US Shale Under Pressure From More Than Just Low Prices

Tyler Durden's picture

Submitted by Colin Chilcoat via OilPrice.com,

Hydraulic fracturing, or fracking, has come full circle in Denton, Texas after a controversial ban on the practice entered into effect on Tuesday. Denton is one of several cities located on top of the massive Barnett shale formation, regarded as the birthplace of modern fracking. The ban, while incomplete, gives strength to what is a growing anti-fracking movement in the United States.

The Barnett shale covers an area of more than 5,000 square miles with depths between 5,000 and 8,000 feet. With more than 40 trillion cubic feet (Tcf) of technically recoverable gas, the Barnett holds approximately 12% of the nation’s proved reserves. Over the past decade, activity on the shale skyrocketed and over 15,000 wells have been drilled to date. For the state, the benefits are clear – in 2011 alone, Barnett production added nearly $13.7 billion to the Texas economy. However, production peaked in 2012 at 2 Tcf and will plummet by more than half toward 2030 – recent ban notwithstanding.

U.S. Dry Shale Production

Source: EIA

Despite the success, fracking is not a victimless pursuit and its spread has been met with an unequal, but growing amount of public criticism; local bans and national moratoriums prove not everyone is on board. Earlier this year, Exxon CEO Rex Tillerson became party to a suit, which sought to remove fracking-related infrastructure from his Dallas suburb.

When carried out properly fracking is no more impactful than conventional drilling. However, when done incorrectly – and this is a source of contention – its costs outweigh the benefits. In short, the practice itself is not so much the worry, but instead its lightning-quick spread across the United States and into increasingly populated areas. Of primary concern are very real issues surrounding land use, water contamination, emissions, and seismic activity.

Science is moving behind the boom, but some startling trends are already apparent. Oklahoma, home to the 27.5 Tcf Woodford shale, has seen its seismic activity – virtually non-existent in the modern era – go through the roof since 2008. The increase is associated with wastewater, which is often pumped back into the Earth after a frack is complete. Between 2006 and 2012, Oklahoma re-injected more than one billion barrels of wastewater annually. And it’s not just Oklahoma – earthquake incidence is up in fracking territory across the central and eastern United States according to the United States Geological Survey (USGS).

Cumulative number of earthquakes

Source: USGS

As science lags, so does regulation and an incomplete regulatory framework muddles the science. Missing information and under reporting create data holes that delay our understanding of an ever more widespread process. Enter civilian groups like Frack Free Denton, who aim to slow growth and take a more precautionary approach through science and technology.

Denton’s ban prohibits drilling within the city limits – about 270 wells – and joins other local referendums passed in California, Colorado, Ohio, and New York. The Texas Oil and Gas Association and the state’s General Land Office both filed lawsuits against the ban, but the city is prepared to defend its position.

The lasting effect of such local referendums is yet to be seen, but they come at a difficult time for an oil and gas industry trying to find its way amid low prices – oil is down 40 percent since June. New well permits issued in November fell nearly 40 percent from the previous month which indicates a slowdown in shale plays across the US. Still, the Energy Information Administration believes the clamor from the fracking boom can sustain a few more naysayers.

 

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KnuckleDragger-X's picture

The earthquake thing is cute but he should of looked at the historical records, there have been earthquake reports in Teas and Oklahome since there have been records and a lot of the quakes are much deeper than the oil.

Bunghole's picture

Correct.  Correlation is not causation, unless you have an agenda.

I could have replied, look at the St. Madrid area on the map.  Lots of quakes, not so much fracking.  Therefore, fracking cant be to blame.  

See how that works?

kaiserhoff's picture

We can always count on ZH these days,

  for the Commie, Lefty, Greenie, Heebie Jeebie stink on the news.

James_Cole's picture

Commie, Lefty, Greenie, Heebie Jeebie stink on the news.

Not many lefties are pro fracking. Article is simply pointing out there are good and bad ways to approach the practice. Where you stand and where the author is at are both positions to the very right of where 'leftys' are. 

Anyway, with the oil price at its temporary lows I've got the popcorn all cue'd up to watch the slow brains lose their shit, shame its not permanent..

kaiserhoff's picture

It almost sounds reasonable, James, but these are the same tactics and BS that keep pipelines on hold forever and ever, and would halt all progress if they could.

