What Is Fracking?

Two engineers working at the Cuadrilla Shale Fracking Plant.
Cuadrilla Shale Fracking Plant (October 07, 2011). (Photo by Matthew Lloyd / Contributor / Getty Images)

Hydraulic fracturing (a.k.a. fracking) is a technique used to acquire gas and oil deep within the Earth by fracturing rock and pressurizing it with liquid.

How Fracking Is Done

The majority of fracking is done on shale rock formations.  Once a location has been selected, a company will drill thousands of feet vertically, then horizontally down into the earth.  A steel casing is then inserted, followed by cement.

  The next step is to send a small device called a "gun" down into the targeted section.  The gun will activate spikes to penetrate the shale rock. 

Once holes have been made, three to five million gallons of water containing a mixture of sand and chemicals is pumped at extreme pressure down into the wellbore.  This liquid will shatter the shale rock, creating multiple fractures throughout the formation. 

The sand and chemicals will also seep into the cracks, holding them open, releasing gas and oil that is pumped back to the surface along with millions of gallons of "flowback" liquid. 

Fracking in the United States

From 2000 to 2010, it is estimated that the number of wells in the United States has nearly doubled to 510,000, according to the U.S. Department of Energy.  Every year, nearly 13,000 new wells are drilled.  Today, at least 15.3 million Americans have lived within a mile of a fracking well, according to a study conducted by the Wall Street Journal.*

The current fracking boom in America is largely driven by concerns over energy security, oil independence, and costs.  Fracking can also be used as a geopolitical tool, driving down prices for countries like Iran and Venezuela.  The current talks between the United States and Cuba is largely stimulated by global oil prices.

 

Fracking is occurring in nearly all areas of the United States, including the Great Plains, the Texas region, Great Lakes region, and the Marcellus Shale Formation (an area stretching from New York to Ohio and south to Virginia). 

One of the most concentrated regions for fracking today, however, is in the Bakken Formation, a 200,000 square mile rock formation located in Montana, North Dakota, and the southern region of Manitoba and Saskatchewan, Canada. This region is particularly attractive because Bakken oil is pure liquid, which requires less refinement compared to the more sludgy oil produced in other parts of the country.

The Affects of Fracking on North Dakota

Fracking has brought an incredible amount of jobs, money, and people to many sleepy towns in North Dakota.  With oil prices high from 2009 to 2014, the state had the country's fastest rates of population and GDP growth.  North Dakota had an unemployment rate of less than 2%, a billion dollar annual surplus, and created an estimated 2,000 millionaires a year.  Fracking in the Bakken Formation has become America's new modern-day California Gold Rush

The money and employment is certainly good, but with the influx of workers, the social fabric of these once insular North Dakotan towns is starting to shift.

  For one, a fair share of the migrants who come here have little education and sometimes criminal records. 

Overwhelmingly, 90% of those who work in the fracking industry are male.  As the gender gap widens, so does the rate of sexual abuse, prostitution, harassment, and depression.  Aggression also becomes a consequence, leading to fights and violence. 

Unfortunately for these small towns, they lack both the physical and social infrastructure to support this population boom.  Hospitals become overrun, sewage management gets overburdened, and grocery stores cannot meet demand. 

Despite their annual surplus, and the 54 percent tax revenue from oil and gas (North Dakota Petroleum Council), many municipalities - but not all - opted to forgo investing in infrastructure expansion because they understand the boom and bust nature of the oil industry.

  Once the people leave, the new developments would become unused. 

The cost of living in North Dakota has become shockingly expensive due to demand and massive inflation brought on by the influx of new capital.  One-bedroom apartments can command over $1,300 a month.

In order to pursue people to continue working in industries outside of fracking, companies had to raise their wages to astronomical levels.  Many waitresses make over $15 an hour and starting pay at most Wal-Marts is $17.  Inflation is leading to economic hardship for those who are not employed in the oil industry. 

North Dakota Today

Recently, oil prices have plummeted, due to a slowing Chinese economy and heavy production out of Saudi Arabia.  This has left both longtime residents and temporary workers who moved there in limbo, waiting to see whether and when prices will rise again. 

Companies have started to cut back on overtime and general labor hours.  Moreover, with the U.S. labor market now strong, there are greater employment opportunities back home for many fracking migrants, leading to population exodus.

North Dakota is trying to avoid the same mistakes made by other states, who in the past relied too heavily on a single industry, like Michigan (manufacturing) and West Virginia (foresting and coal-mining). 

Looking ahead, North Dakota lawmakers recently passed a $1.1 billion "surge" bill to fund construction projects, both as a preparation for a potential second fracking boom and to stimulate local communities to weather this current bust by creating jobs for people no longer employed by the oil industry.

 

Many locals are optimistic that another boom will occur in the near future, as people are always in need of energy. 

* Russell Gold and Tom McGinty, “Energy Boom Puts Wells in America’s Backyards,” Wall Street Journal. October 25, 2013. Web. Retrieved on August 12, 2015.

http://www.wsj.com/articles/SB10001424052702303672404579149432365326304