Earthquakes: The Next Challenge to America's Energy Game Changer
Hydraulic fracturing, or fracking, has been a hot topic this year as energy companies and environmentalists battle over environmental concerns. The debate could soon intensify as new studies sponsored by the fracking industry show there might be connections between fracking and earthquakes. Read along to learn about the research and who might be affected.
The first study
Our story begins in England, where in the spring, two small earthquakes struck in a region where Cuadrilla Resources had drilled and fracked two wells. After the earthquakes, the company voluntarily stopped fracking until a study could be done to determine if there was a connection between fracking and the earthquakes.
The study, called "Geomechanical Study of Bowland Shale Seismicity," was published last week. A summary states:
The report concludes that it is highly probable that the fracking at Preese Hall-1 well triggered the recorded seismic events. This was due to an unusual combination of factors including the specific geology of the well site, coupled with the pressure exerted by water injection. This combination of geological factors was rare and would be unlikely to occur together again at future well sites.
While the report concludes that it would be unlikely for the combination to occur again, other studies and recent events suggest it may not be as unusual as the report claims.
In January, a series of 43 small earthquakes shook Oklahoma. A study by the Oklahoma Geological Survey, currently under peer review, concludes that "there is a possibility these earthquakes were induced by hydraulic fracturing. However, the uncertainties in the data make it impossible to say with a high degree of certainty whether or not these earthquakes were triggered by natural means or by the nearby hydraulic-fracturing operation."
While inconclusive, there's no doubt that more studies will need to be done to determine if fracking and earthquakes are linked. With another earthquake last week in Oklahoma -- the largest recorded in the state in more than 50 years -- this question will be on residents' minds. With Chesapeake Energy (NYS: CHK) and SandRidge Energy (NYS: SD) both headquartered in Oklahoma City, residents know who to ask.
SandRidge spun off some of its Oklahoma holdings this year when it IPO'd the Sandridge Mississippian Trust I (NYS: SDT) . Other drillers in the area include RAM Energy Resources (NAS: RAM) and Range Resources (NYS: RRC) .
More studies are likely in the near term. It will be interesting to see how residents respond if increased earthquake activity is indeed caused by hydraulic fracturing.
At the time this article was published Fool contributor Dan Dzombak holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Range Resources and Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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