In 2011, the United States became the world’s largest producer of natural gas, growing by 7.7% between 2010 and 2011. That represented the largest volumetric increase in the world, according to BP’s Statistical Review of World Energy 2012. In 2010, investment in natural resource recovery accounted for 1 million jobs. The shale-industry boom is expected to account for nearly 1.5 million new jobs and $197 billion annually to U.S. gross domestic product (GDP) by 2015, according to a recent report by IHS Global Insight. By 2035, according to the report, that number is expected to reach $332 billion.
Developing energy from shale is receiving stronger support from Americans as its benefits – more jobs, greater U.S. energy security, and fewer imports – receive stronger acceptance. In October 2012, American Petroleum Institute chief economist John Felmy said the U.S. oil and natural gas industry has added 100,000 jobs since the economic downturn of 2008, due in large part to the development of America’s shale industry. The key to this growth has been tapping into natural gas reserves in shale deposits previously unavailable through the process known as hydraulic fracturing, or fracking.
Understanding Fracking
Hydraulic fracturing is the process of creating fissures, or fractures, in underground formations to extract natural gas and oil trapped in deep shale-rock formations. The process involves pumping pressurized fluids (typically water and sand combinations) into these formations to create the fractures necessary for recovery and extraction. Operators will typically introduce a material such as sand or ceramic into the injected fluid to prevent the fractures from closing once the injection has stopped and the pressure of the fluid is reduced. Carefully selecting which material to introduce into the fluid becomes more important at greater depths where pressure and stresses on fractures are higher. The typical fracturing fluid is approximately 90% water and 9.5% sand, with the remaining 0.5% consisting of additives that are used to aid well production.
The process of utilizing fracturing as a method to stimulate shallow, hard rock oil wells dates back to the 1860s when oil companies in Pennsylvania, New York, Kentucky, and West Virginia used liquid, followed by solidified nitroglycerin. That method was applied to water and gas wells before the technology required to use acid as a non-explosive fluid for well stimulation was introduced in the 1930s.
Hydraulic fracturing became a part of the oil and gas industry in the 1940s when Floyd Farris of Stanolind Oil and Gas Corporation conducted the first hydraulic fracturing experiment in 1947 at the Hugoton gas field in Grand County, KS. In the experiment, Farris injected 1,000 U.S. gallons of gelled gasoline and sand from the Arkansas River into the gas-producing limestone formation at 2,400 feet. Two years later, Halliburton performed the first two commercial hydraulic fracturing treatments in Stephens County, OK and Archer County, TX.
Today, hydraulic fracturing is considered critical to reducing American reliance on foreign sources of fuel while meeting growing energy demands. Since the late 1990s, roughly 13,000 new shale gas wells have been created in the U.S. per year, or 35 per day. According to the U.S. Energy Information Administration, the U.S. had 342,000 natural gas wells in 2000. That number increased nearly 50% a decade later when that number reached 510,000. Hydraulic fracturing is expected to account for nearly 70% of natural gas development in the future.
Timing is critical to companies looking to capitalize on the shale-industry boom. While many have focused their time and resources on the recovery process, it’s equally important for companies to address another challenge: transportation infrastructure.
Transportation Infrastructure Growth
Numerous pieces of equipment are needed in oil and natural gas fields. Traditionally, operators use some combination of the following equipment throughout the fracking process:
Slurry blenders High-pressure pumps Monitoring systems Fracturing tanks Storage units Chemical additive units Low-pressure flexible hoses Gauges and meters.
While many oil and gas companies have been investing heavily in this necessary equipment for the extraction and processing of their valuable natural resources, recent trends show they need to be investing heavily in transporting that equipment.
Natural gas liquids (NGL) processing and transportation infrastructure is going through a significant build-out, according to Industrial Info Resources. Companies are investing in the midstream stage of the oil and gas supply chain, including gas-gathering systems, gas processing and fractionation plants and gas pipeline projects. These infrastructure projects are in the advanced stages of development or construction and are expected to come online in the next 12 months. These projects are being pushed through swiftly because companies understand the shale industry boom – the biggest build-out of oil and liquid pipelines since World War II – is happening fast. They need to react fast or miss their opportunity.
Oil and gas companies have the ability to react fast and utilize their expertise in the extraction and recovery process, but that’s when things get tricky. Typically, these companies would utilize existing pipeline to transport their valuable oil and gas but these pipelines either don’t exist or don’t have the capacity, forcing companies to utilize platforms and safety gangways for loading and transloading trucks or railcars.
Most of these oil companies do not have the engineering resources to meet these types of transportation demands. Many have downsized that part of their business, choosing to outsource their needs to engineering firms. Because most of these projects are located in remote locations, oil and gas companies will opt for engineering firms local to their respective projects. These transportation projects require welders to build and maintain facilities, but according to Industrial Info Resources, there is a critical shortage of welders in the U.S. This can be attributed to experienced welders retiring or younger professionals opting to pursue white collar jobs, as well as qualified welders being sent by engineering firms to work on projects overseas. Another factor is the lack of housing options at these remote sites.
The upstream and midstream oil and gas industries, in particular, have a strong need for welders as the hydraulic fracturing/shale boom has resulted in the construction of new pipelines, terminals, and production facilities. According to Industrial Info’s July, 2012, data, there are 591 oil and gas production projects, 822 terminal projects, and 555 transmission projects, which represent more than $310 billion in investments throughout North America.
With so many obstacles yet so much opportunity, engineering firms representing the oil and gas elite are turning to leading loading stations like GREEN Access & Fall Protection, Sheffield Village, OH to meet their needs. GREEN Access & Fall Protection offers these oil and gas companies the flexibility to use a temporary loading station that can be broken down and taken to the next facility or project, rather than being installed as a permanent platform that can only be utilized at the one location.
For example, GREEN Access & Fall Protection’s modular equipment can be set up at a transloading facility on one side of the rail line to unload fracking sand. At the same time, GREEN Access & Fall Protection is also helping these companies safely extract the natural resources from the ground, load it, and bring it to market.
Conclusion
Oil pipeline investment is soaring courtesy of the shale boom. The Interstate Natural Gas Association of America has estimated that North America will add 19,000 miles of oil pipelines at a cost of $31.4 billion by 2035 as domestic production surges 50% to 12.7 million barrels per day. But IIR Energy believes that $10 billion per year will be spent on crude oil pipelines projects in 2012 and 2013, four times the average of the previous 7 years. But projects like TransCanada Corp.’s proposed $7.6-billion, 1,700-mile Keystone XL pipeline – which would transport oil from Alberta, Canada, to the Texas Gulf Coast – remains in limbo as government weighs environmental considerations versus economic and energy supply concerns.
The amount of oil and natural gas that is annually produced in the shale boom will continue to outpace the amount of transportation infrastructure that is available. Combined with pipeline complications, the oil and gas industry is relying more and more on companies like GREEN Access & Fall Protection to meet its transportation infrastructure needs, ensuring the safe and efficient loading and unloading of the valuable resources expected to improve a nation for many generations to come.
