With the price of a barrel of oil cut in half since June, American shale output expected to drop next month for the first time in more than four years, and the link between hydraulic fracturing and earthquakes growing ever more clear, significant shakeups in the US energy sector are underway.
An executive with Weatherford International — the nation's fifth largest fracking company — said Wednesday that half of the 41 fracking companies currently operating in the US will close up shop or be sold by the end of the year.
Rob Fulks, a marketing director at Weatherford, said the company has been forced to "dramatically" slash costs. He warned that falling energy prices, major companies consolidating, and wells being left uncompleted could lead to just 20 or so companies remaining afloat in 2016.
Dan Chu, director of the Sierra Club's "Our Wild America" campaign, oversees the group's efforts to protect land and wildlife from fracking. He said extreme price swings are consistent with the "boom and bust nature" of fossil fuels.
"There's definitely been a chilling effect on production, transport, and refining of oil and gas worldwide," Chu told VICE News. "Oil and gas has always been a volatile commodity as it relates to market prices, but then obviously it's toxic and flammable as well…Not only is there adequate supply but there's a reduced demand for this kind of energy, as [clean] energy becomes more available and cheaper."
Houston-based oilfield services company Baker Hughes, acquired by Halliburton in November for $34.6 billion and itself an example of the consolidation Fulks described, reported Friday that there were 932 rigs currently exploring for oil and natural gas in the United States, half as many a year ago. Last week marked the 20th consecutive week that the number of rigs in operation had fallen.
Short-term production is expected to drop, too. Earlier this month, the US Energy Information Administration reported that major regions including the Bakken and the Eagle Ford, as well as total US oil production, all are projected to fall from April to May.
Horizontal, hydraulic fracturing, colloquially known as fracking, involves drilling horizontally as well as vertically, and then pumping a mixture of pressurized water, sand, and chemicals deep underground in order to break apart shale rock formations that hold deposits of oil and gas.
Concerns over the environmental impacts of America's energy boom, whether centered on drinking water supplies or the spike in earthquakes, have emerged even in the industry-friendly states. In Texas and Oklahoma residents have demanded better scrutiny of the industry. But with those calls has come Jekyll and Hyde-like pushback on behalf of industry by state legislatures, which are simultaneously acknowledging their constituents' growing worry, yet voting to prohibit them from doing anything about it.
In November, fifty-nine percent of Denton, Texas residents voted to ban fracking, but earlier this month, committees in the Texas House and Senate passed bills that would limit municipalities seeking to outlaw oil and gas drilling. Next, the full House and Senate will vote on the legislation.
"This is a dangerous power grab by Big Oil to stomp out the rights of communities to protect themselves from the worst impacts of dirty drilling," said Luke Metzger, Director of Environment Texas, in a statement reacting to the passed bills. "They won't settle for just overturning the Denton ban but are taking aim at ordinances across the state that limit drilling near homes, schools and parks, as well as many other health and safety standards."
Prior to 2008, no more that two 3.0 or greater magnitude quakes shook Oklahoma each year, but now, after years of fracking operations, an average of two 3.0 or greater earthquakes hit the Sooner State each day, according to the US Geological Survey. No state had more earthquakes in 2014 than Oklahoma.
Last Tuesday, the Oklahoma Geological Survey reported that the rise is "very unlikely to represent a naturally occurring process," and, after years of doubting the link between fracking and earthquakes, state officials acknowledged that the "recent rise in earthquakes cannot be entirely attributed to natural causes." The state even launched an interactive map of earthquake data. Despite all of this, a day later, the Oklahoma House of Representatives approved bills making it more difficult to ban fracking in the state.
Karthik Ganapathy, 350.org's US Communications Manager, told VICE News that the fierce battle enveloping even traditionally drilling-friendly states is unsurprising.
"[Fracking] worsens climate change by pulling fossil fuels like gas and oil out of the ground, releasing carbon into the atmosphere, and prolonging our reliance on the dirty energy sources of yesterday," Ganapathy told VICE News. "Throw in the fact that fracking poisons clean water and harms human health, and you can understand why we've seen such an intense backlash against it across the country."
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