Today’s podcast is Part 1 of a two part series discussing the current state of the global energy supply and how it ultimately relates to the war in Ukraine.
Our guest is Dr. Andrew R. Thomas, author and business professor at University of Akron. He has published 25 books, most of them at the intersection of global strategy, business development, security and energy. In 2018 he published a book called American Shale Energy and the Global Economy. He also published a book in 2014 called Geopolitics, Development and National Security, Romania and Moldova at the Crossroads.
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Andrew started the interview by explaining the fracking process. Fracking is defined as fracturing the rock under the earth’s surface to extract trapped carbon fossils, particularly oil and natural gas. Fracking in the United States first began in the late 19th Century, in Titusville, Pennsylvania. People shot artillery shells down holes using old Civil War cannons to break up rock.
By the 1940s, companies like Halliburton started experimenting with shooting water down holes in the ground to break up rock. The process pretty much remained the same until 1995, when Nick Steinsberger, an engineer at Mitchell Energy, discovered that by shooting water 20 or 30 times more intensely than had been done previously one could break up the rock enough to release substantially more oil and natural gas. Fracking suddenly had the potential to be a sustainable and profitable business. Other technological advancements in fracking were developed in following years, namely, drilling horizontally. In the mid 2000s the United States suddenly found itself energy independent for the first time in decades. Energy independence dramatically changed US foreign policy, which often had been dictated by its reliance on oil and gas from other countries, who were not always the friendliest to the US.
Fracking does have some environmental problems, which Andrew says have been significantly reduced in recent years. There are two main environmental issues fracking companies run into. Sometimes drilling can pollute drinking water if it is too close to the water table. In the fracking process the fluid that is shot down to break up the rock contains chemicals such as sulfuric acid and guar gum. Guar gum happens to be an ingredient in Twinkies, but it’s not a good addition to drinking water.
For a while, drillers didn’t know of a good way to dispose of the fluid they used for fracking, and sometimes they dumped it into rivers. Also, frackers dispose of fluid shooting it down into concrete-lined injection wells, going 20,000 to 30,000 feet beneath the surface of the earth. The fluid usually doesn’t leak, but the process can cause earthquakes because it’s done around geological plates. The US Federal government, primarily under the Obama administration, insulated itself from handling the environmental regulations of fracking by designating most oil and gas drilling under the jurisdiction of state governments. Most States with fracking industries have dramatically improved their environmental regulations for fracking. Unfortunately, Oklahoma and Texas have not self-regulated significantly. Texas happens to have the greatest supply of oil and natural gas in the country.
In recent years, the private investment going into fracking has softened because releasing large amounts of energy resources into the world causes prices of oil and gas to fall, making the business less profitable. Also, energy producing countries such as Saudi Arabia and Russia flooded the world market with their oil and gas in an effort keep energy prices low, which would put American frackers out of business. Vladimir Putin even put out propaganda arguing the negative environmental effects of fracking. Some fracking companies did not survive the falling energy prices, but the ones who did survive improved their companies, coming up with new creative, more efficient processes.
European countries, aside Great Britain for a time, have stayed away from fracking, primarily for environmental reasons. They don’t have a federalist system like that of the United States, which grants autonomy to state governments to make their own environmental regulations. Russia has enough easily accessible oil and natural gas that it has no need to frack.
In 2010, Germany set a virtually impossible goal to no longer rely on fossil fuels or nuclear energy by 2020. During that period, the Germans became reliant on Russia to supply them with natural gas, which they deemed more environmentally friendly than other types of energy. Because it has become clear that for the foreseeable future they will remain dependent on natural gas, they have started building liquified natural gas (LNG) terminals that enable them to import natural gas from the United States. Natural gas must be converted into LNG when it is transported long distances. When it reaches its destination it then must be converted back to its former state.
The three largest importers of natural gas are China, Japan, and South Korea, and now there is an increasing demand for US natural gas in Europe because it is cheaper than most other sources. Andrew says China is in an energy crises right now. The country has had rolling blackouts since October because they don’t have enough coal and natural gas. In October, China started buying coal from North Korea (violating US sanctions). China also relies on Russia for energy, which explaines Putin’s visit with Xi Jinping a week before the Olympics. There is a pretty good chance they also discussed an invasion coming in the next few weeks.
Tune in next week to hear how all this relates to the war in Ukraine.
Question: Would you mind if fracking was done near your home?