Natural Gas Is Our Best Hope for Energy Independence

From Charles Hugh Smith at the OfTwoMinds.com blog, here's a report from Ray W., an energy consultant. It offers some hope that the United States can overcome its oil addiction, with smart planning and effective leadership. Can we do it? Time will tell.

I try to understand the key dynamics of the energy marketplace because I believe that we have reached peak oil and the modern countries are so dependent on fossils fuels. The report below seems to be very objective.

I worry that the Saudis and big oil companies have so much influence in our government that our energy policy will remain the same, until we run out of money.

Of the three main fossil fuels, natural gas is uniquely situated.

Oil is nearing peak production. To find new reserves, companies such as BP, Shell, and ExxonMobil venture into ever more hostile environments, both physical and political, spend ever higher amounts of money, and take ever greater risks. Deepwater Horizon, the oil platform that detonated and sank in the Gulf of Mexico and spewed four million barrels of crude into one of the world’s most productive fisheries, is a tame example.

For real expense and environmental risk, look at the tar sands in Canada; for political risk, look at the Niger Delta. The increasing cost of oil exploration and production will consume a larger share of GDP, just as health care does, and if we continue to expand our dependency on oil, we will continue to erode the standard of living for all but the very wealthy. The trajectory of the price of oil is structurally upward.

Coal is simply nasty. It’s advantage: it’s plentiful and therefore cheap. Otherwise, it’s a supremely destructive substance at all stages of its exploitation, from mining to transport to combustion to ash disposal.

Natural gas is far more plentiful than oil and far less environmentally destructive than coal.

Gas produces about 40% of the carbon dioxide of coal for the same kilowatt-hour of power generation. It leaves no solid waste at all, unlike coal, which leaves tremendous piles of ash that must be disposed of and that are susceptible to environmental catastrophe. The Kingston spill in 2008 deposited 5.4 million cubic yards (about four times the debris of the World Trade Centers) in the Emory and Clinch Rivers in Tennessee.

Gas contains no mercury, lead, arsenic, or other heavy metals as does coal. At pipeline quality, its combustion produces no sulfur dioxide (the main cause of acid rain) and far less nitrous oxide (the main cause of smog) than coal.

Gas is transported by pipeline, which is extremely efficient. Pipelines, being underground, are also visually and logistically unobtrusive and, despite the recent tragedy in San Bruno, California, generally safe. Far more people have been killed in coal-related accidents, not to mention aviation or automobile accidents, than have been in gas-related accidents.

Now we come to extraction, where things get more complicated.

In the past three years, the amount of natural gas produced in this country has increased 16%, from 18 to 21 trillion cubic feet. This is attributable to recent rapid advances in two drilling techniques: horizontal drilling and hydraulic fracturing. The high price of gas earlier in the decade spurred the development of these technologies, which extract gas from solid rock, rather than from conventional pooled deposits.

Extraction presents some serious environmental issues. Some gas deposits contain a fair amount of sulfur, which must be removed and disposed of. Most extracted sulfur is made into sulfuric acid for industrial purposes. Other deposits contain carbon dioxide in quantities as much as 12 percent by volume, which reduces the resource’s greenhouse gas advantage. And it takes a great deal of energy to drill for gas. The rigs generally run on diesel. The recently developed techniques for extracting gas from shale formations also consume large amounts of water. That said, gas extraction doesn’t use nearly the amount of energy or water as coal mine excavation.

Water will be the limiting factor for expanding gas production in the United States. Some shale gas producers have been working diligently to find environmentally acceptable ways to minimize the use of water, mostly through reuse. In shale gas production, the water is injected under pressure to fracture the rock, which liberates the gas.

The injected water contains several chemicals to provide for the optimal viscosity to enhance fracturing while still being liquid enough to withdraw easily. Most producers use less than a dozen chemicals, which comprise 0.5 percent of the injection stream. The very high numbers of chemicals (approaching 600) quoted in the film "Gasland" are an amalgamation of all the chemicals ever used for fracturing across the industry.

Some producers are racing to gain first-mover advantage in the shale plays, which seem to pop up every three months. These producers tend to be less cautious than others, and this is how accidents happen. But there is nothing intrinsically more hazardous or risky about drilling for gas in shale formations than drilling for conventional gas, or drilling for oil, or mining for coal.

Gas-bearing shale tends to be several thousand feet (one to two miles) below the aquifer. There is virtually no way for the gas to migrate into the aquifer except through the vertical component of the well that penetrates the water table en route to the gas resource. Gas wells, like oil wells, are encased in cement to protect the surrounding ground from seepage. Sloppy procedures can result in bad cement jobs. But this risk is present for any gas or oil well; it is not particular to shale gas.

The United States can substantially reduce oil usage and coal usage and improve carbon dioxide emissions by increasing the production and consumption of natural gas. We can reduce carbon dioxide emissions by 20% within weeks, simply by switching about 15% of coal-fired electric generation to gas-fired, using existing spare capacity in the gas-fired fleet.

