Does Fracking Stand a Quaking Chance?

Conspiracy advocates and 2012 doomsdayers just got more fodder for their predictions with an unusual 4.0 earthquake shaking Ohio this past weekend.

The earthquake itself isn't what's raising eyebrows, though; it's the apparent cause: pressure from a wastewater injection well used by fracking companies.

This isn't the first time we've heard this is possible, but it's grabbing headlines now.

Just the facts
It seems that the problems aren't necessarily from the fracking process per se, but the disposal of the fluids used in the process. According to The Christian Science Monitor, "At issue is the effect fluids injected at high pressure can have on faults. The billion-year-old 'basement' rock that underlies much of the eastern US is laced with faults."

At the request of the state of Ohio, Northstar Disposal Services -- the operator -- has closed the well  while the situation is studied more closely.

This situation isn't limited to Ohio. Earthquakes shook Oklahoma last year, and with major players Chesapeake Energy (NYSE: CHK  ) and SandRidge Energy (NYSE: SD  ) headquartered in Oklahoma City, it doesn't take the layperson too long to connect the dots.

Here's where our nation's largest natural gas shales are being developed right now. As you might expect, community members in these states will be very interested to see what professionals conclude.

Source: Energy Information Association.

What this means
For those invested heavily in natural gas, there may be some solace in the fact that the fracking process itself isn't to blame. It seems that the fluid being used in fracking -- which itself has raised environmental concerns -- needs to be disposed of in ways that won't cause the earth to rumble.

It remains to be seen whether simply adjusting disposal methods can solve this, or if it will require a more intensive solution.

Because certain chemicals are added to the water being used in fracking, disposal itself can present a sticky situation. Though some companies -- such as Range Resources (NYSE: RRC  ) -- reveal what chemicals are in its fracking solutions, many do not. These organizations claim that fracking solutions must be kept secret for proprietary reasons.

Whom this effects
Let me be clear, it's far too early for anyone to start proclaiming that the sky is falling for natural gas companies. But if the recent quakes, questions about fracking solutions, and the effects of their disposal continue, this could create a real problem for both investors and the larger energy industry in America.

Beyond the obvious natural gas extractors such as Chesapeake and SandRidge, there are several peripheral companies that are counting on natural gas to power our future. Westport Innovations (Nasdaq: WPRT  ) develops engines for cars, trucks, semis, and locomotives that can run solely on natural gas.

Likewise, Clean Energy Fuels' (Nasdaq: CLNE  ) goal is to build out natural-gas-filling stations to support new fleets of natural gas vehicles. If natural gas extraction were to screech to a halt before it even begins to really hit its stride, it could set these two companies and the movement in general back by years.

What's a Fool to do?
As I said, it's way too early to run for the hills over this. But the fact remains that if you want to make sure your investments are safe, you'd be well served to add these companies to your watchlist to make sure you're up to date on all the latest developments.

If, on the other hand, these developments have convinced you to focus your energy portfolio outside of natural gas, I suggest you take a look at our special free report, "3 Stocks for $100 Oil." With oil having crossed that threshold lately, the report is more pertinent than ever. Get your copy today, absolutely free!

Motley Fool newsletter services have recommended buying shares of Westport Innovations, Chesapeake Energy, and Range Resources. Try any of our Foolish newsletter services free for 30 days. Brian owns shares of Westport Innovations. 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.


Read/Post Comments (12) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 05, 2012, at 12:23 PM, rdranman wrote:

    What Fools. Check out the USGS website... For the last 200 years, Ohio has averaged a 4.0 earthquake every 4 years. In 1998, in fact, they had a 5.2 magnitude earthquake. These are not uncommon in Ohio and certainly started long, long before any fracing or water disposal wells were in place. Come on people, get a clue.

  • Report this Comment On January 05, 2012, at 2:00 PM, newageinvestor wrote:

    @rdranman You sound like a global warming denier. I'm sure the folks at the USGS also subscribe to Scientific American which has an article on this here:http://www.scientificamerican.com/article.cfm?id=ohio-earthq...

