GECF: the next OPEC

GECF is the Gas Exporting Countries Forum, fifteen gas-producing countries that first met in Iran in 2001. These countries control 73% of the world's natural gas reserves and 41% of production.

Natural gas provides 20% of the US electricity and heats more than half our homes. Until fairly recently we have been able to supply just about all our needs from US wells. Now, we get 13% from Canada and 4% from other countries, including Qatar. Since 2002 we have doubled the rigs drilling for natural gas here, but production has been flat. So, it looks as though we will soon be importing more of our natural gas than we have had to do. As importers, we will be joining Japan, South Korea and Europe in depending more and more on foreign countries to meet our needs.

The five foreign countries that have the most proven reserves are Qatar, Iran, UAE (remember Dubai?), Saudi Arabia and Russia. Our proven reserves rank thirteenth in the world. What are the future political and economic implications of importing more oil and more natural gas?

Maybe natural gas is not the savior

That's the opinion - and belief - of Anthony R. Ingraffea, a professor of civil and environmental engineering at Cornell University.  He makes a strong case, based largely on the fact that natural gas wells leak methane and other contaminants outside their casings and into the atmosphere and water wells.

"Methane is a far more powerful greenhouse gas than carbon dioxide, though it doesn’t last nearly as long in the atmosphere. Still, over a 20-year period, one pound of it traps as much heat as at least 72 pounds of carbon dioxide. Its potency declines, but even after a century, it is at least 25 times as powerful as carbon dioxide. When burned, natural gas emits half the carbon dioxide of coal, but methane leakage eviscerates this advantage because of its heat-trapping power."

Ingraffea claims that many studies show that 5% of new gas and oil wells leak immediately after being opened.  And, over time the concrete in these wells starts disintegrating.  NOAA has done a study that shows leakage rates of 2.3 percent to 17 percent of annual production of oil and gas.  A 2011 study from the National Center for Atmospheric Research concluded that unless leaks can be kept below 2 percent, gas lacks any climate advantage over coal.

Your Water Is Burning

You may be surprised that methane gas could cause your well to begin burning or even explode. It can also enable you to perform a trick of lighting a match as water comes out of your faucet and burn the water. These things have happened in some places in the United States. It tends to happen when the water well is as "close" as 3,000 feet (.6 mile) to a natural gas well.

A study by Duke scientists seems to place the blame for the burning water capability on the "hydraulic fracturing" which is used in 90% of natural gas wells; the fracturing, which involves pumping sand and chemicals into the natural gas well, breaks rocks so that gas can be released and enter the marketing chain. The amount of methane in the affected water wells is considered dangerous by the Interior Department and requires urgent “hazard mitigation” action.

One good thing coming from the study was that the wells were not contaminated.

Fracking and Climate Change

Two Cornell professors claim that natural gas wells created by fracking leak 40 to 60 percent more methane than conventional natural gas wells.This is not good for dealing with climate change. The professors assert that within the next 20 years, methane will contribute 44 percent of the greenhouse gas load produced by the U.S. Of that portion, 17 percent will come from all natural gas operations.

Other Cornell professors disagree. How do we mortals come to a decision? Looking at some previous posts on the subject may help you decide.

Boone Pickens may have something

T. Boone Pickens, the oil and gas man, may actually have a viable plan to reduce our dependence on oil - use wind and natural gas. The middle of the country can be a windy place, but we can use the wind to supply some of our electricity; Pickens thinks 20% by 2030. Natural gas, of which we have plenty, would be used to power cars. It now powers 7,000,000 cars around the world but a platry 150,000 here. The technology exists today. The natural gas exists today. The wind exists today. It sounds reasonable to me. What do you think?

Flaring is not good for us

Flaring is performed by the major energy companies such as Exxon and BP. It is the intentional burning of natural gas as companies drill faster than pipelines can move the energy away. And,  according to data from the three largest shale-oil fields in the United States, it is increasing significantly. Last year, operators across the three basins together flared or vented a record 320 million cubic feet of gas, more than 40 percent above levels seen just five years ago. The pace for the first two quarters of 2019 has been even higher.