There is plenty of gas to make this happen without risking huge price run-ups. Gas prices on average might move up about $1.00 per MMBtu, from the $4.00-$5.00 range to the $5.00-$6.00 range. While this would be a 20-25% increase, other costs would go down, specifically the costs of coal-caused pollution. This does not consider the future value preserved by slowing climate change. Also, increased demand would spur increased production, which would moderate such price increases.

Eventually, gas use will have to be reduced if we are to avoid the worst of climate change. Increased gas use is a transitional strategy for the next 20-30 years, to provide time for renewable energy and efficiency technologies to be developed and deployed. However, even at that point, gas would still have a role. It is the logical fuel to use to complement the intermittent nature of renewable electric generation.

Technological improvements are likely in electric storage, but electric storage is unlikely to be economical enough to span all 24 hours of the day. Gas, delivered through pipelines, is an on-demand electric generation fuel, unlike coal or oil, and can respond instantaneously as minute-to-minute consumer demand and renewable generation fluctuate.

If we craft public policy to favor gas to displace coal and oil, we have to be careful not to grow complacent. Gas is not a panacea for climate change. It is still a fossil fuel. However, it is a readily available, pragmatic, interim solution as we move to renewables and efficiency over the next 20-30 years.

 

Letter from T. Boone Pickens to WSJ

Here’s a letter published in the Wall Street Journal from T. Boone Pickens. He is responding to a letter criticizing his plan from Mr. Jenkins.

Link: Letters – WSJ.com.

This Is My Plan for American Energy, What’s Yours?

I read Holman Jenkins’s "Boone Doggle" (Business World, Aug. 6) about my energy plan and I’m convinced that he hasn’t even read my plan. So for the benefit of Mr. Jenkins and his readers, I’ll go over it again.

There are two numbers everybody should keep in mind. The first is 70% — that’s how much of our oil comes from foreign nations.

The second is $700 billion — that’s how much of our money is sent overseas to pay for that oil every year.

Mr. Jenkins argues that this isn’t technically a "transfer of wealth." You can call it whatever you want, but common sense would call it a crisis. It’s hitting every part of the economy, and it’s only going to get worse because we consume 25% of the world’s oil, but we only have 3% of the oil reserves. For years we paid foreign nations to send us their oil and didn’t worry about it because it was cheap. But now it’s not and it matters a great deal.

We’ve had warnings before. Some of us remember the oil embargo of 1973. Back then we were importing less than 30% of our oil but it was still a crisis. And what did we learn? Today we’re importing nearly 70%. We all have — and I emphasize all — allowed our nation’s energy future to rest in the hands of foreign interests. And if we need to know how dangerous it is to rely on other countries for our energy, just look at what’s happening in Georgia. Yes, we buy some oil from our friends, but we also buy from some who aren’t so friendly.

We have to develop domestic energy alternatives and set ourselves on the road to self-sufficiency. Ultimately, that will mean using domestic renewable energy to generate electricity and power our vehicles. Unfortunately, clean, renewable fuels for transportation aren’t ready yet. So here’s my plan to break the foreign stranglehold.

It starts with wind. A Department of Energy study says we can generate 20% of our electricity from wind. I believe that with private investment and proven technology, we can generate 20% of our electricity from wind within 10 years — which happens to be the same amount we currently generate using America’s natural gas. Moving to wind power will allow us to conserve domestic natural gas for transportation. It’s cheaper, it’s cleaner, the technology is ready now and it’s abundant — America only has 20 billion barrels of oil and we’re trying to drill for a few billion more, but we already have the natural gas equivalent of 110 billion barrels in proven reserves and 170 billion more that are being accessed through new technology.

But most importantly, natural gas buys us one thing money can’t buy — time — the time to develop the renewable fuels that will finally end foreign oil’s stranglehold on the U.S.

That’s my plan — to harness domestic resources to reduce the impact of foreign oil and buy us time to perfect the next generation of clean renewables, allowing us to invest more of that $700 billion a year in our own destiny. I don’t expect everyone to agree with it, but I think it’s a good one.

My father used to tell me that a fool with a plan is better than a genius with no plan. So I ask, what’s Mr. Jenkins’s plan?

T. Boone Pickens
Dallas

Why Are We Helping Saudi Arabia Build Nukes?

Congressman Edward J. Markey, in an opinion published in the Wall Street Journal, asks why we are arming an oil and sun rich Islamic country with nuclear energy. Does Saudi Arabia really need nuclear energy? How does Israel feel about this? Are we trading nuclear secrets for an increase in oil production? Will this come back to bite us?

Link: Why Is Bush Helping Saudi Arabia Build Nukes? – WSJ.com.

Last month, while the American people were becoming the personal ATMs of the Organization of the Petroleum Exporting Countries, Secretary of State Condoleezza Rice was in Saudi Arabia signing away an even more valuable gift: nuclear technology. In a ceremony little-noticed in this country, Ms. Rice volunteered the U.S. to assist Saudi Arabia in developing nuclear reactors, training nuclear engineers, and constructing nuclear infrastructure. While oil breaks records at $130 per barrel or more, the American consumer is footing the bill for Saudi Arabia’s nuclear ambitions.

