Fracking Earthquake Investment Opportunities

Fracking does NOT cause earthquakes…

But a byproduct of the process can destabilize fault lines near fracking sites.

According to a new study published in the journal Science, when you couple these weakened fault lines with a seismic event, you can get some serious shaking ground.

Researchers actually looked at three major quakes in Japan, Chile, and Indonesia and found that more than a year later, those quakes — all of which exceeded a magnitude of 8.5 — triggered smaller ones in Midwestern regions of the United States where fracking fluids were pumped underground.

Of course, if the data is sound, this isn’t the first time we’ve seen earthquake triggers related to man-made actions…

From creating massive dam reservoirs to excessive water pumping to the operations of some geothermal power plants, it’s naïve to assume our actions cannot be responsible for such events.

But does that mean we should stop?

Fracking Continues

Last year, after a series of earthquakes shook Youngstown, Ohio, city officials began looking closely at the relationship between these rare earthquakes and the uptick in injection wells near some fracking operations.

John Armbruster, a seismologist Ohio regulator brought in to monitor the earthquakes, reported the following:

Youngstown is an area which doesn’t have a history of earthquakes. This disposal well started operating in December of 2010.

Three months later, the earthquakes began and the earthquakes are trickling along. From March to November, you have nine earthquakes, all of a similar size, 2.5, 2.1, 2.7.

On Christmas Eve, there was a magnitude 2.7 earthquake. Our location of that Christmas Eve earthquake was about one kilometer from the bottom of the well and the location of the earthquake was sufficient evidence that there could be a link.

As a result, fracking operations were temporarily halted, but not terminated. In fact, following a series of seismology reports, regulators decided not to kick those fracking operations to the curb, but instead work with the oil and gas industry to require seismic surveys before proceeding on new wells, as well as integrating more water recycling technology instead of injecting massive amounts of water into waste wells.

Bottom line: In a city where a 4.0 earthquake rocked a relatively quiet community with no history of earthquakes, but a wealth of data that suggested the earthquake was triggered by an injection well, fracking continues.

And rest assured, this latest study will not slow any fracking momentum in the Midwest, either.

Fracking Goes Mobile

Beyond earthquakes, there’s also a large number of Americans that believe fracking results in yet one more environmental burden for which taxpayers will have to shoulder. And in a few, scattered locations, this is true.

However, for the most part, responsible producers don’t want any environmental headaches, either. Generally speaking, most will continue to embrace — not ignore — more sustainable fracking solutions.

In fact, one company in particular has been getting very aggressive in this space…

$mobilefrack$ It was actually launched back in 2010, but with rapid development of fracking operations in the United States and abroad, Siemens’ (NYSE: SI) FracTreat Mobile Treatment System is getting a lot of attention from producers.

The system, which is completely mobile, can treat wastewater on site and allow producers to seamlessly reuse the water.

Because of the relatively quick decline rates of shale, the ability to have mobile operations offers producers a significant operational and cost advantage.

Truth is, although rapid decline rates are far from fiction, all they really mean is that producers will simply have to drill more. So the availability of mobile water treatment systems is paramount to profitability over the long term.

Although Siemens is not a pure play in this sector, I definitely think it would be unwise to ignore its contribution to the continued expansion of shale production.

Other companies looking to clean up by “cleaning up” fracking water include:

Ecolab (NYSE: ECL)
Schlumberger Ltd. (NYSE: SLB)
Halliburton (NYSE: HAL)
Ecologix (Private)
Nuverra Environmental Solutions (NYSE: NES)
EcoSphere Technologies (OTCBB: ESPH)

No form of power generation is environmentally benign. Certainly some are worse than others; but with so much oil and gas beneath our feet, it is highly unlikely that we’ll ever do anything to derail the production of this nation’s shale bounty.

Instead, technology will simply evolve and adapt to new economic and environmental challenges.

And in the process, you and I get to make a few bucks. Not a bad deal.

To a new way of life and a new generation of wealth…

Jeff Siegel Signature