THE FRONT OF THE BOX
December 20th, 2011 § Leave a Comment
A recent NY Times story has a very interesting take on the environmental movement and changes therein. These organizations in the past have taken national or even global approaches to the issues. The rise of global ambient temperatures caused by greenhouse gases is a case in point.
The general public can be left cold at two levels. One is that global issues do not resonate with a lot of folks, local ones do. The other is the discounting of future privation. This is not unlike discounting future earnings in finance; a discount rate is applied which gives a lower present value. Similarly, future suffering is discounted, especially when it is 40 years out, as are most global warming warnings. Rising water levels on a Florida beach 40 years hence (and only a maybe at that) has little resonance with the public in Wyoming. One could call it two degrees of separation.
The Times story draws a clever analogy. If a consumer is walking down a grocery store aisle and she sees a box with a delectable brownie on the face, she may be attracted to it. Some might look at the back of the box detailing the information indicative of an obese future for the consumer of the goods. Even though the future in this case is more in the short term than the aforementioned global warming one, the choice of looking at the back is personal and will not happen all the time.
Environmental organizations are credited with focusing simply on the back of the box. This stuff is bad for you, we want saturated fat detailed, and we want the warnings to be explicit, and so on. Interestingly the smoking hazard warnings are in front of the box and likely work better. In this example, the context is local, so that problem is not there. You simply may not get the attention of the consumer.
According to the story, some of these organizations are getting the message. They are going local and in front of the box. The first is simply a matter of organization, but the second is a bit harder, because the messaging has to hit at the value system. Ocean rise 40 years hence will not play. Asthma risk now for their children will. So, the Sierra Club is focusing on individual coal burning power plants and their presumed effects upon the local population. Shutting these older plants down one by one is the strategy. They have had considerable success and operate in 46 states.
About 40% of coal plants not expected to conform to upcoming EPA standards are over 50 years old. If the Sierra Club and others have their way, it will not matter whether the EPA rules come down. The arguments in Congress over this could put off that day. But if the ill effects of the polluting plants are placed in front of the box for the public, the plants will likely get shut. Thirteen such are currently slated for this fate by Progress Energy in North Carolina. 
If shut down effectively through local action, the electricity will still have to be generated in some way. Natural gas is the only viable short to medium term option. The carbon emissions are about half that of coal, and the front of the box arguments regarding particulate emissions, mercury and NOx attributed to coal do not apply. The other option, that of a newer and cleaner coal plant, is not economically justifiable if gas remains relatively cheap. Plentiful shale gas will assure that.
However, shale gas is the target of many activists who are fundamentally opposed to all fossil fuel. The back of the box issues of fugitive emissions of methane will not get much traction, especially because of the esoteric arguments involved in the modeling. So they have taken to the matter of methane contamination of water wells, with the powerful backing of a couple of Duke University professors. This is not ideal front of the box material because methane in drinking water is not believed to be a health hazard. But any perceived taint to drinking water is powerful stuff.
The unfortunate aspect to all of this is that it distracts from the real issues, which are use of fresh water and most importantly, the potential for polluting discharge of flow back water from fracturing operations. The methane contamination of water wells, while possible, is easily correctable by best practices, voluntary or forced by rules and penalties. The other two issues require more effort, technical and organizational, and should be the focus of local community action. In the end the combination of effective legislation, technology, and industry cooperation can deliver cheap gas in an environmentally secure fashion. We just need to take the steps to make that happen. Then the side of the box will not matter.
Thanks to Christa WagnerVinson for bringing the NY Times story to my attention
SUSTAINABLE ENERGY: A DOUBLE BOTTOM LINE PLUS AFTERTHOUGHT?
November 30th, 2011 § 2 Comments
The definition of sustainable enterprises is the so-called Triple Bottom Line, wherein economic, ecologic and community benefit are all considered and balanced. Is that last leg of the stool given mere lip service or is the practice of energy recognizing this element fully? And ought it to be?
The economic consideration is a given. Without that there is no profit, and absent profit, no enterprise. The ecologic or environmental piece is much in evidence today and few new energy enterprises would dare ignore this element. The societal element is harder to define. One is tempted to think that this is strictly composed of negative impacts upon society, because that is where the rhetoric is directed. In some ways it suits the developers to cast it in this light rather than a more generic one. So, for example, visual pollution is denigrated as a personal preference rather than pollution in the classic sense.
