Foreign Policy Blogs

Some Basics on Fracking to Join the Informed Discussion

Some Basics on Fracking to Join the Informed Discussion

Source: www.ramehart.com

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?

In general, all natural gas wells have their highest production rates once brought on line. After the well starts to produce, its production rate will continuously decline whereby production would first decline rapidly while eventually settling down at a slower declining pace. Consequently, natural gas producers have to keep drilling new wells to maintain or expand the original overall production.

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!

 

 

Author

Roman Kilisek

Roman Kilisek is a Global Energy & Natural Resources Analyst.
His research focuses on global energy politics, mining, infrastructure and trade, global political risk and macroeconomics. He is fond of using scenario development and analysis.

He has lived on three continents and traveled to over 40 countries around the world. He now lives and works in New York City.