End of fracking.....economic impact to United States

[fredtoast]

The U.S. economy received a huge boost from fracking technology. Oil companies made a killing from cheap natural gas and oil using this technique. But now it seems it has ran its course. The oil companies are finally admitting that fracking has contributed to the massive increas in earthquake activity in Oklahoma and other western oil producing states.

In 2007 Oklahoma experienced one earthquake of magnitude 3 (the lowest level where they can be felt). In 2015 there were 907. Oklahoma, which used to have next to zero seismic activity, now has more magnitude 3 earthquakes than California. The number of level 4 earthquakes has also doubled, and 10 of the 12 biggest earthquakes in Oklahoma history have occurred since 2011. Residents of Oklahoma are shocked to find that the damage from these quakes is not covered unless the home/business owner had special "earthquake insurance" (just like "flood insurance" riders). And the cost of "earthquake insurance" (which used to not even be offered in that state) is skyrocketing.

Even though 20% of the jobs in Oklahoma are tied to the oil/gas industry people realize that the potential damage from earthquakes is not worth it.

So now the question is how much liability the oil/gas companies face. For years they denied that fracking was responsible for any of this, but the evidence is now clear. Their experts should have known long ago. They are looking at billions in potential liability. Even if they stop fracking right now there is no evidence that the earthquakes will stop. The damage has been done and it may be irreversible.

This will also have a big impact on the United States oil/gas production which had been booming for the last few years.

Thoughts?

[GMDino]

(04-11-2016, 01:16 PM)fredtoast Wrote: The U.S. economy received a huge boost from fracking technology.  Oil companies made a killing from cheap natural gas and oil using this technique.  But now it seems it has ran its course.  The oil companies are finally admitting that fracking has contributed to the massive increas in earthquake activity in Oklahoma and other western oil producing states.

In 2007 Oklahoma experienced one earthquake of magnitude 3 (the lowest level where they can be felt).  In 2015 there were 907.  Oklahoma, which used to have next to zero seismic activity, now has more magnitude 3 earthquakes than California.  The number of level 4 earthquakes has also doubled, and 10 of the 12 biggest earthquakes in Oklahoma history have occurred since 2011.  Residents of Oklahoma are shocked to find that the damage from these quakes is not covered unless the home/business owner had special "earthquake insurance" (just like "flood insurance" riders).  And the cost of "earthquake insurance" (which used to not even be offered in that state) is skyrocketing.

Even though 20% of the jobs in Oklahoma are tied to the oil/gas industry people realize that the potential damage from earthquakes is not worth it.

So now the question is how much liability the oil/gas companies face.  For years they denied that fracking was responsible for any of this, but the evidence is now clear.  Their experts should have known long ago.  They are looking at billions in potential liability.  Even if they stop fracking right now there is no evidence that the earthquakes will stop.  The damage has been done and it may be irreversible.  

This will also have a big impact on the United States oil/gas production which had been booming for the last few years.

Thoughts?

They'll pay little to nothing.  The company heads will get golden parachutes and the low level employees will be out of jobs and told to "work harder".

[*michaelsean*]

Is there an alternative way to dispose of the water?

[fredtoast]

(04-11-2016, 02:01 PM)michaelsean Wrote: Is there an alternative way to dispose of the water?

Each barrel of extracted oil requires 12 to 50 barrels of water.  There is just too much to dispose of.

[*Nately120*]

Oklahoma seems like a pretty religious state...maybe the oil company can shirk blame by telling everyone to stop masturbating or something so god stops making earthquakes. That should buy them enough time to sweep any liability under the carpet.

[GMDino]

(04-11-2016, 02:01 PM)michaelsean Wrote: Is there an alternative way to dispose of the water?

Probably.  Probably more expensive so it can't be done.

[Benton]

On the legal front, nothing will happen. They might get a fine here or there if someone can prove they knew it, but that's about it.

More importantly, OK and a few other states are going to have serious financial problems for the next few decades. It was a boom. Now it's a bust. States that got used to the income from payroll and property taxes will have to scale back.

[fredtoast]

(04-11-2016, 02:58 PM)Benton Wrote: More importantly, OK and a few other states are going to have serious financial problems for the next few decades. It was a boom. Now it's a bust. States that got used to the income from payroll and property taxes will have to scale back.

20% of all jobs in Oklahoma were related to the oil and gas industry.  The impact will be brutal. 

Some of the western states that are so sparsely populated, like Wyoming, will actually lose a lot of population.  When they have boom times many of the new jobs are taken by people moving out there for no reason other than the job.  When the jobs dry up the people leave.

[Benton]

(04-11-2016, 03:14 PM)fredtoast Wrote: 20% of all jobs in Oklahoma were related to the oil and gas industry.  The impact will be brutal. 

Some of the western states that are so sparsely populated, like Wyoming, will actually lose a lot of population.  When they have boom times many of the new jobs are taken by people moving out there for no reason other than the job.  When the jobs dry up the people leave.

A few years ago, my wife and I separated. I've always loved Wyoming and I seriously considered moving out there. I don't work in the energy industry, but there were plenty of other places needing people. They had some good growth. Really glad I stayed put. I read somewhere a few weeks ago that last year, they were one of only three states that lost average income and jobs while still gaining residents. That's not a good sign.

[Yojimbo]

The "right thing to do" would be for the state/federal government to invest in new job training for the people losing their jobs. I would even suggest it should be training in solar and wind technology installation and maintenance. Kill two birds with one stone.

[fredtoast]

(04-11-2016, 05:46 PM)Yojimbo Wrote: The "right thing to do" would be for the state/federal government to invest in new job training for the people losing their jobs. I would even suggest it should be training in solar and wind technology installation and maintenance. Kill two birds with one stone.

