Think globally and frack locally

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Think globally and act locally? Some do it better than others.

Starting in 1973, after a 400 percent spike in gasoline prices in the wake of the Yom Kippur War, U.S. politicians started calling for “energy independence” — by which they meant ramping up domestic oil production to the point where the country was no longer dependent on imported oil.

It turned out they were better at thinking globally than acting locally.

Government’s attempts to increase domestic oil production and reduce imports flopped spectacularly. U.S. domestic oil production, which had peaked in 1970 at 9.6 million barrels per day (b/d), continued to slide, hitting a low of about 5 million b/d in 2008, while U.S. oil imports continued to grow over the same period, reaching more than 10 million b/d during the three years between 2005 and 2007.

Then the U.S. oil and gas industry, which had always thought globally, got serious about acting locally. The industry started using horizontal drilling and fracking to produce first natural gas and then oil from the shale formations that underlie much of the United States.

As of three weeks ago, U.S. crude production had climbed to 8.8 million b/d.

The U.S. is now producing more crude oil than it is importing — 8.8 million b/d vs. 7.7 million b/d. In addition, the industry is producing 5.2 million b/d of natural gas liquids (which can be substituted for crude in a number of uses), or 14 million b/d of liquid hydrocarbons. Domestic production now accounts for about 70 percent of U.S. liquid hydrocarbon consumption.

Earlier this month, the U.S. Energy Information Administration predicted that domestic crude oil production would reach 10.5 million b/d by the end of next year, eclipsing the 1970 record by nearly 1 million b/d.

(Moreover, about 3.5 million b/d of U.S. imports come from North America Free Trade Area partners Canada and Mexico and are nearly as secure as domestic production.)

In short, thanks largely to horizontal drilling and fracking, the domestic oil industry has brought the United States to the brink of energy indepen dence in under a decade.

The resurrection of the domestic oil and gas industry has led the resurrection of the U.S. economy — including the Colorado economy. According to the Bureau of Labor Statistics, between March 2013 and March 2014 Weld County, where oil and gas companies are investing several billion dollars a year in production and infrastructure, had the largest gain in employment, 7.5 percent, of any of the 339 largest counties in the U.S.

Within Weld, the largest increase occurred in the natural resources and mining sector (i.e., the oil and gas industry), which gained 2,145 jobs over the year (a 24.1 percent increase within the sector).

Of course, in 2008 the industry didn’t deliberately set out to make the U.S. energy independent. It set out to cash in on soaring oil and natural gas prices, which by 2008 were north of $147 a barrel for crude and $8 per thousand cubic feet for natural gas. At those levels, producing oil and gas from shale became highly profitable — and thus possible.

And it has stayed highly profitable, despite the fact that the price of crude quickly sank to around $100 a barrel and the price of natural gas dropped below $4 a thousand cubic feet. That’s because in the space of six years the industry has gotten a lot more efficient at drilling and fracking wells in shale. It has slashed the cost of both drilling and fracking, and is getting a lot more oil and gas out of each new well it drills.

How much more efficient? 

According to a piece in the Wall Street Journal, in 2003 — at the dawn of the horizontal drilling/fracking revolution — Headington Oil Corp. drilled and fracked an experimental well in the Bakken Shale in Montana. The well’s peak production was 828 barrels a day, a stunning accomplishment at the time. Last year EOG Resources Corp. drilled and fracked a well in Texas’ Eagle Ford Shale that produced 2,748 barrels a day, more than three times as much.

American environmentalists can’t quite believe this is happening. Up until recently many believed the country and the world had achieved “peak oil,” that oil production would henceforth decline while the price of oil would soar, and that the age of alternative energy — and alternative American lifestyles — would dawn.

Instead they may be looking at the dawn of a new age of oil and gas.

So can renewable energy ever displace oil and gas?

For that to happen, renewables will have to compete successfully with oil and gas on price and performance. American civilization isn’t going to ditch the internal combustion engine until consumers can get electric cars that equal or surpass conventional ones in terms of performance, fuel economy, and above all price. And American utilities aren’t going to embrace wind and solar until wind and solar can produce dispatchable, base-load electricity as reliably and economically as natural gas, coal and nuclear.

Technological advances on the renewable side may make this possible a lot sooner than a lot of people think.

But competing technologies aside, I suspect that a major reason the petroleum industry was able to resurrect American oil and gas production in less than a decade, while the environmental movement hasn’t been able to make renewables competitive despite 40 years of trying, has to do with attitude. Distrust of both technology (including green technology) and market solutions is endemic in the environmental movement. The oil industry exuberantly embraces both. Oilmen tend to confront problems with a “can do” attitude, while environmental activists tend to confront them with a “don’t do” attitude, which leads them to sabotage themselves.

If environmentalists really want to best the oil industry, the need to quit trying to stop oil and gas production with a bunch of bogus claims about fracking and trash talk about “big oil” and start thinking more like oilmen.

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This opinion column does not necessarily reflect the views of Boulder Weekly.