Hydraulic fracturing (“fracking”) and horizontal drilling are allowing the United States to produce greater quantities of domestic oil and gas, bringing closer the once unthinkable prospect of America being a net energy exporter within the next decade.
The International Energy Agency reported this summer that such technologies are “unlocking” hard-to-reach resources and driving “the recent rebound in US oil and gas production.” The environmentally careful application of these technologies offers opportunities to improve domestic energy security – as well as support America’s foreign policy. This development should be encouraged.
Of course, fracking, or more broadly, oil and gas development, is an industrial activity and can cause negative environmental effects. But many modern industrial and everyday activities have environmental or human health risks. The reasonable response is sensible regulation, at both the federal and state level, rather than wholesale bans.
For example, it would not make sense to propose closing the Interstate Highway System, despite the thousands of deaths annually associated with Interstate use. Instead, we manage the risk through highway design, speed limits, and improved safety features (e.g., anti-lock brakes and air bags).
Likewise, states and the federal government are regulating fracking. Last year, the Environmental Protection Agency required that by 2015, drillers capture “fugitive” emissions at oil and gas wellheads rather than release them into the air. The EPA predicts this will also reduce leaks of the greenhouse gas methane by 25 percent.
The Government Accountability Office reported in 2012 that of six shale-producing states studied, all required protective cementing of well bores, disclosure of chemicals used in fracking, and regulated waste-water injections. Five of the states required wells be set back from water sources.
In short, fracking should be encouraged in a way that rationally addresses public and environmental health while producing the energy needed to meet demand.
Looking ahead, even if wholesale US energy demand dips, demand outside the US – principally in China and India – will continue to grow.
The US Energy Information Administration reports that world energy consumption will grow by 56 percent between 2010 and 2040. Global natural gas consumption will grow by 1.7 percent per year and will be the fuel stock for about a quarter of the world’s electricity by 2040. Overall, fossil fuels will continue to supply almost 80 percent of world energy use through 2040. The US has the potential to meet that global demand – in addition to its own domestic energy needs.
Last year, the International Energy Agency made the astonishing prediction that the US will become the world’s largest producer of oil by 2020 – for a time surpassing Saudi Arabia and Russia. The energy agency also predicts that by 2035 the US will be close to energy self-sufficiency.
Domestic gas supply has shifted just as dramatically. As recently as 2003, then-Federal Reserve Chairman Alan Greenspan testified to Congress on the negative economic effects from tight gas supplies and the imperative to import liquefied natural gas.
In 2012, the US National Intelligence Council issued a report that found “[w]ith shale gas, the US will have sufficient natural gas to meet domestic needs and generate potential global exports for decades to come.” The council characterizes this as a “tectonic shift.” Citigroup also describes the prospects for US energy independence as “real.” These predictions are based on the impact of modern fracking technology on the growth of domestic energy production.
The US energy boom also benefits American foreign policy in three key ways that bolster the need to responsibly pursue further oil and gas development.
First, by no longer being tied to petroleum imports from the Middle East, the US can reassess its long-held “oil-for-security deals that we’ve had with [Middle Eastern governments] for over 40 years,” according to James Jones, the former National Security Agency adviser to President Obama. A major US military presence in the Middle East has not always been – and is unlikely to be – considered a positive aspect of US foreign policy.
Second, for American allies, increased US production will considerably reduce the “oil weapon” threat, and in Europe, the “natural gas weapon” threat. While Americans see the oil threat in the more abstract context of US energy security, their allies in the European Union and Japan experience energy supply shortages in the reality of their day-to-day lives.
In terms of oil, greater US production and supply in the Strategic Petroleum Reserve could help moderate price spikes that in the past might have been associated with supply contractions (e.g., any decision by the Organization of the Petroleum Exporting Countries to restrict supply to increase price, or less production in Nigeria from petroleum theft).
Concerning natural gas, a look at Europe illustrates the threat. Because of the Continent’s undeveloped petroleum resources, Gazprom, the Russian gas giant, has been able to bully consuming nations by constricting the supply of natural gas for heating. New gas supplies will blunt the effect of that tactic. Moreover, if exported US gas can provide cheaper and cleaner power for Europe and help resuscitate a moribund EU economy, all the better.
Third, with increased internal energy security the US could re-think what is a reasonable military presence around the world. American firepower currently keeps the shipping lanes open for oil that ultimately makes its way to China and Europe.
If the alternative supply came from North America, and the need to keep the lanes safe diminished, the resultant savings could be reinvested in education, infrastructure, and lowering the national debt, and for many other needs here at home.
Speaking recently about the potential of US gas exports, David Goldwyn, former US State Department special envoy for energy, put it this way: “Lower prices, lower emissions [related to fuel switching from coal to gas for electricity generation], greater diversification, more competitive pricing. It’s a diplomatic royal flush.”
America, if it acts carefully and strategically, may well harvest a “foreign-policy dividend” related to increasing domestic production of oil and gas. This dividend should not be overlooked in the continuing conversation about the future of fracking in the US.
Don Smith, who was a staff member for former Kansas Gov. John Carlin (D), directs the University of Denver Sturm College of Law’s environmental & natural resources program. Rebecca Watson, who served as assistant secretary of the Interior for Land and Minerals Management in the George W. Bush administration, practices land-access and energy law as a shareholder with Welborn Sullivan Meck & Tooley, P.C., in Denver.