A worker monitors water pumping pressure and temperature at an Encana Oil & Gas Inc. fracking site, outside Rifle, Colo. Colorado joins Ohio, Pennsylvania, North Dakota, Texas, Louisiana, and Wyoming as fracking hot spots.
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Had it not been for the current fracking boom, Ohioans might have been looking at 65 to 129 percent higher heating bills this January.
Columbia Gas of Ohio said this January’s average residential heating bill will be $142.19 to $146.19 for the 1.4 million households it serves, many of them in northwest Ohio.
That’s $6 to $10 more than what the utility projected at the beginning of the month, when it estimated this year’s January bills would average $136.19 per household.
Utility spokesman Chris Kozak said the additional $6 to $10 in charges are “pretty insignificant” considering the brutal cold snaps brought on by two unusual shifts of the Arctic Circle’s polar vortex over North America, the first bringing wind chills approaching -50 degrees and this weekend’s, which brought wind chills of more than -20 degrees.
But what if the modern era of hydraulic fracturing — fracking — to drill for natural gas as we know it hadn’t occurred?
“They’d be paying more, and that’s obvious,” said Tom Stewart, executive vice president of the Ohio Oil and Gas Association.
Based on current usage patterns, applied to Columbia’s January, 2005, and 2006 rates for natural gas, this month’s average residential bills would likely have been somewhere between $234.15 and $324.95.
That’s 65 to 129 percent more.
Columbia’s price for natural gas is among the lowest it’s been in years, which industry experts attribute to a regional abundance of natural gas generated by the modern era of fracking.
The utility’s current rate of 57 cents per 100 cubic feet of natural gas is 41 cents less than it was in January, 2005, when Columbia was charging 98 cents for every 100 cubic feet.
It’s 79 cents less than it was in January, 2006, when Columbia was charging $1.36 cents for the same volume.
The latter was Columbia’s highest price ever, Mr. Kozak said.
“Then we start seeing the revolution of [horizontal] shale drilling,” he said.
Hydraulic fracturing of bedrock is not in itself new. The oil and gas industry has been pulverizing rock since the 1940s or before.
The modern game-changer is the industry’s development of a horizontal drilling technique that, in combination with pulverizing rock, has made it possible for vast amounts of previously trapped natural gas and oil to be recovered in multiple directions at once.
That technique has led to the current fracking boom — which, in turn, has drawn global attention to the controversial drilling practice.
Nations abroad are using it, changing the worldwide markets for natural gas, oil, and other energy products. The Nuclear Energy Institute last year acknowledged the changing global markets for natural gas are hampering efforts to expand or build additional nuclear power plants.
Although there’s disagreement over when and where the horizontal fracking technique began, economic benefits of it began to appear in Ohio about 2006 or shortly thereafter, according to Mr. Kozak and Mr. Stewart.
Drawing a direct correlation between fracking and natural gas prices is difficult, if not impossible.
Consumption patterns, seasonal fluctuation, severance taxes, population density, and pipeline projects are among many other factors that can result in market shifts.
But, to some, there are signs emerging that are more than anecdotal.
According to prices posted Friday by Platts, an industry-respected financial publication, natural gas in New York City costs nearly nine times its price in northwest Ohio.
Mr. Stewart, who has testified before the Ohio General Assembly on behalf of the oil and gas industry, did not hesitate to note New York has a statewide fracking ban.
Prices vary throughout other regions. Northern Ohio’s prices are fairly stable because local supplies of natural gas remain ample, even with the latest cold snap.
“There’s so much natural gas being produced in this region, it can withstand disruptions like that,” Mr. Stewart said.
A double dose of Gulf of Mexico hurricanes in 2005 — Katrina and Rita — was largely responsible for Columbia’s 2006 record-high prices.
Back then, Mr. Kozak said, Columbia Gas relied heavily on Gulf Coast producers for natural gas. It doesn’t now.
“Now, we get more from western Pennsylvania and eastern Ohio,” he said. “The shale’s kind of flattened out the market that way.”
Natural-gas prices affect consumer goods’ prices too.
Columbia’s 2,000 industrial customers collectively consume about as much natural gas as its 1.4 million residential customers do, Mr. Kozak said. Consumption by the Jeep assembly complex in Toledo, for example, matches that of about 15,000 homes, he said.
Oilfields unlocked by fracking and horizontal drilling also have helped suppress crude-oil prices, although exactly by how much is uncertain.
“If we didn’t have fracking today, the price of crude would be higher,” Mr. Stewart said.
The U.S. Energy Information Administration, in an advance copy of a report due this spring, said the modern era of fracking is here to stay.
Natural gas production is expected to grow steadily through 2040, when production reaches 37.6 trillion cubic feet — a 56 percent increase over 2012, according to the government forecast.
Just two years from now, meanwhile, U.S. crude oil production is expected to be close to the 1970 record of 9.6 million barrels per day, then level off and slowly decline after 2020, the energy information administration said.
But prices fluctuate throughout the country, based on availability, so the fracking boom’s benefits are not universal.
The energy information administration noted in a Jan. 7 statement that average wholesale prices for natural gas increased in 2013. It cited a 35 percent increase at Henry Hub in Erath, La., which it described as “the key benchmark location for pricing throughout the United States.”
The document showed a 75 percent increase in New England’s prices and a 61 percent increase in New York’s.
An EIA document from Dec. 17 identified Pennsylvania as the fastest growing natural-gas production state, with 72 percent growth in 2011 and 2012, the most recent years cited.
Western Pennsylvania’s highly productive Marcellus Shale formation is one of Ohio’s natural-gas sources, along with the partially overlapping Utica Shale that predominates in central and eastern Ohio, where a fracking boom also is expected.
Other fracking hot spots are in North Dakota, Texas, Louisiana, Colorado, and Wyoming.
Environmentalists oppose fracking because of the uncertain, evolving science of groundwater impacts, sinkholes, and drilling-related earthquakes. Building roads, the public-health costs of local noise and air pollution, the potential for long-term groundwater contamination, and problems with local geology are fracking's hidden costs, they argue.
The industry cites government reports claiming there are no known effects to groundwater. Scientists, though, have said there appear to be correlations between fracking and minor earthquakes, including some in the Youngstown area.
An article last month in the National Journal, a magazine that focuses on Congress and U.S. government policy, cited figures that show American households aren’t receiving reductions in natural gas prices as steep as those for industry, though — raising the question of who’s benefiting most from the fracking boom.
Contact Tom Henry at: email@example.com or 419-724-6079.
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