• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • The Fracking Truth on Government's Role in Natural Gas Production

    President Obama has been on a kick to promote natural gas production. He said in his State of the Union address, “And by the way, it was public research dollars, over the course of 30 years, 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.”

    There are two very big problems with this statement. First, it makes it sound as if the government invented the technology, commercialized it, and handed it over to private companies. Second, it assumes that if the government hadn’t invested in natural gas technologies, we wouldn’t be where we are today in terms of natural gas production. Both are far from the truth.

    Well before the government invested in natural gas technologies, it was the private sector that established and developed hydraulic fracturing (or “fracking”), a process by which producers inject a fluid, composed of 99 percent water, and sand into wells to free oil and gas trapped in rock formations. Its roots go as far back as the 1860s, and in the 1940s, Stanolind Oil and Gas Corporation began studying and testing the method, with a patent issued in 1949 and a license granted to Halliburton to frack on two commercial wells. In an overview of the history of fracking, Carl T. Montgomery and Michael B. Smith of NSI Technologies write:

    In the first year, 332 wells were treated, with an average production increase of 75%. Applications of the fracturing process grew rapidly and increased the supply of oil in the United States far beyond anything anticipated. Treatments reached more than 3,000 wells a month for stretches during the mid-1950s. The first one-half million-pound fracturing job in the free world was performed in October 1968, by Pan American Petroleum Corporation (later Amoco, now BP) in Stephens County, Oklahoma.

    Government involvement came years later. The Department of Energy partially funded data accumulation, microseismic mapping, the first horizontal well, and tax credits to extract unconventional gas. But in the driver’s seat was George Mitchell, who invested millions of his own money in research and development for fracking and horizontal drilling. His company’s geologist, Jim Henry, first identified Barnett shale as a possibility for more energy. Mitchell spent between $7 million and $8 million of his own money trying to successfully extract shale gas and eventually made it economically viable. He is behind the shale gas revolution, not the government.

    Saying that without government spending we would not have the natural gas production we have today is like saying without the grocery store down the street from your house, you would starve. You find another way to get food. If shale gas production is economical, private companies would have found a way to make it work. The Houston Chronicle reports that “Dan Steward, a former geologist and vice president with Mitchell Energy who wrote a history of the company’s development of the Barnett shale, said industry eventually would have figured out how to make shale gas profitable. ‘But George Mitchell is responsible for making it happen right now, when we need it,’ Steward said.”

    The government’s involvement merely supplants industry dollars with taxpayer dollars. It’s not a matter of congratulating government on dollars well spent if they aid a commercial success or blasting them for wasting taxpayer dollars when a government-propped industry files for bankruptcy. It’s that good economic ideas will find their way to reach the market while bad ones will fall by the wayside. Either way, the use of taxpayer dollars does not make sense.

    If venture capitalists and businesses are overlooking investment opportunities in energy technologies, they are overlooking them for a reason. The United States enjoys robust domestic energy resources (nuclear, natural gas, oil, coal, hydroelectric, wind, and solar). The energy market can be diverse and competitive without government interference. The opportunity to profit off of the domestic and global demand for electricity and transportation fuels is sufficient incentive for the market to invest in these technologies.

    No evidence exists to suggest that the Department of Energy is better equipped to make investment decisions or commercialize technologies when the private sector chose not to invest, and no evidence exists to suggest they are a driver behind commercializing an energy technology.

    President Obama says government support is critical in driving new energy technologies forward. It’s not. It’s wasteful.

    Posted in Featured [slideshow_deploy]

    8 Responses to The Fracking Truth on Government's Role in Natural Gas Production

    1. The solution for fraccing pollution is waterless fraccing; Gasfrac has done over a 1000 fracs with gelled propane; you don’t need any water; you don’t produce any waste fluids (no need for injection wells); no need to flare (no CO2 emissions); truck traffic is cut to a trickle from 900+ trips per well for water fraccing to 30 with propane fracs; and on top of that the process increases oil and gas production; it is a win for the industry, a win for the community and a win for the environment.

    2. Lloyd Scallan says:

      When will the people of this country realize most every statement Obama makes is not "far from the truth".
      Obama lies and distorts! When are conservative publications going to stop the soft ball comments and
      use the words that best describe what and who is Obama.

      • Ken Marx says:

        Conservative publications are trying to be a class act. They'll end up being a class act right up until American Liberty is killed off completely. Lloyd, you are absolutely correct.

    3. Slick says:

      The POTHUS speaks and all I hear is "Blah, blah,blah!" The sound of that "slicker than snake oil" voice makes me sick to my stomach because after three years of the continued out-right lies, half truths, and slanting of the facts, we all KNOW he wouldn't know the truth if it bit him on his posterior!!!

      Listen I have NO DOUBT that the next thing is that the POTHUS will declare "fracking" to be the wave of green energy of the future!!! Look for the American eagle stamped on the product with the words, "In Obama We Trust".

      • Irene (guest) says:

        I see you identify yoursef as "Slick". Are you? ;)
        In your first paragraph, the symptoms you have suggest the need for a check by an audiologist and a dose of Petto Bismol. cite examples, please, of " continued out-right lies, half truths, and slanting of the facts, "…
        Do you know how to pray? Many know The Lord's Prayer. Try it. You'll like it.

    4. Slick says:

      The POTHUS speaks and all I hear is "Blah, blah,blah!" The sound of that "slicker than snake oil" voice makes me sick to my stomach because after three years of the continued out-right lies, half truths, and slanting of the facts, we all KNOW he wouldn't know the truth if it bit him on his posterior!!!

    5. Nick, thanks for clearing this up. In his State of the Union address, President Obama also left some wrong impressions about increased U.S. oil and natural gas production on his watch. The reality is that recent production increases have come in spite of his administration's policies, not because of them. A recent study for API found that new Bureau of Land Management oil and gas leases were down 44% on federal western lands in 2009/2010 compared with 2007/2008. Permits and wells drilled were both down 39%. The uptick in drilling is from production on non-federal, private lands.

      Mark, EnergyTomorrow.org

    6. Pingback: Dee

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.