Jul 17, 2012 10:55 PM GMT
Workers in America’s oil patch pay little heed to the weather. They know for a certainty that down in the South Texas Eagle Ford Shale fields the metal rigs will turn red hot in triple digit summer temperatures, while up north in the Bakken Shale, winter will come with a fury to North Dakota. But these days they do have an eye on the weather forecast 8,500 miles away on the other side of the world in Rajasthan, India, home to a little green bean that is proving vital to the oil and gas industry in the U.S.
Once utilized as cow fodder and for poor man’s curry, the guar bean is now a key element in the chemical cocktail used to frack wells, the technology that has prompted the oil and gas boom sweeping across North America, and is set to spur a worldwide boost in oil and gas recovery. India produces some 80% of the world’s guar gum, a hydrocolloid — a substance that forms a gel when mixed with water. The powdered gum is produced from the endosperm of the guar or cluster bean, much of it grown in one of the driest and poorest regions of the subcontinent, the northern state of Rajasthan. Neighboring areas of Pakistan also produce a significant export harvest. Demand for guar in the energy industry is running up prices, driving up costs and cutting into profits for the exploration companies, but making Indian subsistence farmers a little less poor in the process.
Guar gum is used in a wide variety of industries including textiles, paper, pharmaceuticals, cosmetics, even as a fire retardant. For ordinary consumers, it is the ingredient that makes ice cream silky, salad dressings thick and creamy, and helps maintain the flavor of a beverage in the mouth after that initial gulp. But while a gallon of ice cream calls for just a smidgen of guar gum, to frack a well in a shale formation may take 20,000 pounds of guar beans. At a recent New York capital markets conference, one of the major exploration companies reported using 1,700 tons a month resulting in a first quarter cost of some $40 million. Given that level of demand, prices for guar have jumped from $4 a kilo (about 2.2 pounds) to $30 a kilo in the last 18 months.
The rising price of the gummy gold was blamed by Halliburton late last month for a decrease in profits so far this year. “The price of guar gum has inflated more rapidly than previously expected due to concerns over the potential for shortages for the commodity later in 2012. As such, the costs have impacted the company’s second quarter North America margins more than anticipated,” the company asserted in its earnings statement.
In order to extract gas trapped some 6,000 to 10,000 feet beneath the surface, exploration companies use hydraulic fracturing, dubbed fracking, according to NaturalGas.org, an industry educational website, to “make hard shale rock more porous.” Large amounts of water, typically three to five million gallons, are mixed with small amounts of chemical additives, injected deep into the earth, forcing cracks in the rocks, allowing the gas to escape into the wellbore.
Guar gum has several important qualities key to that process, according to Donald Seisun, head of IMR International, a San Diego-based hydrocolloid consulting company. “It’s a very good suspending agent and it is easy to break,” he says, meaning that when the liquids are withdrawn from the wellbore, the gum helps separate the chemicals from the water. One side benefit, Seisun says, is it’s usefulness in the debate with environmentalists over fracking — “The companies can say: ‘We are using stuff they put in ice cream!’