Here’s How to Devastate U.S. Energy, Economy: Ban Fracking

Mark Green
Posted October 25, 2019

Energy analyst Michael Lynch has a couple of charts in his recent article for Forbes that do a good job of showing the stark repercussions of banning hydraulic fracturing – as a number of Democrats have advocated on the campaign trail.

First, understand that modern, technologically advanced fracking is used for 95% of new wells today. Shale and tight sandstone formations, which need hydraulic fracturing to be economically feasible, accounted for about 69% of total U.S. dry natural gas production in 2018 and 59% of total U.S. crude oil production, according to the U.S. Energy Information Administration. So, yes, a fracking ban or something approaching it would put a major dent in U.S. production.

Lynch focuses on natural gas – the United States’ leading fuel for generating electricity and the No. 1 reason U.S. energy-related carbon dioxide emissions declined to their lowest levels in a generation. Basically, Lynch says a fracking ban would cause U.S. natural gas production to plummet to 2008-2009 levels – you know, back when the U.S. was needing to import natural gas to keep up with domestic needs:

Lynch:

[I]t becomes obvious that this would not be a tweak of the market, but a devastating blow to the industry and, frankly, the economy as a whole. Paying $8/MMBtu for 20 bcf/d of LNG imports would add about $60 billion a year to our trade deficit. Presumably, domestic gas prices would rise to that level, and the additional $5.5/MMBtu on the remaining 70 bcf/d of supply would cost consumers about $140 billion per year. And that would still leave the domestic market short by 17 bcf/d or more.

Similarly, a fracking ban would put the brakes on natural gas production from shale:

Lynch:

Production in the five primary shale basins would drop from 70 bcf/d to about 18 bcf/d in two years. Perhaps 15 bcf/d of that can be offset by ending all exports (mostly by pipeline to Mexico) and importing more from Canada, destroying billions of dollars in assets (pipelines and liquefaction plants). Another 20 bcf/d might be imported as LNG given current capacity, but that would require prices three to four times current levels.

This is why, as Lynch notes, analyst Robert McNally of Rapidan Energy Group says banning hydraulic fracturing would “vaporize” the U.S. energy revolution – which has created jobs and boosted the economy, increased U.S. energy security and strengthened U.S. trade, all while helping lower CO₂ emissions.

While recognizing that the “ban fracking” rhetoric is intended to generate applause from primary voters, it’s astonishing nonetheless, given the game-changing benefits to the nation from the energy revolution – built on safe, responsible hydraulic fracturing.