Why is it done? There aren’t pipelines close enough to a well to capture and transport the gas, or because gas prices are so low that it’s cheaper to discard the gas than to try to sell it. 

Why is this a bad thing? Because natural gas is a potent contributor to global warming and also wastes vast amounts of energy.

Not a tourist site

Although I've never been to Wyoming, I do believe those who tell me it is a beautiful state. Hence, I was surprised to read about Pavillion, Wyoming. There have been many complaints about water quality there for a number of years and it so happens that the area has been drilled for natural gas for at least twenty years.  In the past ten years residents have had a number of complaints, one of the more interesting being the water is black and smells of gasoline. 

The EPA drilled two monitoring wells last year. Yesterday, they released basic information as to their findings; they did not interpret their findings. ProPublica has been reporting on Pavillion for a few years and has its own interpretation of the findings. As you would expect, things are not good. 

Still, the chemical compounds the EPA detected are consistent with those produced from drilling processes, including one -- a solvent called 2-Butoxyethanol (2-BE) -- widely used in the process of hydraulic fracturing. The agency said it had not found contaminants such as nitrates and fertilizers that would have signaled that agricultural activities were to blame.
The wells also contained benzene at 50 times the level that is considered safe for people, as well as phenols -- another dangerous human carcinogen -- acetone, toluene, naphthalene and traces of diesel fuel.
The EPA said the water samples were saturated with methane gas that matched the deep layers of natural gas being drilled for energy. The gas did not match the shallower methane that the gas industry says is naturally occurring in water, a signal that the contamination was related to drilling and was less likely to have come from drilling waste spilled above ground.

Moving beyond oil

Charles Mann has a fascinating but lengthy article about the world's supply of energy and the various forms we have used - wood, coal, oil, natural gas, wind, sun.  Surprisingly, he does not mention nuclear energy.  Nor does he say very much about the environmental costs of such techniques as fracking.

One of the primary points he makes is that we have consistently been able to develop new techniques for extracting energy from the earth.  It does take a long period time to develop the technologies, but we have done so up to now.  The problem is that climate change is moving so fast that we may not have time today.

One example of the effect of technology on the development of energy is the Kern River oil field in California.  Drilling of the field began in 1899.  In 1949 analysts estimated there were 47,000,000 barrels left in the reserve.  In the next 40 years, 945,000,000 barrels were produced.  At that point, 1989, the estimate of the reserve was increased to 697,000,000 barrels.  In the next twenty years 1.3 billion barrels were produced and the estimated reserve was still close to 600,000,000 barrels.  These analysts are obviously not stupid people, yet they were fantastically wrong here and in many other places.

Land is not the only area to mine for energy.  Since the 1970s we have been trying to mine the sea for crystalline natural gas known as methane hydrate.  Estimates of how much methane hydrate exists in the oceans range from 100 times more than America's current annual energy consumption to 3 million times.  Some expect we will be producing methane hydrate within ten years.

Another issue Mann discusses is oil as both an energy source and a source of political power.  Would we pay any attention to Saudi Arabia if they were not an oil power?  If the world does move to methane hydrate, what would the oil nations do to preserve their political power?

And then if we are mining the seas, what are the risks of conflict between nations?

We are currently lucky because of the boom in natural gas.  But, it too has problems.  Mann is a believer in renewable energy.  However, the costs of converting to renewables is astronomical and conversion cannot happen overnight.  Just think of the effort and money needed to revamp the electrical power grid.  Can we do it in time to save the planet?

