Hydraulic Fracturing (Fracking)

Introduction

Geologists have known about vast reservoirs of natural gas and oil trapped in shale formations across the United States for decades, but until recently cost-effective extraction techniques weren’t available, and the resources remained untapped. Shale didn’t factor into most serious analyses of U.S. energy prospects until the combination of two old technologies—horizontal drilling and hydraulic fracturing, known colloquially as fracking—was perfected. A drilling renaissance over the past five years has transformed the United States into a leading natural gas producer and potential oil and gas exporter, reversing a decades-long trend of increasing reliance on foreign sources of oil and gas.

The results have been dramatic. Shale production helped reduce net imports of energy by one-third between 2011 and 2013, according to the U.S. Energy Information Administration (EIA), and by 2014 foreign petroleum imports had fallen nearly 40 percent compared to 2006. These changes hold broad implications for global markets and international relations.

Meanwhile, global energy prices have fallen, and many other countries are studying the U.S. example and plan to tap their own shale resources. But analysts, environmental groups, and governments are concerned about the costs of fracking and the risks to the environment, while falling oil prices have begun to contract investment in the sector.

What is fracking, and where is it happening?

Hydraulic fracturing, or fracking, refers to two processes used to extract natural gas trapped in shale formations. The first step is to drill down to the sedimentary rocks, sometimes as far as ten thousand feet, then drill sideways for a mile or more. This horizontal drilling has been widely practiced since the 1980s to extract conventional oil and gas.

Then, since shale gas is trapped in dense layers of rock and can’t flow through the well by drilling alone, producers must deploy hydraulic fracturing—first introduced into commercial practice in 1947 and effectively combined with horizontal drilling in the late 1990s—which pumps millions of gallons of water, sand, and chemicals at high pressure to open fractures in the rocks, allowing oil and gas to flow. Fracking is used in nine out of ten natural gas wells in the United States.

Graphic courtesy of ProPublica

Horizontal drilling and hydraulic fracturing have allowed producers to tap into large tight oil, shale oil, and shale gas deposits—some of which span multiple states—in the United States, such as the Barnett, Permian Basin, and Eagle Ford shales in Texas; the Fayetteville in Arkansas; the Haynesville in Louisiana; and the largest, the Marcellus, which spans Pennsylvania, New York, and Ohio. Then there is the massive Bakken formation, centered in North Dakota, which has remade the energy map in the United States and around the world, becoming a top global producer and producing more than one million barrels per day  of oil in 2014.

How much oil and gas can fracking unlock?

Though basic fracking techniques have been available for decades, technological breakthroughs in the 1990s paved the way for newfound commercial viability in the shale sector, as CFR Senior Fellow Michael Levi  recounts in his book The Power Surge . As Levi explains, while the EIA, which publishes widely anticipated annual reviews of the sector. didn’t even include shale gas in its 2009 outlook, by 2012 the EIA was reporting that more than one-quarter of U.S. natural gas production was from shale—a figure the EIA estimated would increase to one-half by 2035. The EIA’s 2014 outlook (PDF) shows that proved natural gas reserves (a category of resources that have been established to be economical to extract under present conditions) increased nearly 10 percent in 2013 to 354 trillion cubic feet (tcf), while the more inclusive measure of “technically recoverable reserves” amount to over six hundred tcf —nearly one tenth the global supply.

In the long term, the EIA expects U.S. shale gas production to continue rising through 2040. Such projections are difficult, however, since the viability of deposits depends on a number of unknowable factors, including the future of energy prices, global demand, and technological developments.