| August 9, 2012

Other energy producers learn from the fracking creativity of oil and gas companies

Free enterprise and the American entrepreneurial spirit built this country and made it great. Pioneers in the oil and natural gas industry – especially Oklahoman entrepreneurs – are clear examples of this. Their innovation has led to breakthrough technologies, such as hydraulic fracturing, that boost our economy. According to Chesapeake Energy:

“Hydraulic fracturing is a proven technological advancement which allows producers to safely recover natural gas and oil from deep shale formations. This technology has the potential to not only dramatically reduce our reliance on foreign fuel imports, but also to significantly reduce our national carbon dioxide (CO2) emissions and accelerate our transition to a carbon-light environment. Simply put, deep shale gas and oil formation development is critical to America's energy needs and economic renewal.”

It was free enterprise and innovation by the oil and natural gas industry that created hydraulic fracturing. That innovation has recently inspired energy exploration in other sectors. AltaRock Energy Inc. of Seattle, Washington has a plan in place to “frack” a volcano in order to produce geothermal energy. The process known as “hydro-shearing” is somewhat different than hydraulic fracturing, but basically follows the same concept. AltaRock will inject water treated with a special material at a high pressure into a well near the volcano. The high pressure causes fractures, and then the material creates a shield so the fractures can be opened even deeper. Cold water is pumped through these fractures and is heated by the hot volcanic rock. It then returns to the surface where the heat is extracted to generate electricity by spinning turbines in power plants.

Susan Petty of AltaRock says she is trying to do for geothermal what hydraulic fracturing has done for oil and gas:

“It’s just like shale gas. Everybody used to say, ‘We know there’s gas in shale, but we can’t get it out and there’s just no way to use it…. With geothermal, people were saying, ‘We know the rock is hot, but there’s just no way to get that heat out of there.’ In the early days with shale, people really felt frustrated, but a number of projects persisted.”

Petty also asserts there is no real risk of water contamination or earthquakes, and that the volcano has been dormant for 1,300 years. Petty is backed up by the U.S. Bureau of Land Management, which approved the project. In fact, the full force of the federal government appears to be behind AltaRock and geothermal energy, as evidenced by the $21.5 million it received in federal stimulus funds.

AltaRock should be applauded for its effort to produce commercial levels of geothermal energy through its innovative technologies inspired by the oil and natural gas industry. But why is the federal government once again picking winners and losers? Why has “hydro-shearing” received approval and stimulus funds, while projects in the oil and natural gas industry receive further scrutiny? (That’s not to say we want oil and gas companies to line up for subsidies; we’d rather the federal government let the free market work. In reality, the federal government can only pick losers. If a company depends upon government dollars to be profitable, it’s not a viable business proposition.)

Being a good steward of the environment is an important objective when it comes to energy exploration. Hydraulic fracturing has a proven track record – it has been used for more than 60 years, in more than 1 million wells -- and has not once had a scientifically substantiated claim of groundwater contamination. Nevertheless, hydraulic fracturing has recently fallen under the ever-watchful eye of the EPA. A preliminary report released by the EPA indicates that shallow hydraulic fracturing has contaminated some ground water in Wyoming. The validity of this report has been questioned by several groups who claim the EPA used lax testing methods when collecting samples.

Once again, environmental sustainability is a worthy goal, but it’s absurd to continually burden an industry with a proven track record, especially if using questionable testing procedures. While AltaRock appears to be a worthy project, it is just one example of something that has received federal funds and approval because it is championed by friends of the administration, while projects such as the Keystone Pipeline receive bureaucratic hurdles and red tape. That doesn’t sound like the all-of-the-above energy policy that the president promised. To become energy independent, we need to let our entrepreneurs go to work. The federal government should stay out of the way; let the free-market allocate funds to worthy energy projects, and stop picking losers.

By James Hall

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