Sunday, March 17, 2013

Frack-tured Fairy Tales

People of a certain age will remember the Rocky & Bullwinkle Show.  It was a prime time satirical cartoon that was popular decades before The Simpsons and Family Guy.  A regular feature of the show was ‘Fractured Fairy Tales’ which played on malapropisms to get you to chuckle.  They were kind of ‘punny’ in their day.

Now, the governor of New York is promoting his own fairy tale.  This one is over fracking, the controversial practice of bringing vast newly discovered reserves of natural gas to the surface. New York is sitting on the Marcellus Shale, the second largest known reserve of natural gas in the world at 95,000 square miles ranging in depth from 4,000 to 8,000 feet.  If it had been discovered in Texas, every pickup truck in the state would be on autopilot to the nearest wellhead.  Money would have been invested, drilling would have commenced, a new source of energy would be available to the public and guys wearing boots and ten-gallon hats would be lighting cigars with hundred dollar bills.

But, not in New York.  Many a pickup truck can be seen with a ‘No Fracking’ bumper sticker and the environmental lobby holds a lot of sway in Albany.  This is no small matter.  Studies done by economists at Citigroup project that natural gas coupled with improvements in alternative energy sources and efficiency of power plants, factories and autos have the potential of making the US energy independent within a decade. 

Fracking will attract Foreign Direct Investment (FDI), which has been on the decline since the start of the Great Recession.  Energy independence will reduce our net trade deficit by approximately $433 Billion per year. Energy independence will mitigate our national security concerns in the Middle East, reduce our carbon footprint and create domestic jobs.

I do not mean to diminish the environmental concerns.  Anyone who has seen the documentary Gasland knows that fracking, if done improperly can ruin the water supply.  But, it’s being done safely in places like Texas and North Dakota.

To stir the pot a bit, President Obama has nominated Ernest Moniz to head the Energy Department.  Moniz comes from the MIT Energy initiative, financed by the industry.  He has expressed support for nuclear power and has declared the risks of fracking to be “manageable”.  Perhaps the President really intends to follow through on the policies he outlined in his State of the Union speech:  “this country needs an all-out, all-of-the-above strategy that develops every available source of American energy.”

That isn’t to say that there won’t be incidents.  These activities are prone to human error, as Three Mile Island, the Exxon Valdez and the BP Gulf oil spill have shown us.  But, the opportunity is too great to ignore.  The question isn’t should we or should we not frack.  The question is how can we do it as safely as possible. 

Moreover, we must be view fracking and natural gas in the proper context.  It is not the final answer.  It is a bridge solution.  In the near term, it will reduce greenhouse gases and reduce imports of foreign oil.  However, it’s equally important that we support the research and development initiatives of government agencies like the Advance Research Projects Administration – Energy (ARPA-E) that will provide long term solutions that will enable us to be energy independent while emitting fewer greenhouse gases.  None of the alternative energy options are economically or technologically viable today.  But, they will be some day.  Just not some day soon.

For New York, there’s a broader issue.  Governor Andrew Cuomo has declared his state “Open for Business” and is backing it up with an impressive public relations campaign.  But, such declarations must be backed up by facts.  Businesses are driven by dollars not slogans.  And, New York continues to lose jobs and people to other states. 

In a recent TV ad, the governor makes a big deal about his new policies not increasing taxes.  But, if he wants his slogan to be true, he needs to come to grips with the lack of competitiveness from which New York suffers compared to other states.  Businesses set up shop in low tax, low cost states.  New York is at the opposite end of the spectrum.

The governor must address the structural problems that cause New York to be lagging the nation in job growth and unemployment.  Otherwise the ‘Open for Business’ campaign is just another Fractured Fairy Tale.



  1. Joe Matthews, MS Ed. • Hey that's some pretty Kool Aid you got there. Can you pump it into my underground reservoir? I'd like some grape flavor in my well water, if you have it.

  2. Tom Jeanette, MEM, PMP • With all this fracking going on, you'd think that oil prices would be at an alltime low.

  3. Robert Spencer • Great article, John.

    Cuomo is not worried about his statements being true just whether or not they make good soundbites. NY is dead last on the economic freedom scale in the US according to the Mercator Institute. If I remember that study correctly.

