And We All Frack On

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Several recent stories show that the amazing technology of fracking continues to transform the energy world.

First is the news out of Russia that it has begun drilling a well that aims to tap the huge Bazhenov shale formation. The Bazhenov field, in Siberia, may be the biggest shale formation in the world.

Until now, Russia hasn’t bothered with fracking, even though it has the world’s largest reserves of shale oil (and the ninth largest of shale gas), because it has immense reserves of conventional fossil fuels. But lately its conventional production has begun to stagnate.

So Russia is allowing Royal Dutch Shell and Exxon Mobil to partner with its state-owned Gazprom Neft to start the process of developing fracking operations. How quickly it can mimic the American success in this area is hard to tell — certainly, other countries with large shale reserves (such as China, Poland, and the UK) have yet to get any production going, because the technology is tricky. What Russia has going for it is that — unlike the US — Russia has a leader who actually wants to enhance fossil fuel production, rather than destroy it.

Even more fascinating is the report out of Brussels that the European Commission now wants to cut back on the “climate protection” schemes it has pushed in the past and — wait for it — embrace fracking!

Yes, apparently the Commission’s plan is to step back from its aggressively Green agenda, called “20-20-20,” set back in 2007. The plan then was to achieve a 20% drop in greenhouse gas emissions, raise the EU’s output of renewable energy to 20% of all energy consumed, and achieve a 20% increase in the EU’s energy efficiency — all by 2020. The plan now is to switch to pursuing these green energy goals only on a voluntary basis.

As regards fracking, the Commission now intends to establish only minimal rules, instead of the very strict ones it was considering.

The interesting question is whether Germany’s head Angela Merkel will continue to push for an increase in the use of renewables. She has set the goal for generation of renewable energy in Germany at 60% by 2036. Considering that after Fukushima, Merkel ordered that the German nuclear power industry be closed by 2022, and that half the plants are already shuttered, achieving the renewable goals will drive the cost of German power through the roof.

But she is running into flak from German industry. An article late last year noted that the rising energy prices in Germany and dropping prices elsewhere were beginning to put pressure on German manufacturers to start offshoring much of their operations.

I mean, this is just fascinating: when America is finally free from our current Green president, and we once again encourage domestic oil and gas production, we may find that we get back some of the heavy industry we lost to the Germans decades ago. Hell, maybe their automakers will completely relocate here.

Of course if they do, they will need new names. Instead of Bayerische Motoren Werke, might I suggest Tennessee Motor Works? And Mercedes Benz — well, “Mercedes” is so dated. We might try “Miley” (after our famous twerker-girl pop star). Perhaps “Miley Bends” would work . . .

A recent Wall Street Journal piece noted that many EU companies are moving production to the US, because of our relatively inexpensive energy — and, one might add, because at least in the half of all American states that have right-to-work laws, our labor rules are more realistic.

Finally there is a story about a start-up company called Siluria, which may possibly have solved the technological hurdles in the way of turning abundant natural gas into cheap gasoline — gasoline at about half the price of the current product distilled from petroleum.

Siluria is trying to do what so far has been impossible. While gas-to-liquids plants do exist (plants that convert natural gas to liquid fuels, including gasoline), they are very costly. It takes a lot of energy to do the conversion. For years, companies have searched for a catalyst that would make the conversion more cost-efficient, but so far, no catalyst has succeeded. Siluria has a new approach: it has built an automated system for making and trying out new catalysts. The system has already sifted through 50,000 possibilities, and the company feels that the performance of the catalyst currently in use at its experimental conversion plant justifies opening two larger-scale plants to prove to investors that it has a commercially viable approach.

A number of other companies are trying to find a commercially attractive way to convert natural gas to liquid fuels — none of which, please note, receiving the lavish funding accorded Obama cronies’ multitudinous green energy companies (most of which have failed).