Accounting for lease payments

Chesapeake Energy is a big player in the oil and gas business in Pennsylvania.  Over the years it has signed many, many leases with Pennsylvania residents, mainly former farmers.  The company's pitch has been that the lessees will become millionaires in a few years of receiving royalty payments.  One of the lessees got a check for $8,506 for his first month’s share of the gas produced by the wells on his land.  Four months later the wells were producing the same amount of gas, but the royalty check was for $1,690.The difference was for “gathering” expenses; what these consisted of was never explained.

The companies seem to care little for the leases as they deduct expenses for transporting and processing natural gas, even when leases contain clauses explicitly prohibiting such deductions.Another scheme is to set up subsidiaries or limited partnerships to which they sell oil and gas at reduced prices, only to recoup the full value of the resources when their subsidiaries resell it. Royalty payments are usually based on the initial transaction.  

ProPublica has been investigating oil and gas royalties paid to private parties and the government and has concluded that the companies are keeping billions of dollars in royalties out of the hands of private and government landholders.

Another $800,000,000 down the drain

It's amazing how many of my posts about Aghanistan have included the words "down the drain" in their titles. I have not added up the money wasted, but it is likely in the billions. 

The latest report by the Special Inspector General for Afghanistan Reconstruction (SIGAR) talks about the Task Force for Stability and Business Operations (TFBSO). This Task Force was disbanded earlier this year after it had spent $800,000,000. When SIGAR started asking questions about the Task Force, DOD said that, since the Task Force was disbanded, there was no one to answer the questions.

Special Inspector General for Afghanistan Reconstruction decided to concentrate on the Task Force's Downstream Gas Utilization project  to construct a compressed natural gas (CNG) automobile filling station in the city of Sheberghan, Afghanistan. The main purpose of the project was to demonstrate the commercial viability of CNG for automobiles in Afghanistan as part of a broader effort to take advantage of Afghanistan’s domestic natural gas reserves and reduce the country’s reliance on energy imports. 

The project cost SIGAR almost $43,000,000. Yet Pakistan was able to build a CNG station for $500,000. SIGAR could find no trace of a feasibility study to determine the potential return on the investment. Had they done so, they may have discovered that converting a gasoline-powered car to run on CNG would be very expensive for the average Afghan. TFBSO’s contractor, CADG, states that conversion to CNG costs $700 per car; other sources estimate that it costs up to $800.18 According to the World Bank, the average annual income in Afghanistan is $690. 

Was there a market for CNG?

Fixing Fracking?

One of the major problems with fracking is the leaking of methane, which is the primary ingredient in natural gas, and, when it is burned, is considerably less dirty than coal. However, before it is burned if it should get into the atmosphere (which is just about a certainty), it is 84 to 86 times more powerful than carbon dioxide over a 20-year span.

Studies have shown that there are forty separate types of equipment - such as Loose pipe flanges. Leaky storage tanks. Condenser valves stuck open. Outdated compressors. Inefficient pneumatic systems. Corroded pipes. - that can produce methane emissions during the production and processing of natural gas and oil by fracking.

Lowering methane emissions does not require enormously expensive new technology. It can be done with technology that already exists and at fairly minimal cost, perhaps as low as a penny. Furthermore, a 50 percent reduction in methane emissions is the equivalent to closing 90 coal-fired power plants, according to the Environmental Defense Fund.

One state, Colorado, is doing something about it. They have imposed regulations aimed at reducing methane emissions. And industry has gone along with them. Some quotes “we could see the benefit of the rules.” “It really puts a very disciplined process around regular maintenance.”

Changing energy prices in Australia

Australia instituted a carbon tax last year.  Lo and behold, wind power is now cheaper than coal from new plants and natural gas.  Electricity can be supplied from a new wind farm in Australia at a cost of A$80 ($84) per megawatt hour, compared with A$143 a megawatt hour from a new coal-fired power plant or A$116 from a new station powered by natural gas when the cost of carbon emissions is included, according to a Bloomberg New Energy Finance report.   Older coal-fired power stations built in the 1970s and 1980s are still cheaper than wind-powered plants can still produce power at a lower cost than that of wind, the research shows. This change in relative costs is very significant because Australia has some of the world’s best fossil fuel resources.

