The drilling technology that makes the process of hydraulic fracturing possible depends on a special bean that is only grown in India in significant quantities and for which there was no viable substitute in the US until June this year.
The natural gas boom brought on by the fracking revolution has been particularly fortuitous for Indian subsistence farmers who grow the guar bean that is used in the process, and as demand for the special bean has risen exponentially, so has the price. While prices have since stabilized, the first half of this year saw prices increase 80% in the US. Last year, rampant speculation over the bean even prompted Indian authorities to close down guar futures trading on the commodities market and punish a handful of brokerage firms after prices were pushed up due to speculation.
How does the super bean work? The guar bean has a powdered-gum-like extract called hydrocolloid, which forms a gel when mixed with water. This gum is used to keep cracks in shale rock open during the fracking process.
The bean is predominately grown in Rajasthan, India, and until the fracking revolution was used as cow feed and for a wide range of food products. Some 80% of all guar beans are grown in India.
With prices on the rise, and easing only slightly in recent months, the race has been on to come up with a substitute for the bean that would boost supply and keep prices down. The investment opportunity is immense here, but the window for…