What a Fantastic, 65-Year Ride It Has Been — and Here’S to Another 65 Years and More

What a fantastic, 65-year ride it has been — and here’s to another 65 years and more.

Photo courtesy of Halliburton

Advanced hydraulic fracturing and horizontal drilling Howco took the investment risks, ventured forth and have launched an oil and natural gas renaissance marked the opening of a new era in energy development. in this country — bringing dynamic job creation, From the company’s history: economic stimulus that radiates well beyond the oil and natural gas industry proper and greater energy The investment was risky for Howco, with hundreds security. Thanks to fracking, the United States is an of thousands of dollars at stake. Bob Diggs Brown, energy superpower that, with the right policies, can former vice president of sales and advertising, said harness its vast resources to ensure a significantly Howco’s chief engineer, Bill Owsley, was convinced of better future for its citizens while reducing energy- the concept’s potential. “It wasn’t a cheap prospect related tension across the globe. at a point in time when the process hadn’t really been proved. But Bill Owsley, bless his heart, was just right More on the benefits of hydraulic fracturing below, but for Halliburton. He convinced Mr. Halliburton.” first let’s take a look at how we got here. We celebrate the first commercial use of hydraulic fracturing 65 years ago The onset of the modern shale revolution came with the on March 17, 1949, conducted by Halliburton in Stephens marriage of advanced fracking and horizontal drilling, County, Okla., and Archer County, Texas. But the roots allowing operators to sink a well a mile or more deep of the fracking story stretch back to the 1860s. In a 2010 before gradually turning it from vertical to horizontal — often article for the Society of Petroleum Engineers’ Journal stretching out another 6,000 feet or more and allowing a single of Petroleum Technology (JPT), NSI Technologies’ Carl well site on the surface to accommodate a number of wells. Montgomery and Michael Smith write that energy pioneers Over 65 years of use fracking has safely produced more than experimented with oil well “shooting” that would “rubblize” 600 trillion cubic feet of natural gas and 7 billion barrels of oil. oil-bearing rock to increase flows. Various methodologies The U.S. Energy Information Administration’s Annual were used to fracture rock formations over the years Energy Outlook 2014 Early Release shows how important until Stanolind Oil, a division of Standard Oil of Indiana, hydraulic fracturing is to our energy present and future. So- conducted the first experimental “hydrafrac” in 1947 in called “tight oil” developed from shale and other tight-rock Kansas. It involved pumping fluid carrying “propping agents” formations with hydraulic fracturing will play the major role at high pressure into a well to create fractures that could be in letting the U.S. near historic oil output levels over the held open to free oil and natural gas in the rock. JPT: next couple of years, EIA projects: A patent was issued in 1949, with an exclusive license granted to the Halliburton Oil Well Cementing Growing tight oil and offshore crude oil production drive Company (Howco) to pump the new Hydrafrac U.S. output close to historical high process. Howco performed the ﬁrst two commercial U.S. crude oil production million barrels per day fracturing treatments—one, costing $900, in Stephens History 2012 Projections County, Oklahoma, and the other, costing $1,000, 10 U.S. maximum production level of in Archer County, Texas—on March 17, 1949 … In 9.6 million barrels per day in 1970 the ﬁrst year, 332 wells were treated, with an average 8 production increase of 75%. Applications of the Tight oil 6 fracturing process grew rapidly and increased the supply of oil in the United States far beyond anything 4 anticipated. Treatments reached more than 3,000 wells Lower 48 offshore Alaska a month for stretches during the mid-1950s. 2 Other lower 40 onshore

0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Source: EIA, Annual Energy Outlook 2014 Early Release Similarly, EIA says natural gas from shale will lead overall Hydraulic fracturing is safe and well-regulated by federal and U.S. growth: state regimes. The technologies and processes continue to be improved, guided by industry standards developed from U.S. dry natural gas production trillion cubic feet experiences in the field and which undergo rigorous review

History 2012 Projections before adoption. Here’s what some say about fracking: 40 Shale gas 35 Tight gas U.S. Interior Secretary Sally Jewell: Non-associated onshore 30 Non-associated offshore “Fracking as a technique has been around for decades. Alaska Associated with oil … I have performed the procedure myself very safely.” 25 Coalbed methane 20 Former Obama Interior Department Secretary Ken Salazar: 15 “From my opinion and from what I’ve seen … 10 I believe hydraulic fracturing is, in fact, safe. …

5 We know that, from everything we’ve seen, there’s not a single case where hydraulic fracturing has created 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 an environmental problem for anyone.”

Source: EIA, Annual Energy Outlook 2014 Early Release Former Obama Energy Department Secretary Steven Chu (Columbus Dispatch): When data for 2013 is complete, EIA estimates the U.S. Drilling for shale gas can be done safely, and at least will be the world leader in combined oil and natural gas one prominent study about the risks is not credible, production for the year. Thanks, fracking. said Steven Chu, until recently the U.S. secretary of energy, speaking in Columbus yesterday. The These numbers only suggest the impact that energy safely availability of natural gas from shale, including from and responsibly developed with hydraulic fracturing is Ohio, likely will lead to decades of low gas prices, Chu having and will have on the lives of individual Americans said. He also thinks the energy can be extracted in an and our broader economy. Numbers from an IHS study environmentally responsible way. “You can have your help complete the picture: cake and eat it, too,” he said. • In 2012, unconventional oil and natural gas from fracking and energy-related chemicals activity supported more Colorado Gov. John Hickenlooper, a trained geologist than 2.1 million jobs. with first-hand knowledge of fracking: “I was personally involved with 50 or 60 (fracked) • By 2025 this activity will support nearly 3.9 million jobs. wells. There have been tens and thousands of wells in • In 2012, energy from fracking and related chemicals Colorado … and we can’t find anywhere in Colorado activity contributed almost $284 billion to GDP. By 2025 a single example of the process of fracing that has the contribution could approach $533 billion. polluted groundwater.” Abundant, affordable energy from shale has helped fuel a Finally, with another nod to fracking, increased use of U.S. manufacturing resurgence — as companies fill orders natural gas has helped lower U.S. energy-related emissions for materials and equipment used in energy development of carbon dioxide to their lowest level in two decades, and as they and others realize energy savings in their according to EIA. operations. Overall, the U.S. manufacturing sector has added more than 500,000 jobs since 2009, IHS says. So, add it all up — energy, energy security, economic For U.S. households, the energy surge made possible by growth, job creation, per-household savings, a fracking has produced household savings through lower cleaner environment — and there’s a lot to celebrate natural gas prices. IHS estimates that in 2012 this meant as commercial hydraulic fracturing turns 65. While an increase in real disposable income of more than $1,200 birthday celebrations traditionally include giving gifts per household, which will grow to $2,000 per household in to the one having the birthday, in the case of fracking 2020 and more than $3,500 in 2025. the presents are all ours.

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