One of the most exciting developments in recent years for those who care about energy independence is the technological innovations that have allowed the extraction initially of gas and increasingly oil from shale formations. For those who have followed these game-changing techniques that have dramatically expanded the supply of natural gas and created enough oil to lead to a 25% in the spread between WTI and Brent crude, one of the lingering concerns has been the regulatory risk.
While evidence has been sparse, there have been allegations of ground-water contamination and other environmental issues that result from "fracking", a process of blasting liquids mixed with sand or ceramic proppants to fracture the formation. At the big energy industry conference in Denver last week, an unnamed excecutive joined Halliburton's (HAL) CEO, Dave Lesar, on stage and apparently drank their new fracking fluid known as CleanStim. According to the company, its ingredients are sourced from the food industry. As an aside, I believe that a provider of these inputs may be Balchem (BCPC), which makes choline, for those who are interested. Here's a link to the data sheet from HAL.
In the Marcellus, especially, but even in some of the other shale formations near relatively dense populations, lingering concerns about the safety of the water supply could inhibit growth. Hopefully, improvements in the formulations of the fluids used in hydraulic fracturing will remove an overhang on this otherwise very favorable trend that could expand supply and keep a lid on energy costs.