The Reality of Visual Pollution: Perception is reality, the saying goes, and marketing folks know well that this is a powerful adage. One cannot bully people into feeling a certain way. Certainly not in commerce. But on an issue of alternative energy, some nudging, in the Thaler sense, is in order. Richard Thaler and Cass Sunstein wrote a powerful essay Libertarian Paternalism in the top-economics journal American Economic Review. Non-economists, such as I, must not be daunted by the staid prominence of said journal; this is an easy read. A further easier read, one that costs some money or trouble (going to the library) is their book Nudge. Basically they posit the notion that given free choice people generally do not make the best decisions for themselves, even in an economic sense. They need to be given a nudge. The point of all this meandering is that just because folks “feel” a certain way about visual pollution does not mean they cannot be nudged to a different position.
One way to do that is to clarify the options. Until recently the Sierra Club was against coal, nuclear and hydrocarbons in general (coal is a hydrocarbon, but one challenged in hydrogen content, and most think of it as a different species, but it is not). Last time I looked, that position was tantamount to suggesting we grind industry and life as we know it to a halt. And this is me, a life member of the organization talking. Wind and solar are great options. But they are still fledgling and incapable of base load service. In the interests of fairness, the Sierra Club now supports natural gas as a transitional fuel, still to the consternation of much of the membership.
Duke professors recently made famous by their paper connecting well water methane concentrations to shale gas production suggest in an op-ed piece in the Philadelphia Enquirer that we eschew shale gas in favor of wind and solar. No matter that each of these has opposition as well. There are entire communities that will not permit a visible display of solar panels on homes. Wind power has long been opposed on visual lines. North Carolina, the home state of the aforementioned professors, has a law preventing wind farms on mountain sites, known as the Ridge Law. Many communities have strong opposition to offshore wind production in sight of land.
When one flies into Amsterdam airport, wind farms are in abundance in the water. Personally, I think they look like a flock of birds; but I am a techie, what do I know. Perhaps their acceptance is premised on the Dutch having had windmills as a way of life on farms. More likely is the explanation that it is that or Russian gas. In Holland that may not be the direct option, but in Greece, which is dominantly dependent on Russian gas, it would be. Southern Germany still remembers when the Russians capriciously shut down the pipeline through the Ukraine in the cold days of January 2009. So, opposition to something should come hand in hand with a consideration of the alternative. Unfortunately, a well-informed public is an oxymoron, and the fault does not lie with the public.
Societal Benefit: Fair and equitable economic benefit to the local and regional communities ought to be a goal of sustainable energy development. In Australia’s Northern Territories, uranium mining has provided a dividend to each native Aborigine, conjuring up the image of traditionally garbed locals riding on the beds of Toyota trucks. Every resident of Alaska gets an oil related dividend of substance. But these are the exceptions.
One measure would be similar to that in Alaska. Royalties on production would in part be distributed to the county in question. At the very least, this would go to ameliorate some of the damage to infrastructure. In the case of shale gas drilling, the principal one coming to mind is the deterioration of lightly constructed farm roads by heavy trucks. Beyond the issue of mitigation of damage, the community as a whole ought to benefit in some measure from the overall enterprise. The fortunate leasers of mineral rights should not be the only ones to benefit. That sort of inequity is a sure recipe for neighbor turning on neighbor, particularly when the have-not neighbor incurs some direct negative consequences of the activity.
Technology Forks in the Road: Technology choice can often have a direct effect on the local populace. These forks in the technology road fall into two broad categories: benefitting the local environment and aiding the local economy. The first one is an easy choice if other things are about equal. An example of that is in fracturing operations associated with oil or gas production. As the industry became more skilled at drilling horizontally, the increasing reach of a given well allowed a new technology, known as pad drilling. This involves drilling and producing from up to 25 wells from a single location known as a pad. The number of roads needed drops as does the areal extent of the effects of traffic. Also, this aggregation of wells allows for better supervision and oversight to minimize mistakes. Pad technology was developed in Colorado for the express purpose of minimizing road footprint. It now is even more important in farming communities such as in Pennsylvania.
