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Truth Squad: Did public dollars unearth new energy resources?

By the CNN Wire Staff
updated 1:25 AM EST, Wed January 25, 2012

Editor's note: Part of the CNN political fact-checking series

(CNN) -- President Barack Obama made a pitch for continued federal support of energy research during Tuesday night's State of the Union address.

The statement: "The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don't have to choose between our environment and our economy. And by the way, it was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock -- reminding us that government support is critical in helping businesses get new energy ideas off the ground."

The facts:

The former Standard Oil of Indiana (later Amoco, now part of BP) first tested the use of high-pressure liquid to break up underground rock formations in 1947. The process, now known as hydraulic fracturing or "fracking," was aimed at releasing natural gas from a limestone formation in southwestern Kansas. (http://www.spe.org/jpt/print/archives/2010/12/10Hydraulic.pdf)

The technology has led to a boom in gas exploration in states like Pennsylvania and Ohio, which sit atop extensive shale rock formations. The U.S. Department of Energy says shale has the potential to provide nearly half the American supply of natural gas, a cleaner-burning fuel than coal or oil. But people living near wells have raised concerns about contamination of their drinking water by gas and the chemicals used to release it. (http://www.eia.gov/energy_in_brief/about_shale_gas.cfm)

While private industry pioneered the practice, far cheaper sources of oil and gas were readily available at the time. That began to change after the formation of the oil cartel OPEC and its 1973 embargo on the United States.

As a result of the embargo, and the oil shock that followed the Iranian revolution in 1979, Washington began to pour resources into developing alternative sources of oil and gas. Between 1978 and 2000, the federal government spent about $1.5 billion on oil and gas production research, much of it on extracting fuel from shale, according to a 2001 report by the National Academy of Sciences. But the process remained expensive, and research faded as oil prices came back down in the 1980s.

Not all federal research was successful, and one series of tests in the late 1960s and early 1970s raises eyebrows today. In the ultimate "fracking," the U.S. government attempted three times to use nuclear bombs to open up subterranean gas formations in the Rocky Mountains -- two in western Colorado and one in New Mexico. The tests produced less gas than predicted, and what was freed was radioactive.

By the 1990s, private industry began to step back into the business with new technologies that lower costs, leading to today's boom.

The verdict: True, but incomplete. Federal research helped boost shale research in the last decades of the 20th century, particularly in the 1970s. But private industry originated the technology and picked up the slack as federal investments in research waned.

CNN's Matt Smith contributed to this report.

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