    It may not improve anytime soon. I have little faith in Cuomo to do the right thing.

  4. John -- Very thoughtful and good piece about natural gas and I am generally in agreement with you.

    I did come across a fact a few days ago, that does emphasize the need to do it properly. Methane is commonly cited as being 23 - 26 times more effective as a heat trapping greenhouse gas, but few pay attention to the phrase that properly follows a good citation, namely "when averaged over the course of a century." More careful reading finds that methane degrades in CO2 over time. When averaged over twenty years, it is about 78 times more effective as a greenhouse gas. I have been searching for the factor in its pure form, but it eluded me until last week, when an expert in Finland explained that it is 256 times more effective at trapping heat. So it is extremely important that any natural gas fracking operations minimize leakage so as not to substantially worsen the warming.

    Separately -- I assume you received my book. Have you had a chance to get into it yet?

    Thanks for your blog and sage comments.

    John Englander

  5. Is it just my imagination or has your Blog become more “flavorful” in recent months? Your messages are essentially the same but with a little more zip than they used to have. In any event, for what it’s worth, I like the change.


  6. Harold Bernaert • You must be "fracking" kidding me. But than again, the gas wont move to an other state soon :)

  7. Robert Spencer • I frack you not!

  8. Harold Bernaert • @Robert

    Good news for Gas exporting Norway, bad news for Gas importing New Yorkers.

    A Dutch saying ; "One Man’s Death Is Another Man’s Bread"

    De een z’n dood is de ander z’n brood - One man’s death is another man’s bread.

    Similar to: Their loss, your gain; One man’s trash is another man’s treasure

    This expression is used to explain that while something can be unfortunate for one person can be your advantage

  9. Harold Bernaert • @Robert

    Don't ask me to explain the connection between death and bread :)

  10. Jason G. Ramage, MS, MBA, RBP • I don't think the verdict is in that fracking is an entirely safe practice, so one can hardly blame people for being opposed to it.

    On the other hand, I think opposition to the Canadian pipeline is misguided. NOT building the pipeline is not going to stop the oil from being processed. Canada will just have to ship it west to Vancouver and sell it to China. It's not as though US oil needs are going to suddenly drop if the pipeline is not built, so we may as well take advantage of our relationship with a good neighbor and reduce our dependency on oil from the Middle East or Venezuela.

    I think alternative energy solutions are necessary; unfortunately our government screws it up by letting plain old greed drive decisions rather than solid science.

    Just my thoughts.

  11. @Jason. I agree. I don't think the verdict is in either. But, like many other issues in this country, the debate is being conducted by the hard core left vs. right. Science, testing and improving methods are left out of the discussion. Fracking has been used in drilling for oil since the 1860s and there are over a million wells that use that method in use today. The new reserves that have been discovered along with the economics of cheaper NG are driving the movement toward its expanded use today.

    So, while agree that the verdict is not in... I also agree with Obama's Energy nominee. We should take the approach that the opportunity should not be ignored and figure out how to take advantage of it safely.

  12. Ralph Michalske, MBA • John, in your blog you say, "Energy independence will mitigate our national security concerns in the Middle East, reduce our carbon footprint and create domestic jobs". Natural gas is essentially a nasty gas, methane (CH4) mixed with other hydrocarbons. How will producing more natural gas reduce our carbon footprint? When used as an energy source, natural gas emits CO2, a greenhouse gas.

    In principle I agree that new mining technology is a good thing. In the case of fracking, I wouldn't want it in my back yard. I think it's okay if it's done somewhere else, like Texas. Maybe the NY Governor has similar feelings.

    If you're really into gas as a fuel, look into hydrogen gas. It's almost the perfect fuel, with no hydrocarbon footprint, exists naturally and makes up 75% of the universe, can be processed locally incurring no transmission costs, clear and odorless, most of all hydrogen is free. The biggest drawback to hydrogen is that it's industrialization would put Big Oil out of business since they haven't figured out how to sell something that's free.

  13. @Ralph. Most hydrogen is produced from natural gas. When the pure hydrogen is separated from NG it emits carbon dioxide.

    All of the alternatives have downsides. I don't think NG is a perfect solution. As I have pointed out, it's a bridge technology that will reduce the amount of electricity that is produced from coal.