Biofuels could face similar forks. The conventional approach would be to transport the biomass or crop great distances to giant chemical processing plants. Technologies are being developed to bring the mountain to Mohammad, as it were. These must be specialized to not incur the penalties of reduced scale, but that is happening. This will not only reduce road transport, but also it would create local jobs, which in many instances are high paying ones.
Distributed power is another example. Small 50 to 100 megawatt plants using biomass, wind or mini-nuclear, to name a few, could provide localities. In the limit they could eliminate the need for costly and unsightly transmission lines. At short distances, direct current would be a viable and preferred option to alternating current. Edison would have smiled.
In summation, the societal benefit component of energy alternatives need not be an afterthought. Many elements can be brought to bear with no adverse consequences to the economics of the enterprise. Also, the lasting value of being a good citizen cannot be underestimated. It’s simply good business.
Kicking Shale into the Eyes of the Russian Bear
November 19th, 2011 § Leave a Comment
On January 7, 2009, Russia shut off the natural gas flowing through the main European pipeline in the Ukraine. This was a particularly cold winter and 20 European countries encountered serious shortfalls. Discussed below are the reasons given by all of the players. But the principal point was, and continues to be, that Russia can use natural gas supplies as a weapon to achieve political objectives. In late 2008, Russia threatened to form a gas based OPEC (dubbed OGEC) with Iran and Qatar with the express intent of manipulating world gas prices. Has shale gas dampened their ardor? More on that below.
Unilateral fuel cut off as an instrument of political will would be essentially not possible with oil. Oil is more fungible, and alternative supplies can be brought to bear if a major supplier falters, deliberately or otherwise. It may cost more but you could get it.
Natural gas is a regional commodity. Bulk transport across land can only be through pipelines, and these are expensive and have long lead times. Transport across the ocean is feasible only if the gas is liquefied. For shorter distances there are exceptions, where gas pipelines cross bodies of water, such as in the North Sea. The liquid product is known as Liquefied Natural Gas (LNG). This process entails cooling the gas to -160° C into a liquid that is 600 times as dense as free gas. This is then transported at near-atmospheric pressure. The low temperatures are maintained by auto-refrigeration by allowing small amounts to boil off, which chills the remaining liquid. An everyday analog is cooling of our skin by a fan or a breeze causing evaporation of our perspiration.
While LNG is a viable alternative to a domestic gas supply, it can only be delivered to a port location, and in fact only one with a re-gas terminal. This high capital cost is unlikely to justify a capability merely to be available for upset conditions. So, as a practical matter withholding of a domestic source is a powerful weapon, LNG alternatives notwithstanding. Also, LNG is more costly. Typically the added cost over the price of the gaseous version is about $3-4 per million British Thermal Units (MMBTU). Transport distance is the determinant of where you are in that range. As a frame of reference, that is roughly the price of natural gas in the US today. So, LNG would essentially double that. This is why cheap shale gas in North America has rendered imported LNG passé.
The sheer distance between producer and user is the reason why natural gas prices are so variable across the world. The price in Europe is about double that in the U.S., and in Japan, about triple. This is in part because costly LNG is the marginal cubic foot, and so sets the price.
Russian Use of Gas as Weapon: Unlike in the Soviet era, Russia can no longer impose its political will through threatened military action. Russian gas is a significant source for most European countries. It is the dominant source for nine countries, including Greece, Finland, Hungary and the Czech Republic. This monopoly allows unilateral action against any one of the countries. Action against too many would result in loss of needed revenue. As a parenthetical point, the Arab Oil Embargo in 1973 had a profound and lasting effect on the price of oil, aside from the short-term privation. But the original political objective was not realized, that of causing a significant shift in support away from Israel. Interestingly, though, the lasting price escalation that was a direct result of the embargo swelled, producing country coffers. This allowed financing of politically motivated actions in other countries, including the funding of Islamic schools known as madrasas in Indonesia and other countries. These are believed by some to be linked to militancy. In any case, there is little doubt that oil money is behind militant Islamism.
In an odd twist, the embargo driven sustained higher prices opened up exploration in promising but costly areas such as ultra deep water and the Arctic, thus reducing dependency on OPEC. Since then, Norway and Brazil have become important players, on the backs of deepwater development.
