uploads/2014/07/Environmental-Risks-of-Hydraulic-Fracturing.jpg

The must-know environmental impact of hydraulic fracturing

By

Updated

The advancement of fracking and the associated risks

Unconventional oil and gas resources, which don’t flow easily, exist in small pockets trapped in shale formations. The difficulties of accessing large amounts of unconventional oil and gas by drilling vertical wells led to horizontal drilling and hydraulic fracturing.

As you saw in the previous part of this series, the fracking process involves breaking rocks with millions of gallons of water—along with sand and chemicals—in order to bring oil and gas to the surface.

In the previous part, we discussed the risk of earthquakes associated with fracking. Scientists and environmental organizations have associated several other risks with fracking as well.

Environmental Risks of Hydraulic Fracturing

The chart above shows you various risks associated with fracking. These include groundwater contamination, methane pollution and its impact on climate change, exposure to toxic chemicals, improper waste disposal, and infrastructure degradation.

Impact

Article continues below advertisement

If experts see fracking as a serious problem that could legitimately lead to earthquakes as well as other environmental harm, you could see a disruption to the U.S. oil and gas industry. This disruption could hurt the profitability of companies like Chesapeake Energy (CHK), Anadarko Petroleum (APC), and EOG Resources (EOG). This is because a substantial portion of these companies’ incremental production over the past few years has been due to advances in horizontal drilling and fracking.

Note that all these companies are part of the Energy Select Sector SPDR ETF (XLE) as well as the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Key benefits

Read on to the following part of this series to find out about the positive impacts of fracking for the oil and gas industry.

Advertisement

More From Market Realist