(A Fracking Operation in Pinedale, Wyoming. Image source: here)
According to this report in the Wall Street Journal, US ‘oil’ production surged by 14 percent in 2012 to nearly 9 million barrels per day (this figure includes natural gas liquids, hence the quotations, actual crude oil production was about 7 million barrels per day).
This surge in production was fueled, primarily, by a broad application of hydrolic fracturing technology to enhance the rate at which oil and related fuels are squeezed from the ground. Little in the way of new discoveries have resulted in this enhanced flow of climate fire-juice. Instead, new technologies have been aimed at the old, tired, or difficult to reach sources in order to squeeze more from the ground.
It’s a tough gamble for oil and gas companies. The reason is that a massive investment in new drilling rigs and an ever increasing number of fracked wells is required to sustain this large pulse of new oil. By end of 2012, more than 43,500 wells had been drilled, and, perhaps more importantly, a record 19,000 wells were fracked over the same period. All this drilling and fracking activity costs a lot of money. So a price of oil above 95 dollars is required to sustain most marginal operators.
Tellingly, with a slight fall in world oil prices over the past spring, the rate of new wells drilled had dropped and is projected to fall below 2012 numbers by about 1,500 to around 42,000 by end of 2013. US natural gas production has already leveled off due to lower prices and a large portion of this rig count drop includes the lag due to lower natural gas prices. But traditional oil well drilling is also sliding off. So the new focus is primarily on tight oil and oil shale fracking.
Fracking is an energy and water intensive process that costs much more than a traditional oil well. It also results in increased risks of ground-water contamination. So communities across the US have been forced to choose between oil and gas extraction, and keeping their water supplies safe. There is also a longer-term choice on global climate, which we’ll discuss more in detail below.
As noted above, marginal prices need to remain above 95 dollars per barrel for the highest cost operators to make a profit. Embedded in this high marginal price for shale oil is the fact that most fracked wells have a high depletion rate. The result is that flows from these wells drop off dramatically over time. So more and more wells need to be fracked each year to keep overall flow rates high. The end result is that fracked well production creates a net cliff in fracking dependent oil in a 10-15 year time-frame. New basins of fractured oil will, therefore, need to be accessed to keep flow rates high.
Nonetheless, the US is likely to continue to see higher rates of oil production over the coming 5-10 years due to this fracking boom. But at the cost of much more expensive oil and ever-increasing damage to the world’s climate.
Fracking Climate Change Game Over
Oil fracking is a form of enhanced oil extraction. As such, it enables a more rapid extraction of existing oil reserves and, to a degree, opens reserves that were previously uneconomic to extract. Since less than 1/3 of current fossil fuel reserves can be burned while still maintaining a vague hope of keeping warming below the dangerous 2 degrees Celsius threshold by the end of this century, the race to drill and frack more wells and increase oil production is a race toward climate change game over.
Fracking also results in large methane seeps from fractured wells. These seeps are not included in fossil fuel reserves, yet they still end up in the atmosphere. And since methane is, over 20 years, 105 times more potent than CO2 as a warming agent, this extra emission is a very bad additive to an already warming climate.
The net result is we’ve tapped a more carbon intensive technology to burn more oil faster. In metaphor, we’ve decided not to jog, but to sprint headlong toward the climate cliff.
At current emissions rates and emissions growth rates, the world says farewell to any possibility of preventing a 2 degrees Celsius warming by century’s end sometime around 2025.