SEVEN

THE ENERGY PLAY

GEOLOGY TURNED OUT TO BE A GOOD FIT FOR SOMEONE with a passion for the outdoors and the acquired interest in earth sciences. I’ve drawn a fair amount on my geology background when I’ve considered America’s energy policy. My studies helped me put some science behind my thoughts on energy independence, which I consider an economic, diplomatic, and environmental imperative. And we can achieve it through the natural resources we have. In the mid-1980s, the common belief among geologists was that North America would run out of accessible domestic oil and gas by around 2005. The world would be depleted a few decades after. But thanks to the advent of horizontal drilling technology and refined hydraulic fracturing techniques, America’s vast shale deposits can be tapped. The shale formations of the Marcellus on the East Coast, the Bakken in North Dakota, the Eagle Ford in Texas, and the Monterey in California alone can produce enough energy in the form of natural gas and crude oil to power America for generations. Moving from thinking that North America has nearly depleted our reserves to realizing that the region has more energy potential than any other region on the planet is remarkable. And that’s before we factor in the Keystone Pipeline System, which we share with Canada and that links American and Canadian crude oil reserves. The Keystone exists today along with over fifty pipelines between the United States and Canada. The controversy was the Keystone XL extension, which by any measure was the safest, most well-designed pipeline in the history of mankind. Even an exhaustive US State Department study concluded it was both safe and did not present any significant environmental damage. There can be even less debate about the risk of using rail as an alternative. The controversy was not about an extension of an existing pipeline; it was more about the central argument about the use of fossil fuels.

Since President Jimmy Carter was in office, the policy of the United States has been for America to be energy independent. In fact, the Department of Energy was created to move America in that direction. That direction includes the triad of energy policies to promote greater efficiency and conservation, promote alternate fuels and sources, and develop and improve the use of known reserves of energy—primarily coal, oil, and gas. Gaining greater efficiency by improving the national grid system promoting the transition to energy efficient systems and equipment across the United States is prudent policy. Investing in research and development to create alternative forms of energy to include nuclear, wind, and solar is also a wise investment. Technology improvements in wind and solar technology, especially on the small, residential scale, have made alternative energy viable. Improvements in battery storage technology will accelerate the trend.

The last leg of energy independence is where the greatest change has occurred. The North American oil and gas revolution has changed everything in regard to energy. To some on the left side of the political aisle, it has evoked fear that past gains in efficiency and alternative energy will be overshadowed by the boom in fossil fuels. To others, it offers a clear alternative to foreign sources of energy. The truth is we should continue to emphasize all three parts of the energy strategy. A concentrated focus on one element while ignoring or, in the case of the Obama administration’s war on fossil fuels, trying to inhibit advances threatens to keep America from achieving energy independence and becoming economically strong. It is indisputable that America has the ability to extract and refine fossil fuels, including coal, oil, and gas, in a responsible manner under reasonable environmental and safety regulations. In fact, the United States follows the most stringent regulations in the world. The alternative is to continue to be held hostage to foreign oil-and gas-producing countries that not only don’t have enforceable environmental standards, but are frequently our enemies or global competitors. Whether one accepts climate change or not, the promotion of domestically produced energy under reasonable regulation is far better than foreign-produced energy under no regulation at all. Can we produce energy cleaner? Absolutely. But reliable, abundant, and cost-effective energy is more important to the American economy than the single adoption of highly expensive zero-emission energy. Inexpensive, zero-emission energy would be preferred, but more research and development is needed, and we are years away from any meaningful transition. Given that alternative energy is largely not cost competitive, some have argued that we should ignore the economic cost of energy and instead focus on the social cost of carbon: calculate the cost of going to war in the Middle East, calculate the cost of losing American jobs and families without a future, calculate the cost of human suffering from hunger.

