written 1 December 2018
published 8 December 2018
American oil production doubled in the last decade, exceeding 10 million barrels a day in 2017 for the first time since 1970. The US became the largest oil producer on the planet in 2018, spurring fantasies we are oil independent and masters of our energy future. The miracle behind this is hydraulic fracturing, or fracking.
Fracking involves sophisticated drilling of deep wells with extensive horizontal laterals to access dispersed pockets of oil within shale rock. A chemical brew containing sand is injected by high pressure pumps, fracturing the rock, allowing oil and gas to flow, while the sand keeps the cracks open. As conventional oil fields have depleted and discovery of new fields has declined, fracking allows extraction of the remaining unconventional deposits, but costs more money and energy.
Oil is essential for our current economy. However, if the price is high enough for high cost production to profit, the economy can stagnate, contributing to recession as in 2007. If the price of oil is low, the economy thrives, but these same oil producers lose money. As the economy has slowly recovered from the last economic crash, the US oil industry had to shift to fracking, losing over $250 billion while expanding production.
Even though fracking loses money on every barrel, the hope of increasing economic growth and future profitability, keeps investors on the hook. Many fracking companies are little more than Ponzi schemes, where new investors are required to keep everything from imploding. But the economy stalled this year, due to the Trump trade war and the ballooning US debt needed to fund the tax cut, so investors are becoming concerned that fracking is just another financial bubble.
Part of what makes fracking so expensive is that production in these wells declines within a few years, compared to decades of production from conventional wells. This means new wells must be drilled continuously to maintain even the same production level. Most American fracking production comes from just three fields, but the "sweet spots", or most profitable areas, are already drilled. Further development will be even less lucrative.
Fracking requires vast quantities of chemicals, water, and sand. From the beginning, there was concern about water contamination by the toxic brew of drilling fluids. Much of the fracking is taking place in areas with limited water. Not all sand is suitable for fracking, so demand has created shortages, raising prices. Most rock has natural radioactivity. The drilling fluids are recycled through filters, which then become a hazardous radioactive waste. If these issues are adequately dealt with, they cost the producer, and if they aren't, they cost the community.
Increased costs in dollars can be gamed by further debt, but energy costs are real. Energy sources can be evaluated as a ratio of how much energy is expended to deliver surplus energy in a form useful to the larger community, the Energy Return On Energy Invested (EROEI). Energy sources with higher ratios can support a more technologically based civilization. Agricultural societies run on grain and animal power with an EROEI of 2.5:1. Wood fueled economies, and the civilizations they support, have an EROEI of 7:1. Conventional oil is very energy dense, which means that there is far more energy in the oil than it takes to produce it. The earliest oil fields had an EROEI of greater than 60:1. This vast energy return built the world we know today, with current global consumption of 100 million barrels a day, an energy intensive way of life requiring an EROEI of at least 20:1. The high energy expended in fracking gives it an EROEI of about 5:1, more versatile than burning wood, but less energy efficient.
Fracked oil is light weight oil, suitable for refining into gasoline, but must be mixed with heavier conventional oil to create diesel fuel. The slowing economy and high fracking production volume have caused gas prices to drop in recent months, benefiting the consumer, but diesel prices are still very high, hurting the economy.
Last, but certainly not least, burning fracked oil increases the risk of climate suicide in the near future. The hundreds of billions spent on fracking would be more prudently invested in building a carbon free economy.
