Fracking – Easing Energy Bottlenecks

In the midst of gyrating crude oil prices that have sent many economies into a tailspin, strong votaries of shale gas have thrown their weight behind fracking or hydraulic fracturing, a method employed to extract natural gas from deeply embedded shale that cannot be reached through conventional drilling. The shrill pitch for shale gas extraction is bolstered by the American Petroleum Institute's recent assertion that this energy source can be the 'bridge fuel' for the country in its transition from coal to renewables.

This was further accentuated by recent estimates based on US Energy Information Agency data that suggest CO2 emissions in the US have dropped to their lowest in 20 years, largely due to the rising share of natural gas in power generation. This environmental dimension has also contributed to the growing thrust on shale gas extraction, which can be augmented with fracking.

As such, shale basins have been identified across six continents. Hence, companies with deep expertise in shale oil E&P are indeed looking at a potentially large global market. However, there are certain environmental concerns that need to be addressed. For one, there is a view that the chemicals used in the fracking process like citric acid, benzene or lead could have detrimental effects on the surrounding environment. Some have even said that fracking could result in the release of radiation and cancer-causing substances.

Strong anti-fracking campaigns in places like New York State and Sussex in the UK have also focused on the risk of earth tremors and contamination of ground water, while some others felt that fracking-induced natural gas price dip could stymie the growth of the fledgling renewables industries.

The arguments are no doubt weighty but the proponents of shale gas cite many strong reasons why shale gas is here to stay. They say that lawmakers and oil & gas companies are taking urgent steps to control the effect of fracking on ground and surface water; the impact of withdrawing the water required for fracking, the implications of wastewater treatment and disposal, etc. In fact, some have even ventured to ask whether natural gas from fracking would be worse for climate change than burning coal.

Today, as the global demand for natural gas rises, especially from the Asian markets, shale gas extraction is expected to increase manifold through fracking. Nations with rich shale gas reserves would look to leverage the market opportunities, although addressing the global markets will call for considerable gas transportation infrastructure like massive port infrastructure to liquefy the gas, fleets of specialized tankers, re-gasification -- which in turn can boost the economic prospects of many nations.

These challenges notwithstanding, the emerging consensus is that well-regulated fracking will help many countries around the world achieve energy self-sufficiency.

About the Authors

Wipro Insights set up the Council for Industry Research, comprising of domain and technology experts from the organization, to address the needs of customers. It specifically looks at innovative strategies that will help them gain competitive advantage in the market. The Council in collaboration with leading academic institutions and industry bodies studies market trends to equip organizations with insights that facilitate their IT and business strategies. http://www.wipro.com/insights/

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