How much did the Feds really help George Mitchell?

Ever since President Obama, in his 2012 State of the Union speech, gave the federal government credit for developing hydraulic fracturing,  the idea that the feds underwrote fracking has taken on a life of its own. In response to my recent Texas Monthly article on George P. Mitchell, the Houston oilman who developed fracking technology,  several readers were quick to say that Mitchell couldn’t have done it without the government.

Much of the debate actually dates to comments made by former Mitchell geologist Dan Steward, who in 2011 told the Breakthrough Institute:

[The Department of Energy] did a hell of a lot of work, and I can’t give them enough credit for that. DOE started it, and other people took the ball and ran with it. You cannot diminish the DOE’s involvement.

For a sidebar I wrote on Texas Monthly’s website, I talked with Steward about the comments and explored in more detail exactly what the feds did — and didn’t — do:

Steward doesn’t deny the comments, but they took on a life of their own, getting repeated on other blogs. Given the timing, Steward believes Obama’s speech writers picked up on them, although a DOE report from 2007 also credited the government’s funding of research that led to drilling innovations. The attention from Steward’s comments, though, highlighted the government’s role in developing hydraulic fracturing and provided a boost to renewable energyproponents who favor continued government subsidies for their own innovative research projects. At the same time, they seemed to strike a blow for fossil fuel supporters who claim the government should allow the free market to direct energy development rather than “picking winners.”

In all the hoopla, Steward’s point has gotten lost. He is quick to acknowledge that fracking’s success came through the hard work of people at Mitchell Energy, building on the advances of others. Fracking technology has existed for more than a century, and the first commercial fracking job was done in 1947. His comment that “the DOE started it” refers to the Eastern Gas Shales Project, a research effort in the Appalachia Basin from 1979 that proved shale rock was rich in natural gas. The DOE-supported project tested the use of nitrogen foam to fracture shale formations, and its analysis led to a deeper understanding of natural shale fractures.

George Mitchell’s team studied those results while developing the Barnett Shale near Fort Worth, the first modern fracking play. The company relied on research from the Sandia National Laboratory to use micro-seismic technology to map the shale fractures in wells, and Mitchell also benefited from federal tax credits for unconventional drilling, which helped underwrite the cost of developing hydraulic fracturing.

Steward doesn’t deny any of these contributions, and in fact, he was trying to acknowledge them in his interview with the Breakthrough Institute. In hearing the president’s speech, though, he was annoyed that Obama seemed to give the government most of the credit, without mentioning Mitchell. It was, after all, Mitchell’s perseverance and funding that unleashed a new era of American energy and created the jobs Obama touted.

It’s one thing to note that federal research programs helped unlock fracking technology. It’s quite another to use fracking’s success to justify unqualified federal support for energy development programs. Funding the Eastern Gas Shales Project, for example, is quite different that setting mandating ethanol production levels. The government’s role in fracking’s development was important, but not so important that it eclipses the effort and investment of private industry. In fact, fracking is an example of the proper balance between government support for fledging technology and private industry’s development of it.

It wasn’t about “picking winners,” but fostering them. By reducing the cost of early-stage research, the government made it easier for Mitchell to make the technology commercially viable. Even then, it took almost two decades and cost him millions of his own company’s money.

How much did the feds really help with fracking? According to Steward, who was involved with Mitchell’s program from the beginning: “George probably could have done it without the government. The government would not have done it without George.”

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