Permian Basin Shale

Fracking's Dirty Water Problem Is Getting Much Bigger

Read time: 8 mins
Fracking and agriculture compete for land and water near Denver City, Texas. 

While fracking for oil and gas in the U.S. has contributed to record levels of fossil fuel production, a critical part of that story also involves water. An ongoing battle for this precious resource has emerged in dry areas of the U.S. where much of the oil and gas production is occurring. In addition, once the oil and gas industry is finished with the water involved in pumping out fossil fuels, disposing of or treating that toxic wastewater, known as produced water, becomes yet another problem.

These water woes represent a daunting challenge for the U.S. fracking industry, which has been a financial disaster, something even a former shale gas CEO has admitted. And its financial prospects aren't looking any rosier: The industry is facing another round of bankruptcies as producers are overwhelmed by debt they are unable to repay.

Warren Buffett, Fear, and Greed in Fracked Oil Fields 

Read time: 7 mins
Oil pumpjack at sunset

Warren Buffett, CEO of investment holding company Berkshire Hathaway, is considered one of the top investors in history and can back up that track record with a personal wealth of around $90 billion. Buffett is known for advising investors to be “fearful when others are greedy and greedy when others are fearful.” 

In the U.S. fracked oil industry, this month can be read like a textbook version of Buffett’s fear and greed adage. The shale industry showed plenty of signs of fear while Buffett made a massive “greedy” bet on the future of the Permian Shale in Texas and New Mexico, assuming it will produce oil profitably and investing $10 billion in Occidental’s purchase of shale producer Anadarko.

Chevron and Exxon Say They Can Turn Around the Failed Finances of Fracking Industry

Read time: 9 mins
Gas station sign reading 'Exxon' and 'On the Run'

After a decade of the American fracking industry burning through hundreds of billions of dollars more than it earned, this industry previously dominated by shale drilling specialists is entering a new phase. The oil majors — a group of multinational companies that typically have divisions throughout the oil supply chain — now are investing heavily in fracked oil and gas operations.

Why It Matters If Fracking Companies Are Overestimating Their ‘Proved’ Oil and Gas Reserves

Read time: 12 mins
Oil pumpjacks in silhouette

Back in 2011, The New York Times first raised concerns about the reliability of America's proved shale gas reserves. Proved reserves are the estimates of supplies of oil and gas that drillers tell investors they will be able to tap. The Times suggested that a recent Securities and Exchange Commission (SEC) rule change allowed drillers to potentially overbook their “proved” reserves of natural gas from shale formations, which horizontal drilling and hydraulic fracturing (“fracking”) were rapidly opening up.

Welcome back to Alice in Wonderland,” energy analyst John E. Olson told The Times, commenting on the reliability of these reserves after the rule change. Olson, a former Merrill Lynch analyst, is best known for seeing the coming Enron scandal 10 years before the infamous energy company imploded in 2000.

Today, those same rules have allowed shale drillers to boost their reserves of oil, as well as natural gas. As a result, these “proved” reserves, which investors and pipeline companies are banking on, could potentially be much less proven than they appear.

And the unprecented degree to which this is happening in the shale industry casts a shadow of doubt on the purportedly bright future of America's booming oil and gas industry.

Flip This Well: How Fracking Company CEOs Get Rich While Losing Billions

Read time: 9 mins
Flip this well logo on top of oil pumpjacks

Last year the fracking company Halcón Resources announced a new strategy that was sold as the path to profits for the previously troubled shale oil and gas firm. The company had sold its stake in the Bakken oil fields in order to double down on the Permian shale in Texas. At the time, Reuters touted the deal as a “stunning turnaround” for CEO Floyd Wilson, and the good news immediately drove up the Halcón stock price by 35 percent.

The sale of our Williston Basin operated assets transforms Halcón into a single-basin company focused on the Delaware Basin where we have more than 41,000 net acres,” Wilson said in a statement. He was making his pitch and investors responded.

