According to a Bloomberg Businessweek report, we are seeing an unprecedented drop in the price of natural gas in comparison to oil prices.
Oil is hovering around $100 a barrel. In 2002, oil was about $20 a barrel.
Natural gas is currently at 2002 prices. In fact, the price of natural gas is half of what it was one year ago.
Why? Because of abundant supplies of natural gas, what the U.S. Energy Information Administration calls “robust inshore production.”
There is a glut of gas.
This increased supply is mostly due to hydraulic fracturing. More importantly, a newer way to use the drilling method, horizontal hydraulic fracturing. Horizontal ‘fracking’ has made it easier and cheaper to extract natural gas from shale deposits in the U.S. and other sites around the globe.
Horizontal fracking has meant a boom in gas drilling and production. It’s meant more jobs in certain areas of the country. It’s meant greater dependence on domestic energy, and less dependence on foreign energy.
Because burning natural gas emits about half of the CO2 emissions of coal or oil, it means less of the greenhouse gases that are causing climate change.
It’s meant families can heat their homes more cheaply.
Hydraulic fracturing is getting some attention this week in Lansing. You’ve probably heard it called fracking. It’s a method of drilling for natural gas.
Drillers use fracking to get to the gas that’s trapped in tight shale rock formations below the water table.
Fracking pumps a mixture of water, sand and chemicals into a well under high pressure to force open the rock and extract the gas.
In Michigan, drillers have used the fracking method for more than 50 years and the state regulates the industry.
But what’s new... is that drillers want to turn their drills and dig horizontally along the shale rock. That makes the well site much more productive. But it also uses a larger amount of chemicals and much more water - anywhere from a few million gallons of water to as much as eight million gallons of water per well. After it’s used, that water is usually disposed of in deep injection wells.
Right now in Michigan, there are two experimental wells that are using the horizontal fracking method.
This week the Michigan House of Representatives’ Subcommittee on Natural Gas put out a report encouraging more natural gas production in the state.
Michigan politicians are beginning to wrestle with an issue that's proven to be contentious in other parts of the country.
"Fracking" or hydraulic fracturing is a controversial method of extracting natural gas by pumping water, sand and chemicals into deep underground wells. Both opponents and advocates of the process have started taking action in the state legislature.
The Associated Press writes that "House Democrats on Wednesday plan to discuss a bill that would regulate [fracking]," while "the House's natural gas subcommittee released a report Tuesday encouraging more natural gas production."
An official from Gov. Rick Snyder's administration says the governor is reviewing both the bill and the report.
Some exploratory drilling has already occurred in Michigan's Lower Peninsula.
Take a look at the video below to see an animated view of the fracking process:
An overflow crowd filled a public meeting last night in Brooklyn, south of Jackson. Many in the crowd are worried about the environmental impact of a growing oil drilling operation in the Irish Hills.
"There is nothing they can do here to keep from having an accident...It's going to happen," proclaimed one of the people in the audience.
The crowd at the public meeting demanded answers from a panel of oil industry executives and state officials about drilling going on in the Irish Hills. The region is becoming one of the leading crude oil production centers in Michigan.
Tim Baker is a vice president with West Bay Exploration, the company doing much of the drilling. He admits they need to do a better job explaining how they are trying to drill safely.
“These people have a lot of good questions. This is a beautiful area. There’s a lot of beautiful lakes and streams here," Baker said after the meeting, "We wanted to communicate to them that we are trying to develop (the oil) the best way possible.”
Many Irish Hills residents are worried oil drilling may end up lowering their property values.
Democrats at the state capital are calling for a two-year moratorium on a procedure used to extract hard-to-reach oil and gas deposits.
They are taking aim at a process called hydraulic fracturing – or “fracking” – where water, sand, and chemicals are sent down a well to loosen stubborn pockets of gas and oil.
Critics say it has caused pollution and dried-up water wells in other states.
State Representative Jeff Irwin thinks the procedure needs to be more tightly regulated as it becomes more common in Michigan.
He said more study is needed on the potential effects of deep-rock fracking on the world’s largest supply of fresh water.
“We have a tremendous amount to protect here in Michigan with our surface waters and our Great Lakes,” Irwin said. “When you think about what makes Michigan a special place to be, it’s really our water. It’s the one thing that we have that makes us unique over and above anyplace in the world. We have the best water resources in the world.”
Irwin said new rules should include limits on groundwater withdrawals and full disclosure of all chemicals used.
Brad Wurfel with the state Department of Environmental Quality said Michigan has some of the strictest fracking regulations in the country, and that the process has been safely used in the state's shallow rock for decades.
“If you look around the state, you’ll see where oil and gas producers over the past 60 years have fracked probably on the order of around 12,000 wells,” said Wurfel.
Wurfel said the state updated its drilling regulations in May to address hydro-fracking deeper into the rock.
Consumers Energy says its natural gas customers will be paying less this winter to heat their homes.
Dan Bishop is a Consumers spokesman. He says more plentiful supplies are leading to a 3 percent cut in natural gas prices.
“In recent years there’s been a large amount of new natural gas discoveries in the United States and in Canada. And that extra increase of supply has really put downward pressure on prices," says Bishop.
An environmental group is calling on Michigan lawmakers and President Obama to ban the natural gas extraction process known as “fracking.”
Fracking, or hydraulic fracturing, involves injecting a high-pressure mix of water, sand and chemicals into underground rock formations to release natural gas.
Food and Water Watch says fracking poses an “unacceptable risk” to water supplies and human health. Several recent investigations have shown that fracking contaminated groundwater in several states.
Lynna Kaucheck is with Food and Water Watch in Detroit. She says northern Michigan is a current hotspot for fracking exploration.
“The northern part of the lower Peninsula sits on the Collingwood-Utica shale which is very deep deposits of shale gas. And so right now a lot of out of-state-companies are purchasing mineral rights so they can begin horizontal fracking for natural gas.”
Kauchek says that could to lead to chemically-contaminated groundwater, and pose a risk to the state’s agricultural and tourism industries.
“We don’t believe that fracking can be done safely. Especially not the way that they’re doing it right now.”
State environmental regulators say the gas is so deep in the ground that fracking shouldn’t affect water supplies. They acknowledge some concerns, but say the practice is generally safe.
Newsletters and Daily Email
Podcasts
Mobile
RSS