Midnight Rider's picture

It's all in the eye of the beholder, or the account holder. If you stand to make a lot of of money off of a practice that negatively affects a great number of other people, it deserves some consideration. Not everything is "progress". If your only yardstick is money, then your decison is always simple. How can we make the most fucking money out of this sucker. I don't give a shit about who I fuck up in the process. The issue at hand is there are other values in the world beyond the checkbook. If you don't subscribe to that believe, then go forth with that belief and good luck living in a civilized society. Right now the Fed has this attitude. They have decided to fuck over responsible savers and retirees in favor of handing over massive amounts of money to the banks and ownership class. They do it in the proclaimed name of "saving the economy". But, we all really know what the agenda is. This is late stage kind of stuff looking back in the history books. When you've decided to fuck over the vast majority of your population in favor of a few, things will probably get very interesting in the not too distant future. Especially when it becomes too obvious to hide and the population has a "Network" moment and wont' take it anymore.

813kml's picture

Green pieces of paper are the only yardstick in the US, hence the inevitable implosion.

COSMOS's picture

Too little and too late, they have already screwed up the drinking water for tens of millions of people, if not hundreds.  Good time to be an oncologist.

Oscillation Overthruster's picture

Hey Cosmos.  What flavor was the Kool Aid you drank?

 

Oscillation Overthruster's picture

Hey Cosmos.  What flavor was the Kool Aid you drank?

 

Spanky's picture

Good to see you admit your ideological bias. Some of us prefer to let facts speak for themselves before forming an opinion, thus you're to be congratulated on such a bold admission.

In a world of increasingly centralized authority and control, it speaks volumes that a small (relatively) town in Texas, known for its conservative leanings and otherwise oil industry friendly politics, would not only enact this law, but defend it against both the industry and state government. Perhaps they're simply tired of flaring their water before drinking?

Some of the negative externalities (contamination of water supplies and increased seismic activity) associated with fracking are readily apparent to those living on the shale formations. But you, fine upstanding libertarian that you are, have it all figured out -- it must be those Commie, Lefty, Greenie, Heebie Jeebies at work. Certainly not hard-working citizens attempting to protect their property and themselves locally from bankers, oil companies and crony government politicians and regulators.

FrankieGoesToHollywood's picture

I am not a geologist (I am a singer).  But it seems missleading to indicate the probability of an earthquake is equal at all locations.  maybe St. Madrid is on a fault where as fracking locations are not, but quakes have been recorded after fracking has occured.  nice @ss BTW.

KnuckleDragger-X's picture

And quakes were reported before fracking, I felt them 50 years ago. As for the New Madrid fault, San Andreas is one fault but not the only one in Cali. It's only in the last few years that they've started looking elsewhere. There's a large fault on the east coast that we know diddly squat about except its there.

zaphod's picture

Stop bringing in logic to counter fear mongering charts. Fear porn is what drives media today.

peter4805's picture

Should "have" not should "of".

cigarEngineer's picture

Small earthquakes are good. They release build-up pressure in small doses. Only high-school educated ZHers who farm for a living would think otherwise.

Bossman1967's picture

I live in oklahoma and the amount of earthquakes are unbelievable and now they are going over the 4.0 so I have been here 20 years and the earthquakes didn't start untill 5 years ago so if it's the cracking sorry yall but guess we have to relocate cause this country need the oil and gas period and I will move if needed. see it's called unselfish behavior not very likely many people like me. now my understanding as long as they stay under 5.0 these small quakes are a good thing because it takes pressure of so the big one dosnt happen. oops a quake just happened. jk

Winston of Oceania's picture

I guess twenty years of "observed" earthquakes trumps scientific data...

http://earthquake.usgs.gov/earthquakes/states/oklahoma/history.php

Oh and did I mention that the caldera in Yellowstone is overdue to blow so you may be witness to the beginning of the that little black swan...

Spanky's picture

My family will not move. We have a substantial (relatively) property interest at stake. We could be bought out, if the industry cared to do so, but thus far they've shown no interest. Thus, we assert our rights as property owners to not have our ground water contaminated or buildings damaged by the negative externalities which result from other "persons" (since that is what the courts now hold corporations to be) actions. And since ground water contamination would not only severely damage our livelihood and property values but directly and negatively affect the quality of our health, we consider the threat posed by fracking to be existential.

BTW, most of my family members are rock-ribbed Republicans.... We know how to handle rustlers and thieves.

Not Goldman Sachs's picture

OK, move. I want your hydrocarbons.

taketheredpill's picture

RE: There have been eathquake reports in Texas and Oklahoma since there have been records:

 

That was the point of the chart. 20 eathquakes (M>=3) year after year after year.  Presumably they got 20 per year even before they had records.

