Amid a Government Shutdown, Domestic Oil and Gas Production Hints at the Spirit of Private Industry

Fracking to save US Economy
Associated Press – In a July 18, 2013 photo, a huge plume of gas burns while work progresses at a fracking site run by Encana Corporation in a heavily wooded area between Kalkaska and Grayling, Mich. A new study says Michigan may have large natural gas deposits deep underground, but that low prices and high extraction costs make a development boom unlikely anytime soon, if ever. (AP Photo/Detroit News, Dale Young) DETROIT FREE PRESS OUT; HUFFINGTON POST OUT

As domestic energy production spikes, the US Government grinds to a halt

There has been quite a lot of talk in recent weeks about the role of the US government and the lengths at which opposing parties will go to induce governmental gridlock. Whether you naturally side with the Democrats, Republicans, Independents – or with those who simply stay out of politics, it has become nearly impossible to ignore the three-ring circus that has defined our recent political environment. Amidst all of this turmoil, the US energy sector has realized huge gains in productivity and overall energy resource output. Which leads many to ask – “what has the government done to help US energy production, and why does it appear that the government is working so hard against it?” Pose this question to the leadership committee of any energy industry company and you’ll likely discover that the government has actually served to slow down energy production, while private entities have fiercely pushed to accelerate it.


How can fracking help grow the US economy?

Fracking, short for hydraulic fracturing, has certainly emerged as the single most controversial resource-extraction technique of the past few decades. Overall, oil and gas rigs have become incredibly clean – thanks to a tightening of environmental regulations and more responsible drilling techniques, but fracking has remained a sore spot among the American public.  Interestingly, claims of groundwater pollution appear mostly unfounded, and there have been no major catastrophes linked to fracking – a process that has been in use for over 60 years. Fracking is a public relations problem, in that the process uses caustic and volatile chemicals and places these solutions in relative proximity to groundwater supplies. In actuality, there is little risk and almost no possible way that fracking fluids can permeate potable water supplies.


The reality is, though, that recently employed fracking and horizontal drilling techniques have allowed domestic energy production companies to increase their yields of oil and natural gas by a significant amount. The question really is – what has the government done to help this? The reality is, the US government has done little to proactively spur energy production across the country, as increased regulations and bureaucratic permitting processes have left oil and gas production companies to seek other venues for drilling. With oil production at levels not seen since the early 1990’s (close to 8 million barrels per day!), oil and gas companies have largely sought private land stakes in which to drill, as the permitting process then becomes a state matter. Local and state governments have become quite adept at managing these requests, with some states providing drilling permits in as little as ten days. Those seeking to drill on federal or public lands have been met with increased turnaround times for drilling permits, as well as more intrusive overall government intervention. The Federal government hasn’t done much to make the process of drilling for gas or oil easy.


Private sector oil and gas production is at record-setting levels

The private sector oil and gas drilling environment is robust – North Dakota is estimating that their oil production will double by 2017, to 1.6 million barrels per day. That is more than three times the daily output of the continent of Australia, and more than the daily total of the nation of Qatar! Much of this production is occurring on private land areas, free from the bureaucracy and slow responses of the Federal government. Thankfully, large deposits of lucrative shale formations are being discovered on private lands, making the entire process of drilling an easier one to manage.


What can the Federal government do to facilitate an increase in oil and gas production?

The government needs to recognize that without the incredible increase in private sector oil and gas production over the past couple of years, the price at the pump would be all but unmanageable for most Americans. With increased demand from growing economies like China and India, prices have risen on a global level. Factor in the weak dollar and the constant threat of political unrest in key oil-producing nations in the Middle East, and you have a recipe for $7 per gallon gasoline here in the US.  The Federal government must allow private oil companies to have access to additional leases in areas that have proven reserves. The Alaskan National Wildlife Refuge (ANWR), for example, is estimated to have 1.4 billion barrels of oil in an easily accessible area – all situated under just a few thousand acres of land. Offshore drilling has also been an area that the US has hesitated to fully explore. Most nations allow significantly more offshore drilling than our Federal body allows.


The entrepreneurial spirit and adventurous nature among our domestic oil and gas companies has truly redefined the limits of our domestic energy production capacity. Thanks to the partnership between private industry companies and the individuals who grant private land leases, our oil and gas production results are at historic levels. Add in reduced domestic demand for energy resources due to more efficient vehicles, homes, and businesses, and you have a recipe for success. Additional support from the Federal government in the form of less red-tape and easier access to Federal lands will certainly help move this vital industry into the next realm of success.