Priest on Sernovitz, 'The Green and the Black: The Complete Story of the Shale Revolution, the Fight over Fracking, and the Future of Energy'

Author: 
Gary Sernovitz
Reviewer: 
Tyler Priest

Gary Sernovitz. The Green and the Black: The Complete Story of the Shale Revolution, the Fight over Fracking, and the Future of Energy. New York: St. Martin's Press, 2016. 288 pp. $27.99 (cloth), ISBN 978-1-250-08066-0.

Reviewed by Tyler Priest (University of Iowa) Published on H-Energy (June, 2016) Commissioned by Tammy Nemeth

Hydraulic fracturing, or “fracking,” is the act of drilling a well a mile or more deep into the earth, steering it horizontally through a tightly compacted layer of shale or sandstone, and then pumping thousands of gallons of water laced with small amounts of chemicals and proppants to fracture the rock and release the oil or gas trapped within. Also known as shale extraction, fracking is relatively new, profitable under balanced market conditions, and environmentally controversial.

Is it possible for a political liberal to support fracking? Absolutely, insists Gary Sernovitz, a private equity oil investor, novelist, and author of perhaps the most engaging book published so far on the subject. Although he has a vested interest in promoting shale development, Sernovitz is also a supporter of liberal and environmental causes, so much so that his Houston, Texas, friends chide him as a “Democrat-donating, yoga-practicing, skinny-pants-wearing New York City cliché” (p. 6). With public discussion over fracking in the United States intractably polarized between scaremongering and hype, it is rare to find someone who attempts to straddle the divide between “the green and black,” between environmentalists and oilmen. Sernovitz is partial to the industry that pays his bills, but he portrays environmental and local opposition to fracking fairly and sympathetically. Ultimately, he makes a convincing case that the economic benefits, reduced greenhouse gas emissions, and enhanced energy security resulting from shale extraction outweigh the environmental and social costs, many of which can be ameliorated. These are outcomes that should appeal to Americans across the political spectrum.

Historians, as well, must consider these outcomes, even if they are not ready to embrace them. This means rethinking the scarcity paradigm that has governed the emerging fields of “energy humanities” and “energy history.” In characterizing energy developments since the 1970s, scholars in these fields tend to assume the inexorable exhaustion of petroleum and an imminent transition to a renewable energy future. Sernovitz demonstrates, to the contrary, how oil and gas reserves have been greatly enlarged and how the burst of innovation unleashed by fracking has only just begun. Even though muted at the moment by unusually low prices, the shale boom will likely change our views of energy history just as it has transformed the oil and gas business.

The Green and the Black investigates shale extraction from five different perspectives: the industrial, local, financial, global, and national. Sernovitz emphasizes the uniquely American aspects of the boom, not only the favorable geology underlying large parts of the continent but also the plucky “independents” in the vanguard of innovation. He features an entertaining and now legendary cast of characters, such as George Mitchell, Harold Hamm, Mark Papa, and Aubrey McClendon, the four men on “the Mount Rushmore of the shale revolution“ (p. 46). Prominent critics, like Bill McKibben, Anthony Ingraffea, and Josh Fox, also receive their due. Sernovitz takes seriously the opinions and arguments on both sides, sorting out empirical evidence from hyperbole on a range of contested issues.

Offering accessible tutorials on modern drilling and fracking, he details the process by which “tiny incremental adaptations led to a stampede of industrial creativity” (p. 14). These adaptations coalesced around three technologies that constitute the shale revolution:  slick-water fracking, horizontal drilling, and multistage completions. The results have been stunning. US natural gas production has soared from fifty billion cubic feet per day in 2005 to seventy-two billion cubic feet per day in 2015, an increase equivalent to the combined output of Canada and Algeria, two of the top ten gas producers in the world. During the same period, US oil production rose from 5.1 to 8.7 million barrels a day, an increase equal to the daily production from Iraq, the world’s sixth largest producer. In response to skeptics who contend that fracking is an unsustainable bubble, Sernovitz emphasizes how immature the techniques still are, with many more incremental adaptations to come that will undoubtedly drive costs down and efficiencies up.

Wells that were considered “unconventional” ten years ago are now “conventional.” Although the industry has largely given up on the distinction, peak oilers continue to describe fracked oil as unconventional, so they can maintain that oil drilled by traditional methods, the “easy” oil, is still in decline. Sernovitz points out, however, that most onshore wells in the United States today are fracked, including those in so-called conventional reservoirs. Fractured wells may not produce the cheapest oil in the world, but they are cheaper and easier than those drilled in ten-thousand-foot ocean depths. The history of the oil and gas industry in the United States, from its origins, has been about turning the unconventional into the conventional. Fracking is the latest chapter in that story.

