There’s no doubt that U.S.-based fracking—the process through which oil and gas deposits are blasted from shale deposits deep underground—has caused a revolution in worldwide energy supplies.
Photo credit: Joshua Doubek / Wikimedia Commons
Yet now the alarm bells are ringing about the financial health of the fracking industry, with talk of a mighty monetary bubble bursting—leading to turmoil on the international markets similar to that in 2008.
In many ways, it’s a straightforward case of supply and demand. Due to the U.S. fracking boom, world oil supply has increased.
Glut in supplies
But with global economic growth now slowing—the drop in growth in China is particularly significant—there’s a lack of demand and a glut in supplies, leading to a fall in price of nearly 50 percent over the last six months.
Fracking has become a victim of its own success. The industry in the U.S. has grown very fast. In 2008, U.S. oil production was running at five million barrels a day. Thanks to fracking, that figure has nearly doubled, with talk of U.S. energy self-sufficiency and the country becoming the world’s biggest oil producer—“the new Saudi Arabia”—in the near future.
The giant Bakken oil and gas field in North Dakota—a landscape punctured by thousands of fracking sites, with gas flares visible from space—was producing 200,000 barrels of oil a day in 2007. Production is now running at more than one million barrels a day.
Fuelled by talk of the financial rewards to be gained from fracking, investors have piled into the business. The U.S. fracking industry now accounts for about 20 percent of the world’s total crude oil investment.
But analysts say this whole investment edifice could come crashing down.
Fracking is an expensive business. Depending on site structure, companies need prices of between $60 and $100 per barrel of oil to break even. As prices drop to around $55 per barrel, investments in the sector look ever more vulnerable.
Analysts say that while bigger fracking companies might be able to sustain losses in the short term, the outlook appears bleak for the thousands of smaller, less well-financed companies who rushed into the industry, tempted by big returns.
The fracking industry’s troubles have been added to by the actions of the Organisation of Petroleum Exporting Countries (OPEC), which, despite the oversupply on the world market, has refused to lower production.
The theory is that OPEC, led by powerful oil producers such as Saudi Arabia, is playing the long game—seeking to drive the fracking industry from boom to bust, stabilise prices well above their present level, and regain its place as the world’s pre-eminent source of oil.
There are now fears that many fracking operations may default on an estimated $200 billion of borrowings, raised mainly through bonds issued on Wall Street and in the City of London.
In turn, this could lead to a collapse in global financial markets similar to the 2008 crash.
There are also questions about just how big existing shale oil and gas reserves are, and how long they will last. A recent report by the Post Carbon Institute, a not-for-profit think tank based in the U.S., says reserves are likely to peak and fall off rapidly, far sooner than the industry’s backers predict.
The cost of drilling is also going up as deposits become more inaccessible.
Besides ongoing questions about the impact of fracking on the environment—in terms of carbon emissions and pollution of water sources—another challenge facing the industry is the growth and rapidly falling costs of renewable energy.
Fracking operations could also be curtailed by more stringent regulations designed to counter fossil fuel emissions and combat climate change.
Its backers have hyped fracking as the future of energy—not just in the U.S., but around the world. Now the outlook for the industry is far from certain.
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By Aaron W Hunter
A chance discovery of a beautifully preserved fossil in the desert landscape of Morocco has solved one of the great mysteries of biology and paleontology: how starfish evolved their arms.
The Pompeii of palaeontology. Aaron Hunter, Author provided<h2></h2><p>Although starfish might appear very robust animals, they are typically made up of lots of hard parts attached by ligaments and soft tissue which, upon death, quickly degrade. This means we rely on places like the Fezouata formations to provide snapshots of their evolution.</p><p>The starfish fossil record is patchy, especially at the critical time when many of these animal groups first appeared. Sorting out how each of the various types of ancient starfish relate to each other is like putting a puzzle together when many of the parts are missing.</p><h2>The Oldest Starfish</h2><p><em><a href="https://www.biorxiv.org/content/10.1101/216101v1.full.pdf" target="_blank" rel="noopener noreferrer">Cantabrigiaster</a></em> is the most primitive starfish-like animal to be discovered in the fossil record. It was discovered in 2003, but it has taken over 17 years to work out its true significance.</p><p>What makes <em>Cantabrigiaster</em> unique is that it lacks almost all the characteristics we find in brittle stars and starfish.</p><p>Starfish and brittle stars belong to the family Asterozoa. Their ancestors, the Somasteroids were especially fragile - before <em>Cantabrigiaster</em> we only had a handful of specimens. The celebrated Moroccan paleontologist Mohamed <a href="https://doi.org/10.1016/j.palaeo.2016.06.041" target="_blank" rel="noopener noreferrer">Ben Moula</a> and his local team was instrumental in discovering <a href="https://www.sciencedirect.com/science/article/abs/pii/S0031018216302334?via%3Dihub" target="_blank" rel="noopener noreferrer">these amazing fossils</a> near the town of Zagora, in Morocco.</p><h2>The Breakthrough</h2><p>Our breakthrough moment came when I compared the arms of <em>Cantabrigiaster</em> with those of modern sea lilles, filter feeders with long feathery arms that tend to be attached to the sea floor by a stem or stalk.</p><p>The striking similarity between these modern filter feeders and the ancient starfish led our team from the University of Cambridge and Harvard University to create a new analysis. We applied a biological model to the features of all the current early Asterozoa fossils in existence, along with a sample of their closest relatives.</p>
Cantabrigiaster is the most primitive starfish-like animal to be discovered in the fossil record. Aaron Hunter, Author provided<p>Our results demonstrate <em>Cantabrigiaster</em> is the most primitive of all the Asterozoa, and most likely evolved from ancient animals called crinoids that lived 250 million years before dinosaurs. The five arms of starfish are a relic left over from these ancestors. In the case of <em>Cantabrigiaster</em>, and its starfish descendants, it evolved by flipping upside-down so its arms are face down on the sediment to feed.</p><p>Although we sampled a relatively small numbers of those ancestors, one of the unexpected outcomes was it provided an idea of how they could be related to each other. Paleontologists studying echinoderms are often lost in detail as all the different groups are so radically different from each other, so it is hard to tell which evolved first.</p>
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