Policy Documents

Backgrounder: Hydraulic Fracturing

March 6, 2012

The recent discovery of vast deposits of oil and natural gas trapped in shale rock formations has revolutionized our nation’s short-term, mid-term, and long-term energy outlook. For example, proven natural gas reserves in the United States rose by 40 percent between 2004 and 2009. At the same time, new technological advancements in hydraulic fracturing (also known as “fracking”) and directional drilling have made recovery of shale gas and shale oil extremely economical.

Affordable, Abundant Energy
Since these new hydraulic fracturing technologies hit the oil and natural gas fields a few years ago, natural gas production has risen sharply and natural gas prices have fallen dramatically. Natural gas production, for example, rose 50 percent in a single year from 2008 to 2009. Natural gas production costs, meanwhile, have fallen 50 percent since 2008.

Regarding oil, most U.S. oil reserves are located beneath federal lands that are off-limits to exploration and production, so proven reserves have risen “only” 10 percent since 2008. The area with the greatest increase in oil production is western North Dakota, where the huge Bakken Shale formation is yielding enormous amounts of shale oil on privately owned properties utilizing hydraulic fracturing production techniques.

The production of oil and natural gas through hydraulic fracturing techniques is revitalizing state and local economies from the pain of the 2008–2012 economic downturn. As a result of oil fracking in the Bakken Shale formation, unemployment in North Dakota is hovering around 3 percent and recent high school graduates can earn six-figure incomes in the oil fields. In Texas, where fracking is a primary reason Texas is leading the nation in oil and natural gas production, the state saw substantial job growth even during the recent national recession. More than 40 percent of the jobs created during the national recession were created in Texas.

Without hydraulic fracturing, none of this newfound energy abundance and regional economic strength would be possible. The newly discovered oil and natural gas fields are locked in shale rock formations, and hydraulic fracturing is the only practical means of unlocking the oil and natural gas from the shale. Hydraulic fracturing and a healthy and productive national energy economy are inseparable.

Low-Emissions Electricity
Environmental activist groups very recently championed natural gas as a so-called “bridge to a renewable energy future.” Natural gas power cuts carbon dioxide emissions in half versus coal power plants, and natural gas cuts the Six Principal Pollutants tracked by EPA by approximately 90 percent relative to coal. (http://en.wikipedia.org/wiki/Natural_gas)

In the 1990s and early 2000s, the gradual increase of natural gas market share relative to coal was relatively costly, as the levelized production cost of electricity from natural gas was significantly higher than that of coal power, though still much less expensive than wind and solar power. In recent years, however, hydraulic fracturing and the shale gas revolution have dramatically changed the economics of electricity generation. During the past two years the price of natural gas electricity has been approximately the same as the price of coal-powered electricity. The nation has benefited from much cleaner electricity generation without paying much of an economic premium for doing so. And because we have vast shale gas reserves that have yet to be tapped, natural gas prices are likely to remain inexpensive and stable for many decades to come.

Environmental Issues
Ironically, the same environmental activist groups that so recently championed natural gas are now opposing natural gas, and especially shale gas production through hydraulic fracturing techniques. They assert shale gas production (1) threatens water supplies, (2) threatens air quality, and (3) is causing increased earthquake activities. Let’s review what hydraulic fracturing entails, and then address each of these environmental assertions in turn.

Shale oil and shale gas reserves typically lie thousands of feet below the surface of the land. To reach and unlock the oil and natural resources from the shale, energy producers drill a wellbore deep beneath the surface to reach the shale. Once the wellbore is drilled and secured, energy producers inject fracking fluid at high pressure into the shale rock, in a manner much like a pressure washer, which in turn causes fractures in the shale that allow the oil or natural gas to rise through the wellbore to the surface.

Fracking fluids are typically 98 to 99 percent water. Chemical additives – primarily sand – are added in small amounts to protect the wellbore and improve production. While many of the ingredients are natural and common, some fracking fluids utilize trace amounts of chemicals that would be harmful to people if ingested in large quantities.

Water Supplies
Several layers of impermeable rock separate the shale oil and shale gas from aquifers and groundwater. As a result, the fracking of shale rock in itself cannot compromise the purity of water supplies. Periodically, as is the case with other forms of energy production and utilization, a leak in an above-ground pipe, wellhead, or some other transportation or storage equipment has caused minor groundwater pollution. Such pollution is uncommon, very minor, not specific to hydraulic fracturing techniques, and has yet to cause a single documented instance of drinking water contamination.

Federal, state, and local governments have tested thousands of sites for hydraulic fracturing pollution of groundwater and drinking water resources. The small number of sites with minor groundwater pollution (caused, as noted above, by post-production issues rather than hydraulic fracturing itself) and the complete lack of any documented drinking water pollution is quite remarkable given the large and growing amounts of natural gas and oil produced through hydraulic fracturing techniques. (See, for example, http://news.heartland.org/newspaper-article/2011/11/19/feds-find-no-water-pollution-arkansas-fracking)

Air Quality
As is the case regarding groundwater and drinking water, federal, state, and local governments have thoroughly tested hydraulic fracturing sites for air pollution. Test results consistently show the fracking process does not pose significant air pollution or health risks, and air quality in the immediate vicinity of fracking sites consistently meets applicable air quality standards. (See, for example, http://news.heartland.org/newspaper-article/2010/02/01/air-commission-fort-worth-gas-production-safe and http://news.heartland.org/newspaper-article/2011/08/02/study-no-adverse-health-effects-natural-gas-drilling-fort-worth)

Importantly, natural gas produced through hydraulic fracturing enables power plants to generate affordable electricity with only a small fraction of the emissions produced by coal power. The increase in natural gas electricity generation is one of the most important reasons U.S. power plant emissions have declined by 67 percent since 1980, according to EPA data.

Earthquakes
In some regions near hydraulic fracturing sites there has been a heightened frequency of minor earthquakes. No definitive connection has been shown between energy production and the earthquakes, so any asserted connection is speculative. Nevertheless, it is possible that a connection does exist. Researchers have reported, however, that any such connection would not be related to the hydraulic fracturing process itself, but would instead be related to the common practice of re-injecting used fracking fluids underground near fracking sites. (See, for example, http://www.scientificamerican.com/article.cfm?id=ohio-earthquake-likely-caused-by-fracking.) If any connection between recent minor earthquakes and fracking is demonstrated, this can be readily addressed through rules restricting the process of re-injecting used fracking fluids underground.

Summary
Hydraulic fracturing is the primary reason national energy production is reversing many long years of decline. Fracking allows economical production of newly discovered shale oil and shale gas reserves without significant environmental consequences. By unlocking vast new natural gas reserves, fracking is playing a major role in environmental improvement, allowing for the affordable generation of electricity with only a small fraction of the emissions produced by coal-fired power plants. Hydraulic fracturing presents a win-win situation for the economy and the environment.