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Fracking Allows Business Gas Suppliers to Drive Prices Down

By Edited May 9, 2016 0 0

In order to keep prices competitive, businesses need to drive their costs down. For manufacturers, one of the most significant costs that they need to control is the energy that drives their production processes. With the introduction of new techniques, such as fracking, to extract gas, business gas suppliers are able to drive costs down, helping businesses to maximize their profitability. However, fracking remains controversial due to concerns about its impact on the environment. Ultimately, governments must decide whether the benefits of fracking outweigh the disadvantages.

What is Fracking?

Fracking is short for hydraulic fracturing. This is a technique for speeding up the release of gas trapped in underground rocks, such as shale, limestone, and sandstone.

Traditional extraction methods relied on drilling in to pockets of natural gas that had already been released from the surrounding rock. This gas would be brought to the surface and contained, ready for processing and distribution to customers. When using these traditional methods, companies would often be faced with natural gas supplies that were too shallow to produce commercially viable amounts of gas because most of the natural gas was still trapped in the surrounding rock.

In order to release the trapped gas, companies developed methods of breaking rocks apart. Hydraulic fracturing techniques, which use water to split the rocks, have been in use since the 1940s. However, the early fracking techniques were limited to releasing gas from sandstone and limestone via vertical wells. The gas trapped in extensive shale deposits could not be commercially harvested using this method. In the 1990s, improved fracking techniques were developed that allowed horizontal wells to be drilled into the shale deposits. High pressure water was pumped in to the shale, causing it to break apart and release the trapped gas. During the fracking process, sand is introduced to keep the fracture open while the water contains chemicals that kill bacteria and dissolve minerals that might block the fissure.

Why is Fracking Good for Businesses?

New, commercially-viable fracking techniques have opened up access to trillions of cubic feet of natural gas that lies trapped underground in shale deposits. By increasing the amount of natural gas that can be extracted, energy companies can ensure that they meet their customers’ demands in a reliable and cost-effective manner.

According to the U.S. Energy Information Administration, the production of natural gas within the U.S. is projected to rise to 33.1 trillion cubic feet per year by 2040. This is a 44% increase in production from 2011, when 23.0 trillion cubic feet per year of gas was produced. The bulk of this increase is due to the extraction of natural gas from shale deposits, made possible by advances in fracking techniques. Extraction from shale alone is projected to grow from 7.8 trillion cubic feet per year in 2011 to 16.7 trillion feet per year by 2040.

As the supply of gas increases, the price per unit charged to customers will begin to fall due to competition between business gas suppliers. This ensures that businesses that rely on gas to power their processes can secure the best possible deal. Individual consumers also benefit from fracking because lower production costs lead to lower retail prices.

Is Fracking Good for the Environment?

Of the available fossil fuels, natural gas is a cleaner-burning option than coal or oil because it releases lower levels of carbon dioxide and sulfur dioxide, which are thought to be significant contributors to climate change. Increasing the volume and reliability of natural gas supplies allows businesses to depend on gas for their energy, enabling them to move away from the fossil fuels that cause higher levels of pollution.

However, burning gas still contributes pollutants to the atmosphere which are not produced by alternative sources of fuel, such as nuclear and renewables including wind, water, and solar power.

What Are The Disadvantages of Fracking?

There are concerns in some quarters that fracking may have a detrimental effect on the environment when it is used to extract natural gas. Care must be taken by companies that introduce the fracking process to ensure that the chemical-infused water does not seep out of the well and contaminate the surrounding groundwater.

The amount of water used in the fracking process is significant. In areas where water is in short supply, there are concerns that the diversion of water to fracking could have a detrimental effect on the surrounding wildlife. Environmentally-responsible disposal of the chemical-infused water used in the fracking process is a major challenge for gas companies.

By breaking down shale underground, fracking can contribute to minor earthquakes, according to the U.S. Geological Survey. These small earthquakes are strong enough to be felt by those living nearby.

Control of Fracking by National and Local Governments:

Because of concerns about the impact of fracking on the surrounding environment and local inhabitants, some national and local governments have restricted or banned the practice.

France, Bulgaria, and Tunisia all have nationwide fracking bans in place. Spain has introduced fracking bans in two regions, despite support for the technique from its federal government. While the practice has been used in Canada since 2000, recently some provinces have become more concerned about the technique. Quebec introduced a moratorium on fracking in 2011.

Practices vary from state to state in the U.S. In May 2012, Vermont became the first American state to ban fracking. In May 2013, a mid-level state appeals court ruled that municipalities in New York can control fracking by using local zoning laws. Over 50 of New York’s municipalities have banned gas drilling over recent years, with over 100 introducing moratoria.

The Way Forward:

Clearly, fracking offers benefits to businesses and individuals if it can increase the supply of natural gas. However, the concerns that exist around environmental issues have made countries increasingly wary of the practice. The U.S. Environmental Protection Agency has established an independent expert advisory board to examine fracking. The board includes 31 experts drawn from industry, universities, and science laboratories. Its report is expected to be published in 2014.

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