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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

Obama mentions oil, Keystone in State of the Union

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President Obama touched on several aspects of the energy debate during Tuesday night’s State of the Union Address, including:

Imported oil:

More of our kids are graduating than ever before; more of our people are insured than ever before; we are as free from the grip of foreign oil as we’ve been in almost 30 years.

Ramped-up U.S. oil production:

At this moment — with a growing economy, shrinking deficits, bustling industry, and booming energy production — we have risen from recession freer to write our own future than any other nation on Earth.

Consumers savings from cheap gasoline:

We believed we could reduce our dependence on foreign oil and protect our planet. And today, America is number one in oil and gas. America is number one in wind power. Every three weeks, we bring online as much solar power as we did in all of 2008. And thanks to lower gas prices and higher fuel standards, the typical family this year should save $750 at the pump.

The debate over the TransCanada Keystone XL pipeline:

21st century businesses need 21st century infrastructure — modern ports, stronger bridges, faster trains and the fastest internet. Democrats and Republicans used to agree on this. So let’s set our sights higher than a single oil pipeline. Let’s pass a bipartisan infrastructure plan that could create more than thirty times as many jobs per year, and make this country stronger for decades to come.

And something else about solar power:

I want Americans to win the race for the kinds of discoveries that unleash new jobs — converting sunlight into liquid fuel …

As The New Republic noted, it was the first time in his six SOTU Addresses that Obama mentioned Keystone:

It’s not surprising he’d weigh in now, given how Keystone has dominated the first few weeks of debate in the new Republican Congress. Lately, Obama has sounded skeptical of the pipeline’s economic benefits, but we still don’t have many clues as to how he will decide Keystone’s final fate in coming months.

(Photo: WhiteHouse.gov)

Arctic Leaf

Can alternative vehicles still play a role?

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A couple of Google engineers shocked the world last week by announcing that after working on the RE<C (Renewable Energy Cheaper Than Coal) Initiative for four years, they had concluded that renewable energy is never going to solve our carbon emissions problem.

In a widely read article in IEEE Spectrum, the prestigious journal published by the Institute of Electrical and Electronics Engineers, Ross Koningstein and David Fork announced that after working at improving renewables on the Google project, they had decided that it wasn’t worth pursuing. Google actually closed down RE<C in 2011, but the authors are just getting around to explaining why.

At the start of RE<C, we had shared the attitude of many stalwart environmentalists: We felt that with steady improvements to today’s renewable energy technologies, our society could stave off catastrophic climate change. We now know that to be a false hope.

Google’s abandonment of renewable energy raises the immediate question: What about the effort to reduce carbon emissions from vehicles? And here the news is much better.

Although everyone concentrates on coal and power plants, they regularly forget that half our carbon emissions come from vehicles. It’s typical that Google’s RE<C effort didn’t address what to do about our cars. It’s too complicated to try to control the emissions from 200 million point sources.

But what’s never discussed is the fuel that goes into these vehicles. It’s well known that ethanol and methanol cut carbon emissions compared with gasoline. That’s a good chunk of the battle right there. But it doesn’t even take into account the possibility of making both fuels from non-fossil-fuel resources, so that both would be all pluses on our carbon budget.

Ethanol, as currently produced in this country, is synthesized entirely from corn, so there is no fossil-fuel element involved. Ethanol currently takes up 10 percent of all the gasoline sold is this country, but it is currently marketed at 85 percent ethanol in the Midwest, with only a 15 percent element to guarantee starting on cold days.

Methanol is generally synthesized from natural gas, so there is still a fossil-fuel element there, but there is always the possibility of making methanol from non-fossil sources. Municipal waste could easily be converted directly to methanol.

And of course there is always the possibility of synthesizing ethanol and methanol using renewable energy. People always talk about storing wind or solar energy as hydrogen, but methanol would be easier to store than hydrogen since it is a liquid to begin with and not subject to leakage and escape. Methanol can be easily stored in our current infrastructure.

The Chinese are currently building six methanol plants in Texas and Louisiana to take advantage of all the natural gas being produced there. All this methanol is slated to be shipped by tankers back to China, where it will be used to boost China’s own methanol industry — and to run some of the 1 million methanol cars the Chinese have on the road.

Yes, the Chinese are far ahead of us when it comes to using methanol a substitute for oil. But there’s a scenario that will introduce methanol in the American auto industry. With all this methanol on hand in Texas and Louisiana, someone will install a pump on one of the premises for dispensing methanol. Cars at the site will use it. Then someone will say, “Hey, why don’t I use this in my car at home? It’s cheaper.” Before you know it, there will be a contingency to have the EPA decide that methanol can be used in automobile engines the same as ethanol is currently used. And in the end, we will have large quantities of methanol substituting for foreign oil.

Is it a dream? No more unrealistic than the dreams that kept the Google scientists occupied for four years.