The United States is in the midst of an oil and natural gas boom. A new technology called hydraulic fracturing, fracking for short, is making that possible. The government has only recently tightened regulations meant to reduce air pollution that occurs in the last stages of drilling an oil or gas well. This investment in sustainable fracking technology is meant to keep the oil and gas boom going while avoiding excessive pollution by methane and other greenhouse gases. Currently these gasses can be released from wellheads once oil and or gas is discovered and before the well is set up for production. A leader in the use of and investment in sustainable fracking technology is ExxonMobil. Although the oil giant worked with this technology more than thirty years ago it chose to purchase XTO Energy, a natural gas producer with extensive expertise in hydraulic fracturing. The price tag was $45 Billion. For those investing in oil, an appreciation of the advantages, risks, and price tag of an investment in sustainable fracking technology is important.
What Fracking Does for United States Energy Reserves, the Economy, and Oil Company Profits
At the turn of the millennium many experts believed that the USA had run out of reserves of natural gas that were recoverable at a reasonable price tag. As fracking technology has been applied to shale deposits across the nation natural gas production has gone up by a forth just since 2005. A third of natural gas production comes from shale deposits and reliable estimates are that in twenty years nearly two-thirds of US natural gas will come from shale deposits via fracking technology. Current estimates are that the USA has a century of natural gas reserves recoverable by current technology.
The natural gas industry itself employs two thirds of a million people and is a $118 Billion a year business that is growing in leaps and bounds at a time when the recovering US economy is glad to have more jobs.
And, ExxonMobil profits have gone up again making it the world’s largest corporation by value. Their investment in sustainable fracking technology, mostly by purchasing XTO Energy, has paid off. In the game of picking new winners in the stock market, investment in sustainable fracking technology looks promising.
The Obama administration has just announced regulations that will compel drillers to deal with greenhouse gases that emerge from the wellhead during the later stages of drilling. These regulations are already in place through state policy in Colorado and Wyoming so the work and don’t seem to get in the way of the oil and gas boom. Because technology to trap emerging gases is not readily available at every wellhead the government is giving drillers a three year grace period during which they may burn off excess gases. Thereafter investment in sustainable fracking technology that include the trapping of escaping gases will be mandatory. Another aspect of hydraulic fracturing that scares environmentalists is contamination of water supplies. Advances in technology such as encasing the drilling apparatus in cement encircled steel pipe is meant to reduce the chance of water table contamination. Also, most of the oil and gas with which the drillers are concerned is commonly very far below the water table. A little investment research into who does what in the oil and gas industry and who is successfully applying fracking technology could be profitable for both the long and short term investor.