In fact, the whole fracking revolution was entirely the creation of a handful of brilliant entrepreneurs in the private economy, operating in the face of the administration, not with its help. Over the decades, the role of the federal government in confronting our energy dependence on the Mideast has been one of trying to pick winning technologies, and failing every time. Not just failing, but failing at a cost to taxpayers of billions of dollars, all the while impeding private enterprise.

It is time just to end the idiotic Federal Energy Department, and let the free market solve the problem.




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Comments

Thomas L. Knapp

Last numbers I saw were for 2012.

As of that time, US domestic oil production had increased in each successive year of the Obama administration, and there were about five times as many offshore rigs in operation in 2012 as there were when he took office.

Maybe he's one of them there "stealth Greens?"

Gary Jason

Thanks for your comment, Mr. Knapp. But I don't buy the implied point that Obama has much to take credit for in the Renaissance of American fossil fuel production.

To use the 2012 figures, Obama's administration more than cut in half the number of NEW permits and leases for offshore oil and gas drilling. Compare: under Bush from 2006-2008, there were 3,317 new leases issued and 1,316 permits issued for offshore drilling; under Obama from 2009-2011, there were only 1,304 leases and 515 permits issued for offshore drilling. In the same periods, under Bush there were 9,661 new leases and 20,479 permits issued, under Obama, there were only 5,568 leases and 12,821 permits issued for onshore drilling. Yes, early on in his administration, Obama reated to the Gulf oil spill, but he has been slow to start issuing new permits, and he extended his actions to ONSHORE drilling on public lands, which have not seen any oil spills.

The increase in rigs reflects the prior increase in leases, and the expansion of existing leases.

In Liberty, I certainly criticized Bush for his pushing of silly green energy initiatives, but under Obama, this situation became far, far worse.

Sorry, but I stick to my point: if we see a pro-energy president in 2016--Republican, Democratic, Libertarian, or Boston Tea Party--we can finally witness America's energy independence. Because if we are this doing well in the FACE of an administration devoted to green energy, imagine what we can do under onethat welcomes new sources of fossil fuels.

Fred Mora

When the press deign noticing that high energy costs are hampering the economy, they tend to react by dissing manufacturing, this uncool relic of a pre-web age. In the ignorant minds of many journalists, only old, smoky factories consume lots of power.

But costly electricity also hampers IT companies, especially the ones that operates data centers -- which is many of them these days. The online services (email, web, etc) that are so appreciated by our elites are consuming a lot of power. Garden-variety datacenters require tens of megawatts (if this was published in the Moneyed Media, I'd insert a condescending comparison with average household consumption here). The power bill is now often the top expense in datacenter operations, above salaries -- and IT geeks don't come cheap.

If our current green masochism keeps increasing the price of power, our prized datacenters will start emigrating to saner countries, taking a sizable chunk of our competitivity with them.

Gary Jason

Thanks for your comment, Fred.

Yes, indeed, high energy costs hurt our high-tech/IT sectors as well. But my focus was on blue-collar type manufacturing, for the reason that for too many years, too many commentators have repeated the mantra, "heavy manufacturing jobs have gone, and they will never return."

Nonsense. Those jobs can and will return, if we reduce needless regulation, keep passing right-to-work laws that control the unions that kill industries, and especially lower dramatically the energy costs of production. If we get a reasonably pro-energy administration, this will happen.

Scott Robinson

Dear Mr. Jason,

Nice observation of the fact that everything getting pushed by the government and media doesn't seem to work. This like the desire to reduce our air pollution with all of the new fuels. I remember when compressed natural gas (CNG) started fueling our busses in about 1997. Mentioning the issues of getting natural gas a liquid in your article was good. Maybe the innefficiency of getting the CNG is the reason why this hasn't taken off as an alternate fuel.

Good Article,
Scott

Gary Jason

Thanks for reading my piece, Scott.

I think that natural gas will continue to win market share, whether or not someone can succeed in making cheap gasoline out of it. For while CNG (and LNG) both have their costs, both are already expanding in our economy. As I have noted elsewhere in these pages, CNG/LNG is being adoped in both truck and locomotive fleets.

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