Category Archives: fossil fuels

Another salvo in the question over fracking

Texas Barnett Shale gas drilling rig near Alva...

Texas Barnett Shale gas drilling rig near Alvarado TX. Image via Wikipedia

Opponents of natural gas production are heralding the release of a new study that finds hydraulic fracturing (fracking), the process used to break apart underground shale deposits with high pressure water and chemicals in order to release shale gas, generates at least 20% more greenhouse gases than coal.

Previously, opponents had rallied around the threat the process posed to water supplies. Some studies have found possible evidence that hydrofracking fluids can contaminate water aquifers. The industry, meanwhile, argues these findings.

The new study, conducted by scientists at Cornell University, evaluated the greenhouse gas footprint of natural gas obtained by fracking. They found that the small amounts of methane gas, a greenhouse gas with greater warming potential than carbon dioxide, escaping to the atmosphere from venting and leaks over the life of a well is 30% higher than emissions from conventional gas. Since the greatest danger of methane leaks is during the initial fracking process, the emissions are greatest in the short-term. The study found emissions to be 20% greater than coal on a 20-year comparison, but comparable to coal over 100 years. The study notes that although the uncertainty of fugitive emissions is large, it illustrates the larger need for published and consistent pollution measurement by the gas industry. So far the industry has fought such measures.

Meanwhile, critics of the Cornell study are crying foul over the uncertainties and pointing to the advantages clean-burning gas has over coal. Energy in Depth, an association of independent producers, has posted a rebuttal to the study. And Tom Zeller, Jr. has posted a thoughtful post about the debate on the New York Times’ Green Blog. With the future of nuclear power up in the air, the debate over natural gas is an important one.

You can read a PDF of the Cornell study here.

Chevron to spend $26 billion in capital expenditures

CNBC has posted an interview with Chevron CEO John Watson, in which he discusses Chevron’s growth plan. The company is slated to spend $26 billion in capital expenditures, up 20% from last year. Of particular interest are his comments on natural gas, which Chevron has focused on. Currently, natural gas is trading at a 75% discount to crude oil and the U.S. has abundant supplies, enough to last for over 100 years according to the Energy Information Administration. In addition, President Obama recently endorsed the plan of T. Boone Pickens to convert heavy-duty vehicles to run on natural gas instead of diesel.  There have been concerns over the development of these resources, however, due to possible pollution linked to the process of hydraulic fracturing.

You can watch the video here.

“Major energy announcement” is more of the same

A coal mine in Wyoming, United States. The Uni...

A coal mine in Wyoming. Image from Wikipedia.

Secretary of the Interior Ken Salazar said he was going to make a ” major energy announcement” Tuesday from Cheyenne, Wyoming. While we’d hoped his comments would be in regard to new wind resources being developed, we weren’t surprised by the actual announcement: more public land will be strip-mined for coal.

“Coal is a critical component of America’s comprehensive energy portfolio as well as Wyoming’s economy,” Salazar said.

The new strip mines will be in the Powder River Basin and Salazar announced that they will yield an estimated 758 million tons of coal. The Powder River Basin already provides about 40% of the nation’s coal. Along with the coal comes countless jobs, billions in bids and royalties for both Wyoming and the federal government, and a marked increase in carbon dioxide emissions. Wyoming’s coal-fired power plants already emit more carbon dioxide in eight hours than the power plants of Vermont do in a year, and Vermont has more people, although Wyoming is the leading state in energy exports which helps to explain its emissions.

Salazar noted that the Obama administration is still committed to renewable energy, but with the stall of solar projects in California and this new coal sale, we have to wonder how deep that commitment is.

A Brazilian oil carnival?

 

Inside the Sambadrome during Brazil's Carnival. Image from Wikimedia

My Brazilian friends are recovering from their Rio carnival, which ended on Tuesday. One of these years, I’ve got to go and throw my Dutch, and usually somewhat reserved, self in the energetic mix.

Brazil is not just famous for its carnivalistic energy, but also for its liquid energy. In the Bush years, Brazil was heralded in DC as the big example for ethanol production. The sugarcane ethanol produced in Brazil would not make a great dent in our consumption. At its peak it is just under 0.5 million barrels per day, which is around two-thirds of the daily US ethanol production and under 3% of our total daily consumption. I am no fan of biofuels and would not applaud a growth in this area, not here and not anywhere. Sugarcane plantations in Brazil have driven other crops further into the Amazon leading to deforestation, have led to depletion and erosion of valuable land, and many have been proven to abuse large numbers of poor workers for the benefit of the few, as Father Tiago so passionately describes in his 2007 interview.

But, it is not really ethanol that Brazil is known for in liquid fuel circles. Instead it is its growth in oil and gas production, particularly offshore.  The oil, and gas, production in Brazil is predicted to increase dramatically in the next decades. Petrobras, the Brazilian oil company, is rapidly growing, in Brazil and overseas. In 1999, Petrobas was listed as the 27th largest energy company in the world. This year, it surpassed Chevron and Shell, based on total value (not on annual production) and entered the top 3. This is an incredible growth in just over a decade.

