Georgia boasts no native sources of fossil fuel — coal, natural gas or oil — yet the energy industry fuels this state’s economy just as surely as if it were the epicenter of operations.
As the state slowly recovers from the economic downturn, the 50 percent drop in prices at the nation’s gas pumps has been a mixed blessing. On one hand, it gives commuters a cheaper trip and lowers the cost of doing business. On the other, it reduces the viability of recovering “unconventional” oil and natural-gas resources in an already-hostile regulatory environment.
While hydraulic fracturing has been around in one form or another for 150 years, the industry boom began when higher oil prices combined with innovative drilling to make it feasible to extract previously inaccessible, “unconventional” shale gas and oil resources. From 2007 to 2012, increased production resulted in U.S. crude-oil reserves increasing 43 percent and natural-gas reserves growing 30 percent.
Economic viability for fracking, according to experts, requires oil prices around $80 a barrel. This week, oil was trading at $48-$56 per barrel, the result of a deliberate effort by OPEC to drive U.S. shale producers out of the market. As Bloomberg News reports, “That way Saudi Arabia, the cartel’s biggest exporter, can keep its market share in the U.S.”
How long OPEC can keep this up is anybody’s guess. Obama-administration policies exacerbate the challenge. Last month, President Obama vetoed the Keystone Pipeline, ignoring scientific research and depriving Americans of jobs and our allies’ resources. Last week, tougher regulations for fracking in federal lands doubled down on the hurt.
A 2014 U.S. Census Bureau report found, “mining, quarrying, and oil- and gas-extraction industries were the most rapidly growing part of our nation’s economy over the last several years.” Today, the industry responsible for abundant, affordable fuel is scaling back operations and auctioning off equipment. The number of new wells has fallen more than 38 percent.
Middle Georgia’s “kaolin belt,” especially, feels the hurt as the fracking downturn affects mining and manufacturing of proppants, tiny ceramic beads using kaolin and bauxite ore. Proppants prop open the fractures as shale gas and oil are extracted. Some examples:
• In February, French company Imerys announced it was indefinitely “mothballing” a facility in Andersonville (opened in 2012) and reducing production at a $140 million facility in Wrens that it purchased in April 2013. The Andersonville facility includes 16,000 acres devoted to mining and processing kaolin and bauxite into proppants.
• In March, Carbo Ceramics, a Houston-based company that is the world’s largest supplier of proppants, announced it was closing its plant in McIntyre. The company, which has plants in Toombsboro and Millen, said it’s “managing output at other facilities,” which includes slowing down and idling production as deemed necessary. According to news reports, Carbo’s Georgia investment of more than $350 million provided more than 200 Georgians with jobs.
“Our business is about 80 percent local and about 20 percent tourist, so when we lose a company like Imerys, when they lay off people, it really hurts us,” an Andersonville store owner told WBRC News.
Georgia companies involved in pipeline- and drilling-equipment manufacturing also are trying to outwait OPEC and compensate for bad policy. Meanwhile, it behooves Georgians to remember that unfriendly energy policies out of Washington, D.C., and the White House don’t just hurt far-off Canada or Alaska’s Arctic National Wildlife Reserve. When they slam the door on opportunity, Georgia’s foot is in that door.