What about the environmental risks and consequences, as depicted in Josh Fox’s provocative 2010 documentary, Gasland, which launched the anti-fracking movement? Sernovitz catalogs the multitude of errors, distortions, and fabrications in the film, but he also expresses grudging admiration for the questions it raises. He cannot deny “that the lives of the people in Gasland had been damaged by the industry in which I work” (p. 68). He admits “drilling and fracking are loud, messy activities that bring pollution and disruption to communities” (p. 7). Poor casing and cementing in a few early wells contaminated groundwater, causing understandable alarm. Industry secrecy about the chemicals used in fracking sowed further distrust. Underground injection of wastewater has produced unnerving earth tremors, or “induced seismicity,” in fault-prone locations, such as in central Oklahoma. For those concerned about climate change, like Sernovitz himself, fracking has extended the fossil fuel era longer than desired.

Many of the environmental problems associated with the shale revolution nevertheless have been overblown or are fixable. Concerns about water contamination from the actual fracturing process have proven to be unfounded. The chemical registry, FracFocus, has helped dispel the myths about the chemicals used in fracking and their threat to aquifers. The methane discovered in some water wells and faucets has turned out to be unrelated to fracking or drilling. The notorious tap ignited in Gasland, for example, was connected to a water well that encountered several coal seams. Fracking does use a lot of water, about forty-four billion gallons per year, but this is only 0.03 percent of the total water consumed in the United States, or less than one-tenth the amount that evaporates from the Lake Mead and Lake Powell reservoirs on the Colorado River. Moreover, an increasing amount of produced and flowback water, as much as 90 percent in places, is recycled. Debate continues over the amount of methane that leaks from natural gas wells and infrastructure. Sernovitz believes, however, that the most comprehensive data indicate that the amount is smaller than critics charge and that “corporate self-interest and new regulations will make it a smaller problem still” (p. 179). The same can be said for the induced seismicity problem.

Weighing the risks and rewards, Sernovitz concludes that the shale revolution, on balance, has been good for the American economy, its environment, and its national security. Accounting for new reserves and infrastructure, he estimates that it has created, as of 2015, almost two trillion dollars in wealth initially spread among oil and gas firms, service companies, and landowners. Not included in this figure is the money it saved consumers. In the absence of fracking, oil and natural gas prices would likely be much higher today. The US trade deficit would also be higher, and the dollar lower. The boom helped the US economy recover from the financial crisis and recession faster than other advanced economies. It also aided the fight to slow climate change. The displacement of coal by natural gas drove US carbon dioxide emissions 12 percent lower between 2007 and 2012, a reduction 18 percent greater than sixty-two other countries combined. Furthermore, without shale technology, dirtier Canadian oil sands would likely be the primary source of new North American oil. Finally, by reducing US dependence on foreign oil and placing a brake on rising global oil prices, the boom gave US foreign policymakers a freer hand in restraining Iran’s nuclear ambitions and added leverage in dealing with Middle East monarchies and Vladimir Putin’s Russia.

Sernovitz may not be able to reconcile hardcore green and black perspectives on one of the most contentious subjects in American environmental politics. But he has staked out important middle territory for those seeking ethical and practical alternatives to the slogans of “drill, baby, drill” and “leave it in the ground.” In the end, he can only try to reassure both himself and his readers “that there is no one-sentence answer to our energy challenges any more than there is a one-sentence answer to life. There is, as in everything, only compromises and imperfect solutions and best available decisions based on data, probabilities, and hope” (p. 238).

Printable Version: http://www.h-net.org/reviews/showpdf.php?id=46391

Citation: Tyler Priest. Review of Sernovitz, Gary, The Green and the Black: The Complete Story of the Shale Revolution, the Fight over Fracking, and the Future of Energy. H-Energy, H-Net Reviews. June, 2016. URL: http://www.h-net.org/reviews/showrev.php?id=46391

This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.

Tyler Priest’s review of my book is so generous, so intelligent in distilling the book’s central points, and so perceptive in its arguments beyond the book that there is little need for me to directly respond to it. Nonetheless, with all the humility of an undergraduate history major addressing professional historians, I thought that it could be helpful to provide some additional thoughts on Priest’s call for “rethinking the scarcity paradigm,” a running thread through his review, my book, and Marta Musso’s recent review of Steven Yetiv’s Myths of the Oil Boom, also on H-Net.

Whether the scarcity paradigm needs to be rethought depends on the duration of the shale revolution and its effects. From daily headlines emerges a sense that the contraction in US shale drilling activity since the 2014 oil price collapse proved that the shale revolution was just another localized oil boom and bust in a century and a half of the same. One can see that this is far from the case if one fully understands four aspects of the revolution: data on production and reserves, a reminder of why shale production is geologically different, the potential global expansion of shale development, and the timing of the shale revolution relative to global decarbonization.

