APICS is the premier professional association for supply chain management.

Cost and Controversy

By Christopher Jablonski | November/December 2012 | 22 | 6

APICS magazineUncovering the pros and cons of fracking

Supply chains are linked inextricably to energy. Energy is essential at all stages of production and transport, whether by air, land, or sea. When prices rise, production drops, freight movement becomes prohibitive, and supply chains suffer. When there are surpluses, entire economies receive a boost. 

 Without question, one of the biggest developments in energy in the last few years has been the proliferation of natural gas. Along that line, the biggest buzzword today is fracking. It has been highlighted in such diverse news outlets as the Economist, National Public Radio’s This American Life, Fox News, and National Geographic. Gus Van Sant has made, and will release in December, a feature-length film starring Matt Damon that seeks to undermine it. It has been blamed for water contamination, air pollution, global warming—even earthquakes. Yet its supporters say it revitalizes depressed economies, promotes independence from coal and oil, and decreases greenhouse gas emissions. As with many issues in supply chain and operations management, fracking is complex and multifaceted. But just what is fracking, and what are the sources of controversy?

Methane in the madness
Natural gas consists primarily of methane and is formed, like all fossil fuels, through the breakdown of organic materials from biological and chemical processes. It is extracted from natural gas fields, oil fields, and various other sources, whereupon it is processed and compressed or liquefied so that it is more desirable as a source of energy. Unlike coal and oil, this processing usually occurs directly at the harvesting location, where it is then transported. The most common traditional uses of natural gas are for heating and electricity generation. 

Not all forms of natural gas are easy to extract, such as that formed in landfills and marshes. Some are not concentrated enough or are impractical, such as the byproducts of grazing cattle. Yet, it has been known for many decades that the gas trapped in some deposits of shale, a sedimentary rock formed by the accrual of layers of compacted minerals, could be retrieved and processed for commercial uses or sold as a commodity. Yet, the technology, infrastructure, and processes to do this efficiently and profitably were lacking. Additionally, most valuable shale can only be found a significant distance below the Earth’s surface, compounding the issue of how to efficiently, safely, and successfully retrieve the gas. 

 In the modern practice of hydraulic fracturing—often shortened to “fracking”—a fluid is released into shale deposits at high pressure, cracking the rock. A material known as a proppant is added to the fluid mixture, which keeps the fractures from closing and enables fluid to penetrate further into dense rock. Eventually, once the fluid pressure is released, gas will seep out from the shale, where it more easily can be recovered. As shale gas deposits tend to form underground along large horizontal bands, it is common for drilling operations to follow suit and operate laterally through the bands. Horizontal drilling enables the recovery of gas from areas where vertical drilling would be impossible, such as under lakes or inhabited areas. 

 Shale gas deposits can be found worldwide. China is believed to possess the largest global recoverable reserves, but much of the recent debate and activity surrounding fracking has occurred in the United States, where the practice began. About one-third of all US gas production now comes from the fracking of shale, and this proportion is only expected to increase. Current production hotspots include Texas; North

Dakota; Colorado; and the mid Atlantic region, where the large Marcellus Shale formation has spurred tremendous growth in fracking activity in the last five years and in Pennsylvania in particular. 

Some states and municipalities have resisted and legislated against fracking, often citing risks to public health and safety. New York and Vermont have passed statewide moratoriums on fracking, expressing the need to further explore the impacts and consequences. Ohio recently passed a bill requiring extensive testing and reporting at drilling sites, including shale deposits. Many citizens’ groups also have protested fracking. 

A fractured community
Concerns about fracking are many and varied, and research into fracking’s effects and consequences is being performed across the country. One area that has seen controversy is the impact of the rise of fracking and natural gas use on carbon output and global climate change. While methane has a reputation as a relatively clean-burning substance, natural gas leaked into the atmosphere during fracking and recovery is problematic. One frequently reported study out of Cornell University claims that the methane leaked through fracking is substantially higher than that of traditional natural gas extraction—and that the impact of natural gas on global warming is worse even than coal and oil.
However, a growing body of research contradicts these claims. Larry Cathles, PhD, a professor of earth and atmospheric sciences at Cornell, disagrees with his colleagues’ conclusions, asserting that certain choices made while conducting the studies resulted in significant exaggeration of the danger to the atmosphere. Additionally, as the researchers only studied methane’s impact on a relatively short time horizon, they disregarded the fact that methane dissipates from the atmosphere fairly quickly, whereas “any carbon dioxide put in the atmosphere will still be there for a very long time, and there’s nothing to do other than try to scrub it out,” Cathles says. 

