About two-thirds of U.S. natural gas production and about half of U.S. oil production currently comes from hydraulically fractured wells. Fracking is an essential process in the U.S. oil and gas extraction process that has enabled the country to become self-sufficient in its hydrocarbon needs. The fracking industry is currently at a critical moment, facing reduced spending and increased environmental regulations.
However, this is exactly the point where things get better. It's this pressure that will bring fracking into the next decade, better, safer and stronger. It's not the end of fracking, it's simply the new beginning.
The fracking industry is under increasingly severe pricing pressure across the value chain due to reduced spending by operators. In 2014 the U.S. rig count began its decline, negatively affecting fracking activity across the nation, with two major players, Schlumberger and Halliburton, experiencing a decline in fracking revenue from 2014 to 2015 of 29 percent and 39 percent, respectively.
Such companies lead the industry in research and development, but during 2015, Halliburton cut its R&D expenditure to $487 million from $601 million in 2014, and Schlumberger cut its R&D expenditure to $1.09 billion from $1.22 billion in 2014. Related: Why Did China Grossly Overpay For A Utility In Brazil?
Along with the decline in oil prices hindering the fracking business, it has also been at the center of major controversies in recent years due to concerns about water and air quality.
Hydraulic fracturing or "Fracking" is the process of pumping fine sand suspended in a mixture of water and polymer at high pressures into the well to crack open rock formations to release oil and gas. When this mixture flows back, the sand remains in the formation and provides channels for the oil and gas to flow into the main well bore to reach the surface.
Similarly well stimulation techniques such as acid fracture and matrix stimulation are also applied within the pressure-pumping services.
During the flow back process, as much as 50 percent to 70 percent of frac fluid that is not biodegradable is unrecovered-and subsequently dissipates into the reservoir through formation leak off.
Faulty well construction could result in frac fluid penetrating undesired zones, which could affect drinking water quality. The EPA is continuing a study of hydraulic fracturing and its potential impact on drinking water to assess the potential for fracking to affect the quality of drinking water and factors affecting the frequency or severity of potential changes.
The Interior Department has enforced rules on fracking, and legislation and regulations are being considered at local levels that could impose further chemical disclosure or other regulatory requirements. The states of New York and Vermont have banned hydraulic fracturing, while some local jurisdictions have adopted ordinances that restrict or prohibit the use of hydraulic fracturing.
(Click to enlarge)
Such regulations on hydraulic fracturing require "green" techniques as well as a focus on reducing emissions from fracking operations. Fracking companies have since focused on utilizing biodegradable or food grade additives for the preparation of fluids to be injected into the formation. In 2010, Schlumberger commercialized OpenFRAC fully disclosed Hydraulic Fracturing Fluids, a family of fluids that avoid the use of chemicals listed on the U.S. EPA Priority Pollutants and National Primary Drinking Water Contaminants.
Services such as the HiWAY Flow-Channel Fracturing Technique utilize 40 percent less proppant and up to 60 percent less water per job, while yielding average production increases of 20 percent. Halliburton similarly has developed the CleanStim Hydraulic Fracturing Fluid System with ingredients sourced from the food industry, providing an extra margin of safety to people, animals, and the environment.
Each of these components is rooted in the U.S. Food and Drug Administration's CFR 21 list, which defines foods for human consumption. Halliburton is also evolving the services provided through Frac of the Futureâ„¢, utilizing less equipment for reduced emissions and a reduced well-site footprint.
Another new technique developed by ViperDrill relies on a Coiled Tubing Unit, casing milling system, and a so call HOT head-a cutting head assembly to radially drill through formation rock up to 60 feet laterally. This technology, although in its early stages, can be used as an alternative where fracking is banned or uneconomical. It can also be used in conjunction with frac or acid stimulation treatments for improved treatment contact. Related: Could Helium Help Canada Recover From The Oil Bust?
In conventional stimulation treatments, zones with higher permeability receive greater fluid volumes than zones with lower permeability, resulting in an ineffective treatment.This technique allows fluid penetration into all zones of interest. This technology is currently limited to a maximum depth of 7000 feet and requires up to 1.5 days per lateral.
Current multi zone stimulation vs Viper Drill Enhanced Oil Recovery (VD-EOR) Scenario
Lastly, fracturing operations are increasingly driven by natural gas, one example of this is Evolution Well Services' electrically driven 35,000 HHP hydraulic fracturing fleet in the Permian Basin. Emissions are said to be 66 percent less compared to conventional methods as the fleet replaces diesel engines-instead powered by electricity generated from a General Electric TM2500+ gas turbine generator fueled by natural gas.
Although hydraulic fracturing services face industry pressure with decreased activity from falling rig counts and more stringent environmental regulations, fracking is essential to the exploitation of hydrocarbon reserves in the U.S. and will continue to be in demand through "green" techniques.
By Qarnain Foda for Oilprice.com
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Qarnain Foda is the co-founder of the energy analytics blog enernomics.org. With a background in oil field services, he specializes in economic analysis of the… More
Comments
http://ehp.niehs.nih.gov/wp-content/uploads/122/4/ehp.1306722.pdf
I will acknowledge considerable benefit from from burning oil. But it is increasingly tough to extract and transport oil going forward. We need to be aware that net benefit from burning oil is declining rapidly.
It's time to move on from our seeming techno-infatuation with fracing and deep-water extraction. What are all of the costs for continuing to burn up a resource that was millions of years in the making?
All points in this article will be revised, or become irreverent, as soon as the national debt bubble bursts.