Saudi Arabia has poured money into developing its vast reserves of natural gas for domestic electricity production. It continues to invest in a national gas transportation pipeline and stepped-up exploration, building a solid foundation for domestic energy production that could meet its electricity needs for many decades. Nuclear energy, on the other hand, would require enormous investments in new infrastructure by a country with zero expertise in this complex technology.

Have Ms. Rice, Mr. Bush or Saudi leaders looked skyward? The Saudi desert is under almost constant sunshine. If Mr. Bush wanted to help his friends in Riyadh diversify their energy portfolio, he should have offered solar panels, not nuclear plants.

Saudi Arabia’s interest in nuclear technology can only be explained by the dangerous politics of the Middle East. Saudi Arabia, a champion and kingpin of the Sunni Arab world, is deeply threatened by the rise of Shiite-ruled Iran.

The two countries watch each other warily over the waters of the Persian Gulf, buying arms and waging war by proxy in Lebanon and Iraq. An Iranian nuclear weapon would radically alter the region’s balance of power, and could prove to be the match that lights the tinderbox. By signing this agreement with the U.S., Saudi Arabia is warning Iran that two can play the nuclear game.

In 2004, Vice President Dick Cheney said, "[Iran is] already sitting on an awful lot of oil and gas. No one can figure why they need nuclear, as well, to generate energy." Mr. Cheney got it right about Iran. But a potential Saudi nuclear program is just as suspicious. For a country with so much oil, gas and solar potential, importing expensive and dangerous nuclear power makes no economic sense.

The Bush administration argues that Saudi Arabia can not be compared to Iran, because Riyadh said it won’t develop uranium enrichment or spent-fuel reprocessing, the two most dangerous nuclear technologies. At a recent hearing before my Select Committee on Energy Independence and Global Warming, Secretary of Energy Samuel Bodman shrugged off concerns about potential Saudi misuse of nuclear assistance for a weapons program, saying simply: "I presume that the president has a good deal of confidence in the King and in the leadership of Saudi Arabia."

That’s not good enough. We would do well to remember that it was the U.S. who provided the original nuclear assistance to Iran under the Atoms for Peace program, before Iran’s monarch was overthrown in the 1979 Islamic Revolution. Such an uprising in Saudi Arabia today could be at least as damaging to U.S. security.

We’ve long known that America’s addiction to oil pays for the spread of extremism. If this Bush nuclear deal moves forward, Saudi Arabia’s petrodollars could flow to the dangerous expansion of nuclear technologies in the most volatile region of the world.

While the scorching Saudi Arabian sun heats sand dunes instead of powering photovoltaic panels, millions of Americans will fork over $4 a gallon without realizing that their gas tank is fueling a nascent nuclear arms race.

PS: Atanu Dey  has an explanation:

All indications are that one of these days the US will have to take action against Iran for their ambition to develop nukes. In the meanwhile, the US is putting the next country — Saudi Arabia — in the pipeline for the same old routine: sell them technology, and then go invade them and take over the oil fields under the pretext that they have WMD.

It’s quite impressive. I am not only impressed by the American strategy but also impressed by the foolishness of the countries that fall for it.

Link: Iraq now, Iran next, Saudi Arabia for later

The Future of Industrial Agriculture

Thinker and writer John Michael Greer describes why organic farming is the next step in the evolution in agriculture that is unfolding in the United States. Excerpts below.

Link: The Archdruid Report: Agriculture: Closing the Circle

It’s extremely common for people to assume that today’s industrial agriculture is by definition more advanced, and thus better, than any of the alternatives. It’s certainly true that the industrial approach to agriculture – using fossil fuel-powered machines to replace human and animal labor, and fossil fuel-derived chemicals to replace natural nutrient cycles that rely on organic matter – outcompeted its rivals in the market economies of the twentieth century, when fossil fuels were so cheap that it made economic sense to use them in place of everything else. That age is ending, however, and the new economics of energy bid fair to drive a revolution in agriculture as sweeping as any we face.

Industrial farming follows an extreme case of the extractive model; the nutrients needed by crops come from fertilizers manufactured from natural gas, rock phosphate, and other nonrenewable resources, and the crops themselves are shipped off to distant markets, taking the nutrients with them. This one-way process maximizes profits in the short term, but it damages the soil, pollutes local ecosystems, and poisons water resources. In a world of accelerating resource depletion, such extravagant use of irreplaceable fossil fuels is also a recipe for failure.

…organic farming moves decisively toward the recycling model by using organic matter and other renewable resources to replace chemical fertilizers, pesticides, and the like. In terms of the modern mythology of progress, this is a step backward, since it abandons chemicals and machines for compost, green manures, and biological pest controls; in terms of succession, it is a step forward, and the beginning of recovery from the great leap backward of industrial agriculture.