Wednesday, April 17, 2013

Fracking for... oil?

      The first article that I read about was titled “Shale Oil find fuels boom in U.S. business”. This article was about a major oil find in the Eagle Ford Shale deposits, about 60 miles up the road from Corpus Christi, that had been storing oil for millions of years in a underground bedrock. This oil became available at a cheap price due to advancements in technology to extract oil from the shale, by fracking. Along with oil, a plentiful amount of natural gas was also found, which only makes things better for Eagle Ford. According to John Larue, executive director of the Port of Corpus Christi, this find will help in his aggressive plans to expand. He expects the local economy to double or triple in a few years.
      This oil find is seen as a “boom in US business” because we are able to acquire this oil safely and efficiently. US businesses will flock to this area, in hope of producing their goods without outsourcing and for a cheap price. This oil find will also bring in international businesses within the US, because the energy found is cheap. There was also a good amount of natural gas found, which attracts businesses that use gas to power their factories. Companies from Austria and China are expected to pay $700 million and $1billion, respectively, to place factories in an area where they are powered by the Eagle Ford Gas. This will also lead to about 350,000 jobs that pay $60k to $80k a year, with more jobs coming from construction and servicing. 
      The second article I read was not as intensive as the first, but did elaborate on funding for the development of oil and gas assets in the area and the amount of oil that will hopefully be retrieved. This article also discussed how there will be 20 different well locations for each reservoir. Each well will retrieve 120,000 to 150,000 [barrels].
      I believe that the only issue with this oil find is that there is no way of efficiently transporting the oil to businesses located along the east coast, such as Philadelphia and Pittsburgh. Due to federal law, it prevents the gas being transported, unless the oil is carried in US made vessels. These cities on the East coast needed this oil badly, but had no way of getting it, which ultimately lead to the closing of those factories. Only small barges have been able to ship the oil, which is very inefficient. Even though the transportation costs are high through these barges, it is still cheaper for these companies to acquire from Eagle Ford than to import crude oil.  Ideas of extensively dredging the Mississippi River and Intercoastal Waterway have been brought to light, but the federal government is unwilling to authorize this.
      I have an indifferent opinion on the situation. Overall, I think that it is good that we have found oil efficiently and that we are able to do it safely. I think it is also a good thing for our economy because it will allow us to minimize outsourcing and even bring foreign companies into the US to make profit. What I am indifferent about is the fact that there is no efficient way to transport the oil to parts of the country such as Philadelphia. The only way that we can do so is by intensive dredging, which is harmful to the environment, which leads to other issues. Overall, I do believe that this find is good for the economy, but without being able to transport efficiently, I am not sure how major of an impact this really can have for our whole country.
--Jonathan Ma

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