Hydraulic fracturing, or fracking, has drawn a ban in New York City’s watershed, and the New Jersey legislature is contemplating to prevent the transport of wastewater from fracking through the Garden State. What do we need to know about “fracking” to join an informed discussion?
Currently, natural gas prices continue to recover from their lowest levels in a decade. At a certain level, natural gas producers will either resume aggressive drilling and/or they will curb the abandonment of non-profitable older wells. According to Mark Anthony’s research in his article “The Long Tail Of Natural Gas Production,” the natural gas industry abandoned only 590 gas wells in 2009–note the high natural gas prices at that time –while the abandonment reached a high of 21402 in 2010. Most likely that being a consequence of steadily declining natural gas prices starting in 2009. Needless to mention, the drilling of new wells declined also.
We might be at an inflection point with higher natural gas prices in the short term (hot summer will require more power generation) as well as medium term (the winter 2012 /2013 may be much colder than the unseasonable winter in 2011/2012). On top of that, the U.S. natural gas abundance opens up a wide range of export opportunities. All these factors will lead to again more aggressive drilling and at the same time more scrutiny by the public and the legislature.
CNBC published on its website “Inside The World of Fracking,” which is a very interesting and informative slideshow, I would like to draw the readers’ attention to. Understand the basics and join the discussion!