As any reader of this blog knows, I am a big fan of GasFrac Energy Services (symbol GSF:CA or GFSVF on the pink sheets). There has been a bit of news that any follower of that stock must know.
First, the stock has moved to trade in Canada on the TSX. This is a big event. There are a number of funds and other potential buyers who cannot buy a security unless it is trades on an exchange like the TSX. The small exchange and the pink sheets where the stock previously traded kept these buyers out of the stock. In the long term, this will help raise the price of the stock.
Second, the upset about hydraulic fracturing used to complete oil and gas wells in shale formations continues to grow. Texas is passing legislation requiring companies to disclose the contents of their hydrofracking solutions. Maryland just instituted a ban on the use of hydrofracking. The environmentalist community continues to agitate against the process in many other locales. The response from the E&P companies has been half hearted and weak. As a result, the din is growing louder. All of this is a big opportunity for GasFrac since its process uses no water and solves essentially all of the environmentalists' complaints. (It also helps that the GasFrac process produces better results.)
A good example of this is an article published today by CNN Money.
It is a hit piece, and the CNN reporter did not bother to mention GasFrac or its alternative process at all. As a result, I wrote the following e-mail to him:
"I find it amazing that you could write an article about the purported dangers of fracking and not mention the alternative method used by GasFrac Energy Services Inc.
GasFrac is a Canadian company that uses liquid propane as a fracking medium rather than water. The liquid propane is a gel that actually changes into a gas underground once the fracking is completed. That means that the propane comes back to the surface in gas form and it is easily removed from the oil or natural gas that the well is producing. The propane can then be re-liquified and reused on the next well. If you stop for a moment and consider what this means to environmentalists, the answer is startling. First, there is no water usage. That means that issues like the scarcity of water in Texas during the current drought are removed. Second, since no liquid comes out of the well, there are no dissolved salts or radioactive materials brought to the surface. That means there is no need to dispose of contaminated water. That’s correct, the GasFrac process does away with all of the issues of pollution from underground being brought to the surface. Third, since the liquid propane is recycled, there are many fewer trucks needed to bring the liquids to the well sites. After the first well id completed in an area, there are just a few supply trucks coming in rather than the caravan of water trucks that arrive at each well completed by hydrofracking.
Beyond the environmental benefits, there are also clear economic benefits to the GasFrac process. Hydrofracking leaves about half of the water injected into the well in the ground as the well produces its oil or natural gas. This water acts to block some of the production that eventually comes from the well. In other words, a well completed with liquid propane will produce a substantially higher amount of oil or natural gas during its life. The results vary on that extra production, but a fair estimate is that it will be in the area of 15% or more extra production.
In case you think that the GasFrac process is something experimental, you should be aware that GasFrac has completed hundreds, if not thousands, of wells. The estimated revenue for the company for 2011 is about a quarter of a billion dollars, a figure that is expected to grow to half a billion in 2012. Even with all this growth, the company is fully booked for the rest of the year and much of 2012.
I have to tell you that I think that many of the complaints about hydrofracking are exaggerated, but the real point is that there is an easy solution to all of them. If you want more information about the GasFrac process, I suggest that you go to the company website www.gasfrac.com
I think that you owe your readers a full exposition of the subject and that a follow up article about the Gasfrac process would make much sense."
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