I don't know why "energy companies" are not investing more in alternative energy.

[Yojimbo]

(04-11-2016, 05:50 PM)fredtoast Wrote: I don't know why "energy companies" are not investing more in alternative energy.

I've wondered the same. They easily have enough capital to corner the market on it if they want to. Instead, they're spending that money on lobbying to keep the dying fossil fuel industry propped up. Seems short sighted and self destructive.

[Benton]

(04-11-2016, 05:46 PM)Yojimbo Wrote: The "right thing to do" would be for the state/federal government to invest in new job training for the people losing their jobs. I would even suggest it should be training in solar and wind technology installation and maintenance. Kill two birds with one stone.

I don't know how much the feds should be involved. Ideally, we'd stop subsidizing oil companies and more job training would be available at lower costs.

But these workers may benefit from WARN. Depends some on the state. More liberal states tend to have more displaced worker assistance available (job training, bring in recruiters from other areas, etc). Given the states mostly fracking, the workers probably won't be given a lot of guidance.

(04-11-2016, 05:50 PM)fredtoast Wrote: I don't know why "energy companies" are not investing more in alternative energy.

Just a guess, but I'd say returns. You can get paid to drill oil and sell it for a lot of money. It requires capital, but a lot of the capital is already invested. You've already got machinery and technology for it. On the flip side, you'd have considerably more capital trying to make solar or wind profitable.

Should we be investing? Yes. If someone told you there was a chance to make $100 by investing $80, or to make $100 by investing $10, you'd probably go with option B. Sure, Option B will be gone eventually, but by then you've already made your money.

[Yojimbo]

(04-11-2016, 06:20 PM)Benton Wrote: I don't know how much the feds should be involved. Ideally, we'd stop subsidizing oil companies and more job training would be available at lower costs.

But these workers may benefit from WARN. Depends some on the state. More liberal states tend to have more displaced worker assistance available (job training, bring in recruiters from other areas, etc). Given the states mostly fracking, the workers probably won't be given a lot of guidance.


Just a guess, but I'd say returns. You can get paid to drill oil and sell it for a lot of money. It requires capital, but a lot of the capital is already invested. You've already got machinery and technology for it. On the flip side, you'd have considerably more capital trying to make solar or wind profitable.

Should we be investing? Yes. If someone told you there was a chance to make $100 by investing $80, or to make $100 by investing $10, you'd probably go with option B. Sure, Option B will be gone eventually, but by then you've already made your money.

I think they have enough money where they could have both options.

[Bilbo Saggins]

(04-11-2016, 05:50 PM)fredtoast Wrote: I don't know why "energy companies" are not investing more in alternative energy.

Because most people want to see good return on investment within their lifetimes.  Fossil fuels provide massive up front profits, whereas a technology like solar or wind can take a lot longer (50-80 years.  I forget how long) before you see the same type of energy production per dollar invested.  Over periods of 100 years or more the green technology can be far more efficient so long as it doesn't break down, but no one really cares because no one wants to wait around 100 years to see the whole benefit of their labors.  The American economy is like an impulsive person who's addicted to sugar in that regard.  We know that eating spinach and broccoli will be better in the long run, but our behavior is dictated by that short-term "rush."

The fact that the entire economy is geared to run on fossil fuels doesn't help matters. The infrastructure and vehicles themselves are not engineered with green energy in mind, adding to the cost to convert.

[SunsetBengal]

(04-11-2016, 02:14 PM)fredtoast Wrote: Each barrel of extracted oil requires 12 to 50 barrels of water.  There is just too much to dispose of.

I can't help but think that your statement is total BS.  The water can be cleaned and purified, and thus put back into the ecosystem.  I really wish Stewey, from the old board, were around.  He could set the record straight on this topic.

[Benton]

(04-11-2016, 08:26 PM)SunsetBengal Wrote: I can't help but think that your statement is total BS.  The water can be cleaned and purified, and thus put back into the ecosystem.  I really wish Stewey, from the old board, were around.  He could set the record straight on this topic.

The short answer is, there isn't a short answer. Every well is different.

http://www.scientificamerican.com/article/water-use-rises-as-fracking-expands/

Quote:The amount of water used for fracking in each well varies widely by region. In southern Illinois, an operation can use as little as 2,600 gallons of water each time fracking triggers the flow of oil or gas into a well. In West Texas’ Permian Basin surrounding Midland and Odessa, fracking uses between 264,000 and 2.6 million gallons of water each time. In Pennsylvania, Ohio, south and eastern Texas, Arkansas, northern Colorado and Montana, fracking can use more than 9 million gallons of water.

I've never read anything that puts a specific X-Y amount of barrels of water to barrel of oil (not saying it's not out there, just that I haven't seen it).

[SunsetBengal]

(04-11-2016, 08:35 PM)Benton Wrote: The short answer is, there isn't a short answer. Every well is different.

http://www.scientificamerican.com/article/water-use-rises-as-fracking-expands/



I've never read anything that puts a specific X-Y amount of barrels of water to barrel of oil (not saying it's not out there, just that I haven't seen it).

Agreed, the answer seems to vary, from site to site.  That is why I reflected upon the personality, from the old board, that went by Stewey.  He works in the energy industry, and had many lengthy posts, that explained much in clinical, and everyday language.

[fredtoast]

(04-11-2016, 08:35 PM)Benton Wrote: I've never read anything that puts a specific X-Y amount of barrels of water to barrel of oil (not saying it's not out there, just that I haven't seen it).

I cited that number from a story in Time (3-21-16)

[fredtoast]

(04-11-2016, 08:26 PM)SunsetBengal Wrote:  The water can be cleaned and purified, and thus put back into the ecosystem. 

At what cost?