Why are the economics of low-cost energy more important? The answer is simple. Without low-cost energy America cannot manufacture or produce goods and services at a globally competitive price. Unless we are competitive, the American economy will fail and there won’t be any jobs or food production. Without jobs and food production, there will be no government revenue and prices for commodities will rise and people will go hungry. The government won’t be able to afford to enforce reasonable environmental regulations or provide the critical conservation protections we enjoy. If you want to look at what happens when a government or an economy cannot provide adequate enforcement or environmental protections, I would invite you to take a look at the devastation in Africa. New pipelines are built and immediately tapped by tribes for convenient fuel or barter. After the tribes take their bounty, the holes are often left unplugged to release millions of gallons into the environment. In Iraq, there is no longer any potable surface water in the country, and there hasn’t been since well before the first Gulf War. Trash is taken to vacant lots and burned, and industrial waste is flushed into the rivers. In China, visibility is often measured in meters. How can continuing to support oil production and manufacturing under those conditions be in our best interest?

If the United States was energy independent today, it is doubtful that we would give the amount of attention and American blood to the oil-rich Middle East that we do today. With the exception of Israel and a handful of our allies, we would have far more flexibility and leverage to intervene economically and militarily under conditions of our choosing rather than being dictated a set of terms by OPEC or others. For some, it’s hard to believe that there are people and regimes that simply are evil and subscribe to an ideology of hatred. These people also believe that if we just talk to these regimes, we can all be happy and live in harmony. I am not one of those people, as I have been there and seen hatred up close. Anyone who puts a pilot in a cage and sets it on fire, crucifies entire villages, and cuts the heads off children can’t be reasoned with. Same goes with those who launch intercontinental ballistic missiles (ICBMs) with “death to Israel” written in Hebrew on the side of them. The reality is there are true threats in the world, and obtaining energy independence and increasing our role as a global energy supplier makes sense economically, militarily, and environmentally. It’s simply good domestic and foreign policy.

Getting back to the Keystone Pipeline—a few additional comments. As a Montanan, the proposed Phase 4 Keystone XL initiative would have affected me directly; it would have linked the Hardisty reserves in Alberta, Canada, with the Baker reserves in my home state before running lines to refineries in Illinois and Texas.

I’ve already written about the Montana outdoors. I’ve played in it, trained in it, and taken my kids through it. I love it and actively support policies that protect it. But I also love my country, and I’ll tell you this about what President Obama’s ill-advised quashing of Keystone XL has done: his rejection has made oil and gas transport operations in our country more vulnerable to everything from infrastructure failure to acts of terror.

Currently, synthetic crude and diluted bitumen from Hardisty is carried in a pipeline—the Phase 1 pipeline—that runs parallel to the Canadian border before turning down into North Dakota toward Steele City, Nebraska. That section runs almost 1,200 miles, with more than 750 miles of it in Canada.

The Phase 4 pipeline—Keystone XL—would have run 327 miles of pipeline through Canada. There were several different proposals for the US portion of the pipeline floating around, but under most of them the total pipeline length, including both the United States and Canada, would have been under 900 miles. That’s 300 fewer miles of pipeline to defend against potential sabotage.

Keystone XL would also have featured a pipeline with a larger diameter than the one used in Phase 1, which would have resulted in more oil reaching refineries in less time. It also would give the United States a backup option if Keystone 1 was damaged: the flow of crude from Hardisty would be slowed but not stopped.

That’s something else the people who opposed Keystone, XL don’t seem to realize: The Keystone pipeline is up and running. Phase 1 has been operating since 2010. Nor is it the only pipeline between Canada and the United States. There are more than fifty pipelines, and the newest was built while Keystone XL was being debated. When President Obama rejected Keystone XL, he didn’t stop oil pipeline transportation from Canada into the United States. He merely obliged us to continue relying on a less-efficient, more-vulnerable system that doesn’t have another backup.

Of course, we do have other sources of domestic energy. We have reserves that can be tapped by using horizontal drilling to create wells within seams in shale and injecting liquids into the area. Current methods call for a sort of soapy sand-and-water mixture to serve as the injection fluids: previously, drillers used benzene and diesel. The current mixture used by explorers is potable: people have, in fact, drunk it.