The Russian action in 2009 was allegedly driven by a dispute with the Ukrainians with respect to poaching on the gas line. While there may have been merit to this, most believe the action was intended to injure the Ukrainian Orange Revolution, which was seen by Russian President Dmitry Medvedev as not commensurate with Russian interests. That the Revolution was suppressed is not in question. The temporal connection strongly implies causality with the gas cut off action. In many ways this act was more effective than would have been a military one. It also undoubtedly sent a message to other European states. Even Western Europe was affected, with southern Germany losing about 60% of its imported gas.
Shale Gas Could Change That: As discussed in a previous chapter, the mechanism by which shale gas accumulates makes it likely to be ubiquitous. So the likelihood of substantial deposits in Europe is high. Initial estimates by the Energy Information Administration (EIA) show large deposits in Poland and France, with smaller amounts elsewhere, including the UK and the Ukraine. Poland is actively exploring and the U.K. is following suit. France currently has a moratorium on fracturing, but is also not as much in strategic need due to low dependency on coal-based power. U.S. efforts to produce gas with a minimal environmental impact will be important in widespread exploitation in Europe. Poland is certainly resolute on the matter. Furthermore, in the U.S., as exploration proceeds, the resource estimates are bound to increase. All new hydrocarbon resource plays follow that pattern.
Gazprom, the mammoth Russian company operating gas assets, has publicly expressed concerns regarding the effect of shale gas on future pricing. The fact that Russia too will have large deposits is irrelevant. A further increase in their resource base is interesting, but not a factor in the concern regarding domestic sources in client countries.
An interesting possibility is that U.S. shale gas could be exported as LNG. Until European deposits are developed, U.S. sourced LNG could be a factor in offsetting Russian supply. If U.S. prices remain low, as is expected, landed LNG in Europe could profitably be at below $9 per MMBTU for some years and closer to $7 today. From a Russian standpoint, this will not be a pricing concern, but certainly the gas as weapon argument is affected. Strictly from an economic perspective, the best sources for North American LNG are Alaska and British Columbia gas, and the most logical target customer is Japan.
OGEC is dead: 60% of the conventional gas reserves reside in Russia, Iran and Qatar. Operating costs are very low, especially in Iran and Qatar. In late 2008, the three announced an intent to form a gas based OPEC, which was dubbed OGEC. (Note: the P in OPEC is Petroleum and by definition, albeit not by common usage, gas is included in the term petroleum, so the acronym OPEC could have applied to gas as well in theory; but with a different cast of characters that would not have made sense.) Alexey Miller, chairman of Russia’s Gazprom, said they were forming a “big gas troika.” He also predicted an end to the era of cheap hydrocarbons, thus signaling the intent of the gas cartel to raise prices and keep them high. OPEC accomplishes this despite supplying only about a quarter of the world’s oil. The Troika would likely have been pretty effective, in part because Russian markets are Europe and China over land, and the other two are much more LNG dependent. So, unlike current OPEC members, at least the senior partner Russia, will be essentially non-compete with the other two except for LNG relief valves for Russian force majeure, contrived or otherwise.
Shale gas over time will kill attempts at OGEC. China is expected to have even more shale gas resource than the U.S. and will exploit it quickly. China National Offshore Oil Corporation (CNOOC) has already taken positions in two U.S. shale gas plays and in the first large one in the U.K. There is little doubt that part of the intent is to transfer technology to China deposits. European shale gas will certainly be a factor. There is reason to believe most of the countries currently importing LNG, including India, have shale gas opportunities. Finally, there is the specter of U.S. as an LNG export player. All of this adds up to a world with a lot of gas in consuming countries and more options. When consumers have options, cartels are ineffective. Gas has always been harder to manipulate than oil. Transportation needs can only be met by oil-derived products. Gas on the other hand can be replaced by coal, wind and solar for power. OGEC can be pronounced DOA, and we have shale gas to thank for that.
So, Where Did All This Gas Come From Suddenly?
November 13th, 2011 § Leave a Comment
Few will dispute that shale gas has changed the very make up of the petroleum industry. At every twist and turn new resource estimates appear, each vastly greater than the previous. The estimate in 2008 exceeded the one from 2006 by 38%. As with all resource estimates, be they for rare earth metals or gas, disputes abound. But through all the murk is the inescapable fact: there certainly is a lot of the stuff. How could this suddenly be so? The last such momentous fossil fuel find in North America was the discovery of Alaskan oil. But a discovery out in the nether regions is understandable. In this case we were asked to believe that all this was happening literally in our backyard.