One of the biggest leaks of natural gas

Of course, it happened in California. It began on Oct. 23, 2015 in Aliso Canyon, outside of Los Angeles. It probably will not be stopped until this Spring. 

Methane – the main component of natural gas – is a powerful short-term climate forcer, with over 80 times the warming power of carbon dioxide in the first 20 years after it is released. Methane is estimated to be leaking out of the Aliso Canyon site at a rate of about 62 million standard cubic feet, per day. The daily leakage has the same 20-year climate impact as driving 7 million cars a day.

Here's an interesting chart developed by the Environmental Defense Fund. 

Revenue? Who Cares?

As I've said before, the federal government seems to have a rather cavalier attitude towards revenue. Any budget cutting they've done has focused exclusively on the expense side to the point that one has to believe that they do not know that a budget is a combination of revenue and expense.

In the 1990s the feds realized that oil companies were underpaying the royalties due the government (i.e., us) for oil extracted from government-owned wells and they did something about it. Why they didn't also look at natural gas royalties is probably an interesting story, but they didn't do so. Hence, the current revenue gap - royalties to be paid to the government for natural gas extracted from property owned by the taxpayers. In FY2005 alone the revenue loss has been estimated at $700 million. Who knows what the total loss is!

While part of the problem is due to shenanigans by the companies, another cause is the stupid rules defining the size of the payment. Instead of just saying the payment is x% of the sales price to the ultimate consumer ('ultimate' to negate their selling to an affiliate as they do now), the government allows a series of arcane deductions. Usually, simple is better and this is a perfect example of that maxim.

In line with this administration's inability to hire competent people, the Inspector General of the Interior Department (which is charged with collecting our money) has termed the department's auditing process "ineffective" and is performed by unqualified auditors.

Another Posting About Water And Drilling For Gas

Image by Toban Black via Flickr

Earlier this month I wrote about a problem with drilling of some natural gas wells: the water from your faucet can be set on fire. Today's post is not about drilling per se. It's about the law in many states; in these states you don't have the right to prevent drilling on your land if most of your neighbors want drilling on their land. This situation is referred to as 'forced pooling'. It is quite common when drilling shale gas.

Most laws with regard to forced pooling do provide for the possibility of a royalty payment, but the size of the payment is unknown and when you'll get the payment is also unknown. During the drilling process and before any royalty is received you may find that your water has been polluted. There is no reimbursement for your costs in buying clean water to drink and wash with; over a year or two these costs can add up. But, the more important cost is the trampling of your rights as a landowner and citizen.

Musings on Energy

I’m almost always surprised at John Q. Public’s behavior. Sometimes we do very stupid things, sometimes we are a lot smarter than you’d think. The current media brouhaha about gas prices is an example of the latter. Just about all of the interviews I’ve heard with the public with regards to gas prices demonstrate that people are using their brains. Some are taking public transportation, some cutting back on their driving, some planning to buy a more efficient vehicle. What are our leaders doing?

Bush and company want more oil from Saudi Arabia and the Arctic National Wildlife Reserve. Saudi Arabia says no. But is that because it wants to keep its profits high? Or maybe it does not have as much oil as we think? Drilling in the pristine Arctic wilderness would result in a savings of 75 cents per barrel, according to the Department of Energy. And that would happen 10 years from now.

Our leaders are giving tax breaks and spending money on biofuels, much of it corn-based which is increasing the price of food around the world. But they are also keeping the import tax on ethanol from Brazil, which uses sugar for the fuel and, as a result, produces much cleaner emissions. I wonder whether we will have an import tax on Brazilian oil, as they are becoming a major force in oil production.

The Senate wants to tax the oil industry for excess profits but they never say what profits are excess. They also assume that the oil companies are the real culprits in this mess, never mind the facts – we are not a conserving nation; the new world economy has increased demand significantly; supplies are uncertain; our weak dollar, driven in some measure by the war and our greed, is a very important factor in the price of oil.

