Vermont HF Ban is Bad Public Policy
Recently, the Vermont legislature passed a bill that outlaws the process of hydraulic fracturing in that state. I have to admit that my initial reaction to this was to yawn and compare this action by Vermont to the State of Florida outlawing snow skiing. After all, there’s currently no exploration for oil and natural gas taking place in Vermont, and thus, no hydraulic fracturing going on. So basically, the Vermont legislature’s action is purely symbolic with no practical effect, at least for now.
So what, right? Well, let’s give it a little further thought.
Let’s think back to just 2005, seven years ago. In that year, the industry had yet to discover the Haynesville Shale in Northwest Lousiana — and it had only at that point recently discovered the massive Marcellus Shale that spans portions of five northeastern states. In 2005, we were still three years away from Petrohawk developing the first successful well into south Texas’s own Eagle Ford Shale, which today is the hottest oil and gas development area in the nation, and probably in the world.
So while we chuckle right now at the apparently silly action of a state attempting to ban an activity that has been performed safely more than a million times in a span of 65 years, and which in any case isn’t even taking place anywhere within its borders, it must also be pointed out that no one actually knows with any certainty what potentially productive geologic formations might lie beneath Vermont’s surface. What if, three years, or five years, or ten years down the road, some enterprising geologist were to discover a formation underneath Vermont that would, if developed, have the potential of adding tens of billions of dollars and thousands of jobs to that state’s economy, as the Eagle Ford is adding right now to the Texas economy? Were that to happen, this seemingly silly act will have effectively denied the citizens of Vermont the ability to benefit from their own mineral resources.
Having now spent 33 years in the oil and natural gas industry, I can assure you that the one and only thing we can predict with absolute certainty in our industry is that things will change. What we think we know today may well be wrong tomorrow.
Here’s a personal example of just how wrong experts can be about this industry’s future. In 2003, I participated in a study sponsored by the Department of Energy via the National Petroleum Council designed to assess the potential supply and demand situation for U.S. natural gas through the year 2025. We had some of the very brightest people from industry, academia and environmental groups working on this project for 9 months, and at the end we produced a report we all felt confident provided as accurate picture as current information and the best economic projection models could provide.
By 2007, we had all begun to feel that maybe we had missed the boat on some aspects of the study. By 2009, with the discoveries of the Haynesville, Marcellus, Eagle Ford, and a couple dozen additional shale plays around the country that none of us knew about in 2003, we all realized we had been completely wrong about everything. Literally everything.
So the members of the Vermont Legislature no doubt feel very good about themselves right now, but let’s be honest: this is not good public policy. And the potential for looking very silly somewhere down the road is very high. Believe me, I know from firsthand experience.