To appreciate what happened we first need to understand how oil and gas is formed and recovered. Millions of years ago marine organisms perished in layers of sediment comprising largely silt and clay. Over time additional layers were deposited and the organic matter comprising the animals and vegetation was subjected to heat and pressure. This converted the matter into immature oil known as kerogen. Further burial continued the transformation to oil and the most mature final form would be methane. By and large the only real difference between oil and gas is the size of the molecule. Methane is the smallest with just one carbon atom. One of the lightest oil components, gasoline, averages about eight carbon atoms. Diesel averages about twelve. So, although we refer to them as oil and gas, chemically they are part of a continuum. So, it is easy to understand that they could come from a single source.
The key word is source. The rock in which the oil or gas originally formed is known as source rock. The figure shows a schematic representation of the location of one such source rock. This is almost always shale, which we told you was some mixture of silt and clay and sometimes some carbonates. Conventionally, the fluid in this rock will migrate to a more porous body.
This is depicted as the sandstone shown, which is predominantly silica, an oxide of silicon. It may also be a carbonate, predominantly calcium carbonate. These two minerals are host to just about every conventional reservoir fluid in the world. The fluid (and by the way gas is a fluid, although not a liquid) migrates “updip” as shown to the upper right. This is because the hydrocarbon is less dense than the water saturated rock and essentially floats up, not unlike oily sheens on your cup of coffee.* This migration continues until stopped by a layer of rock through which fluid does not easily permeate. This is known as a seal, and more colloquially, a cap rock. Ironically this is most usually a shale, not unlike where the fluid originated. The trapped fluid is then tapped for production.
The trap is often a dome as shown in the upper left. It can also be a fault. This is when earth movements cause a portion of the formation to break away and either rise or fall relative to the mating part it just separated from. In some instances a porous fluid filled rock will now butt up against an impermeable one, and a seal is formed laterally.
Source: Wikipedia
In the schematic shown the yellow zone would be the sandstone, and the updip fluid shown in red now finds itself abutting an impermeable zone shown in green.
In the early days of prospecting they looked for surface topography indicative of a dome type trap below. These days sound waves reflected back produce excellent images of the subsurface.
Unconventional Gas: We have described how conventional gas, and oil for that matter, are found and produced. The current flurry of activity in shale gas is concerned with going directly to the source. This was previously considered impractical, primarily because the rock has very poor permeability, which is the ease with which fluid will flow in the rock. The permeability of shale is about a million times worse than conventional gas reservoir rock. In fact, as we observed earlier, shale acts as a seal for conventional reservoirs. The breakthrough was the use of hydraulic fracturing. Water is pumped at high pressures, causing a system of fractures. These are then propped open with some ceramic material to hold the cracks open. Without this the sheer weight of the thousands of feet of rock above would close the cracks. The propped open fractures now comprise a network of artificially induced permeability, allowing the gas to be produced. This is akin to pillars and beams used in underground mines.
The sheer ability to extract gas from source rock is now well understood as feasible. But some still doubt the magnitude of the estimated resource. Here is the explanation of why one would expect this resource to be plentiful. Consider that for a conventional reservoir to be formed one needed a confluence of two events. First there needed to be a proximal porous and permeable rock and second, a trap mechanism had to exist. So it would be easy to believe that more source rock did not have these conditions than did. In other words the probability of source rock without a release mechanism was greater than with. This is why it is reasonable to conjecture that the total resource trapped in source rock is greater than the resource that escaped into permeable trapped rock. Further adding to the potential is that this is fresh territory, relatively unexploited. Decades of exploitation have denuded conventional reserves, while the source rock remains relatively untapped.
A word on the nomenclature of resource estimation. A resource estimate indicates the quantity of estimated hydrocarbon accumulation, whether economically recoverable or not. A subset of that is a reserves estimate. Reserves are the portion of the resource that one could recover economically and bring to market. Typically in a new play one would expect reserves to keep getting revised upwards. This is because every new well put on production increases the certainty of the extent and quality of the reservoir, and the reserves can confidently be increased. In reading the popular literature it would be well to keep the distinctions in mind; they are often confused.
*Darker roasts produce more oil. One way to minimize oily sheen is to brew with cold water; also results in a “sweeter” coffee. This is analogous to “sun tea”.