The House has the brilliant idea of suing OPEC. Talk about intelligence and pandering! How stupid do they think we are? This idea may be even more stupid than the gas tax holiday of Clinton and McCain.

Why have our leaders not pushed harder for conservation and efficiency? Why have they not pushed a fuel, natural gas, we have in abundance?

Why don’t we throw the bums out?

Selecting the right words is important

I'm probably overstepping my boundaries by questioning an article by one of my betters, a Pulitzer prize-winning and best-selling author, who serves on the U.S. Secretary of Energy Advisory Board and chaired the US Department of Energy’s Task Force on Strategic Energy Research and Development - Daniel Yergin. He went to Yale and earned a PhD from Cambridge.  He mixes with people like Bill Gates, appears on television as an energy expert. And I, an old man from East Cambridge, find Dr. Yergin's article in the NY Times somewhat lacking in considering the environmental costs of "America's New Energy Reality".

It's quite interesting that the word "fracking" is not used in the article, yet the reason for our new energy reality is, in fact, the arrival of fracking on the scene.  Yergin speaks of the natural gas market having been "transformed by the rapid expansion of shale gas production".  As for the increased availability of oil, Yergin attributes it to " tight oil. That is the term for oil produced from tight rock formations with the same technology used to produce shale gas."

Fracking is a real cost of our new energy reality.  Is the cost worth it?  Yergin does acknowledge in a somewhat off-hand way that there may be environmental costs, but you have to read the article a couple of times to pick this up.

Taking Advantage of the Opportunity

In today's NY Times Scott Anderson argues that many suicides are preventable. He contends that a lot of people kill themselves because of a momentary passion and an available means of doing so. He cites a number of situations where it does appear that people would not kill themselves if the opportunities were not so plentiful:

• In England coal gas was used to heat homes and fire stoves for many years. By the late 1950s 2,500 people a year killed themselves by putting their head in the stove. This accounted for about half the annual suicides. Over the next decade and a half coal gas was phased out and replaced by natural gas. Guess what? Suicides dropped by a third and have remained constant.
• In Washington, D.C., half of the suicides in the 1980s were from people jumping off the Ellington Bridge. The Taft Bridge is very close to the Ellington but very few jumped off that bridge. The railing of the Taft was chest-high, that of the Ellington was at belt level. It took more effort to jump off the Taft. The city put up a suicide barrier at the Ellington and the number of suicides went to zero, while those at the Taft stayed basically the same.
• A study, "Where Are They Now", of people who survived a jump from the Golden Gate between 1937 and 1971 showed that only 6% of them committed suicide subsequently.
• Public health studies have shown that states which have more gun owners have two-three times the incidence of suicide by guns.

Anderson has some interesting points.

Bidder 70

From Bill Moyers & Company:

Tim DeChristopher, an environmental activist who, in 2008, went to an auction during which drilling rights for the natural gas and oil beneath stretches of pristine Utah wilderness were being sold off. DeChristopher decided he couldn’t stand by and watch the process, so he signed on as a bidder. He purchased plot after plot, knowing he had no way of paying for them, in order to keep the land out of the hands of the oil and gas companies. His act of protest landed him in jail.

A film has been made of DeChristopher's struggle.  Here is the trailer.

Arsenic and Old Water

The question of fracking's effect on water contamination is still up in the air as far some UTexas researchers are concerned. In a recent study they found groundwater near natural gas fracking sites in Texas’ Barnett Shale contained arsenic, selenium and strontium which were above EPA’s maximum contaminate limit for drinking water. Previous tests of the same area did not find the same level of metals, far from it. At the same time they found uncontaminated water near some gas wells.  The researchers do not believe that they have a smoking gun.  The EPA agrees with them, despite water contamination having been reported in more than a thousand places where drilling is happening.