Now in 2010 to 2013 they get 120 earthquakes per year.  You can argue about why it has changed, but you can't argue that it hasn't changed.

SilverRhino's picture

Also keep in mind that Denton, Tx is so liberal it's practically Berkley, Ca due to the presence of two hard core liberal universities in town.  

Those dumb shits dont know their asses from a hole in the ground out here.

tweedle dee's picture

I lived in Denton for 12years and it is in no way liberal. The gas flaring, drilling

noise and polluted air finally upset the most Republican of people. Republicans want

their children to grow up healthy too. You do not know what you are alking about.

Gaius Frakkin' Baltar's picture

Finally an answer to the housing bust...

HandyCrapper's picture

We wish you a NIMBY Xmas!

Amish Hacker's picture

Not "serve and protect." Now it's "Observe and collect."

buzzsaw99's picture

it is the disposal wells causing the earthquakes.

Atomizer's picture

Once fracking is shutdown, earthquakes will continue. Call it, egg on the face by environmentalist crying wolf.

M6 Solar Flare, GMOs, Volcano News | S0 News December 5, 2014

FYI

ersatz007's picture

we fracked some folks

ersatz007's picture

i downvoted myself only because i'm sure someone beat me to the punch long ago...

Salah's picture

They're laying off mudloggers by the dozens in the Permian & San Juan....

duo's picture

There's a fracking well a few hundred yards from the University of North Texas football stadium.  Yards.  I mean middle of the parking lot close.  I guess the evaporation, er, storage ponds for the toxic waste, er, proprietary fracking mixture, are well hidden.

Winston of Oceania's picture

did you lose this "che" from the assend of your name?

Doom and Dust's picture

I hope this post is a sign reasonable people get reasonable about shale fracking: A highly riskful and expensive method of energy extraction predicated on artifically inflated energy prices and low-yield junk bonds.

Max Steel's picture

Desperate irish leprechauens 

Amish Hacker's picture

Out here on the Left Coast, it recently came to light that fracking companies have been injecting billions of gallons of their waste water into clean aquifers, instead of into the area where the gas was extracted, which lies below the aquifer. Why? Because it increased their profits, and regulators were happy to look the other way.

This news was not "well" received in a state suffering in an historic drought.

http://rt.com/usa/194620-california-aquifers-fracking-contamination/

CEOoftheSOFA's picture

Earth movements caused by both fracking and water floods of oil fields has been researched as far back as the sixties.  I did a term paper on it in 1974.  Injecting fluid in fracture zones lubricates them and causes them to slip.  This is usually considered to be favorable since it usually causes small slips which prevent large tension increases which cause large slips.  

ndoilguy's picture

Saudi Royals and Putin are seeing the results of thier investments in the anti-frac greens. FORWARD! TO THE LONG MARCH ON THE SHINING PATH

CEOoftheSOFA's picture

Earth movements caused by both fracking and water floods of oil fields has been researched as far back as the sixties.  I did a term paper on it in 1974.  Injecting fluid in fracture zones lubricates them and causes them to slip.  This is usually considered to be favorable since it usually causes small slips which prevent large tension increases which cause large slips.  

gwar5's picture

Thanks for confirming what I had been thinking! Cheers!

rejected's picture

Can one imagine if America had this type of reaction in the early 1900's. We would still be on horseback. Then our carbon friends would object and we'd be walking.

And,,, Oh myyyy God, There'd be no IPADS.

heywood2's picture

Toeing the Russian line as always here on ZH.

 

The NY Times had an interesting artile recently about how the Russian State was funding many of the anti-fracking groups in Europe. Yeah, Vlad hates fracking, because he's such an environmentalist :)

 

 

Winston of Oceania's picture

Why else do you think he had the frenchfracker killed? Take a train to Russia it is far safer just ask the Poles...

IridiumRebel's picture

Yeah! Next he may try to topple some regimes in the Middle East like.....

 

Oh wait!

TheFourthStooge-ing's picture

.

The NY Times had an interesting artile recently about how the Russian State was funding many of the anti-fracking groups in Europe.

Yep, the NY Times is always interesting to those seeking to pull the wool over their own eyes.

No evidence whatsoever, but hey, if you can make money and nicely by telling propaganda, fantasy, why bother spoiling it by telling facts?

http://russia-insider.com/en/politics_business_opinion/2014/12/02/01-09-...