BEYOND GASLAND
October 8th, 2011 § 3 Comments
No shale gas production issue may be more fraught with partisan rhetoric than that of water well contamination. The award winning documentary Gasland leveled accusations and energized entire communities. Industry reponse was equally summary in denial. We need to get beyond all that. Here is an attempt at clarity.
Well water contamination is very personal and frightening. Think Erin Brockovich. Airborne species appear not to get the same reaction. Certainly, carbon dioxide in the air barely registers on the average personal anxiety scale. Consequently, assaults on the quality of well water make for avid reading and activism. In the case of shale gas, industry response has also been sweeping in denial. Both sides play fast and loose with the English language, as will be shown.
There are two potential ways in which shale gas operations could contaminate aquifers. One is through leakage of the chemicals used in fracturing. These then would be liquid contaminants. The second is the infiltration of aquifers by produced methane. This is a gaseous contaminant, albeit in the main dissolved in the water. If present, a portion may be released as a gas, as spectacularly depicted in Gasland. Natural occurrences such as the Eternal Flame Waterfall in the Shale Creek Preserve in New York, shown in the picture, demonstrate methane intrusion into a fresh water source.
Natural contamination is either from relatively shallow biogenic methane from decomposing vegetation or from thermogenic gas from deep deposits escaping up along faults and fissures. The last is generally due to tectonic activity at some time. The two types of gas have fairly different fingerprints and can often be distinguished on that basis. Good oil and gas exploitation practitioners will avoid producing in areas with significant vertical leak paths because they vitiate normal sealing mechanisms.
The distinction between potential liquid and gaseous contamination is important because the hazards are different, as are the remedies and safeguards. Also, because well water could not naturally have the liquid contaminants, any presence at all is evidence of a man made source. Therefore, simple testing of wells proximal to drilling operations is sufficient, with the only possible complication being some source other than drilling, such as agricultural runoff. This is easily resolved because of the specificity in the chemicals used for fracturing.
Unfortunately, the two get lumped together in the statements by shale gas opponents and also the genuinely concerned public. Some see methane intrusion as proof of well leakage as a whole and therefore equate it to chemical contamination as well. Gasland reports “thousands of toxic chemicals” as the hazard. In actuality, the mechanisms for possible leakage are quite different. Methane as gas is much more likely to leak out of a badly constructed well than is a liquid. Also, the mechanism by which methane could leak is well understood and it is not conducive to leakage of fracturing fluid. The public cannot be expected to know this and so it is easy to see why the two get banded together. To them, a leaky well is a leaky well. Fortunately, this is not the case.
So, do producing gas wells sometimes leak into fresh water aquifers? The answer is yes. In all cases this is because of some combination of not locating cement in the right places and of a poor cement job. Many wells will have intervals above the producing zone that are charged with gas, usually small quantities in coal bodies and the like. If these are not sealed off with cement, some gas will intrude into the well bore. This will still be contained unless the cement up near the fresh water aquifers has poor integrity. In that case the gas will leak. You will notice nothing in the prior discussion says anything about fracking. In other words a badly constructed well is just that, no matter how the gas was released from the formation.
This distinction is lost on many. The recent notable paper by Robert Jackson and others is the most comprehensive work of its kind to date. It unequivocally shows no fracture chemical intrusion into water wells. It also shows gas intrusion in disturbingly many cases, although later studies will take care to normalize for possible natural seeps and prior drilling activity. Yet the title of the paper is Methane contamination of drinking water accompanying gas-well drilling and hydraulic fracturing. (Emphasis added) The last three words infer a causality that is not proven and in fact is contraindicated by the absence of fracturing chemicals in the water wells.
Industry proponents on the other hand make statements such as “hydraulic fracturing has never contaminated ground water”. Lisa Jackson of the EPA testified recently under oath “I’m not aware of any proven case where the fracking process itself has affected water, although there are investigations ongoing.” In precise terms this may be right in that fractures have not propagated into ground water. Take the case of a well associated with fracturing operations that leaks gas but not liquid. One could argue that the poor construction would simply not have occurred but for the desire to fracture the shale reservoir. So an opponent would take those very data and say “hydraulically fractured wells contaminate ground water”, while the proponent could say “hydraulic fracturing did not contaminate ground water”. Neither would be wrong. It is the public that will be confused with this license taken with the language.