Brazil - The first 100% Brazilian oil platform...

Petrobras' P-51 offshore platform, the first platform built entirely in Brazil. Image via Wikipedia

And Petrobras is hungry to expand further through a five-year investment program of over 200 billion dollars total. This should allow Petrobras to double its production in ten years to over five million barrels of oil per day. Where would it get all this extra oil and gas? The company would tap into the vast pre-salt reserves that have been discovered far offshore and very deep below the ocean floor.  These reserves are very hard to get to as they reside underneath large salt layers or domes. Pre-salt drilling requires much higher pressure than typical offshore oil and the salt layer may shift after drilling. Known for its technological know-how in deep and ultra-deep drilling, the company can probably get to the pre-salt oil, if investors bite. Investors are wary, though, after the BP disaster in the Gulf, and it is not clear if the confidence they have in Petrobras, which is a very well respected company in this field, is high enough to warrant the loans. The tenacious relation that Petrobras has with the Brazilian government doesn’t help. The government now also requires that Petrobras be the lead operator on offshore developments in Brazilian territory. Norway has similar requirements and it has served that country well. The Brazilian government no doubt hopes that revenues will help lift Brazil out of poverty and support its rapid growth.

Despite these uncertainties, there is no doubt that Brazil will be a strong and growing exporter of oil in the years to come. With a dwindling excess capacity in OPEC, and turmoil in the Middle East, this is perhaps not so bad.

Fractitious fracking?

Shale gas production featured strongly again today with a thought provoking article on fracking in the New York Times. I highly recommend it. It once again shows the strong role politics plays in energy production. This is no surprise since energy is a multi-billion dollar per day industry. It is also no secret that the fossil fuel industry, including the gas industry, spends millions on lobbying in Washington and at state levels.

I think that the pressure applied by the gas industry and supporters will lead to fracking permits, some of which will be given too hastily and without enough thought or oversight. What I hope is that the current debate, and the many protesting voices raised from other segments of the population, will help to caution the industry, and convince it that it is better to be safe than sorry.

What to think about natural gas?

Large scale renewable energy projects are not in a great place right now. Last week I wrote about the threat posed by sections 1425 and 3001 of the House Continuing Resolution (CR) that would eliminate the loan guarantee program for renewable energy projects. But even if these sections are removed, there is a growing push away from large scale renewable energy production to gas fired power plants as primary candidates for replacing coal plants. Proponents argue that renewable energy can not grow sufficiently fast at this stage, and that there is an abundance of gas in the USA and friendly nations. Also, which is true, natural gas plants will on average emit only half as much carbon dioxide as coal plants. There is particular enthusiasm in the US for shale gas. Partly this is because of the large estimated shale gas resources in the continental US. But primarily, the excitement results from the relative ease with which shale gas has thus far been produced. This is true in particular for the Barnett shale. Excellent production numbers in the Barnett spurred intense exploration of other shales.

But, there are a couple of issues missing from most discussions, including the recent article in the New York times.  Let’s first focus on production. Shale gas is not an easy to produce fuel. Shale is a very low permeable rock. To enable production, gas flow must be stimulated, which is typically done by fracturing the shale, thus creating flow paths for the contained gas. “Fraccing” is still more an (engineering) art than a science: when designing a production process little is known about the rock properties of the deep lying reservoirs. A successful Barnett does not guarantee that similar production successes will be booked in other fields with different geologies at different depths. I believe therefore that the gas industry is over-estimating the ease with which shale gas can be explored. The other issue is political in nature. Many of the coal states also contain shale gas resources. This no doubt makes it easier for any administration to sell a shift from coal to gas, rather than from coal to renewable energy projects. And I wonder how much this political advantage plays a role.

I have no doubt that it is a good idea to replace some of the coal with gas as soon as possible. But this should not come at the detriment of investments in renewable energy projects. Wind and large scale solar are at a stage where they can be implemented, relatively fast. Costs are claimed to be too high still, but as I’ve argued often before, there is no level playing field. Hidden tax advantages for fossil fuel projects are typically not taken into account, and investment money available to the renewable energy industry is simply not as cheap as that for other energy resources. Certainly without a loan guarantee program, capital costs will be too high.

The argument is often made that we should keep investing in renewable energy projects, but need large shale gas investments now to create a bridge between a coal dominated electricity industry and one based on renewable energy production. But, it is a zero sum game, and would it not be a bit naieve to think that after huge investments in shale gas and natural gas production, the gas industry would happily phase itself out in a decade or two? I believe that this simply won’t happen: unless we prioritize renewable energy now, we’ll be living in a gas dominated USA in the future. It may give us fewer carbon emissions than coal, but its emissions is still far above zero.

