Energy & Capital's Cori O'Donnell Quotes Breitling Oil and Gas CEO Chris Faulkner

The following article discusses Fracking Limitations that have been imposed in Texas. Chris Faulkner, Breitling Oil and Gas CEO, was quoted from his Bloomberg Interview:

Texas Drought Imposes Fracking Limitations

Locals Fear Fracking Will Use Up Dwindling Water Supply

By Cori O’Donnell
Thursday, October 6th, 2011

Texas Drought Imposes Fracking Limitations PDF

 

The severe drought in Texas has prompted local authorities to impose water limitations, which affect not only the citizens but also the local oil and natural gas companies.

Local water districts have the authority to allocate the water from subterranean aquifers. Hydraulic fracturing (fracking) restrictions have been put into place in addition to the pumping restrictions that are placed on farmers and small towns.

Hydraulic fracturing, which uses high pressurized water to create new channels in rock, is the technique used to develop about 85 percent of the oil wells drilled in Texas, according to state regulators. Even before the drought came into play, fracking was a controversial issue for the gas and oil companies.

Fracking concerns the local people because they fear it can contaminate the water supply, and now feared even more is if fracking will use too much water during the intensifying drought.

Bloomberg reports that “The rumblings have definitely started in the last six months,” said Chris Faulkner, chief executive officer of Breitling Oil and Gas Corp., a closely held producer in Irving, Texas. “It used to be, ‘Are you going to contaminate my water;’ now the concern is, ‘You’re going to use up all my water.’”

The U.S. Environmental Protection Agency is investigating if fracking really does lead to contamination, and is considering imposing even stricter regulations on fracking. Fracking typically uses three to ten million gallons of water, mixed with chemicals, to crack rocks and release the oil and gas.

Texas produces one-fifth of the crude and one-third of the gas in the U.S. and has exempted the energy industry from many of the water conservation rules, says Ben Sebree, the VP for government affairs of the Texas Oil and Gas Association.

Although the city of Grand Prairie in the Barnett Shale in North TX is the first to ban use of city water for fracking, no oil and gas companies have had to shut drilling down. Some companies have resorted to alternative means of obtaining water.

Breitling Oil and Gas Corp. recently trucked in 3.5 million gallons of water to a drilling site in Hemphill County instead of using the local water supply. The company reports it cost $68,000 to bring in the water, which is minuscule compared to the $3.5 million it cost for fracking the well.

Devon Energy Corp. (DVN) is using portable distilling plants to recycle water in the Barnett Shale and plans to recycle a third of water it uses in the Granite Walsh field, said Tony Thornton, a spokesman for Devon.

Violations of water restrictions can cost up to $2,000 in fines.

Fracking may use up a lot of water but it has nearly doubled the amount of active rigs drilling in the state to 903, according to data provided by Baker Hughes.

The University of Texas’ Bureau of Economic Geology projects the Barnett Shale’s water use to increase to 40,300 acre-feet; an acre-foot equals about 325,000 gallons of water. There’s enough water in one acre-foot to supply three average households with water for a year.

This drought has caused the state to have the driest year on record since 1895 when the records started being kept.  The drought it supposed to continue into 2012.

As the drought continues new restrictions will be imposed as well as limitations on fracking.

That’s all for now,

Cori