January 24, 2012
You Didn’t Frack That
How Energy Innovation Happens
Governor Mitt Romney and many conservatives view oil and gas development as a quintessentially free enterprise activity. Government only gets in the way; it deserves no credit for making it happen. But as a geologist who benefitted from government funding to study shale gas more than 30 years ago, Terry Engelder writes, this view is badly mistaken.
Governor Mitt Romney doubled-down on his criticisms of President Barack Obama’s energy policies in last night’s town hall debate, saying the president has stood in the way of the private sector’s full exploitation of America’s fossil fuel resources.
“Look, I want to make sure we use our oil, our coal, our gas, our nuclear, our renewables,” Romney said in a testy exchange. “But what we don't need is to have the president keeping us from taking advantage of oil, coal and gas. This has not been Mr. Oil or Mr. Gas or Mr. Coal.”
The Republican presidential hopeful and his conservative allies have repeatedly attacked Obama for investing in green energy and backing strong environmental regulations for oil, gas, and coal – all while taking credit for the growth of domestic fossil fuel production over the past four years.
At an energy policy debate last July, Linda Gillespie Stuntz, a Romney energy adviser and Shell board member who served as deputy energy secretary under President George H. W. Bush, said, "Romney thinks these kinds of technology-specific incentives are a bad idea" referring to Obama's solar and wind investments. "The U.S. should not be playing venture capitalist with taxpayer dollars conscripted from citizens."
A better model of energy innovation, she added, was the recent revolution in technologies that allowed for the extraction of natural gas from shale. "The more the government steps back… we'll see real innovation, like we saw when it was American wildcatters who really developed the hydraulic fracturing technology that's made this energy bonanza a reality and it didn't have anything to do with federal government."
The accusation that President Obama didn't cause the natural gas revolution is reminiscent of Republican criticisms of Obama for saying, "If you’ve got a business -- you didn’t build that." The quote was taken out of context by the Romney campaign —Obama was making the point that businesses require "roads and bridges," education and technology innovation — but it struck a chord among conservatives and Republicans who view free enterprise and market forces, not government spending, as the key to America's wealth.
In his state of the union address, when Obama mentioned shale gas, he didn’t take credit for technological revolution but rather pointed to it as a defense of his green energy investments. "It was public research dollars, over the course of thirty years," said the President, "that helped develop the technologies to extract all this natural gas out of shale rock -- reminding us that government support is critical in helping businesses get new energy ideas off the ground."
Not long after that, Texas oil and gas entrepreneur T. Boone Pickens rejected the President's claims. "I witnessed my first frack job in 1953," Pickens told a TED conference. "I hear the President say the DOE [the Department of Energy] invented it 30 years ago and I don't know what he's talking about." Like most conservatives, Pickens views oil and gas development as a quintessentially free enterprise activity. Government only gets in the way of it, through regulations and restrictions for drilling on public land; it deserves no credit for making it happen.
But as a geologist who benefitted from government funding to study shale gas more than 30 years ago, I can attest personally that this view is mistaken. It was clear from the beginning that the government was a strong proponent for shale gas development. Responding to gas shortages, presidents Ford and Carter authorized the Department of Energy to start the Eastern Gas Shales Project (EGSP) in the Appalachian basin, which funded many research projects including mine and initiated dozens of projects in collaboration with industry proving that shale held large amounts of gas. One of the most important EGSP products was the first horizontal well drilled in gas shale. My research first benefited industry when Shell asked my advice on Michigan gas shale in the 1980s.
And in the 1990s, the federal government supported the work of the wildcatters in Texas who were the first to extract large volumes of gas from shale. Contrary to the Romney campaign's claim, those wildcatters are quick to acknowledge that the shale gas revolution depended on critical help from the federal government through the EGSP. "They did a hell of a lot of work, and I can't give them enough credit for that," Dan Steward, a geologist for Mitchell Energy, told the Breakthrough Institute. "You cannot diminish DOE's involvement."
Federal support for Mitchell Energy’s early work in Texas came in two forms. The first was a $10 billion, 20-year unconventional gas tax credit — almost identical in form to the tax credit for wind production that Romney opposes. The second was a kind of government venture capital for Mitchell Energy's first horizontal well, and development of high-tech, 3-D underground mapping technologies, both of which proved to be key components to making shale fracking cost-effective.
In short, those shale gas pioneers who benefitted from the ESGP would agree with President Obama who said, "If you were successful, somebody along the line gave you some help."
Today, Romney is criticizing President Obama for not opening federal lands up fast enough to shale gas exploration. In truth, the shale revolution anchored by the EGSP has been so successful that there is overproduction, resulting in a glut of natural gas.
Eventually, though, supplies will decline, and we'll need new energy sources, whether solar or wind or nuclear. Given how long energy revolutions take — efforts to tap large volumes of gas from shale benefitted from more than 30 years of focused federal help — we'll need to sustain government support beyond a few years of stimulus funding. We'll need to give these alternative energy technologies at least as much time as we gave to shale production, so that solar, wind, and other energy entrepreneurs can, like Mitchell Energy, stay in the game and keep innovating until they achieve their breakthroughs.
Terry Engelder is a professor of geology at Penn State University.