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Mining & Resources

Countries ‘must continue fracking for energy independence’

4 Nov 2013, by Informa Insights

Oil & Gas exploration and production fundamentalsFracking is an important practice for countries looking to maintain their energy independence, an analyst firm has claimed.

Frost & Sullivan said that while hydraulic fracturing has been under immense pressure from green groups, drilling for shale gas extraction has far more benefits than disadvantages.

The organisation claimed fracking has been suspended or slowed down across much of Europe, including France, the UK, the Netherlands and Denmark – largely due to political lobbyists and environmental campaigners.

However, Frost & Sullivan argued that there are enormous economic advantages, including the promise of energy independence for many nations, meaning projects are likely to be revived in the long term.

North America leads the way in fracking

According to the firm, North America has maintained its drilling activity following a number of improvements to its fracking procedures.

This has included boosting water management functions, enhancing the efficiency of drilling operations and removing large amounts of on-site pollutants from trucks and machinery.

Companies have also made efforts to pursue methane gas recapture from flaring, with Frost & Sullivan pointing to significant industry collaboration as a major facilitator for these changes.

Regulations are likely to get even more stringent, with the US Environmental Protection Agency rolling out a number of green studies examining fracking.

Other countries should follow in North America’s footsteps, Frost & Sullivan stated, thus improving the industry through a trial and error process that allows fracking to continue in the meantime.

The organisation highlighted the fact that UK fracking production costs are three times as high as in the US, but claimed technological advancements and logistical efficiencies could lower this disparity.

The benefits of fracking

Energy and environment industry analyst at the company Ankur Jajoo admitted that circumstances differ from nation to nation, but he gave support to fracking overall.

“As every region and location is different, they are not all equally economically viable in terms of recoverable product, even if they have a large volume of reserves,” he stated.

“Yet, it is important to resume drilling activity in the interest of lower energy costs, both regionally and globally.”

Mr Jajoo noted that an increase in fracking would help boost the infrastructure of pipelines and liquefied gas terminals, reducing the cost of transportation and boosting the end-user market for natural gas.

“Rather than levy higher taxes on consumers of commodity products such as gasoline, jet fuel, diesel fuel, and heating oil, governments have an opportunity to earn that tax revenue from increased oil and gas activity,” he explained.

His comments may encourage more companies to pursue oil and gas training, with forecasted activity in fracking expected to rise worldwide.

Fracking in Australia

Frost & Sullivan’s report focused mainly on Europe, but there are ramifications for the Asia-Pacific market as well, with fracking also a contentious issue in Australia.

The organisation said exploration businesses looking to invest in fracking will need to gain acceptance from governments and citizens.

Companies would do well to spend money on education campaigns that help end users understand the benefits of fracking, it added, while learning of the development of new technologies within the industry.

The Western Australian government has already thrown its support behind fracking, with mining and petroleum minister Bill Marmion claiming the practice has the potential to create many long-term jobs and stimulate economic activity.

“I strongly believe we can achieve this without compromising the environment or safety,” he stated.

Mr Marmion also accused naysayers of having ulterior motives, stating their fight is not really about fracking.

“It is to prevent natural gas becoming a major fuel source for the generation of energy as opposed to renewable energy.”

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