A frequently cited danger of fracking stems from the chemicals used to open up the shale at high pressures. While fracking fluid traditionally consists of mostly water, mixtures often are adulterated with additives to attain different levels of viscosity and capacity to carry proppant. Chemicals used in fracking fluids have included hydrochloric acid, benzene, dichloroethane, and other additives regarded as harmful to human health. The question is not whether fracking chemicals can cause harm; rather, the issue at hand is to what extent the dangers can be contained and if leakage into groundwater presents a substantial threat to humans and other living creatures. 

Indeed, the US Environmental Protection Agency is examining this question very closely and conducting a large-scale study of five major fracking sites in the United States, with the study due to be completed by the end of 2012 and published in 2014. Previous studies have been more limited in scope and narrow in focus, such as when an accident or known contamination occurs or when a new technique requires scrutiny. There have been several known incidents where groundwater was contaminated as a result of fracking, with some resulting in actions taken against the companies responsible. However, it remains to be seen whether the presence of harmful chemicals is too large an inherent risk to public health or if research and better safety practices are enough to mitigate the risk. 

Some concerns about fracking are perhaps not as substantial as the potential dangers to health and safety; nevertheless, they are frequently cited by its opponents. Critics say fracking sites are loud and full of pollution, not only from fracking processes themselves, but also from the supporting infrastructure. When fracking companies come to towns, roads are ravaged and local economies depressed. Some even have blamed the 2011 East Coast earthquakes on fracking. 

Many of these criticisms are unmistakably rooted in truth; however, there are competing bodies of research on others, such as fracking’s effect on local economies. And while there is evidence that fracking can cause earthquakes on a small scale, with the vast majority of them undetectable by humans, there is little to suggest it is responsible for some of the recent tremors felt in areas where they are less common.

Look on the bright side
Despite the criticism leveled at fracking, at worst, experts still feel strongly that fracking carries fewer downsides than traditional fossil fuel production, particularly from coal and oil. But what, precisely, is fracking good for? Why pursue it in the first place? 

By far, the biggest benefit of fracking is the abundance of cheap energy—energy that’s far cleaner than coal, depending on how you view the science. Recent data from the US Energy Information Agency even suggest that US carbon emissions are at their lowest levels in 20 years—and that the rise of natural gas and fracking are responsible. Natural gas prices also are at record lows, potentially stimulating manufacturing, electricity generation, and the recovering economy.

One challenge that stems from having a lot of inexpensive natural gas is finding new ways to use it. Jarrod Goentzel, PhD, works in the MIT Center for Transportation and Logistics, where he studies how alternate forms of energy can benefit supply chains. He says natural gas has been a huge boost to power grids, where its greatest strength is the ability to boost output quickly in response to increased demand. However, it is a challenge to turn grid electricity into a form that can benefit long-haul freight. One avenue of interest and requiring further study is liquid natural gas—a highly compressed form of significant energy density. Yet the nation’s infrastructure has been built over about 100 years to handle gasoline and diesel fuel. Essentially, “the refueling infrastructure would have to be developed further in order to support liquid natural gas,” Goentzel says.

While it may see challenges and face further criticism, fracking is here to stay. Critics claim that natural gas presents merely a stopgap measure to the problem of dependence on fossil fuels. But Cathles says natural gas is a logical, pragmatic step on the road to 100 percent renewable energy. It is important for study and research to continue to better understand the effects of fracking, both positive and negative, and to keep exploring technology that can take advantage of the large amounts of energy it can provide. With any luck, over the next few years, we will know enough to remove a lot of the uncertainty surrounding this multifaceted topic.  

Christopher Jablonski is staff editor at APICS. He may be contacted at cjablonski@apics.org.
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  1. Gaurier November 30, 2012, 03:16 AM

    Thank you Christopher for trying to cool down the debate and rely on facts.

    If I may give a comment that is unfortunately subjective (I'm not a research scientific :) :
    I personally am ok with the "caution principle", when topics are related to health, safety and environment : that is to say "study first, practice after if the result seems OK". Whatever the result is (positive or negative impact of such technology), a sustainable approach would require to further study, deeply, before continuing using fracking, as the current opinions may diverge, just like you demonstrate it in your good article.

    Furthermore, let's see this as an opportunity of "doing better and more with less" : if the global feeling is "we lack energy", the mindset will turn to "what could we do to perform with less", which is probably globally the positive approach for a sustainable future (=  close to the definition of "lean = doing more with less").
    On the contrary, if we collectively tend to think "energy is unlimited and cheap", no one will think like said before, will we ?

    So in conclusion, let's give a chance to technology, if deep studies shows the global benefits, but let's not promote it before results are complete, shared and collectively accepted. And finally, let's take this opportunity to promote "lean and sustainable thinking", just in case the technology does not fullfill its promises.


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