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What was the federal role in starting the shale-gas revolution?

A Wall Street Journal op-ed inadvertently implies the question—along with wider energy-sector implications.

It’s not news that Wall Street Journal opinion pieces regularly criticize federal efforts to advance energy technologies and their commercialization. But what about a WSJ op-ed that presents a triumphal overview of America’s shale-gas revolution, yet omits any mention of underlying federal R&D contributions and other federal involvement?

Harvard professor Joseph S. Nye Jr has served in government and as dean of the Kennedy School. His 9 June WSJ op-ed carried the headline “Shale gas is America’s geopolitical trump card.” A boldfaced thumbnail-summary sentence highlighted the word innovations: “Russia's $400 billion natural-gas deal with China pales beside the significance of US drilling innovations.”

Nye observes that the innovation-based shale revolution boosts the economy, produces jobs, reduces imports, improves the balance of payments, generates new tax revenues, makes American industry more competitive by lowering energy costs, and buoys Americans’ outlooks about the future. He offers an explanation of how these successes evolved. While “the technologies of horizontal drilling and hydraulic fracturing are not new,” he writes, “their pioneering application to shale rock is largely a product of American entrepreneurship in the past decade.” He adds that the revolution “demonstrates the combination of entrepreneurship, property rights and capital markets that are this country's underlying strength.”

But the US Department of Energy recalls that early attempts to apply hydraulic fracturing, or fracking, “to gas shale were . . . pioneered by DOE research and demonstration project cost-sharing with industry.” The Breakthrough Institute calls the shale-gas boom “the product of over 25 years of federal agencies and programs driving technology development in collaboration with private gas companies.”

Among that institute’s related efforts, it published the May 2012 fact sheet “Where the shale gas revolution came from: Government's role in the development of hydraulic fracturing in shale.” The institute says the fact sheet derives from “a series of investigations and interviews with gas industry executives and federal researchers” which “uncovered the path that shale fracking took towards full commercial maturity.”

Citing “successive developments of massive hydraulic fracturing (MHF), microseismic imaging, horizontal drilling, and other key innovations that when combined made the once unreachable energy resource technically recoverable,” the institute asserts several claims. It says that along “each stage of the innovation pipeline—from basic research to applied R&D to cost-sharing on demonstration projects to tax policy support for deployment—public-private partnerships and federal investments helped push hydraulic fracturing in shale into full commercial competitiveness.”

Michael Shellenberger, Ted Nordhaus, Alex Trembath, and Jesse Jenkins produced the fact sheet. Here are excerpts:

• Federal programs proved essential to gas industry engineers in figuring out how to map, drill, and recover shale gas—and, most importantly, how to do it cost-effectively.

• While Jimmy Carter is often pointed to as the president who initiated the energy push in response to the oil crises of the early seventies, it was Republican president Gerald Ford whose administration began a concerted federal effort to seek unconventional natural gas in response to shortages.

• There are plenty of countries with sizable shale deposits but without America’s strong public innovation system. . . . It was the United States that first cracked the shale gas challenge through decades of research and commercialization; shale fracturing operations in other countries are only now getting off the ground.

• The gas industry itself has spoken on behalf of federal research efforts. “The DOE started it, and other people took the ball and ran with it,” said Mitchell Energy’s former vice president Dan Steward. “You cannot diminish DOE’s involvement.”

The fact sheet’s section on frequently asked questions includes one that applies directly to Nye’s framing of the shale innovations’ origins: “Was this simply a case where the government introduced early iterations of the technology that were then perfected by private sector innovators?” Here’s the institute’s answer:

While private gas companies, particularly Mitchell Energy, did provide substantial in-house R&D to the shale gas commercialization effort, federal programs were involved along every phase of the innovation pipeline. From early R&D (diamond-studded drill bits, microseismic imaging, directional drilling) to cost-sharing on demonstration projects (the Eastern Gas Shales Project, the subsidization of Mitchell Energy’s first horizontal drill in the Barnett) to tax policy support for a pre-commercial industry (the 1980-2002 Section 29 production tax credit for unconventional gas resources), federal agencies and policies acted over 25 years to maximize the effect of shale gas research and commercialization.

The Breakthrough Institute authors don’t shrink from engaging larger technopolitical implications in the energy realm—the very issues that the WSJ opinion page often engages. The fact sheet says, “Because private companies have difficulty monetizing and capturing all the benefits of energy technology research, it is consistently the case that federal coordination and investment is required to drive high-level technological innovation in the energy sector.”

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Steven T. Corneliussen, a media analyst for the American Institute of Physics, monitors three national newspapers, the weeklies Nature and Science, and occasionally other publications. He has published op-eds in the Washington Post and other newspapers, has written for NASA's history program, and is a science writer at a particle-accelerator laboratory.

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Scitation: What was the federal role in starting the shale-gas revolution?
http://aip.metastore.ingenta.com/content/aip/magazine/physicstoday/news/10.1063/PT.5.8051
10.1063/PT.5.8051