Atlas Energy LP (ATLS), Air Products & Chemicals, Inc. (APD): Is Fracking on the Verge of Drying Up?

In drought-parched Texas, a typical hydraulically fractured well requires about 6 million gallons of water. And with Arkansas, Colorado, New Mexico, Oklahoma, Utah, and Wyoming also low on aqua, Halliburton Company (NYSE:HAL) has unleashed a new technology that makes wastewater available to its customers.

Other fracking goings-on
While water is likely to remain a key consideration for hydraulic fracturing for years to come, there are several other items of importance currently swirling about with regard to unconventional drilling, which has been responsible for a 30% increase in U.S. oil reserves and a 90% incrasee in our gas reserves:

• The Environmental Protection Agency continues to move forward with its nationwide study of the potential effects of hydraulic fracturing on groundwater and drinking water. A resulting report is expected to be released in 2014. In the meantime, 31 experts from universities, scientific laboratories, and industry have been appointed to review what promises to be a landmark document.

• The EPA also has abandoned its interminable and controversial research into whether fracking by Encana Corporation (USA) (NYSE:ECA) fouled the water table in Pavillion, Wyo. The effort was a follow-up to a 2011 study by the agency, which purported to find a connection between Encana Corporation (USA) (NYSE:ECA)’s operations and the contamination of an aquifer, has been turned over to Wyoming officials. They plan to release a final report next year.

• The Obama administration has set forth a proposed rule requiring oil and natural gas companies that drill on federal land to disclose the chemicals used in their hydraulic operations. It also would establish standards for well construction and waste disposal.

A Foolish takeaway
Hydraulic fracturing, it seems, will always be a target for environmental grousing and federal nitpicking. It seems unlikely, however, that it will ever be severely curtailed. On that basis, I’m increasingly becoming a proponent of Chesapeake Energy Corporation (NYSE:CHK), especially under its new management.

The company is the nation’s second largest natural gas producer, its most active fracker, and the holder of substantial acreage in many of our nation’s major shale plays. it’s also likely to see its shares propelled higher by what’s likely to be an increase in U.S. natural gas demand.

The article Is Fracking on the Verge of Drying Up? originally appeared on Fool.com is written by David Smith.

Fool contributor David Smith owns shares of Chesapeake Energy. The Motley Fool recommends Halliburton and National Oilwell (NYSE:NOV) Varco, owns shares of National Oilwell Varco, and has options on Chesapeake Energy.

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