  14. Michael Moser, CAFM • John,
    Great topic and one I really struggle with. Abundant, low cost, (relatively) clean fuel is great for our country and economy. Our clients want it and it creates revenue for our business so I should also want it, right? But I struggle with the process and its potential dangers. If we don’t (really) know what chemicals are being injecting into our water tables, how can we be comfortable with that? And let’s be honest; we don’t have good reason to trust C-level management. Greed is well, greed.

    I suppose I would be less concerned if my water supply was from a treatment facility and not a well (only because of the false sense of security), but it doesn’t, and each time I open the faucet, or replace the filters in my in-home purification system, I can’t help but think about what is in, or could be in the water I consume.

    I want inexpensive natural gas and propane (a NG byproduct) as much (or more) than the next guy, but I’m not convinced we should rush into it at the expense of contaminating our water. After all, on the spectrum of fundamental necessities, it does rate right up there.

    I often hear people compare the economic benefits to the environmental ramifications. Really? Polluting our natural resources should not be an acceptable trade off. We can do better than that if we try.

    Now, I am not an expert on fracking, but I am apprehensive when we are told these “unknown chemicals” are safe…trust me. Oh, okay…if you say so. In our society greed often trumps common sense. As Ronald Regan said, “Trust but Verify”. Maybe we should listen to The Gipper.

    You asked me to comment, so I won’t be shy... I don’t agree with your statement; “None of the alternative energy options are economically or technologically viable today. But, they will be some day. Just not someday soon.” That statement is too general and not accurate. Certainly, they are not a viable solution for everyone, we have different needs. But there are many fleets today converting to CNG and LPG because of a strong ROI, good performance and a positive contribution toward sustainability. Power generation plants are also converting to NG. I think that makes it viable. Certainly the shale gas extraction and resulting low fuel cost is driving it. This is precisely why I struggle with fracking….the economic and ecological benefits are positive at the tailpipe (so to speak), but we really don’t know what the environmental impacts are on the front end without full disclosure of the chemicals being used. I wish the process could be completely transparent so we can accurately assess the potential ramifications, but it isn’t…so we can’t.

    Government should demand full disclosure and transparency or no drilling…period. The drilling industry (e.g. free market) would then figure out how to do it competitively, without harming the environment. Why is that so difficult? Proprietary trade secrets? Hogwash. I have to assume it is political pressure…it’s how we roll.

  15. @Michael. Just a semantic point to start. I don't think of NG as an alternative fuel although I can certainly see how it could be viewed that way. The power plants in vehicles are certainly a new alternative. But, fracking in some form has been around since the 1860s and there are over a million wells using the method. The newer method that you describe gives me pause too.

    My observation is that the left vs. right debate exhibits the usual behavior. What is left out is the science, testing and evolution of the methods. I like the approach of Obama's energy nominee. Let's "manage" to make it work. That means assessing the risks and evaluating whether your assessments were correct as you improve the methods.

    All of the alternatives entail risks and I don't think we know how any of them will scale. But, inaction is inexcusable. All it does is preserve the status quo.

  16. Cuomo is singularly focused on becoming President and he thinks he'll get there by appealing to the far left of the Democratic Party. He doesn't care about creating jobs, he's more concerned with hugging tree-huggers. Plus he is pushing to extend the state's supposedly short term high tax bracket on millionaires, fueling class warfare under the guise of reversing "income inequality".

  17. Phillip Parker • I would submit that the oil and gas industry can't really be trusted to do anything safely without rigorous oversight. See Deepwater Horizon. One of the biggest obstacles to safe fracking is that the companies insist that the chemicals they use in the fracking water are proprietary information, so we have no idea what's really being pumped into the aquifer. The fracking boom is intoxicating, but beware of the hangover tomorrow.

  18. James Caron • I worked the fields in North Central AR for a while, and while quite a few people complained, it seems to have been mostly for the benefit of the ambulance-chasers. While I was up there, not a single case of harm could be confirmed with third-party testers. I'd be careful all the same, but the water coming out of the wells is merely very weak salt water, and is disposed of by injecting it back into the earth deeply enough that it isn't a factor.

