Tag Archives: Energy

California Passes Fracking Regulation

Jerry Brown Delivers California State Of The State Address

California is leading the way on fracking legislation, with the passage of California Senate Bill 4, frackers in California are now required to follow a new set of rules on disclosure of their fracking fluids and the impacts they have on the environment. The law requires that fracking operators publish the proportions, quantity, and chemical names of all of the components of their fracking fluid, and to provide free testing of water sources nearby the fracked wells. The law also requires disclosure on how much wastewater is produced, its chemical composition, and how it is disposed off.  A particularly good measure will be a requirement for the monitoring of groundwater before, during, and after fracking operations.

The law is being attacked by both the fracking industry and environmentalists. Environmentalists see the law as too weak. One group sent a petition to Governor Brown of California, asking him to pass a ban on all fracking in the state. Industry groups have claimed that this bill will make it harder to frack and slow down growth in the state, threatening growth in California.

Fracking can cause contamination of aquifers and small earthquakes, as multiple studies have concluded. However, there has yet to be a comprehensive scientific study looking at large number of wells on the effects of fracking on ground water and seismic activity in a broad area. By making testing mandatory this law could provide clear and definitive data on fracking and foster a much better understanding of the practice. While some my say that a ban is necessary, it perhaps premature before a comprehensive scientific study has been conducted. Should the data  this law will provide make it clear that fracking is an imminent danger to water quality, it would then be appropriate and necessary to pass a law banning the practice entirely.

Shale Production: Reserves and Costs of Production

Currently only four countries are producing from shale formations. Two types of product can be produced from shale oils, natural gas and light tight oil. Natural gas is an actual gas that we familiar with, heating our homes and generating electricity, Light tight oil a grade of oil that is trapped in shale formations, and is one of the higher quality and more flammable types of oil. The United States of America, Canada, China, and Argentina are the four current commercial producers of shale natural gas and oil.  The United States produces the vast majority of both, with Canada in second. New production from shale formations is coming online in Algeria, Australia, Colombia, Mexico and Russia.

The graph below illustrates relationship between prices and the size of reserves. Reserves actually refer to the amount of oil or natural gas that it is profitable or cost effective to recover at current prices. Shale natural gas and tight oil is significantly more expensive to recover than conventional oil. So as the price goes down the size of shale reserves actually decreases. At current prices, $45 – $50 the Canadian tar sands are no longer viable to produce. Oil prices to be $70 – $75 to make it worthwhile to produce. As well much of the shale gas production in the United States is no longer profitable to produce at current oil prices.

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Sources:

US State Department Keystone XL Pipeline report; fig. ES-8 http://keystonepipeline-xl.state.gov/documents/organization/221135.pdf

U.S. Energy Information Administration calculations with data from DrillingInfo, Canadian National Energy Board, Cedigaz, Fact Global Energy China Monthly, Chevron, and Yacimientos Petroliferos Fiscales