This “Clean” Fracking Breakthrough Could Make You a Bundle
As the war on fracking rages on, a “clean” technical advance is emerging that could help ease this ongoing debate.
In the process, fantastic new opportunities are developing for investors.
Fracking involves moving a large amount of water laced with chemicals downhole under considerable pressure. The adverse impacts of this have always been its biggest sticking point.
That has led to major advances in chemical-free fracking and the use of alternatives to water in the process. The move to use carbon dioxide, gels, and propane to frack wells are good examples of this.
But the opposition has taken little solace from the claims these methods are safe.
So for the past several years, my recommendation to producers has been simple: Identify the problems, lay them clearly out on the table, and then start finding ways to solve them.
That is the way things normally operate in a market.
Hiding behind state laws or hiring expensive New York City PR firms may sound like a good move in the board room but it never translates well with the general public.
Which leads me to the fracking breakthrough that could make you a bundle…
Hmmm…What’s That Smell?
If you have ever been to a fracking site like I have, there is something you notice immediately. It’s the smell.
Your initial reaction leads you to believe its gas. But it’s not. On its own, natural gas is odorless. The smelly stuff is added to it so that you know when there is a gas leak.
On a fracking site, the odor comes from the fuel used by the heavy apparatus footprint on the surface.
That array of machinery is needed to drill wells and run the extensive number of pressure trucks, compressors, and supporting equipment required for the fracking to take place.
All of this equipment runs on diesel and that is what you smell.
There are two problems with this set-up. First, as the price of diesel increases, so does the cost of running the well. The second is that diesel fuel leaks which is one of the primary environmental concerns at drilling sites.
And unlike the discussion that surrounds fracking, these leaks are not occurring thousands of feet below the surface. In this case, the diesel spills onto the land itself with all the direct consequences to water, soil, and the ecology. In addition, diesel emissions are increasingly a problem on site as well.
However, now there is a solution to this very visible concern that comes along with fracking.
Companies are beginning to use the gas pumped out of the ground as the fuel source for the equipment drilling the well and doing the pumping. That eliminates the use of diesel altogether.
This is not simply natural gas. Given the power required, operators have been using compressed natural gas (CNG).
But now even that is giving way to a better, cheaper, and more efficient source. It’s liquefied natural gas (LNG).
The use of LNG is becoming more important as deeper wells are drilled, especially in the Utica Shale basin that underlies the Marcellus in Pennsylvania and West Virginia.
A Major Step Forward For Cleaner Fracking
The latest wrinkle in the move towards using LNG on frack sites just happened yesterday.
It involved two privately-held companies, but there will be a play emerging that involves publically traded stocks. In fact, two of them are already in the Energy Advantage and Energy Inner Circle portfolios.
Prometheus Energy Group, privately held by Shell Technology Ventures Fund 1 B.V. and Black River Asset Management LLC (a wholly-owned owned but independently managed subsidiary of private Cargill) announced yesterday that it would supply LNG to Antero Resources to power drilling rigs in the Marcellus and Utica basins.
Prometheus also said it would be providing logistics delivery and onsite LNG equipment for storage and regasification at various sites in northern West Virginia and eastern Ohio.
According to Antero, it currently operates 18 rigs in West Virginia, Ohio, and Pennsylvania. The company says it will begin using the LNG for the fracking process as well. The LNG will first be introduced at Antero’s West Virginia operations
Prometheus also added that using natural gas to power drilling operations will significantly reduce emissions of nitrogen oxides and particulates compared to the diesel fuel traditionally used.
But there is another major advantage to gained: The CNG in use today and the LNG about to be used is much cheaper than diesel. That improves profit margins at the well site.
As one veteran puts it, “after the first well is drilled at some of these sites, a lot of people can use compressed natural gas produced on site to drill the next well.”
Now LNG is about to get the same treatment because it provides more horsepower and it is easier to store than CNG.
So don’t look now but we may finally have changes in fracking that are beneficial to both the environment and the bottom line.