Hydraulic fracturing has attracted a lot of attention in recent years with the rise of U.S. shale oil and gas drilling and production. Hydraulic fracturing is also at the center of heated debates, controversy, and protests around the world amid growing environmental concerns.
Thanks to the use of hydraulic fracturing methods, U.S. shale producers have significantly raised America’s crude oil, natural gas, and natural gas liquids (NGLs) production over the past decade. The U.S. is now the world’s largest oil and natural gas producer, ahead of both Russia and Saudi Arabia, thanks to the drilling boom that hydraulic fracturing started.
In a world with growing oil and gas demand growth, it is important for investors to know the key aspects of hydraulic fracturing in order to make informed investment decisions.
This complete guide to hydraulic fracturing will answer the following questions:
- What is hydraulic fracturing?
- How does hydraulic fracturing work?
- What are the types of hydraulic fracturing?
- What are the key Pros and Cons of hydraulic fracturing?
- What is Hydraulic Fracturing?
Hydraulic fracturing, also referred to as fracturing or fracking, is a type of a well stimulation process that increases the production of oil and gas. This hydraulic fracturing stimulation is typically performed to increase the flow of fluids in rocks that usually have low permeability, such as shale and tight sandstone.
The purpose of hydraulic fracturing is, as the name itself suggests, to create new fractures in the rock or increase existing fractures so that fluids, such as oil and gas, can flow more freely. Without hydraulic fracturing, oil and gas that are tightly locked in rocks with low permeability cannot be economically extracted. Before hydraulic fracturing, the tightly contained hydrocarbons in rocks were too expensive to be profitably produced. Due to the hydraulic fracturing, many previously unproductive formations in shale rocks in the United States have started to produce oil and gas.
Despite the fact that hydraulic fracturing became universally known this century, this well stimulation process is not a novel invention.
In vertical oil and gas wells, hydraulic fracturing has been used for more than half a century, in order to boost the flow of fluids in conventional oil and gas formations. Related: This Emerging Oil Hotspot Threatens The OPEC Deal
Hydraulic fracturing in the United States was first tested by Stanolind Oil in the Hugoton gas field in Kansas in the 1940s.
But it was the horizontal drilling of oil and gas wells that ushered in the U.S. shale revolution which turned the United States into the world’s top oil and gas producer in less than two decades.
Currently, wells drilled horizontally into tight oil and shale gas formations across the U.S. overwhelmingly dominate America’s production from tight oil and shale gas formations, according to the Energy Information Administration (EIA).
Just fifteen years ago, back in 2004, horizontally drilled wells accounted for only 15 percent of U.S. crude oil production from tight oil formations. As of the end of 2018, the share of horizontally drilled wells represented 96 percent of U.S. crude oil production from tight formations.
The share of horizontally drilled natural gas wells of shale gas production is similar. Back in 2004, this share was just 14 percent, while by the end of 2018, it had jumped to 97 percent, EIA data shows.
Over the past two decades, hydraulic fracturing and horizontal drilling have been the main driers of the increase in U.S. oil and gas production. But how does hydraulic fracturing actually work?
- How Does Hydraulic Fracturing Work?
Hydraulic fracturing is the process of pumping specially made fluids at high pressure and high rate into the oil or gas-bearing rock formation to create fractures and fissures so that oil and/or gas can move freely and be extracted at a reasonable cost.
The fracturing fluid, or frac fluid, contains water, proppant, and chemicals to create fractures thanks to the high pressure at which the fluid is pumped into the formation. These fractures extend away from the wellbore and can even extend several hundred feet away from it.
The fracturing fluid also generally includes gels, friction reducers, and surfactants similar to those found in household cosmetics and cleaning products. These additives in the frac fluid can improve the results of the stimulation operation and the productivity of the oil or gas well.
A typical fracturing fluid would contain anywhere between three and a dozen additional chemicals. Those could be acids, salts, sodium carbonates, and others that increase the efficiency and protect the pipe and wellbore from corrosion and ensure chemicals do not change their characteristics or freeze.
Proppant, solid particles mixed with the fracturing fluid, holds the fractures in the rock open, stimulating an easier flow of oil or gas out of the well. If there is no proppant to hold the fractures open, they will close and would not allow oil or gas to flow from the formation.
Proppant can be sand particles or specially engineered and man-made ceramic materials. Drillers carefully pick the types of proppant to use in fracturing because of the different size and form of the solid particles. The right shape and size of the sand or other proppants would help to increase the flow of oil and/or gas from the reservoir to the wellbore.
After the fracturing fluid is pumped into the formation at high pressure, the pressure of the rock returns fluids to the surface via the wellbore. This fluid, typically called produced water, or flowback, may contain the chemicals injected into the reservoir and naturally occurring materials including metals, brines, and hydrocarbons. The produced water is usually stored in tanks at the site of the well fracturing or in pits, before it is disposed of, treated, or recycled.
In many cases of disposal, the flowback is injected underground for disposal. Not all areas, however, allow this option, so drillers must treat, process, or reuse the produced water. In the United States, according to each state’s environmental regulations for produced water disposal, oil and gas drillers and producers often have three options
- treatment and reuse
- deep well injection, or
- open air pits
There are federal and state regulations for how and where produced water can be disposed of or treated, so that it does not impact local drinking water resources. Opponents of hydraulic fracturing cite the flowback water treatment and disposal as one of the key concerns with the extensive use of fracking.
