Journal: Truck Gauge

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A big fracking deal

Hydraulic fracturing brings threats and opportunities for carriers

A couple of months ago, a dry van operation in Ohio bought several specialized tank trailers to support the booming gas and oil extraction taking place in the huge Marcellus shale bed. The operation demands higher driver pay and more expensive equipment and maintenances, but the freight rates are multiples of the company’s usual rates. And with other operations increasingly luring drivers away with high pay anyway, to some extent it was a case of “If you can’t beat ’em, join ’em.”

Eventually, other transport modes will capitalize.

Hydraulic fracturing, or “fracking,” is a process by which a mixture of sand and water is injected into brittle shale beds to break up the rock and allow the extraction of natural gas and oil. The technique has been under development for many years, but it got a major boost in 2005 when Congress exempted it from the Safe Drinking Water Act.

Fracking is a big deal for trucking, says Noël Perry, senior consultant with transportation forecasting firm FTR Associates and principal of Transport Fundamentals. Perry notes that the process uses lots of water, sand, pipe and bulk chemicals. Wells are in remote locations, so those materials have to be hauled to those sites. And much of the used water has to be pumped out of the well and disposed, which could mean a haul of several hundred miles to a properly designed disposal facility.

With hauls in both directions, a large well can generate 1,500 truckloads of work per year, Perry says. And we could be looking at more than 20,000 wells when fracking is in full swing. FTR Associates estimates that up to 25 percent of the tank trailer market already is being diverted to fracking.

In addition to providing freight opportunities to trucking companies, fracking at this scale has the potential to push up driver pay and create some unusual stresses. For example, the impact of fracking on trucking will become even more pronounced if the housing market begins to turn around, says Eric Starks, president of FTR Associates. Home construction needs cement, and rail doesn’t have much capacity in that market anymore because it has reallocated those cars to hauling for fracking.

Will these impacts from fracking continue? Certainly the demand should continue to grow strongly, but there are environmental concerns. The U.S. Environmental Protection Agency recently launched a study on the range of environmental impacts related to fracking and plans to develop standards for wastewater discharges from the activity. But given the economic impact of fracking in terms of both jobs and lower energy costs, environmental activists will have an extremely hard time curtailing the practice – let alone killing it.

In the longer run, the bigger risk for trucking is that rail and pipeline companies will develop more convenient and efficient transportation options and reduce the fracking industry’s dependence on trucks. Even so, new rail spurs and pipelines likely would take several years to build even if the projects are expedited. So expect to see the effects of fracking for years to come – whether or not you are involved directly.

Avery Untitled 1AVERY VISE is executive director, trucking research and analysis for Randall-Reilly and senior editor, industry analysis for Commercial Carrier Journal. E-mail avise@truckgauge.com

 

 

 

Where the Action is

Extraction of natural gas from shale formations was negligible just a few years ago but now represents almost 15 percent of domestic natural gas production and is growing rapidly. Below are some of the most productive shale beds today.

Where The Action Is Untitled 1Marcellus – The largest shale bed in area, encompassing parts of Kentucky and Ohio and large swaths of West Virginia, Pennsylvania and New York

Fayetteville – Arkansas

Woodford – Oklahoma

Haynesville-Bossier – Louisiana and Texas

Barnett – Texas

Eagle Ford – Texas

Bakken – North Dakota and Montana

For a map of all current and potential areas for hydraulic fracking in the contiguous 48 states, go to www.eia.gov/oil_gas/rpd/shale_gas.pdf.