Much of the talk of the US shale “bust” comes down to corporate bankruptcies and the screeching deceleration of oil and gas drilling—down about 80 percent in two years. Yet the pain for some in the industry is a function of economics: prices fell because of an oversupply caused mainly by the shale revolution. Shale oil and gas supply growth, however, is already at the cusp of restarting as prices recover. This is how markets work, and it is important to note that we have not yet seen the geological limit to US shale growth, or even an economic one at “equilibrium” prices. Analysts at RS Energy Group estimate that there are 159 billion barrels of oil and 1,674 trillion cubic feet of gas still extractable in the Lower 48 states—equivalent to thirty-one years of oil production and sixty-one years of gas production at current total US supply rates. Even at eighty dollars per barrel of oil, per RS forecasts, Lower 48 oil production can grow to 13 million barrels per day in 2021 from about 8 million barrels today. Natural gas production is projected to grow 42 percent under similar price scenarios.

The idea of the shale revolution as a sugar high, rather than a real change, also comes from applying the “oil boom” heuristic to something quite dissimilar from other booms. The shales are important because they are different, and they are different because they reversed a feature of the “resource triangle” that—geologically and conceptually speaking—underpinned the scarcity paradigm. Oil industry observers had long assumed an irreversible trend: As the world steadily depleted higher quality oil and gas reservoirs (and consumed the hydrocarbons), it would be forced to access lower quality and more expensive reservoirs—until a crunch point of acute scarcity demanded extreme consumer lifestyle and political changes. The shales are, indeed, wildly lower quality reservoirs by traditional metrics like permeability and porosity. But the revolution occurred because the US industry taught itself to extract oil and gas from these reservoirs more cheaply than “better” reservoirs. That is something truly new, particularly given the shales’ scale and advantages of capital flexibility.

In my book and in this essay, I compare the shale revolution to the dot-come “bubble” of the late 1990s and early 2000s: both were marked by almost unimaginable shifts in the underlying strategy and logic of industries; both attracted too much enthusiastic capital, leading to too much supply; and both saw periods of declining values and the un-survival of the unfit. But the bursting of the dot-com bubble in 2000-2001 hardly halted the spread of the Internet. I strongly suspect that the same thing will be said of the shale pause in 2014-16.

This is partly because of a third feature of the shale revolution: some of the most head-twisting effects of the shales have been in international relations. US oil and gas supply increases and shale-driven global energy price declines have altered the fates and interactions of the United States, Russia, Iran, Saudi Arabia, Brazil, Venezuela, and many other countries. There are political, cultural, infrastructural, capital, and geological reasons why the shale revolution happened “first and most” in the United States, but there are many places where industrial experience and, more important, political will could spark shale booms. One of the looming questions of shale history is whether the story will be contained to the United States and to a lesser extent Canada, China, and Argentina. If the shale revolution does not spread, the current political rebalancing of the world, reoriented on energy strength, will likely continue along the same lines. If shale extraction expands at similar costs and improvements, shale’s global phase could scramble international relations further and lead to even more fossil fuel abundance.

Finally, had the shale revolution occurred in the 1960s, one could see it as nothing more than an afternoon snack for the world’s insatiable hunger for hydrocarbons. But the shale revolution has come, by sheer coincidence, during a period of unprecedented global efforts to decarbonize the world’s energy sources—for the good of us all. Oil and gas consumption is still growing (and grew even faster than normal last year because of low prices), but the long-term growth path has moderated, particularly for oil. Oil consumption will likely reach a period of stabilization and then decline (as coal already seemingly has), barring a major acceleration of demand in China, India, and other developing economies. The shales, in other words, are bringing an abundance of oil and gas at the start of a twenty-to-forty-year period when we can, in many forecasts, see the declining demand for those fuels—not because of energy scarcity but because of more competitive and widespread low carbon energy sources.

While one can declare no energy revolution to be worthy of the name unless it completely reverses the consumption of fossil fuels, I think that revolution is a pretty mild term for a world now capable of entering a multi-decadal period of energy transition under stable prices rather than assaulted by economic and energy inflation, uncertainty, scarcity, and chaos. Sometimes the most important revolutions are ones that prevent violence and distress.

Priest wisely cautions readers against defending old historical paradigms. Certainly, the shale revolution at times can seem too familiar, too good ol’ boy, too oilfield to be history making. But to ignore the deep changes that have already happened, and will continue to happen, because of the shales would be to ignore an ongoing historical transformation still not yet fully explored.

Gary Sernovitz

New York, New York