Although hydraulic fracturing has been used in the United States for more than 65 years, it wasn’t until the late 1990s and early 2000s that the horizontal drilling, combined with hydraulic fracturing, unleashed the U.S. shale production boom.
- What are the types of hydraulic fracturing?
Horizontal drilling and directional drilling technologies allow increased exposure of the oil and/or gas formation to the production well. Combined with hydraulic fracturing, horizontal drilling expands oil or gas production to formations that were once considered uneconomical for the production of oil or gas.
Before directional drilling, part of which horizontal drilling is, oil and gas wells were drilled vertically straight down to the earth.
With directional drilling, the angle of drilling changes and it is not straightly vertical. In this way, directional or horizontal drilling can reach more of the oil and gas-bearing formation and stimulate reservoirs that couldn’t have been stimulated with vertical drilling only. Horizontal lateral sections can be designed to reach natural fractures to help them crack open wider for more oil or gas flow from the formation.
Simply put, horizontal drilling exposes more of the reservoir to the wellbore, thus significantly increasing production from a drilled oil or gas well.
With the advance of drilling technology and equipment, drillers can now place multiple horizontal wellbores more accurately, at a deeper underground level, and at longer distances.
Companies are also using multi-well drilling pads which drill directionally several wells. Pad drilling allows drillers and producers to target reservoirs underground in multiple directions while the impact on the surface is minimized. Producers may have a dozen wellbores branching out in the ground and extracting oil with only one site at the surface. They are reducing the surface impact and costs by drilling multiple wells in different directions from one location on the surface.
The lateral length of horizontal wells has increased over the past decade, according to the EIA, which allows for even more exposure to oil- and natural gas-producing rock from a single well. Related: Libya Is Facing A New Oil War
Hydraulic fracturing, combined with horizontal drilling, has raised U.S. crude oil and natural gas production significantly over the past decade, but it has also drawn a lot of opposition from environmental and indigenous groups over concerns about the impact of this type of drilling on the environment.
Some U.S. states, such as New York, Vermont, Maryland, and Washington, have banned hydraulic fracturing, but none of these has been an active fracturing drilling site before the bans were instituted. France banned fracking at the beginning of the 2010s, while the UK—a year after fracking had resumed for the first time in seven years—passed in November 2019 an immediate moratorium on fracking after a report by the Oil and Gas Authority said the consequences of seismic activity associated with fracking are difficult to predict.
Pros and Cons of Hydraulic Fracturing
Proponents of hydraulic fracturing in the U.S. say that fracking has made America the world’s top oil and natural gas producer, surpassing both Russia and Saudi Arabia in the past two years.
Also, according to the American Petroleum Institute (API), hydraulic fracturing and horizontal drilling have helped the United States to unlock hundreds of millions of barrels of oil and billions of cubic feet of natural gas. The oil and gas industry in the U.S. supports more than 10 million jobs.
In 2015, the oil and gas industry supported 10.3 million jobs and contributed more than $1.3 trillion to the U.S. economy, or 7.6 percent of the nation’s GDP, according to API’s estimates. The jobs made up 5.6 percent of the total employment in the United States.
“A ban on fracking could raise costs significantly for American families and manufacturers, profoundly damage the U.S. economy, diminish our geopolitical influence, and severely weaken our energy security.”
Opponents of hydraulic fracturing cite multiple concerns about the damage this technology can do to the water, air, soil, and human health.
The three key risks to environment include:
- Air pollution from the methane emissions during the fracking and oil or gas extraction processes
- Potential groundwater or surface water contamination from toxic chemicals in the produced water
- Potential risk of induced seismic activity
Gas flaring in the top producing U.S. shale sites is a growing problem because of the massive amounts of associated gas that flows from wells together with the oil. Flaring worsens air quality in the areas where oil and gas is being extracted.
The toxic chemicals used in the fracturing fluids and ending up in the flowback are harmful to human health if they are ingested or breathed in by people. Those chemicals, if people come to contact with them, can cause respiratory problems, irritate skin, disrupt the functions of the glands, or impact the nervous system. The industry usually takes precautions not to expose people to hazardous chemicals.
In 2016, research from Johns Hopkins Bloomberg School of Public Health suggested that people with asthma who live near bigger or larger numbers of active unconventional natural gas wells operated by the fracking industry in Pennsylvania are 1.5 to 4 times likelier to have asthma attacks than those who live farther away. The findings of the research were published in the peer-reviewed medical journal JAMA Internal Medicine, published by the American Medical Association.
“Ours is the first to look at asthma but we now have several studies suggesting adverse health outcomes related to the drilling of unconventional natural gas wells,” said study leader Sara G. Rasmussen, MHS, a PhD candidate in the Bloomberg School’s Department of Environmental Health Sciences.
The study could not explain exactly why asthma attacks are likelier closer to hydraulically fractured wells, but researchers suggested that air pollution and increased stress levels from the noise, traffic, and other community impacts associated with the industry could play a role. Stress has been found in previous studies to significantly raise the risk of asthma attacks, Johns Hopkins researchers said.
Opponents and proponents of hydraulic fracturing will point to all kinds of research about health impacts or economic benefits from fracking, respectively. Amid the growing climate and environmental concerns, the oil and gas industry will be under increased pressure to address those concerns. At the same time, it is hydraulic fracturing plus horizontal drilling that have made the United States the world’s largest oil and gas producer.
By Michael Kern
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