As a driller injects the soapy solution, sand, and water into the well, the mixture creates incredible pressure in the shale. That pressure causes fracturing and forces a release of oil and gas, which can be captured once the water is removed from the well. Here’s the beauty of the process: the sand remains behind, essentially building a dam as you build up the pressure.

This method is effective, and if you use a casing (a lining for the drill hole that protects nearby groundwater and aquifers, by allowing drillers, using fiber optics, to immediately identify potential areas for bleed offs before they occur), monitoring devices, a geology report, and best practices in the technology realm, it’s clean.

It’s also what is known as hydraulic fracking, and like so many other situations people opposed to it haven’t done their homework. Most of the allegations about minor cases of fluid pools are unclear as to whether the fluids are from surface spills or earlier drilling efforts that didn’t have the right type of casing. The industry is well past earlier techniques of injecting benzene and diesel fuel into a well without adequate groundwater monitoring.

One of the key safety features of fracking is one no explorer would be without—the geology report. There’s no sense in drilling a $10 million well without first conducting a $150,000 geologic study. Fuel explorers are guided by scientists, and scientists don’t leave things up to chance.

Take concerns about groundwater. In the Bakken Formation, which is under parts of Manitoba and Saskatchewan in Canada and North Dakota and, yes, Montana in the United States, fracking activity is separated from groundwater by thousands of feet of solid rock. And Bakken is a significant source of desirable low-sulfur, light, sweet crude oil.

When an explorer understands the geology, doesn’t drill in a fault zone, uses seismic monitoring to measure shifts and other geologic events, and handles the fluids properly, fracking is safe and effective. Even a hostile Department of the Interior (DOI) and the Environmental Protection Agency (EPA) said as much.¹

Extracting gas makes economic sense as well. European gas prices are usually three to five times higher than prices Americans pay. We could fund the infrastructure needed to extract this light, sweet crude based off the premium prices we could charge Europe without raising prices in the United States, much in the way Saudi Arabia provides cheap gas for its citizens.

Here’s another argument, focused solely on economics. Through exploration and extraction, California could hasten its current financial recovery without drawing even more heavily on personal income tax receipts than it already does. It could more adequately fund its pensions and boost education spending all by opening up the Monterey Formation to drilling and adapting existing technology to take advantage of saltwater injection fluid. We don’t yet have the technology to use salt water as injection fluid, but there are a lot of good jobs—and good resource yields—ready to be realized if we go ahead with this exploration.

We would gain more than just energy independence through these activities. We’d have surpluses, and being able to export fuel would yield global political benefits. Currently, Russia is emboldened by knowing US allies in Europe are beholden to Russia for its natural gas. If we were able to extract and export liquefied natural gas—we have the gas, but we don’t have the infrastructure yet—we’d be able to counter Russia’s aggression while reassuring our allies that their fuel needs would continue to be met.

There’d be benefits at home too. The reason the United States is losing manufacturing jobs is the high cost of doing business. Yes, labor is usually the number one cost, and we’re not going to be able to compete on labor costs. But we can compete on energy costs. Solar and wind sources don’t have the economies of scale yet to deliver cost-efficient energy the way coal can.

If we have an abundance of energy, and we can reduce the cost to turn on machines and keep them running on domestic soil, businesses will be better able to absorb higher labor costs, and for the most part they’ll be getting a better educated and trained labor force than they would overseas. If nothing else, corporations won’t face the language barriers a lot of consumers find frustrating! We’d also free up military resources. A lot of people in government do not consider ramifications like that when they have knee-jerk reactions to a single pet issue (especially when that issue is unsupported by good and objective science, like the presumed environmental impact of Keystone or fracking). Right now, the US Navy is responsible for maintaining safe sea-lanes in the Persian Gulf. We police them and enforce the rules of the sea on a daily basis, which is something no other nation’s navy—or coalition forces—could do. There’s no greater peacemaker than a US aircraft carrier. Our presence in these waters helps stave off piracy and national conflicts; we are the peacekeepers on the high seas.