However, the move was part of a familiar formula for those in the shale industry, which uses horizontal drilling and hydraulic fracturing (fracking) to release oil and gas from shale formations: Borrow lots of money, drill lots of fossil fuels at a loss, flip the company for a profit.

The Secret of the Great American Fracking Bubble

Read time: 8 mins
Natural gas drilling well pad in Wyoming

In 2008, Aubrey McClendon was the highest paid Fortune 500 CEO in America, a title he earned taking home $112 million for running Chesapeake Energy. Later dubbed “The Shale King,” he was at the forefront of the oil and gas industry's next boom, made possible by advances in fracking, which broke open fossil fuels from shale formations around the U.S.

What was McClendon’s secret? Instead of running a company that aimed to sell oil and gas, he was essentially flipping real estate: acquiring leases to drill on land and then reselling them for five to 10 times more, something McClendon explained was a lot more profitable than “trying to produce gas.” But his story may serve as a cautionary tale for an industry that keeps making big promises on borrowed dimes — while its investors begin losing patience, a trend DeSmog will be investigating in an in-depth series over the coming weeks. 

2014 Year in Review: Photos of All Things Fracking Related

Read time: 7 mins

The oil and gas fracking industry continues to change America's physical and political landscape. Falling oil and gas prices have threatened to stall the industry's production growth, but for now, new drill sites continue to spring up. It was a very eventful year for both the industry and its critics. Here is my look back at some of the most notable stories and photographs.

In 2014, The Post Carbon Institute and the University of Texas released reports finding the Energy Information Administration's projections of the fracking boom’s production potential greatly inflated. 

Numerous peer-reviewed studies have been published that hold the fracking industry responsible for water and air contamination. And health studies have connected industry emissions to negative health effects impacting those living near fracking sites.

Despite the fracking industry's continued growth, the anti-fracking movement claimed numerous victories in 2014. The most high profile victories: Denton, Texas voters passed a referendum banning fracking in their city, and New York Governor Andrew Cuomo issued a statewide fracking ban after his health commissioner's report concluded that the health risks are too great.

Meanwhile, America's export policy on liquefied natural gas (LNG) is loosening and the federal government will streamline permits for frack sites on public lands overseen by the Bureau of Land Management (BLM), a unit of the U.S. Department of Interior.

DeSmog Fracking Coverage in 2014

Here are some selected stories covered by DeSmogBlog on the fracking industry in 2014:

Why ExxonMobil's Partnerships With Russia's Rosneft Challenge the Narrative of U.S. Exports As Energy Weapon

Read time: 7 mins

In a long-awaited moment in a hotly contested zone currently occupied by the Russian military, Ukraine's citizens living in the peninsula of Crimea voted overwhelmingly to become part of Russia.

Responding to the referendum, President Barack Obama and numerous U.S. officials rejected the results out of hand and the Obama Administration has confirmed he will authorize economic sanctions against high-ranking Russian officials.

“As I told President Putin yesterday, the referendum in Crimea was a clear violation of Ukrainian constitutions and international law and it will not be recognized by the international community,” Obama said in a press briefing. “Today I am announcing a series of measures that will continue to increase the cost on Russia and those responsible for what is happening in Ukraine.” 

But even before the vote and issuing of sanctions, numerous key U.S. officials hyped the need to expedite U.S. oil and gas exports to fend off Europe's reliance on importing Russia's gas bounty. In short, gas obtained via hydraulic fracturing (“fracking”) is increasingly seen as a “geopolitical tool” for U.S. power-brokers, as The New York Times explained. 

Perhaps responding to the repeated calls to use gas as a “diplomatic tool,” the U.S. Department of Energy (DOE) recently announced it will sell 5 million barrels of oil from the seldom-tapped Strategic Petroleum Reserve. Both the White House and DOE deny the decision had anything to do with the situation in Ukraine.

Yet even as some say we are witnessing the beginning of a “new cold war,” few have discussed the ties binding major U.S. oil and gas companies with Russian state oil and gas companies.

The ties that bind, as well as other real logistical and economic issues complicate the narrative of exports as an “energy weapon.”

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