    The scientists that came out with this were from Columbia University. Unless you have a PhD in geology you are not at all qualified to dispute the facts here.

    So, dude, give ME a break and do some real fact checking before scoffing at others

    This is an excerpt from the article:

    Nine small earthquakes had already occurred between March and November 2011 within an eight-kilometer radius of a wastewater injection well run by Northstar Disposal Services. Because quakes are otherwise rare in the Youngstown area, the Ohio Department of Natural Resources in November asked Columbia University's Lamont–Doherty Earth Observatory (LDEO) to place mobile seismographs in the vicinity to better determine what was going on. John Armbruster from LDEO installed four seismographs on November 30.

    By triangulating the arrival time of shock waves at the four stations, Armbruster and his colleagues needed only a day or two to determine with 95 percent certainty that the epicenters of the two holiday quakes were within 100 meters of each other, and within 0.8 kilometer of the injection well. The team also determined that the quakes were caused by slippage along a fault at about the same depth as the injection site, almost three kilometers down.

  • Report this Comment On January 05, 2012, at 2:26 PM, sssurf04 wrote:

    "for a layperson to connect the dots" ??????

    the "dots" you refer to would be on different pages and on different pictures in the coloring books that had dot connect pages in the books that I had growing up.

    Cause and effect are two different things that my teachers cautioned me about in school.

    Does that mean if we have an earthquake when we have snow on the ground that we ought to ban snow?? Obviously not. Be careful of what you say, ie "just the facts" as Sgt Friday used to say on Dragnet.

  • Report this Comment On January 05, 2012, at 2:35 PM, sssurf04 wrote:

    to new age investor,

    Rather than scoff at the previous posters info on Ohio earthquakes you should rely on something more than magazine articles from a Google search.

    Have you a degree in Geology? Have you done geological work in Ohio? Or are qualified to do so.?

    Well I have a graduate degree in Geology, have performed geological work in Ohio. (and 30 years as a professional workinggeologist) I do not rely on second hand opinions, and neither should you.

    As I said go with the facts, not someone's bias or opinions. Yes PhD's have bias. I hope you have a better rest of the day.

  • Report this Comment On January 05, 2012, at 4:07 PM, ETFsRule wrote:

    sssurf04:

    Why not post some counter-arguments of your own, rather than a bunch of "blah, blah, blah" ?

    Are you unconvinced by the findings of the researchers from Columbia? Don't you think that the extreme proximity of the wells to the epicenter of the earthquake could be meaningful?

    "As I said go with the facts, not someone's bias or opinions."

    For someone who wrote this sentence, you sure didn't present a lot of facts in either of your posts... just a bunch of bias and opinion from your end of the debate.

  • Report this Comment On January 05, 2012, at 5:15 PM, TMFCheesehead wrote:

    @rdranman & @sssurf04-

    I'm not a geologist, but I in general, I rely on the opinions of experts like geologists (just like I do doctors, lawyers, etc.).

    I don't think the geologists in any of the pieces I cited (or Newageinvestor did) are mincing words; they are clearly pointing the finger at the wastewater disposal.

    And please don't misread me, I have great hopes for natural gas, and have a good portion of money investing in Westport Innovations, which relies on natural gas extraction to succeed.

    Brian Stoffel

  • Report this Comment On January 05, 2012, at 5:29 PM, seattle1115 wrote:

    At least in the short term, it's rather irrelevant from an investor's point of view whether the correlation between wastewater injection wells and the quakes actually implies causation. The hint of a connection is enough to increase the likelihood of litigation and/or regulatory pressure, which is likely to create downward pressure on the price of the companies implicated.

