Table Of ContentTHE POWER SURGE
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THE POWER SURGE
ENERGY, OPPORTUNITY, AND THE
BATTLE FOR AMERICA’S FUTURE
MICHAEL LEVI
A Council on Foreign Relations Book
3
3
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© Michael Levi 2013
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Library of Congress Cataloging-in-Publication Data
Levi, Michael A.
Th e power surge : energy, opportunity, and the batt le for America’s future / Michael Levi.
pages cm
Includes bibliographical references and index.
ISBN 978–0–19–998616–3 (hardback : alk. paper) 1. Renewable energy—United States.
2. Energy industries—United States.
I. Title.
TJ807.9.U6L48 2013
333.790973—dc23
2012043264
1 3 5 7 9 8 6 4 2
Printed in the United States of America
on acid-free paper
CONTENTS
1
THE BATTLE FOR THE FUTURE OF AMERICAN ENERGY 1
2
“THE BARBARIANS ARE AT THE DOOR” 20
3
ENERGY INDEPENDENCE ON THE HORIZON 50
4
“GAME OVER” 81
5
THE CAR OF THE FUTURE 109
6
“WIN, WIN, WIN, WIN” 143
7
WILD CARDS 179
8
THE ENERGY OPPORTUNITY 195
vi • CONTENTS
Acknowledgments 211
Glossary 213
Notes 217
Index 249
1
THE BATTLE FOR THE FUTURE
OF AMERICAN ENERGY
“Are you with the pipeline company?”
Th e question was undoubtedly a recent addition to the young
trooper’s arsenal. A year earlier, had you asked the offi cer patrolling
State Route 43 outside Carrollton, Ohio, whether people would be
crisscrossing his territory in search of oil and gas, he probably would
have laughed. Th e state had its smatt ering of wells, most left over from
booms turned to busts decades earlier, but fossil fuels, like much else
in rural Ohio, had long been in decline. Th e area had briefl y become
famous the previous October when eighteen tigers, along with a menag-
erie of other exotic animals, escaped a zoo about seventy miles away
and rampaged over the surrounding countryside. 1 Back then, the pros-
pect of an earth-shaking oil boom would have been less plausible than
a highway encounter with a cheetah.
Yet change had come fast, which helped explain why the offi cer,
his squad car lights fl ashing, now found himself suspecting that I was
involved in the oil business as he questioned me by the side of the
road, having pulled me over for an ill-timed pass. Earlier that aft ernoon,
2 • THE POWER SURGE
I’d donned steel-toed boots, a light blue fi re-retardant coat, and plas-
tic safety glasses as I walked toward Neider 10-14-5 5H, a well being
drilled by Chesapeake Energy a few miles northeast of Carrollton. Th e
mercury read eighty-nine degrees, but with diesel generators fi ring
and the drill rig operating at full force, it felt like well over a hundred.
I’d been given a pair of fl uorescent green earplugs to protect myself
from the hundred-decibel fury of the operation (think good seats at an
intense rock concert), but I pocketed them; I wanted the full sensory
experience.
Th e rig, more than ten stories tall, held a drill that had already bored
several thousand feet underground. Now the drill was turning. Slowly,
with the operator at a panel of electronic controls and another heft y
man who introduced himself as Tar Baby (“fi rst name Tar, last name
Baby”) watching over his shoulder, the giant machine fed slightly curved
pipe down the well. Deep underground, the borehole was beginning to
bend, and over the next few days, it would fi nish a full ninety-degree
twist, ending up parallel to the earth’s surface but more than six thou-
sand feet down in the heart of the Utica shale. By the time drilling was
complete, the well would extend sideways another fi ve thousand feet.
Th en the rig would move, and a procession of trucks would come in.
Th e well would be pumped full of water, sand, and a proprietary mix
of chemicals, and fracked.
If Chesapeake was lucky, the well would spit back much of the
water and then start gushing a mix of natural gas and liquids that
were similar to oil. John Neider, at fi ft y-three, would hit the jack-
pot, too: having leased his farmland to the gas company, he’d be in
line for a big royalty check, just like the one he collected when the
company successfully drilled its fi rst well on his property barely a
year before.2
Th at well was just the third in Ohio to produce natural gas and valu-
able oil-like liquids from the deep shale. Th e fi rst had started producing
on June 14, 2011, a year to the week before my visit. It initially pumped
out 9.5 million cubic feet of natural gas and 1,425 barrels of oil and
other liquid fuels every day. 3 Neider’s wells didn’t quite measure up, but
by most industry yardsticks they still scored as a smashing success. So
did properties as far away as Texas, Oklahoma, North Dakota, and, just
THE BATTLE FOR THE FUTURE OF AMERICAN ENERGY • 3
next door, Pennsylvania, all of which were being transformed by an oil
and gas revolution that seemed to be sweeping the land.
For decades, most analysts on Wall Street and in Washington (not to
mention Houston and Dallas) had been resigned to a long, slow decline
for American-produced oil and gas. Now the gush of fossil fuels, not
just from shale but from the deep waters of the Gulf Coast, and, beyond
the U.S. border, the wilds of northern Canada, was bringing with it ever
more excited predictions: billions of dollars in revenues, millions of
new jobs, and, because natural gas was replacing coal in power plants
across the nation, plummeting emissions of carbon dioxide, which
drives climate change. In Youngstown, forty miles north of Carrollton,
mills were humming as they churned out steel pipe and machined
equipment for wells not only in Ohio but also across the Pennsylvania
border to the east. Carrollton itself, like countless other towns across
new oil patches now spanning the country, was being buoyed by an
infl ux of drillers who had moved to follow the new jobs. Perhaps the
most tantalizing prospect, though, was the one captured in two-foot-tall
lett ers on a Chesapeake billboard by the side of the highway. For forty
years, Americans had dreamed of freeing themselves from the shackles
imposed by the need to import oil from volatile regions and distasteful
dictators. Now, with domestic supplies surging, many were convinced
that the goal was within reach. Th e billboard described the oil and gas
boom simply: “Th e Answer to Foreign Oil.”
Not everyone, though, was convinced. Indeed, many were down-
right hostile to the developments. Two days before I visited the rig
near Carrollton, I’d joined some of the most passionate opponents in
Columbus, the state capital, at what its organizers billed as the biggest
antifracking gathering ever. Andrew Sidesinger, a thirtysomething soft -
ware engineer, brought his three young children; it was how he wanted
to spend Father’s Day. Warren Huff , a seventy-four-year-old geology
professor from the University of Cincinnati, spent the drive down tutor-
ing his van mates on the fi ner details of energy in general and shale in
particular. Th ey were among nearly a thousand people who traveled
from every corner of the state, and well beyond its borders, to send a
clear message: oil and gas were not the answer to the nation’s problems.
Indeed, oil and gas only promised to make those problems worse.
