Massive New Opportunities in Advanced Fracking

Hydraulic fracking is an expensive, complicated and dirty endeavor. That is the present reality. But new technology already being employed and even more promising ideas coming online soon could clean up the process, help remove opposition, expand drilling possibilities, reduce costs and increase investment opportunities exponentially.

These are our picks for the existing and emerging technologies that have the most potential for investors (in ascending order):

Advanced Oxidation

The process of advanced oxidation uses ozone as a disinfectant to clean fracking water. The process purports to eliminate the need for chemicals used to control bacteria and scale inhibition during fracking. The end is result is that 100% of the fracking water is recycled.

The company to keep an eye on here is Ecosphere of Florida, which says it has so far successfully "cleaned" 2 billion gallons of water and gotten rid of 1.7 million gallons of chemicals that would otherwise been needed during the fracking process. It's been doing this since 2008, with its operations in place in some 600 oil and gas wells across the US. Its next foray will be into natural gas liquids.

Contaminant Binding

This process uses an electric current to bind contaminant particles together, thus allowing their filtration from the water. The technology cleans water on site and includes a validation process.

The company behind this technology is WaterTectonics, of Washington, which has a global licensing agreement with Halliburton. WaterTectonics has seen its finances more than triple between 2009 and 2011 and it's now eyeing expansion globally and offshore. 

These are the proven, existing technologies, which focus on cleaning up frack water. These are the safer bets, for now. Looking ahead just a bit, though, there are two other technologies we like even more: One focuses on expanding drilling capabilities; the other is focused on cleaning up fracking in a way that would eliminate the need to clean up frack water in the future. The first is already being tested with amazing success so there's no time to waste here. The second is still a tight secret but it could be a MAJOR breakthrough and we're only a week away from finding out more!

Carbon Dioxide Fracking

Seismic activity aside, the main spoiler for fracking is its use of massive amounts of water-up to several million gallons per well in some cases-water that comes back contaminated with sand and the chemicals necessary for the fracking process. Disposing of this water in wastewater wells could contribute further to unwanted seismic activities.

So right now it's all about the water and that's where carbon dioxide injections could come in.

Dr. John Abraham, who is heading a team that is two years away from developing its own version of carbon dioxide injection technology, says the idea is to replace the water used in fracking with carbon dioxide.   

As you inject carbon dioxide into the hole, it reaches a "supercritical" state with "very special properties", according to Abraham. As a result of this, there are a number of advantages:

•    Reduced water use
•    Reduced use of chemicals which are added to the water
•    Easier oil and gas extraction in depleted wells
•    More stable bore holes
•    More controlled, smaller-radius holes can be drilled
•    Drilling will be faster
•    Some of the carbon is sequestered, which reduces greenhouse gases

As MIT notes, oil and gas companies have been using carbon dioxide injection for decades, but only on a limited basis. Carbon dioxide fracking is already done in Wyoming, but that's largely because Wyoming has carbon dioxide pipelines, so it makes sense in terms of costs.

The potential spoilers here are that this would require an entire infrastructure to bring carbon dioxide to the fracking site, which means more pipelines most likely. The only way to make this economically feasible, according to MIT, may be to put a price on carbon emissions. However, in places where there's enough production going on, it just might make sense to put the necessary infrastructure in place.

Multi-Well "Octopus" Drilling

One of the greatest drilling developments of the last decade is multiple well pads, which some like to refer to as "Octopus" technology.

Imagine gaining access to multiple buried wells at the same time, from a single pad site. This is what "Octopus" technology is doing, first in a canyon in northwestern Colorado in the Piceance Shale Formation and then in the Marcellus shale. It's definitely not your traditional horizontal drilling.

Traditionally, to drill a single well, a company needs a pad or land site for each well drilled. Each of these pads covers an average of 7 acres. The Octopus allows for multiple well drilling from a single pad, which can handle between 4 and 18 wells. So, a single pad on 7 acres can now be used to drill on up to 2,000 acres of reserves. More than anything, it means that drilling will be faster, faster, faster … And less expensive in the long run once it renders it unnecessary to break down rigs and put them together again at the next drilling location. It's simple math: 4 pads usually equals 4 wells; now 1 pad can equal between 4 and 18 wells.

Here's how the technology works: A well pad is set up and the first well is drilled, then the rig literally "crawls" on its hydraulic tentacles to another drill location from the same pad, repeatedly. And it's multi-directional. It takes about two hours between each well drilling. With traditional horizontal drilling methods, it takes about five days to move from pad to pad and start drilling a new well.

Last year, Devon Energy (DVN) drilled 36 wells from a single pad site using Octopus technology in the Marcellus Shale. More recently, Encana (ECA) drilled 51 wells covering 640 underground acres FROM ONE PAD site with a surface area of only 4.6 acres in Colorado. Multi-well pad drilling is also revolutionizing drilling in Bakken, and this is definitely the long-term outlook for shale. It will become the norm.

What this means for the environment is less drilling disturbance on the surface. With the necessity of so many pad sites (one for each well) for drilling, most of the process stays underground. We're talking about fewer roads and fewer pipelines necessary to access pad sites, and centralization of storage and processing facilities. It certainly won't remove the fracking footprint, but it will make it smaller.

Is there any downside? Yes. Essentially what multi-well pad drilling means is the possibility that all the wells on a single pad could come online simultaneously and if there isn't sufficient pipeline capacity then trucks would have to be employed to handle the higher volumes.