The chart below, from the US Energy Information Administration, shows how fracking is effectively cash flow negative. This in turn implies that it is an energy negative process at current prices, it consumes more energy than it produces.

For the year ending 31 March 2014 operational cash flow from 127 oil and gas companies was USD568 billion. These companies required a further USD110 billion from debt and asset sales to stay cash positive. And this is for only one year.

Higher oil and gas prices would help, but this is an industry with other problems, most notably environmental. It requires a huge number of short lived wells. Each well requires large quantities of water, a periodic table of chemicals, many trucks and large areas for each well. Any further cost imposts will almost certainly curtail industry growth.

EIA_CHART

 

More information on fracking and shale oil and gas  at the links below.

  • This article shows the rapid production decline from fracked shale oil wells
  • This article shows the typical low productivity per shale oil well
  • This article is an overview of the fracking process
  • This article gives some fracking history
  • This article explains the difference between coal bed methane and shale gas

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04 August 2014 Commodities