Chart of the day: Fracking up the landscape

This chart shows the daily production of natural gas in five states, and the Gulf of Mexico (Federal GOM). Apart from Louisiana and Texas, almost all of the increase in production has come from states which were not previously major gas producers, as the practice of fracking has opened up new reserves.

As we wrote yesterday:

The standard used is the price of gas at the Henry Hub in Louisiana, a key connection between 13 different pipelines, and it is generally representative of the wholesale price across North America. Owing to the localised boom in production, however, the low prices have not been matched in the rest of the world.

This boom has occurred because of a sharp rise in the use of hydraulic fracturing, or "fracking", and horizontal drilling (which is what it sounds like it is) to retreive gas from previously untappable shale rocks. These technologies are controversial due to the damage they do to the environment above and beyond what is normal for resource extraction.

Fracking involves pumping highly pressurised fluid into wells to force the creation of fractures in the rock, allowing the gas to escape to within reach of the drills. The concern is that the fluids used, although 98 per cent water, contain a number of known toxins, carcinogens and radioactive tracers, all of which can potentially seep into and contaminate groundwater. The practice of creating the fractures themselves has also been linked to small earth tremors in the locality of the well.

Despite this, fracking has taken off in the US, with overall gas production rising from 59 billion cubic feet per day in 2010 to 69 billion cubic feet per day in 2012. This increase, added to an unusually warm winter which reduced demand, has led to the supply boom which has so surpressed prices.