Money and Finance

The Facts Behind the Frack

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To call it a fractious debate is an understatement.

Hydraulic fracturing, or fracking, wrenches open rock deep beneath the Earth's surface, freeing the natural gas that's trapped inside. Proponents argue that fracking-related gas recovery is a game changer, a bridge to the renewable energy landscape of the future. The gas, primarily methane, is cheap and relatively clean. Because America is brimful of the stuff, harvesting the fuel via fracking could provide the country jobs and reduce its dependence on foreign sources of energy.

But along with these promises have come alarming local incidents and national reports of blowouts, contamination and earthquakes. Fracking opponents contend that the process poisons air and drinking water and may make people sick. What's more, they argue, fracking leaks methane, a potent greenhouse gas that can blow up homes, worries highlighted in the controversial 2010 documentary Gasland.

Fears that fracking companies are operating in a Wild West environment with little regulation have prompted political action. In June, the group Don't Frack Ohio led thousands of protesters on a march to the statehouse, where they declared their commitment to halting hydraulic fracturing in the state. Legislation banning the process has been considered but is now on hold in California. New York — which sits atop a giant natural gas reserve — has a statewide fracking moratorium; pending policies would allow the process only where local officials support it.

Despite all this activity, not much of the fracking debate has brought scientific evidence into the fold. Yet scientists have been studying the risks posed by fracking operations. Research suggests methane leaks do happen. The millions of gallons of chemical-laden water used to fracture shale deep in the ground has spoiled land and waterways. There's also evidence linking natural gas recovery to earthquakes, but this problem seems to stem primarily from wastewater disposal rather than the fracturing process itself.

While the dangers are real, most problems linked to fracking so far are not specific to the technology but come with many large-scale energy operations employing poor practices with little oversight, scientists contend. Whether the energy payoff can come with an acceptable level of risk remains an open question.

"People want it to be simple on both sides of the ledger, and it's not simple," says environmental scientist Robert Jackson of Duke University. "Our goal is to highlight the problems, so we can understand the problems and do what we can to help."

- Links
Jeremy Grantham Divines Oil Industry's Future (LINK) [Excerpt from his letter.] The simplest argument for the oil price decline is for once correct. A wave of new U.S. fracking oil could be seen to be overtaking the modestly growing global oil demand....

- Gmo's 4q 2014 Letter
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- Fracking: How It Works, Where It’s Done
Link to slideshow: Fracking: How It Works, Where It’s Done ...

- Pass The Books. Hold The Oil.
Thanks to Andrew for passing this along. EVERY so often someone asks me: “What’s your favorite country, other than your own?” I’ve always had the same answer: Taiwan. “Taiwan? Why Taiwan?” people ask. Very simple: Because Taiwan is a barren...

- Duke Energy Is Acquiring Piedmont Natural Gas (pny)
This morning I got word that one of my favorite dividend utilities is being purchased by Duke Energy. The deal which is a cash deal and is set to be completed by the end of the year for nearly $5 billion in cash. PNY shareholders are set...

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