  • Report this Comment On January 05, 2012, at 8:33 PM, Shermanater wrote:

    It's not just the magnitude of the earthquake but the frequency. Youngstown, OH has averaged one earthquake about every other year, they've had 11 since an injection waste water treatment plant opened about a year ago. And, yes, injection wells have been around for years, however; not at the millions of gallons of waste that this HIGHLY pollution intense industry is producing on a daily basis. I hope you 'industry huggers' are getting paid quite the profit to make it worth lying to God fearing citizens by blogging all over the internet. Obviously you don't work blogging at 2 in the afternoon. GET A REAL HONEST JOB. And, yes, I worked with geologists. Wrote them their little bar code programs so their little hands wouldn't get cold writting up soil samples on the drill rigs. They have no clue what's down there but the gas industry pays them very well to say 'it's all good'. Stop disparaging the truth, Cokedale, Colorado (proven injection wells caused earthquakes in 1981) still having earthquakes now, Greenbrier, AK (banned injection wells within 1200 mile radius after they were linked to over a 1000 earthquakes), Oklahoma, had only 50 earthquakes a year which has now spiked to 1047 after an injection well opened about a year ago. Keeping pumping that toxic stuff down into the earth, someday, it's going to come back up in your backyard or your watershed (water takes the path of least resistance, in this case, very very toxic and radioactive water). Keep making swiss cheese out of the earths crust and see where that gets the world.

  • Report this Comment On January 05, 2012, at 9:59 PM, trin6810 wrote:

    arkansas - texas - oklahoma - ohio - oh oh - injection wells in all - lots of quakes - good thing the companies were kind enough to use evaporation pits in the west when they started - that way they dispursed their poison in the wind - and left superfund sights behind(and oh-gee their excempt) - to bad for people in the way - text theo colborn - where is industry study saying this is safe - nowhere in the wind - so safe let them place themselves under clean air clean water superfund acts for starters - never happen - AND RANGE RESORCES GAVE OUT FRACK SOLUTION ha ha show me - DO THEY MENTION FUEL OIL

  • Report this Comment On January 06, 2012, at 12:49 PM, EngineerEd wrote:

    Fracking has been used for over 70 years to develop oil and gas wells for commercial production. Earthquakes have been occurring for much longer. Let's let the experts evaluate whether there is any connection between the recent quakes at the new fracking sites. Elsewhere in the world where fracking has been practiced for many years, no earthquakes have occurred. Hence the reluctance to jump to the conclusion that fracking causes earthquakes.

    I think everyone needs to take a step back and consider if the life-style we enjoy- including automobiles, airplanes, cell phones, microwave ovens, oil and gas-heated homes, etc., are truly as dangerous to humans, as some people proclaim. Can we justify them? Can we offset the "potential risks" against the benefits? Then we can rationally evaluate what can be done to minimize or eliminate any discovered hazards?

  • Report this Comment On January 07, 2012, at 11:36 AM, Nawaralsaadi wrote:

    The solution is pretty simple: waterless fracking, Gasfrac has done over a 1000 fracks with gelled propane, no water is used, no waste water is produced and no need for injection wells; and on top of that gelled propane fracking increases oil/gas production and reserves; it is a win for the industry and a win for the environment.

  • Report this Comment On January 08, 2012, at 10:52 AM, trin6810 wrote:

    Industry myth that fracking going on for 70 years - where is study to say safe? doesn't exist - 50 years ago fracking tried in our area - shallow wells - 60,000 gallons of water 1200 lbs of chemicals - one frack per well - not enough gas to be commercially viable - wells capped and farmers allowed to use wells on site use only - back then epa required firms to truck backflow to Pa heavy metal treatment plants for disposal - even today those wells spit up ugly stuff(have read lab reports) - new system since 2005 - 4,000,000 gallons of water per FRACK - 250,000 lbs of chemicals per FRACK - 7 FRACKS per well - industry wants 72,000 welss in upstate NY - do that math sometime - there are lots of people here - staggers me - Someone said difference in old time fracking vrs new time fracking - like going down the NYS thruway at 65 or 6500 miles an hour - facts above are from NYS Sgeis report - read them and weep - but remember each time you hear 70 years best to think about it - Clean air act - clean water act superfund act - needed to be excempted before they began new "fracking in the 2000 - is there anyone out there foolish enough to not realize the reason for that - and it wasn't just the money - this process has serious effects on public health - that's the reason to oppose it - bad practice - bad industry

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