Now imagine that the naval resources used to protect those sea-lanes could be pulled away because we were self-reliant. The next time we need to impose sanctions against Iran, we’d be able to back up our resolve with a blockade. The last time we imposed sanctions, they were porous and Iran was still able to sell around a million barrels of oil a day. The next time, they wouldn’t.

I’ll admit that I have a personal stake in this. My son-in-law—Jennifer’s husband—is a Navy SEAL too. I’d rather not see him sent overseas for the purpose of defending foreign oil when we have untapped energy resources here. His training and talents could be put to better use defending other American interests.

I’ve moved away from my thoughts on studying geology to global politics. I’d like to get back to my original story here, because once I get started on the destructive power of partisan—especially anti-American—politics, let’s just say I could go on for quite some time.

At Oregon I took the usual requirements for the major and some elective courses as well. But one geology professor and class really made an impression on me, if only because in theory I wasn’t supposed to be in it at all.

During my sophomore year, I was in the gym signing up for classes. The guy behind the geology desk was the infamous Professor Gordon G. Goles, the head of the department. Goles was a top cosmochemist; he specialized in extraterrestrial geology. Yep, that was a field, even then. Goles was one of the few people selected to examine the lunar rocks brought back from the Apollo 11 spaceflight—the first moon landing. At the University of Oregon and among aspiring geologists like me, Goles was revered.

As I was signing up for classes, Goles turned to me and said, “Ryan, there’s a course I’d like you to take: geochemistry. It’s a graduate-level course, but I know you can handle it, and I’d really like it if you took this course.”

There were a number of prerequisites that I hadn’t taken yet, but Goles assured me that I could get in—after all he was teaching it. I was shocked and honored to be personally asked to take his class, so I said yes and signed my name on the dotted line. He smiled and left the desk to a graduate assistant.

On the first day of class I went to the geology department and looked for the room that the schedule listed. The room I found had mostly graduate assistants and even a couple of younger geology professors in it. “That’s not it,” I said to myself and searched the rest of the building for the right class. Eventually, I made my way back to the first room that was listed on the schedule, and there was Gordon G. Goles standing in front of the class. He looked at me through his black plastic glasses, smiled, and said, “Ryan, come on in and have a seat.”

Goles began the lecture, and … well, he may as well have been speaking Greek. I had no idea what he was talking about.

The class ended, and I went up to him and told him I didn’t understand anything he had said. He told me not to worry, that he would help me through the class, and that not only would I pass, but that I would enjoy the course as well. Confused, I stayed in and began to learn “the Greek.”

It turned out the reason he wanted me in the class was that when he had previously taught it all of the students in his class were getting high grades. He was concerned that the pace may be too slow and the subject matter too easy. He worked with me and—well, my old friend the I Ching probably explains it the most appropriately: “Before a brilliant person begins something great, they must look foolish in the crowd.”²

I was the perfect guinea pig. He would give me the exams a day before the test and coach me so I’d understand what the questions were asking. I didn’t have a way of solving the questions, but understanding what was being asked was an important step forward. I found him to be a delightful man with a passion for scientific discovery. His conclusions were based on hard evidence that could be reproduced, not on conjecture or theory. When he had an opinion, he stated so and was careful to separate the facts from his thoughts or best guess. In short, he was a true man of science.

He ended up giving me a B for the class, and I did take away some knowledge other sophomores who were studying geology didn’t have. Based on working with me, he concluded that the course was tough enough. His students, including me, knew that he was an extremely talented teacher.

Why anyone would be that enthusiastic about geochemistry, I don’t know. The I Ching didn’t help me there.

Okay, even if I wasn’t going to be a geochemist, I liked geology and stuck with it as my major. I graduated in May 1984 with a bachelor of science degree. I knew I wasn’t going into the NFL, my college girlfriend had dumped me for someone who was, and I decided to drown my sorrows. Literally. I was going to combine love for swimming and my degree in geology by enrolling in a diving school in the hopes of surveying the region’s subsurface geological activity.