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Arctic Leaf

Fracking offers hope

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I’ve just finished The Frackers, the excellent history of how the United States became the world’s leading developer of fossil fuels, by former Wall Street Journal reporter Gregory Zuckerman.

There are three lessons that can be taken away from this history, all of which relate to the development of alternative sources of energy:

  • The government had very little to do with the development of fracking. It was all done by wildcatters who operated far outside major institutions.
  • The founders of these methods didn’t necessarily get permanently rich. All have done well initially but have been undone by their very success, producing a superabundance of gas and oil that has driven down prices to the point where producers are overextended.
  • The maverick wildcatters who have opened up our gas and oil resources are not necessarily opposed to alternative sources of energy. In fact, they have often become the biggest promoters of wind, solar and alternative fuels for our transport sector.

Let’s examine those myths one by one:

The government should get credit for the breakthroughs. Proponents of big government often try to promote the idea that the fracking revolution never would have occurred without the help of the government. They even argue that government was responsible for the fracking initiative. Three years ago, Ted Norhaus and Michael Shellenberger of the Breakthrough Institute published a piece in The Washington Post in which they practically argued that fracking had been invented in the laboratories of the Department of Energy. George Mitchell, who spent 40 years developing fracking, had simply borrowed a few ideas that the DOE had designed.

Read the opening chapter on Mitchell in The Frackers, and you’ll hardly find one reference to the Department of Energy or government help. At one point the DOE contributed a few million dollars to an experiment that Mitchell had designed, but that was it. The rest of the story tells of Mitchell’s fascination with trying to suck oil out of shale rock, and how he nearly bankrupted his moderately successful oil company in the effort. He had no luck trying to convince the major oil companies that shale could be accessed. At one point, Chevron came very close to fracking the Barnett Shale, where Mitchell had his first breakthrough, but the company gave up on the effort. Harold Hamm experienced the same frustrations in the Bakken, where he alone believed there were vast reserves of oil but couldn’t get anyone to support him, until he finally made a breakthrough. The government had nothing to do with it.

Fracking wildcatters always get rich. The great irony for many of these pioneers is that they are often undone by their own success. Aubrey McClendon built Chesapeake Gas into the nation’s second-largest producer of natural gas but was forced to give up his company because the success of his fracking had driven the price of gas so low that he was overextended. The same thing happened to Tom Ward, an early associate of McClendon’s who had built his own company, SandRidge, based on fracking. Ward was forced out of his ownership by the board of directors. Harold Hamm has been having the same trouble in The Bakken since the superabundance of oil has forced the price down. Developing a new source of energy doesn’t necessarily mean you’re going to be permanently rich.

The developers of new ways to access fossil fuels are opposed to other alternatives. Because they have been so successful in reviving production of oil and gas, the assumption has been that the Frackers are wedded to fossil fuels and are undercutting alternatives. This is not true. The primary motive of all these innovators has been to make America more energy-independent and reduce our reliance on foreign oil. All of them see the development of fossil fuels as only a temporary step, and acknowledge that we must ultimately find some other sources of energy. T. Boone Pickens, the dean of oil magnates, put forth a plan that would try to get the electrical sector to rely on wind so that natural gas could be moved over to the transport sector to replace oil. His Clean Energy Fuels Corporation had some success in building a “natural gas highway” that substitutes compressed natural gas for diesel fuel in long-haul tractor trailers. Both Mitchell and Hamm have been exploring alternative energy, and they’re funding efforts to try to substitute renewables for fossil fuels, both domestic and imported.

As Zuckerman concludes at the end of The Frackers:

The great leap forward should have involved alternative energy, not oil and gas. The U.S. government allocated over $150 billion to green initiatives between 2009 and 2014. … There’s little to show for the investments, however. … Instead a group of frackers, relying on market cues rather than government direction, achieved dramatic advances by focusing on fossil fuels, of all things. It’s a stark reminder that breakthroughs in the business world usually are achieved through incremental advances, often in the face of deep skepticism, rather than government inspired eureka moments.

It’s a lesson worth keeping in mind as we pursue alternative fuels to substitute for foreign oil.

Fuel Freedom Staff

New York state bans fracking, citing health concerns

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New York state has banned hydraulic fracturing, the drilling technique known as fracking, citing risks to the state’s air and water, as well as other potential harmful effects on people’s health.

The decision was announced by the administration of Gov. Andrew Cuomo, who had sent mixed signals previously about his intentions.

The New York Times reported:

The question of whether to allow fracking has been one of the most divisive public policy debates in New York in years, pitting environmentalists against others who saw it as a critical way to bring jobs to economically stagnant portions of upstate.

Mr. Cuomo, a Democrat who has prided himself on taking swift and decisive action on other contentious issues like gun control, took the opposite approach on fracking. He repeatedly put off making a decision on how to proceed, most recently citing a continuing — and seemingly never-ending — study by state health officials.

On Wednesday, six weeks after Mr. Cuomo won re-election to a second term, the long-awaited health study finally materialized.

According to ThinkProgress:

… state Department of Environmental Conservation commissioner Joseph Marten said he would issue a “legally binding findings statement” seeking prohibition of the controversial process.

Fracking involves injecting water and chemicals into shale rock to free trapped oil and natural gas. The practice has been in limbo in the state for the past five years, but in June a state appeals court ruled in favor of local governments seeking to ban fracking on their own. In light of that decision, along with proposed bans on fracking near aquifers and in state parks, according to ThinkProgress:

… Marten said that 7.5 million acres, or 63 percent of Marcellus shale [a formation that lies beneath large sections of New York, Pennsylvania and other states], would already be off limits to fracking. Activists say that 170 towns and cities in New York have already passed fracking bans or moratoria.

The acting state health commissioner, Dr. Howard A. Zucker, said the state’s investigation had found “significant public health risks” associated with fracking. The NYT goes on:

Holding up scientific studies to animate his arguments, Dr. Zucker listed concerns about water contamination and air pollution, and said there was insufficient scientific evidence to affirm the long-term safety of fracking.

Dr. Zucker said his review boiled down to a simple question: Would he want to live in a community that allowed fracking?

He said the answer was no.

“We cannot afford to make a mistake,” he said. “The potential risks are too great. In fact, they are not even fully known.”