The three-way balancing act between the environment, job growth and energy self sufficiency are all going to play out in earnest here in Ohio during the coming elections. The primary reason for the growing interest in our State is the fossil fuel production capabilities of the shale fields throughout Ohio, with a special emphasis on the Utica shale deposits east of Columbus. The process of fracking, which drills down on average, 4,000 feet in Ohio and just as far horizontally, pumps the well full of chemically treated, "slick water" to crack the shale deposits, displace the gas and force it to the surface. This has dramatically lowered the cost of production and is ushering in significant economic prosperity.
There are always unintended consequences when theoretical models face real world application in high volume. There were more than 400 fracking wells drilled in Ohio in 2010. The Bakken shale reserves in North Dakota employ more than 6,000 wells to produce twice as much natural gas while also producing enough oil to place them at number 10 on the OPEC production list ahead of Ecuador. The production of natural gas and oil through the fracking process is not limited to the United States. Qatar, Russia and Iran contain about 70% of the overseas, undeveloped supply. This is why environmentalists are sounding such an alarm. Here in the U.S., fracking, while regulated by the EPA, is blamed for everything from contaminated drinking water to the recent earthquake, measuring 4.0 on the Richter scale outside of Youngstown. In fact, the EPA just approved a 100% green replacement for the biocide, "slick water" industry standard. How many Russian state subsidized fossil fuel producers do you think are lining up to purchase SteriFrac to protect the environment?
The economic prosperity that fossil fuel production is bringing to our area cannot be ignored. Ohio is making waves on the international energy production scene due to the volume and quality of its reserves. France's largest oil company, Total SA, just purchased the rights to drill 619,000 acres of the Utica Shale Field for a total of $2.32 billion dollars. This shale field is expected to produce not only natural gas but also enough crude oil to put Ohio in the top five U.S. producers. The production boom is expected to bring more than 200,000 jobs to Ohio by 2015 and provide an annual income of more than $12 billion to Ohioans. These numbers can be extrapolated to include the Bakken fields as well as the Eagle Ford field in Texas, which is expected to drill more than 3,000 wells in 2012 alone.
The last issue to address is energy independence. The most promising estimate comes from London's Daily Telegraph, citing British Petroleum research, stating that the U.S. could become entirely energy independent by 2030. More realistic research points to the U.S. Energy Information Administration, which recently stated that we pay $4 in natural gas for the equivalent energy as $25 worth of oil. This is up from less than a 4 to 1 ratio just 18 months ago. The price gap between domestic and overseas natural gas is nearly as wide. Most of Europe pays upwards of $16 per mmbtu (million metric British thermal units) compared to $4 per mmbtu here in the U.S. This price differential makes exporting liquefied natural gas (LNG) a growing business opportunity while the world catches up.
Comparing the cost of electricity to the cost of gasoline clearly explains the efficiency of natural gas. Forty percent of our electricity comes from natural gas. Massachusetts's Institute of Technology published a paper this summer showing that the price of electricity has remained stable as gas prices have sky rocketed. Barring the extraction of shale gas, they expect the price of oil to increase five fold over the next 20 years. Meanwhile, allowing the use of shale oil would only see crude double in price while electricity will climb by a mere 5-10% in the same timeframe.
The issues we've addressed are merely the broadest points of a discussion that requires much further debate on all fronts. The simple facts are that we have a global production advantage that we haven't seen in at least a generation. However, as a natural resource, we must respect the ground from which it flows and treat it accordingly. Finally, all fossil fuels have a finite supply. We must not allow cheap access to a new source to stall the development money and efforts flowing into renewable energy sources.
Andy Waldock http://www.commodityandderivativeadv.com http://www.cotsignals.com
866-990-0777
Article Source: [http://EzineArticles.com/?Fracking-in-the-USA&id=6828511] Fracking in the USA
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