Rhetoric aside, proper stewardship of our resources and the environment is possible. Some possible measures are listed here. Permits must be given only to oil companies with good track records, thus maximizing the chances of diligence in well construction. Water wells proximal to intended operations (Jackson suggests 2,000 feet, I believe) be tested prior to drilling at the cost of the operator. Logs be required to to assure cement integrity. At a minimum the Cement Bond Log; this famously was not run on the Macondo well that blew up in the Gulf. Routine testing of the water wells, with a prompt attempt to seal the well, if leaking. This occurrence should also prompt a severe penalty. All of this and adherence to sound drilling and completion practice will ensure the sustainable production of a valuable resource.
NATURAL GAS VERSUS COAL: DUELING REPORTS
September 28th, 2011 § 1 Comment
Until recently, natural gas was seen indisputably as a cleaner alternative to coal. Robert Howarth at Cornell University changed all that, at first abortively in 2009, when his study was demonstrably flawed. His revised report, which now includes the contribution of fugitive methane in coal mining, has been published. A hailstorm of criticism notwithstanding, some of the issues beg debate. A more recent study appears to be in support as well. In contrast is the report by the Worldwatch Institute, conducted in collaboration with Deutsche Bank which unequivocally concludes the superiority of natural gas, nevertheless recommends attention to fugitive emissions. 
So what is the public to make of all of this? They are right to assume that science is deterministic at least in the broad swaths of the argument in question. So there is no dispute that when combusted, natural gas produces about 50% less carbon dioxide than coal in producing the same amount of electricity. Where the dueling reports diverge is in the area of fugitive emissions: these are releases of methane during the operations involved in producing and transporting the fuels. There is also no dispute that methane is about 25 times more potent than carbon dioxide in its global warming proclivity.
The bulk of the debate surrounding the Howarth work has been around the time scale for the analysis. This is because, although methane is much more potent, it turns out that this potency dissipates much faster than in the case of carbon dioxide. So, one gets a different result when the effects are studied for twenty years as for a hundred years. The latter has been the accepted standard. But Howarth and others make an argument for using the shorter time span, which turns out to disfavor methane. Of note is the fact that when carbon sequestration in deep saline aquifers is considered, the yardstick they are held to is well in excess of a hundred years. In other words the sequestered gas has to be guaranteed to not leak over that period.
In the case of coal, the emissions comprise methane found in association with the coal. For centuries this has been a known hazard of coal mining, both from the standpoint of poisonous atmosphere for miners and from the possibility of explosions in confined areas of the mines. In the past, canaries were famously used as indicators of methane. If they died you got out in a hurry; a sort of go no-go device. Some of those still awake through this discourse no doubt are skeptical in that you know you can smell a gas leak in your kitchen. Well, it turns out methane has no odor, but the producers deliberately introduce one for precisely the intended purpose of olfactory detection of leaks.
Natural gas production and distribution can leak in two principal areas. One is in transportation. The system of pipelines and associated valve assemblies at various points can leak after aging induced malfunctions. But this can be addressed through maintenance mechanisms. The main source of fugitive emissions is the natural gas produced prior to the existence of a pipeline to move it. This is in the early days of the prospect. Even in areas riddled with pipelines, a spur line to the new rig in question does not exist at the outset. Current custom is to not invest in that until the reservoir is proven commercially viable. The initial gas produced during the discovery process has nowhere to go. It is often released. Hence the problem. Now, it could be flared, which is the process of simply burning it on the end of a pipe. This would dramatically reduce the problem since the released pollutant would be carbon dioxide, not methane. But one imagines this approach is not taken probably because flaring draws singular attention to the enterprise. This gas produced in the very early days of the well is the problem.
The public may well ask why something useful is not done with the gas. The answer lies in part in the short duration of the production. It cannot economically warrant any sort of capture and use. But if such a technology were to be developed, the potential would be significant.
A final note: fugitive methane emissions from livestock exceed that from oil and gas operations. This results from the fact that ruminants such as cows produce methane as a normal consequence of their digestive process: they belch methane. An outbreak of vegetarianism would help the environment!
MAKING A VIRTUE OF BEING LATE
August 12th, 2011 § 2 Comments
This statement has the makings of an oxymoron. In many settings it certainly is. So, for example there can be no discernible virtue of being late for your own nuptials. Being late for one’s own funeral, if that could be pulled off, has decided good points.
