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The problem Despite all the tv commercials about how many jobs fracking is creating the truth is that the number of producing Fracked Natural gas wells have declined by more than 50%.

According to Baker Hughes, the number of drilling rigs engaged in natural gas drilling has dropped from 936 one year ago to 422, for the week ended October 12, 2012.

Why is the question water maybe one reason several already drilled and  producing Fracked wells have been abandoned.

Fracking requires a huge amount of water many already fracked Natural gas wells need to be reFracked in order to keep producing Natural gas and refracking means more water is needed.

Drilling a typical Chesapeake

Barnett deep shale gas well requires approximately 250,000

gallons of water.

Water is also used in hydraulic fracturing, where a mixture

of water and sand is injected into the deep shale at a high

pressure to create small cracks in the rock which allow gas

to flow. Hydraulically fracturing a typical Chesapeake

Barnett horizontal deep shale gas well requires an average of

2.5 million gallons per well.

Notice in the map below just how much of America is experiencing a drought. you can’t frack if you don’t have the water.

     Another factor in the drop in fracking is the banks that loaned the frackers money  are forcing the frackers to sell natural gas below cost and driving them out of business.

Big companies like Chesapeake and lesser-known outfits like Quicksilver Resources andExco Resources were able to supercharge their growth with the global financing, transforming the face of energy in this country. In all, the top 50 oil and gas companies raised and spent an annual average of $126 billion over the last six years on drilling, land acquisition and other capital costs within the United States, double their capital spending as of 2005, according to an analysis by Ernst & Young.

Now the gas companies are committed to spending far more to produce gas than they can earn selling it. Their stock prices and debt ratings have been hammered.

 My bold Exxon Mobile is losing its shirt Fracking, Chesapeake Energy had to refinance its loans recently the smaller players in the fracking game I fear have lost the title to their wells.  After all for every dollar you spend fracking you lose more than a dollar at today’s prices.
Berman claims that prices $8.68 or higher per million Btu are needed for profitability ofHaynesville Shale, and nearly as high prices are needed to justify drilling other US shale plays. The current US price is about $3.50 per million

Fracking wastes millions of gallons of water and we are in a drought.

Fracking losses money at today’s prices. When prices are low production should be allowed to drop until  demand drives up prices to a point where production makes money!

Our banks the efficient allocators of capital that they are/s

are acting like loan sharks and demanding that they get paid now even if it means the Frackers go under.

Fracking will not make America an energy exporter

Our shale gas resources, however, while much ballyhooed in the press, are far less certain. We may now have a 100-year supply of gas in America, as suggested by recent reports. . . or we may not. The U.S. consumes 24 tcf of gas per year. Currently, we only have an 11-year supply on the books: 273 tcf classified as “proved reserves,” meaning gas that is commercially producible at a 10 percent discount rate. Beyond that, there are only “probable,” “possible,” and “speculative” resources, where the gas has not yet actually been discovered, or proved to be economically recoverable. Even where we are sure that the resources exist, we do not know how much of is technically recoverable until we produce it. And as I noted two weeks ago, in the EIA’s Low Case shale gas estimate, the U.S. could become a net gas importer by 2035.

But loans made to Fracking Comapnies Liquid Natural Gas plants, ports, ships, Natural gas Pipelines etc very well might bankrupt our banks.


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Comment Preferences

  •  Probably oversupply. (7+ / 0-)

    Gas prices have been on the way down over the past several years (they were above $7 a few years ago) while production costs have, as you say, been on the way up. Fracking just increases the supply, making the price even lower.

    Equilibrium will be reached in time, I think.

    Moderation in most things.

    by billmosby on Wed Jan 16, 2013 at 12:36:32 PM PST

    •  That's it. The price is so low it costs more to (2+ / 0-)
      Recommended by:
      Mr Robert, NYFM

      open a well than it will generate in revenue.  There is some talk about exporting LNG but there are no facilities for that.

    •  The banks (2+ / 0-)
      Recommended by:
      Mr Robert, phonegery

      are forcing the frackers to keep producing gas even though they are losing money the banks need revenue from those loans.
          Lack of water seems to be why wells are shutting down not market forces.
         However more than half the fracked wells drilled have shut down and prices are nowhere near Equilibrium.
             A sudden market correction is likely but if the price goes up every power company that was building a gas plant will have to raise the rate they charge for  power.
           No new gas plants will be built. All those natural gas semi''s will be grounded.
         The liquid natural gas pipelines, ports ships the gas industry and the banks want to build preferably at tax payers expense would be canceled.
          I wonder if the fracking industry can survive long enough for the frackers and banks to fleece the tax payers?

