Fracking is heading for more troubled waters

ENERGY groups are moving their controversial fracking operations from land to sea off the US, South American and African coasts.

Cracking underground rock to enable oil and gas to flow more freely into wells has grown into one of the century’s most lucrative industry practices.

The technique is also widely condemned as a source of groundwater contamination. The question now is how will that debate play out as the equipment moves into the deep blue. For now, caution from all sides is the operative word.

“It’s the most challenging, harshest environment that we’ll be working in,” said Ron Dusterhoft, an engineer at Halliburton, the world’s largest fracker. “You just can’t afford hiccups.”

Offshore fracking is a part of a broader industry-wide strategy to make billion-dollar deep-sea developments pay off. The practice has been around for two decades, yet only in the past few years have advances in technology and vast offshore discoveries combined to make large-scale fracking feasible.

While fracking is also moving off the coasts of Brazil and Africa, the big play is in the Gulf of Mexico, where wells more than 160km from the coastline must traverse water depths of 1.6km or more and can cost $100-million to drill.

Those expensive drilling projects are a boon for oil service providers such as

Nobody has really looked at the environmental impacts of offshore fracking

Halliburton, Baker Hughes, Superior Energy Services and Schlumberger.

And producers such as Chevron, Royal Dutch Shell and BP may reap billions in extra revenue over time as fracking helps lift crude output.

Fracking in the Gulf of Mexico was expected to grow more than 10% over a two-year period ending in 2015, said Douglas Stephens, president of pressure pumping at Baker Hughes, which operates about a third of the world’s offshore fracking fleet.

That was a reasonable and worthwhile investment, as the industry grappled with the challenge of “how to best fracture and stimulate the rocks” bearing crude oil, said Cindy Yielding, director of appraisal at BP.

At sea, water flowing back from fracked wells is cleaned up on large platforms near the well by filtering out oil and other contaminants. The treated waste water is then dumped overboard into the vast expanse of the Gulf of Mexico, where dilution renders it harm- less, according to firms and regulators.

The treatment process is mandated under Environmental Protection Agency regulations.

In California, where producers are fracking offshore in existing fields, critics led by the Environmental Defence Centre have asked federal regulators to ban the practice off the West Coast until more is known about its effects.

Offshore fracking in the Gulf of Mexico should also be subject to a detailed environmental review, said Tony Knap, director of the Geochemical and Environmental Research Group at Texas A&M University. The concern was that chemicals used in fracking fluid released in the Gulf could harm sea life or upset the ecosystem, said Miyoko Sakashita, oceans director at the Centre for Biological Diversity.

“One of the key problems is nobody has really looked at the environmental impacts of offshore fracking. We find that incredibly concerning,” she said.

A spokesman for the Environmental Protection Agency was not aware of any studies on the effect of offshore fracking because the practice had long been viewed as “a somewhat short-term discharge and often mixed with other discharges”.

To frack some of the world’s biggest offshore wells, about three million kilograms of people and gear, including rock- crushing engines and tons of sand to prop open cracks in the rock, must be crammed onto a 90m ship, called a stimulation vessel.

As demand for offshore fracking has risen, oil service companies have increased the global fleet of fracking ships 31% since 2007, according to a survey by Offshore Magazine, creating a market about as large as Russia’s onshore industry. The pumping horsepower used to frack wells, a measure of supply, is expected to grow another 28% by the end of 2018, to 1.2 million horsepower, estimates Houston-based PacWest Consulting Partners.

The new frontier in the Gulf of Mexico for companies including Chevron and Shell is an underground zone called the Lower Tertiary, an older layer of the earth’s crust made of denser and harder-to-crack rock.

Deep-water wells cut through multiple pancaked layers of oil-soaked rock, and each layer must be fracked to get the most oil out, a task that can take a full day to get to the bottom of the well.

Halliburton and others have figured out a way to save time and money by fracking all those layers in one trip down the well. The more intense fracking means larger volumes of water, sand and equipment are needed to coax oil out.

“It’s getting more sophisticated,” said James Wicklund, an analyst at Credit Suisse in Dallas. — Bloomberg