Chesapeake Energy Corporation (NYSE:CHK) has announced it is partnering up with GasFrac Energy Services to begin testing waterless fracking at its Ohio oil wells. Chesapeake is the most active driller operating in the Utica shale play and has determined its Tuscarawas County well to be the best candidate for testing waterless shale fracking. The company noted that one of its partners, EV Energy Partners has already attempted to use the technology. This information led to the VP of the company’s northern division to decide to try it on their own well in an effort to maximize value.
GasFrac is a small, publicly traded company operating out of Alberta, Canada and they made news last year when it began testing its own waterless fracking well. It partnered with EV Energy on that venture. The well was fracked with liquid butane and mineral oil, as opposed to the common method that uses water. Waterless fracking is attractive as it removes the need for massive amounts of water to instigate the process. Fracking involves injecting fluids into cracks in the shale formations to cause them to release gas or oil. The waterless method is more economical and efficient. It also addresses environmental concerns.
The testing is in the early stages so it is still to be determined if the new process will be of any value to the company. One of the most attractive aspects of the waterless method is the way it addresses environmental concern. Fracking continues to be a hot-button topic in the US and if companies like Chesapeake Energy Corporation (NYSE:CHK) can find more earth-friendly methods it would reduce much of the pressure put on it by environmental groups. The company is notlooking at this as a quick solution though, and reminded investors that grading the new technology and determining its value could take some time.
The stock is on a serious downtrend and until it finds a solid base there isn’t much to be desired of it. Technically it is in a free-fall and without a substantial consolidation it remains a sell.