The Keystone XL Debate

Location of bitumen depoits (

Location of bitumen deposits in Canada. Image via Wikipedia

The oil sands of northeastern Alberta represent the largest reservoir of crude bitumen in the world and make Canada second only to Saudi Arabia in terms of total oil reserves. In the past, the development of these oil sands was considered cost prohibitive. Bitumen is a heavy oil that is too thick to be conventionally pumped. Instead it must either be heated to a more liquid state or strip-mined and processed, both of which require a huge investment. With the rise of oil prices, however, these processes have become economically viable and Canada is positioned to become one of the largest oil producing countries in the world.

Currently almost all of Canada’s bitumen is transported to refineries in the U.S. where it is transformed into a variety of refined products representing about 20% of total U.S. oil and gas consumption. Each year, more oil is exported and Cambridge Energy Research Associates estimate that Canada could provide up to 40% of U.S. oil imports by 2035, but the refineries currently being supplied are estimated to run out of spare capacity by 2014. A critical component of increasing imports is a proposed pipeline known as Keystone XL, or the Keystone expansion project, that would transport oil to additional refineries.

The existing Keystone pipeline, owned by TransCanada Corp., supplies the midwest and has a daily capacity of 435,000 barrels of oil. The proposed expansion, running across the Great Plains to Texas and the Gulf Coast, could provide an additional 500,000 – 900,000 barrels. At first glance, the project seems promising: the U.S. has an opportunity to get more of its oil from a trusted neighbor rather than hostile regimes, construction and manufacturing jobs would be created, and states along the route would gain billions in tax revenues. But as TransCanada’s permit application waits for State Department approval (since the pipeline crosses an international border), debates are erupting over the project.

This is a picture of Syncrude's base mine. The...

Syncrude

Critics have long complained that the environmental impacts of oil sand recovery are unacceptable. Large areas of the boreal forest have been strip-mined and though mitigation work is being performed, only a small amount of land has so far been labeled as reclaimed. The toxicity of tailings is also a fear, since it could possibly pollute nearby waterways or affect area wildlife. Moreover, the amount of energy expended in oil sand recovery means its production releases higher amounts of greenhouse gas emissions compared to other sources. Finally, it is unclear whether Canadian regulators can keep pace with potentially rapid industry growth, leaving environmentalists to complain that U.S. energy money should be funneled towards efficiencies and alternatives rather than increasing production of the “dirtiest” of oils. Industry leaders have tried to fight back by pointing to the mitigation and reclamation gains that have been made, worried that the public impression of oil sand development is unbalanced. The Economist quotes government water scientist Preston McEachern comparing the oil sands to “the harp seal of the environmental movement.” The harp seal is considered to be an easy target.

But the explosion of BP’s Deepwater Horizon rig in the Gulf of Mexico, along with a spill of about 800,000 gallons of oil from Enbridge’s southern Michigan pipeline, has brought new opponents into the debate. Farmers and ranchers along the proposed route of the pipeline are worried what the impact might be if a similar spill occurred. Not only is the land of the Great Plains difficult to maintain in a productive state, but the main water source for the area is the shallow Ogalalla Aquifer. And with the release of a joint report from the National Resources Defense Council (NRDC), the Sierra Club, the Pipeline Safety Trust, and the National Wildlife Federation claiming the acidic and corrosive composition of bitumen crude puts pipelines at a greater risk of developing leaks, these fears seem well-founded. TransCanada, meanwhile, defends their state-0f-the-art pipeline system for detecting and stopping leaks, while Alberta’s Energy Resources Conservation Board called the NRDC report’s analysis flawed and misleading.

Environmental concerns aren’t the only issue being debated. The economics of the project have become contentious, with worries of cost overruns, foreseeable delays in reaching pipeline capacity, and assessments that shuttling the oil to the Gulf Coast will actually increase the price per barrel since there will no longer be an oversupply (and associated discounts) in the Midwest. Meanwhile lawsuits have been filed in Oklahoma over the ability of a foreign company (TransCanada) to exercise eminent domain rights in the U.S. in order to get the pipeline built.

America is not in a good position to replace its daily energy consumption with renewables any time soon; the threat from the Republican’s continuing resolution to current solar projects is just one indication that we aren’t moving away from fossil fuels. Nor is it likely we’ll be able to substantially reduce demand through conservation and efficiencies in the foreseeable future since no immediate or broad-reaching actions have been taken. Moreover, energy consumption is closely related to economic growth and as the weak economy begins to pick up, we’ll probably see an increase in energy demand rather than a decrease. And though we may not like the environmental impacts of bitumen extraction, we’re currently getting just as much oil from countries with reprehensible human rights records, little regulation or mitigation, and undergoing potentially volatile political situations.

Only time will tell how the U.S. plans to deal with the debate over Keystone XL (the State Department isn’t expected to issue a decision until later in 2011) as well as the larger debate over energy use and supply. While we bluster about without a clear energy plan, the planned northern extension of Keystone XL will allow Canada to export heavy crude from its west coast ports. The U.S. might fret about Canada’s dirty oil, but international markets, such as those in China, will be only too happy to take delivery. Perhaps it’s time to finally get serious about planning our energy future.