5 Things You Need to Know About Fracking

A major job producer? An environmental hazard? Here are the facts you need to join in the debate.

North Dakota can boast one of the few growing economies in the US today due to its booming oil and natural gas industry. While many areas of the country have struggled to produce jobs, energy companies in North Dakota lack workers to man oil wells. In fact, North Dakota has just surpassed Ecuador (an OPEC member) in oil production, producing between 440,000 and 510,000 barrels per day. (See Looking for Work? Try the Middle of Nowhere.)

Energy companies, however, have been under greater government scrutiny at the state and federal level as regulators want to make sure that horizontal hydraulic fracturing (fracking) doesn't pose serious environmental and health threats to various parts of the country.

Earlier this week, the supervisors in Rockingham County, Virginia, rejected a proposal from Carrizo Oil and Gas (CRZO) to build what would have been the state's first fracking drill site. States such as Ohio and New York have either already imposed a moratorium on fracking or may do so in the future as lawmakers worry the quick expansion of the industry will harm their constituents. Ohio, for example, has become the dumping ground for the wastewater produced by fracking, and companies have poured 368.3 million gallons of wastewater in wells in the first three quarters of 2011.

The Environmental Protection Agency has joined the fray by reporting that fracking may have contaminated groundwater in Pavillion, Wyoming. However, the agency's inclusion in the debate has not produced any clear answers. The Wall Street Journal points out, among other things, that the US Geological Survey claims the well water tested had contained organic chemicals for at least 50 years and may have no connection to fracking.

Due to the lack of information on this nascent industry, it may be some time before regulators and scientists reach definitive conclusions about the benefits and costs of fracking. In the meantime, listed below are five must-know facts about the practice.

1. Fracking works by reaching oil and natural gas trapped deep beneath large rock formations.

Halliburton (HAL), the biggest provider of fracking in North America, invented hydraulic fracturing in 1949, but the process did not become popular until 2005, when the 2005 Energy Policy Act exempted fracking from the Clean Water Act, the CLEAR Act, and EPA regulation. Since then, fracking has been introduced in at least 34 new states, and since 2008, companies have used fracking in 90% of newly drilled wells.

The process consists of making a cement-cased well by drilling vertically for approximately 7,500 to 8,000 feet, and then drilling horizontally for approximately 2,000 to 3,000 feet. Workers then inject between 200,000 and 6 million gallons of fracking fluid, which is 98% to 99.5% water and sand mixed with numerous chemicals and compounds. The water pressure and chemicals expand the hole formed by the drilling and break the rock formation, trapping oil and natural gas. The oil and gas then travels through the cracks formed in the rock, allowing workers to draw it up through the well.

Four companies, namely Halliburton, Schlumberger Ltd. (SLB), Baker Hughes Inc.'s (BHI) BJ Services unit, and FTS International Inc.(formerly known as Frac Tech Services) conduct half of the fracking in the US.

2. The fracking industry is currently a leader in US job creation.

The oil and gas industry now employs around 440,000 workers, and since 2003, has generated more than 1 in 5 of all new net jobs. Specifically, it generated 200,000 jobs.The vast majority of these jobs have gone to North Dakota, currently the leading state for all fracking activity. As of December 2011, North Dakota had the lowest unemployment rate in the country, at 3.3%. In November 2011, the state reported 16,000 job openings, many of them for positions paying more than $100,000. But North Dakota isn't the only state benefiting from new fracking developments: Pennsylvania's Marcellus shale formation helped produce 18,000 jobs in the first half of 2011.

Companies drilling in the Eagle Ford region in South Texas are now trying to rival the companies of North Dakota. Natural gas prices hit a 10-year low on January 19 at $2.32 per 1,000 cubic feet, however, and energy-producing companies like ExxonMobil (XOM) have reported that they will close up some of their wells in hopes of raising the price.

3. Water contamination is the top concern.

New state regulations have only recently forced corporations to report detailed information about the chemicals released during the fracking process. The accidental cracking of the cement casing that insulates the fracking wells may lead to the contamination of water supplies through fracking fluid leakage, and this problem has regulators increasingly worried.

Frac Focus, an organization dedicated to informing the public about the chemicals used in fracking, has been gathering information on the chemcials used as they become disclosed, providing a list of commonly used chemicals in fracking and information about the oil wells located in the US. Some of these chemicals include hydrochloric acid, glutaraldehyde, magnesium oxide, isopropanol, methanol, and many other chemicals that the Occupational Safety and Health Administration (OSHA) states should not come into contact with humans in significant quantities.

4. New fracking projects introduce new lawsuits.

As explained above, fracking fluid uses millions of gallons of water containing hazardous and radioactive compounds. States like New York and North Dakota lack treatment centers for the water and must store the water in underground wells. This creates the obvious problem of fracking water potentially leaking out of storage and into water supplies. At this point, no direct links have been established between fracking and contamination of wells and water supplies. Residents near drilling sites have reported damage to their properties, however. Since August 2009, 23 cases have been filed against energy companies for their fracking activities.

The residents of Dimock, Pennsylvania, are among the people who have taken the corporations to court. Dimock's Norma Fiorentino drew water from the same well for 36 years without incident until her well blew up in January 2009. Fiorentino and her neighbors sued Cabot Oil & Gas Corp (COG) for causing elevated levels of methane from fracking. Again, though, the burden of proof remains on the plaintiffs; they need to show how the liquid used by fracking and injected several thousand feet below the earth's surface traveled upward into drinking aquifers a few hundred feet below the surface.

5. Fracking can lead to earthquakes.

The biggest risk of fracking at this point seems to be earthquakes induced by the drilling and injection of massive amounts of liquid to break shale formations. The US Army and the US Geological Survey (see US Confirms Link Between Earthquakes and Shale Gas Extraction) have proven that drilling can lead to earthquakes. They confirmed that the 12,045-foot injection well drilled by the US Army's Rocky Mountain Arsenal in 1961 caused seismic activity when soldiers injected 165 million gallons of liquid waste into the ground.

Now states like Oklahoma and Ohio are experiencing more earthquakes than normal. In 2010, Oklahoma experienced 1,047 earthquakes when the state normally only sustains 50 earthquakes per year. Earthquakes have originated from areas that contain a large concentration of injection wells, like Lincoln County, which contains 181 injection wells. Officials in Mansfield, Ohio, have reconsidered the construction of wells for wastewater since earthquakes struck the nearby town of Youngstown last year.

Join in the conversation. What do you think? Does fracking hold the key to a new economic renaissance in the US, or does it pose a grave threat to our environment?

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