What is the historical significance of fracking?

The $6 trillion global energy industry has undergone a lot of changes over time. Hydraulic fracturing, the method of extracting natural gas from shale rock formations, stands out as one of the single most important innovations throughout history. Fracking was first introduced in 1947; however, wasn’t commercially used until 1999 with Barnett Shale. Fracking has made it possible to reach significant oil and gas resources that had previously been too difficult to retrieve.

In the U.S. the fracking industry continues to grow. The U.S. Energy Information Administration predicts that about 7.6 trillion cubic feet of shale gas will be produced in the U.S. in 2012. The production of natural gas is estimated to increase 4% to 5% each year. The International Energy Agency estimates there is technically about 208 trillion cubic meters of recoverable shale gas resources. The same agency estimates by the year 2035, natural gas production will increase from 3,376 billion cubic meters to 5,112 billion cubic meters.

The largest fracking opportunities in the U.S. lie in shale plays, including:

  • Barnett Shale, Texas
  • Bakken Shale, North Dakota
  • Haynesville Shale, Louisiana
  • Marcellus Shale, Appalachian Basin
  • Raton Basin, Colorado

Fracking has been slow to spread abroad. Governments in Europe, Asia, Africa and South America have done little to encourage fracking. Concerns regarding the environment might be one of the reasons for the slow growth of fracking abroad. For example, Britain temporarily suspended fracking after environmental concerns were brought to media attention.

Fracking has enormous potential in the U.S. for energy and the economy and despite international concerns, the technology appears to be on the rise in many countries. Investors are looking to capitalize on the growing industry. According to Motley Fool, the full potential of fracking is yet to be discovered. Experts suggest watching companies like Halliburton, the largest provider of fracking services, which is under appreciated for its global potential to scale.

Sources: Seeking Alpha, Motely Fool

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