By Tony Shan | February 4, 2013
Counties near Durham inch closer to fracking.
Since the North Carolina legislature approved hydraulic fracturing, more commonly known as fracking, in July 2012, state representatives have debated how to move the process forward.
This map depicts the natural gas deposits (brown) in the Durham area that may be harnessed through fracking in coming years. Continue reading
President Obama and Republican presidential candidate Mitt Romney hotly debated energy independence and drilling for oil in North America during the town hall style Presidential Debate at Hofstra University in Long Island, N.Y. Continue reading
AP | By KEVIN BEGOS
PITTSBURGH (AP) — It sounds like a free-market success story: a natural gas boom created by drilling company innovation, delivering a vast new source of cheap energy without the government subsidies that solar and wind power demand.
“The free market has worked its magic,” the Barnett Shale Energy Education Council, an industry group, claimed over the summer.
The boom happened “away from the greedy grasp of Washington,” the American Enterprise Institute, a think tank, wrote in an essay this year.
If bureaucrats “had known this was going on,” the essay went on, “surely Washington would have done something to slow it down, tax it more, or stop it altogether.”
But those who helped pioneer the technique known as hydraulic fracturing, or fracking, recall a different path. Over three decades, from the shale fields of Texas and Wyoming to the Marcellus in the Northeast, the federal government contributed more than $100 million in research to develop fracking, and billions more in tax breaks.
Now, those industry pioneers say their own effort shows that the government should back research into future sources of energy — for decades, if need be — to promote breakthroughs. For all its success now, many people in the oil and gas industry itself once thought shale gas was a waste of time.
“There’s no point in mincing words. Some people thought it was stupid,” said Dan Steward, a geologist who began working with the Texas natural gas firm Mitchell Energy in 1981. Steward estimated that in the early years, “probably 90 percent of the people” in the firm didn’t believe shale gas would be profitable.
“Did I know it was going to work? Hell no,” Steward added.
Shale is a rock formation thousands of feet underground. Among its largest U.S. deposits are the Marcellus Shale, under parts of Pennsylvania, New York, Ohio and West Virginia, and the Barnett Shale is in north Texas. Geologists knew shale contained gas, but for more than 100 years the industry focused on shallower reserves. With fracking, large volumes of water, along with sand and hazardous chemicals, are injected underground to break rock apart and free the gas.
In 1975, the Department of Energy began funding research into fracking and horizontal drilling, where wells go down and then sideways for thousands of feet. But it took more than 20 years to perfect the process.
Alex Crawley, a former Department of Energy employee, recalled that some early tests were spectacular — in a bad way.
A test of fracking explosives in Morgantown, W.Va., “blew the pipe out of the well about 600 feet high” in the 1970s, Crawley said. Luckily, no one was killed. He added that a 1975 test well in Wyoming “produced a lot of water.”
Steward recalled that Mitchell Energy didn’t even cover the cost of fracking on shale tests until the 36th well was drilled.
“There’s not a lot of companies that would stay with something this long. Most companies would have given up,” he said, crediting founder George Mitchell as a visionary who also got support from the government at key points.
“The government has to be involved, to some degree, with new technologies,” Steward said.
T.V. Program Special Hosts Prominent Washington Insiders to Debate Obama, Romney Energy Plans
Although both claim to favor an “all of the above” strategy for establishing energy policies and achieving energy independence, President Barack Obama and Republican challenger Mitt Romney have very different approaches, experts said during a special U.S. presidential campaign edition of Platts Energy Week, an all-energy news and talk show program.
Elgie Holstein, a senior energy adviser to the Obama campaign and former chief of staff at the U.S. Department of Energy, said the president’s policies have helped boost development of renewable energy, which he said is a crucial element in developing energy policy. He said Romney, the former governor of Massachusetts, does not support renewable energy.
“Governor Romney talks about energy independence, but he wants to take off the table the things we need to get there,” Holstein said. “President Obama has doubled our use of renewables in this country and we’re on the way to doubling the fuel efficiency of our cars and trucks by 2025. These are things that Governor Romney just doesn’t support.”
But Romney supporter Jeff Holmstead, head of the Environmental Strategies Group for the law firm Bracewell & Giuliani and a former assistant administrator at the U.S. Environmental Protection Agency (EPA), said Obama has stifled development of conventional energy sources so the government can help subsidize renewable projects instead.
“The number of permits that have been issued for any type of an energy project has trickled to almost nothing, so there is a difference between seeking jobs that can only be achieved through federal subsidies and actually getting the federal government out of the way and letting people develop the resources that are at our disposal today,” he said.
He said the “heavy hand” of government has made it too hard to get permits for conventional sources, and said the coal industry has been a particular target since Obama took office.
“[A] much more expensive energy is all he’s given us so far,” he said.
Holstein, however, countered that Obama’s policies have struck a balance between environmental and economic concerns.
“The president has committed over $5 billion … to clean coal,” he said. “It isn’t that the president opposes coal, it’s that we no longer have to make these choices between a dirty environment a healthy economy.”
Holstein said the low price of natural gas has been the biggest problem for coal.
“If coal is losing market share to natural gas … these are choices that industry is free to make under this administration,” he said.
He added that Obama deserves credit for increased natural gas production and a drop in oil imports, countering Republican complaints that he is blocking production.
“You can’t turn around and say that somehow or other the president is blocking these things when clearly it’s happening,” he said.
Holmstead said the energy industry, not Obama, should get the credit for any increases in production.
“It is completely disingenuous for the president to say, as he did, ‘We cut oil imports.‘ The president hasn’t done anything,” he said. “It’s like the rooster taking credit for the sun coming up.”
Holmstead said Romney would spur American oil and gas production by giving more power to the states, but not at the expense of environmental concerns.
“There are much better ways of achieving our environmental objectives, and that’s what the Romney campaign has said they want to do,” he said.
Holmstead said environmentalists have too much sway in determining energy policy under Obama.
“There has always been … robust debate within administrations to try and balance energy concerns and environmental concerns,” he said. “Under this administration, our energy policy has been completely turned over to EPA.”
Holstein said he was concerned about the direction Romney would take energy policy.
Holstein said the Obama administration is not interested in regulating hydraulic fracturing as long as the states are doing their job.
“The states have really taken the lead on this and I think they’re doing a good job,” he said.
Holmstead said that while the Romney campaign agreed with that approach, he doubted whether the Obama administration would opt not to regulate fracking since there are already six federal agencies looking at the issue.
“There does need to be oversight, I think the public needs to understand this can be done safely, but we don’t need more federal government involvement,” he said.
By Saabira Chaudhuri Unit Corp. (UNT) has agreed to acquire oil and natural gas assets from Noble Energy Inc. (NBL) for $617.1 million in cash, significantly increasing its acreage and allowing it to grow its production in the oil and natural gas liquids-rich Anadarko Basin Continue reading
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