain underground accumulations of natural gas. The report was written to summarize the potential of various basins (low areas where layers of sediments such as clays, silts and sands were deposited and hardened to become shale and sandstone) to contain oil and gas. These basins are found around the eastern edges of the Continental U.S. and were formed 220 million years ago when North America and Africa rifted apart to form the Atlantic Ocean.  The Hartford basin runs north through Connecticut into Massachusetts. This basin is 13,000 to 16,000 feet thick.  Where shale and sandstone form, there is always the potential for accumulations of oil and gas.

Immediately, residents of the area became alarmed that the drilling boom, with its accompanying noisy drilling rigs, pipelines, gas compressors, noise, odors and environmental damage, could be on its way here.

But if one reads the report carefully, it only talks in general terms about the Hartford Basin. Ask any geologist who has any familiarity with this basin whether any significant accumulations of oil and gas exist here, including yours truly (former petroleum geologist), and the answer is a resounding “No way”. Is there natural gas in the Hartford basin – what little evidence there is says yes, but in very small amounts and not nearly enough to make it worth sinking any wells
into the ground.

Last - state law prohibits the drilling of these kinds of wells in Massachusetts, so even if there was enough gas to make it worthwhile to drill here, it would be illegal.

The Office of the Massachusetts State Geological Survey has a great summary of this issue, if you are interested in more detail (http://www.geo.umass.edu/stategeologist/shalegas.htm).

A Bit More About Fracking

Thirty years ago, when I worked in the oil patch, we drilled vertically through rock formations, which required a lot of wells to get at all recoverable hydrocarbons and required a rock formation through which oil and/or gas flowed easily. Getting hydrocarbons out of shale, which is basically clay turned to rock, was a laughable idea given the tools the industry had at hand.

Fracking technology has been around for many decades but its use has increased dramatically through the development of a drilling technology called directional drilling, which allows wells to be drilled horizontally through a rock formation, dramatically increasing the volume of an accumulation of oil or gas that can be extracted from one well.  Precise horizontal drilling was only made possible through increased power and decreased size of computers, which can actually be mounted right in the end of the drill, to guide the drill bit in real time.

Back in the early 1980’s we could drill directional wells, but it was a very slow process requiring technicians to lower tools into a borehole containing the equivalent of a brownie camera taking pictures of a bubble level, to estimate the orientation of the hole.  Even then, thousands of wells were drilled that way from offshore oil platforms in places like the Gulf of Mexico off of Louisiana and Texas, where I worked.

As an aside – horizontal drilling has been used right here in Westborough to run a sewer line underneath the Assabet River.

Fracking involves pumping, under high pressure, a brew of water, silica sand, acids, sodium chloride, polyacrylamide, ethylene glycol, borate salts, sodium and potassium carbonate, Glutaraldehyde, Guar Gum, citric acid, isopropanol,  benzene, toluene and other volatiles into a well to break open a rock formation, hold it open and promote the flow of gas, gas liquids and/or oil into the well.  The technology is safe and well known.

What is not safe is how the fluids are handled when they are extracted from the well after the fracking process is complete.  What gets nasty is the handling of the gas as it flows from the well, is compressed and transported away from the well. Re-injecting the spent fracking fluids into deep disposal wells in known to cause earthquakes. Large drilling rigs themselves, with all their ancillary supporting equipment can create huge scars on the land.

The End Result

Because of fracking and directional drilling, the oil and gas industry can exploit hydrocarbon accumulations in rock formations all over this country that were previously ignored. It is now projected that the U.S. will be energy independent by the end of the 2020s or a bit later and be producing more oil than Saudi Arabia (yes, you read that correctly).

The drilling boom has also dropped the price of natural gas several fold. Anyone remember that at the turn of the century, natural gas was more expensive per BTU than fuel oil. Now, it’s the other way around. It is also one of the reasons why our electric rates have been flat the last few years and coal-fired power plants are being scrapped in favor of those fueled by natural gas (a really good thing in my mind as the idea of “clean coal” is a joke).

One of the interesting results of the drop in gas prices is that in many areas, the drilling boom has already come and gone.  It’s no longer economically viable to drill wells just for “dry” gas, which is pure methane, the gas that is piped to your home.  Oil companies want to go after accumulations of “wet” gas, or gas that contains heavier hydrocarbons or liquid components which can be separated out and sold for more profit.  As you might suspect, wet gas accumulations are not as common as dry gas.

It’s possible that the price of natural gas may start to rise again as drilling wanes and existing wells stop producing. The same thing has not yet happened with oil.  That boom, out in the west, is still ramping up. As long as oil prices are in the $100/barrel range, it will still make economic sense to drill those wells.

Does Energy Self Sufficiency Mean Cheaper Gasoline?

Even though we are drilling more wells in the US now than in last 15 years or so, the short answer is no.

Ask anyone in Canada, a country which is energy independent, how much they pay for gasoline.  It’s the same price we pay. Oil prices are set in a worldwide commodities market, in the same manner as wheat, rice, pork bellies and oranges are. It’s not just supply and demand here in the U.S.; it is supply and demand in China, India, Europe and everywhere else.

Markets are also affected by world events such as regional instability in the Middle East, storms that shut down production in the Gulf of Mexico, fires that close refineries in California and on and on. Markets operate on perception and fear as
much as on rational factors as available commodity supply.

Gasoline at the pump has been getting cheaper lately after hovering near $4/gallon several months back. Heating oil has come down too.  I was paying $3.99/gallon last spring and am paying $3.35/gallon now. Some of it is due to more supply, some of it is due to refineries coming back on line, and some of it is due to the slow pace of economic growth and recession in Europe.  Events in Syria and rocket launches from North Korea notwithstanding, the world overall is a fairly stable place right now.

Cheaper gasoline is a good thing – but don’t expect prices to go to $2.50 a gallon and even if they do, don’t expect them to stay there. The fact that we have to resort to technologies like fracking or drilling in waters over 5000 feet deep to get at the oil and gas we need means the easily accessible sources are depleted and our new sources are only viable when the price of oil is high.