      •  Must be true, Glen Beck was saying pretty (0+ / 0-)

        much the same thing a few weeks ago. Costs weren't going to be covered by revenue, although his take was it was just a supply and demand thing, didn't mention the banks.

        I don't see how a bank can force a bankrupt company to keep losing money, though. Wouldn't the usual bankruptcy procedures apply?

        Moderation in most things.

        by billmosby on Wed Jan 16, 2013 at 02:45:45 PM PST

        [ Parent ]

  •  Production has been rising (3+ / 0-)
    Recommended by:
    Things Come Undone, newton123, NYFM

    over the last year according to the EIA report in spite of the decrease in rig count.

    Production has been rising despite large decreases in the natural gas rig count over the past year. According to Baker Hughes, the natural gas rig count was 431 as of December 28, 2012, compared with 811 at the start of 2012. The oil rig count has also declined in recent months (oil rigs often produce associated natural gas), although declines have been much smaller than declines in the natural gas rig count. The declines in rig counts, coupled with continued production growth, suggest increases in rig efficiency, which will maintain production levels going forward.

    The only trouble with retirement is...I never get a day off!

    by Mr Robert on Wed Jan 16, 2013 at 12:57:30 PM PST

    •  My guess is they (2+ / 0-)
      Recommended by:
      Mr Robert, NYFM

      are only producing from the most productive wells natural gas production does tend to drop off huge after the first year of production.
         But still less wells and production as a total has gone up.  wonder what they have changed to increase production at those wells and/ or did they find much more productive natural gas fields?

      •  I keep an eye on the EIA reports (0+ / 0-)

        because I have a small royalty stream from ExxonMobil and I was puzzled by the stable production levels given the decline in rig count. I'd expected to see a drop in supply, but that just hasn't happened.

        The only trouble with retirement is...I never get a day off!

        by Mr Robert on Wed Jan 16, 2013 at 01:12:18 PM PST

        [ Parent ]

  •  Oversupply and (5+ / 0-)

    perhaps in PA's case, overenthusiasm. Perhaps there's not as much gas down there as previously thought.

    just a little bit bored.

    by terrypinder on Wed Jan 16, 2013 at 01:00:26 PM PST

  •  They're all fracking oil shales now. (3+ / 0-)
    Recommended by:
    Mr Robert, NYFM, Roger Fox

    Here's a pretty detailed article on rig count analysis.

    Gas production growth from Chesapeake's liquids plays to accelerate in 2013

    A closer play-by-play analysis highlights that the "gas by-product" from CHK's liquids plays is so abundant that it offsets a larger part of the steep decline in the company's massive shale gas portfolio. In fact, of the nine oil and liquids plays highlighted in Chesapeake's Q3 press release, five produce just as much natural gas as they produce oil and liquids on a Btu equivalent basis, and two additional plays produce 38% natural gas. Only two plays of the nine, the Eagle Ford and PRB Niobrara, have natural gas as a lesser part of the production stream (26% and 18%, respectively).

  •  There was this Google cite. (0+ / 0-)
    Will Natural Gas Storage Reach Full Capacity? | Energy4Business
    Underground natural gas storage is at a record level and is poised to stay that way throughout the remainder of 2012. The glut of natural gas stems partly - Cached
    There were many articles last year about the weather, warming, and lowered demand leading to low to no storage capacity available.

    Time is a long river.

    by phonegery on Wed Jan 16, 2013 at 02:35:05 PM PST

  •  ANOTHER argument for solar and wind (2+ / 0-)
    Recommended by:
    Roger Fox, cordgrass

    Neither of which uses any water to generate power.

    Coal, gas, nuclear, hydro - all have to have lots of lots of water to work. We can't afford to waste any more water on these outmoded obsolete technologies.

    We have better ways to do things now. Let's get to it!

    Women create the entire labor force. ---------------------------------------------------------------------------------------- Sympathy is the strongest instinct in human nature. - Charles Darwin

    by splashy on Wed Jan 16, 2013 at 04:12:24 PM PST

  •  terrific news, thank you! n/t (0+ / 0-)

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