Thank God The Government Invented Fracking!
Not too long ago the New York Times published an article asking if the shale oil revolution had killed OPEC. It included assertions that it was funding by the US government that caused the fracking revolution, an assertion based on an older article from the notoriously pro-big government Breakthrough Institute. Not to miss out on a good fabrication, Barack Obama has often claimed responsibility for lower energy costs due to the explosion in US natural gas and oil production, a trend that has elevated America to the #1 slot in world oil production. In fact, part of the political calculation that allowed him to block the Keystone oil pipeline, which was to carry Canadian oil from tar-sands to American Gulf refineries, was that we do not need the energy. But is this true? Is government responsible for one of the few economic bright spots in the recent US economy?
Every US citizen is aware that gas prices have plummeted, dropping to around $2.00 per gallon at this writing. In fact, the world seems awash in oil, with OPEC nations seemingly unable to cut back on their production to bolster market prices. In “Behind Drop in Oil Prices, Washington’s Hand,” Eduardo Porter claims that the root cause of the decline in world energy prices is expanded US production – a direct result of the so called “shale-oil revolution.” Were OPEC nations so addicted to oil money that they could no longer maintain a monopoly on production, keeping prices high by limiting their production? Porter's answer is that what broke the cartel was the incredible increase in US production. What's more, he credits this “sudden” oil boom on government intervention that traces back to the early 1970s.
Facing fears of a broad energy shortage, in the shadow of an embargo by Arab oil producers, the Nixon administration and Congress laid the foundation of an industrial policy that over the span of four decades developed the technologies needed to unleash American shale oil and natural gas onto world markets.
In true liberal fashion, the author bemoans that “little has been said about the role the United States government played in developing new energy technologies.” While few doubt that the flood of oil and gas from America’s rejuvenated wells has had a dramatic impact on the world energy scene, and that this resurgence is mostly due to the use of new technologies – horizontal drilling and fracking – only the most liberal among us would credit the federal government with such prescience. To bolster his claims Porter cites a number of reports from the Breakthrough Institute, a progressive think tank that champions everything big government. Here is how they describe their own reports.
The history behind the shale gas boom remained relatively unknown until late 2011, when researchers at the Breakthrough Institute conducted an extensive investigation revealing the role that federal agencies like the Department of Energy and the National Laboratories played in supporting gas industry experimentation with shale fracking.
This is not surprising as they think all sorts of inventions and technology would not exist without the benign intervention and sponsorship of our government overlords. No less an intellectual giant than Al Franken, a one time mediocre comedian and now a mediocre Senator, has praised the institute's work. Notice that he confuses government support for renewables with support for enhancing oil production.
My colleagues often criticize government support for renewables. They believe it is only the marketplace that determines which technologies will become relevant. The history of fracking tells a very different story. The Breakthrough Institute has looked extensively into this.
So progressive preening aside, is this really true, are fracking and horizontal drilling results of secret government research aimed at breaking the back of the OPEC oil cartel? Let's take a brief look at the history of fracking and horizontal drilling and see if they really were invented after 1972 by an infusion of government cash.
By some estimates, up to 90% of today’s producing wells are stimulated by fracking. From Texas to North Dakota’s Bakkan Play a new generation of oil millionaires has arisen because of widespread application of fracking technology. Simply put, fracking is the process of breaking up rock containing oil or gas to allow the sought after fossil fuels to be extracted more efficiently. This practice has been around for a very long time. According to “Fracking: A Look Back,” by Michael MacRae, published on The American Society of Mechanical Engineers website:
The mechanical principles of fracking have not changed since the first brave shooter dropped an explosive charge down a well in the 1860s. Then as now, the task is to deliver a powerful force to a designated depth underground, rubblizing the hard rock formations around the well to stimulate the release oil or gas trapped within. Modern methods use high-pressure jets of water, chemicals, and sand to break up formations. Acting as a proppant the sand seeps into the resulting cracks and keeps them open. Oil and gas permeate the sand en route to the well casing.
The original fracking tools of choice were gunpowder and, later, nitroglycerin, delivered down a well within an “exploding torpedo” patented by a Civil War veteran, one Lt. Col. Edward A. Roberts in 1865-1866. The inventive Roberts patented his creation (not the government) and as reports of 1,200 percent production increases began to circulate, the petroleum industry eagerly adopted the “Roberts Torpedo.”
Robert's method was quite dangerous. Large amounts of water were pumped down the well to achieve what he called “superincumbent fluid tamping” to concentrate the power of the explosion as it sent cracks through the formations below. Oil rigs exploded with regularity. Today the oil industry is far beyond dropping gunpowder or nitroglycerin down bore holes. Nowadays they use hydraulic fracturing. Was this the great advance that the government promoted in the 1970s? Not according to MacRea. As he explains in his article:
According to a 2010 fracking history by the Society of Petroleum Engineers (SPE), the idea of non-explosive alternatives to nitroglycerin took root in the 1930s. Experiments through the next decade paved the way for the first industrial-scale commercial uses of the modern patented “Hydrafrac” process in1949, with Halliburton holding an exclusive license in the early years. SPE recounts that 332 wells were fracked in the first year alone, with up to 75 percent production increases recorded. By the mid-1950s, fracking hit a pace of about 3,000 wells a month.
So once again we see that a method of fracking was patented by industry without any government assistance. Since then, fracking has entered a golden age as oil and gas producers began to exploit the US’s massive shale formations in earnest around 2003. As MacCrae reports, “today companies are extracting more oil and gas from the Bakken than they can ship.”
But that's only half the story, what about horizontal drilling, the other piece of the American fossil fuel revolution? Perhaps it was the brainchild of some dedicated government scientist, a civil servant toiling away in anonymity in a hidden government laboratory. Turns out that directional/horizontal drilling has been with us for almost a century. Now, from a single location, various wells can be drilled at myriad angles, tapping reserves miles away and more than a mile below the surface. According to the RigZone website:
Directional drilling has been an integral part of the oil and gas industry since the 1920s. While the technology has improved over the years, the concept of directional drilling remains the same: drilling wells at multiple angles, not just vertically, to better reach and produce oil and gas reserves. Additionally, directional drilling allows for multiple wells from the same vertical well bore, minimizing the wells' environmental impact.
You get the picture, the fundamental ideas behind the shale oil revolution have been with us for a long time. They have been continuously improved over time because people who drill for Oil and gas have a great incentive – money! They were not just sitting around saying “If only we could get some government funding we could really improve how we extract oil from the ground.” Only idiots would think that. Or liberals. But I repeat myself.
This is not to say that some government money didn't help improve some of the techniques used today, but consider this – most drilling companies considered their fracking fluid, the liquid injected into the wells to break up the rock, to be proprietary industrial secrets. No amount of government funding would have tempted them to expose their formulas. The truth of the matter is that the US Federal government has severely restricted fracking on government controlled lands and has spared no expense investigating fracking operations looking for any sign of groundwater contamination or other grievous environmental transgressions.
These days government is involved in every facet of our lives, from workplace to bedroom. There are government funded studies investigating sex, do you think government deserves credit for inventing sex? Progressive government fanboys like the Breakthrough Institute live in a fantasy world where government is always the greatest good and individual or corporate initiative is suspect. Evidently they believe that there were never any worthwhile inventions in the history of mankind prior to big government. What fools.
Be safe, enjoy the interglacial and stay skeptical.