By Nicolas Loris
President Obama has been on a kick to promote natural-gas production. Unfortunately, he seems to think the key to doing this is more government involvement.
"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," he said in his State of the Union address last month, "reminding us that government support is critical in helping businesses get new energy ideas off the ground."
There are two 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 gas production. Both are far from the truth.
Well before the government invested in natural-gas technologies, the private sector established and developed hydraulic fracturing, or "fracking," a process that injects fluid (mostly water) and sand into wells to free oil and gas trapped in rock formations. The technology's roots go as far back as the 1860s. In the 1940s, Stanolind Oil and Gas Corp. began studying and testing the method. In 1949, a patent was issued and Halliburton was granted a license to use the technology.
Government involvement came years later. The U.S. Department of Energy partly funded data accumulation, microseismic mapping, the first horizontal well, and tax credits for unconventional gas extraction. But who was in the driver's seat? George Mitchell, who invested millions of his own money in research and development for fracking and horizontal drilling.
The geologist for Mitchell's company, Jim Henry, first identified Texas' Barnett Shale as a possible resource. Mitchell spent between $7 million and $8 million of his own money trying to extract shale gas and eventually made it economically viable. He is behind the shale gas revolution - not the government.
"Dan Steward, a former geologist and vice president with Mitchell Energy ... said industry eventually would have figured out how to make shale gas profitable," the Houston Chronicle reported. The paper went on to quote Steward as saying, "But George Mitchell is responsible for making it happen right now, when we need it."