  19. Joe Matthews, MS Ed. • @Jason, yeah, that filthy oil will be processed, and it will end up in the same location regardless. Once it's on the world market, we compete for it like everybody else- Canada won't be giving us good-buddy discounts, because it's an oil company, not a friendly country exporting the oil. Yes, Canada is full of polite people who manage to not shoot each other so much despite being more armed, but the potential economic benefit for US is only a handful of payroll jobs for a few years and then maintenance, plus any real estate leases.

    @James, up here in PA we do it differently, I guess. We get solvent. England has documented earthquakes. NG is better than petroleum, but we're jumping off the cliff with no idea what's below.

  20. Jason G. Ramage, MS, MBA, RBP • I think you're mistaken; if the pipeline is built, that oil will be shipped to US refineries rather than sold to China or elsewhere. And while the number of jobs created may have been inflated, that's not the real reason to support the pipeline; the real reason is to work towards energy independence so we don't rely so much on foreign oil from the Middle East.

    The environmental concerns surrounding the pipeline issue are valid, but to dismiss the project out of hand makes no sense.

  21. Ralph Michalske, MBA • Generally speaking you're correct, however, there are several alternative methods under study in Norway as fuel stations on their Hydrogen Highway. If you're interested in what other countries are doing in the area of alternative fuels, then go here=>

    I like Norway's approach as it industrializes the hydrogen filling stations which is a major hurdle to get over to make hydrogen fuel practical for automobiles. Personally, I'd like to see the US get involved in the R&D for this alternative fuel. However, in the US, there is a huge tidal current against developing alternative energy which doesn't involve hydrocarbons.

  22. @Ralph. Thanks for passing on this article. I learned something new today. There is a lot of R&D going on at ARPA-E.

  23. Ray Wach • John, good article.

    Phillip: good point, but I think we are not very smart about oversight. We micro-manage procedures and hire thousands of inspectors, but then when something happens we only apply monetary fines. We make tension between the companies and the government. It might be better if we didn't regulate procedures but instead regulated performance, let the businesses find the best way to meet them, and then had penalties that would make it worthwhile to the companies to work very hard to be safe. For example, instead of specifying the size of the railing around a machine and sending an inspector to measure it, we could share advice on safety and make the manager personally responsible for the safety of his workers. There are pros and cons to both approaches and each is most effective in some situations, but we are only using one of them.

  24. Phillip Parker • Ray, one of the enduring lessons from Admiral Rickover is that no organization can be expected to police itself. The idea that the oil and gas or banks, or any other industry will take care of itself is dangerous fantasy. The size of some monetary fines lately seems to be only a slap on the wrist. Shut 'em down until they comply.

  25. Karen VanAssche • John, thanks for posting. Very interesting subject. I agree that every effort should be put into all viable sources of alternative energy. This one sound awfully good. Of course, I'm not a scientist so I can only go based on what I read. It has to be cheaper and simpler to use than plugging in electric cars with cords running all over the place and the high cost of electricity.

    The whole Rocky and Bullwinkle Show was a favorite of mine when I was a kid - so far ahead of its time. And I particularly loved Fractured Fairy Tales with Edward Everett Horton narrating.

  26. Eric Werme • > Tom Jeanette, MEM, PMP • With all this fracking going on, you'd think that oil prices would be at an alltime low.

    I don't follow oil or gas all that closely, but one issue claimed in a recent TV news report (what passes for reports these days) is a claim the easy coast will have to import more refined petroleum products because of inadequate refinery capacity.

    When I got my annual fix price natural gas offer at the start of the current heating season. (I see snowflakes outside, yep, nothing like springtime in New England!) I wrote an article about that. A 46% price drop in three years! And notes on the US natural gas supply, the LNG _export_ terminals in planning stages, and even LNG fueling for long haul truckers.

    The development of the oil fields like Bakken in the Dakotas and the closer-to-the-refineries Eagle Ford Shale in the Western Texas Basin means both better crude supply and continued price pressure on natural gas, as oil fields tend to produce that too.

    So yeah, gasoline prices should fall, or at least slow down the international price climb.

  27. John Greene • John, an excellent post that should stimulate thought and conversation across the board. Kinds reminds me of the old adage "Don't bring me your problems if you don't have any solutions." I am all for clean energy and energy independence. But nothing is perfect. It's high time citizens in this country decided if it's better to be truly energy independent or forever beholdin' to the Arabs for their oil.