Source: ACUS.org
Being late is not precisely the same as coming in second. Nobody knows that Tom Bourdillon and Charles Evans were within 300 feet of the summit of
Everest three days before the second team of Edmund Hillary and Tenzing Norgay got to the top. Bourdillon and Evans likely did not even make it into Trivial Pursuit.
In the business of innovation there is a body of literature on the value of being first. “First mover advantage” is firmly in the business lexicon. But so is the “fast follower” principle. Indubitably, fast followers could be faced with patents preventing that from happening. Intel went out in front early and was never materially threatened. But many businesses have been built on the premise of letting somebody else build the market and make the mistakes. There is that old adage: the people in the front get shot.
So, what does all of this have to do with energy? The history of development of shale gas is instructive. After the realization that horizontal wells and fracturing enabled gas production from these tight rocks, the early attempts employed methods previously used. In particular, those involved in using sugars as thickening agents to easily fracture the rock. The sugar residue impaired production. Newer techniques, in areas such as in the Marcellus, use “slick water”. The results have been dramatic, albeit at the expense of higher volumes of water.
All of the foregoing is just plain building on the experience of the past. This post on the virtue of being late keys on the point that if fate has dealt you a hand that causes you to be late to the party, find ways to make that a positive. This is the opportunity presented to the areas of the east coast that have not yet materially been swept up by the shale gale. These include Ohio, West Virginia, Maryland and North Carolina. These states must institute measures whereby the exploitation of the resource is done in an environmentally sound fashion while still maximizing the realization of economic value for the communities affected.
The important measures required fall in the following categories:
- Ensuring that the water related issues are dealt with from the start. The foremost is the requirement to re-use all the fracturing water, because improper discharge has plagued parts of Pennsylvania. Fresh water usage must be replaced, over time, by saline water. This is technically feasible and simply needs execution. Water wells proximal to intended drilling should be tested prior to drilling and then routinely thereafter. The cost of this must be borne by the operator. Chemicals used must be publicly disclosed with very few exceptions, and even in those cases, full disclosure must be made to the authorities. The use of toxic chemicals such as the BTEX family and diesel in the fracturing fluid is technically unnecessary and should be expressly disallowed.
- The latest technologies to minimize environmental impact should be employed. These include the use of pad drilling to minimize road traffic and measures to prevent fugitive methane emissions. Enabling rule-making, such as unitization schemes to allow pad drilling and mandatory sensing for emissions and indications of casing leakage, must be instituted.
- A significant fraction of royalties collected should be ploughed back into giving relief to the affected communities. This includes hardening of farm roads unsuited to the heavy vehicles associated with the exploitation, and the water handling infrastructure.
- The public must be educated on all the issues and opportunities for dialog should be created. A clearing house of information is needed for affected parties such as potential land leasers and homeowners proximal to production activity.
The Secretary of Energy commissioned a study whose findings have just been published for public comment. This is a balanced report with a very positive attitude that is in keeping with the position we have been taking: shale gas is a game changer and it is incumbent on us to enable it responsibly. Produced in a scant 90 days, the report is necessarily short on some detail. But the message is clear and there is an air of optimism. For this it will undoubtedly be pilloried by some interest groups.
HOW VIABLE IS A CARBON TAX?
July 31st, 2011 § 1 Comment
Source: Harvest Power
Most discussion regarding a price on carbon emissions avoids the ”tax” word. Conventional wisdom goes that supporting a carbon tax is a poison pill for re-election. Consequently Europe resorted to a cap-and-trade scheme in the belief that this was tantamount to the free market setting a price. But political pragmatism in the form of holidays for certain industrial sectors severely diminished the effectiveness of the instrument.
Cap-and-trade does have allure. It permits businesses to buy and sell carbon credits, thus providing a measure of flexibility. However, by its very nature, the scheme engenders uncertainty. In Europe, the price has fluctuated from about 13 euros ($18) per tonne of carbon –dioxide today to a high of 34 euros ($47) in 2006. This sort of uncertainty discourages investment capital. Uncertainty equates to a higher discount rate, which increases the transaction price. This applies in particular to carbon sequestration schemes, all of which are expensive. Cleaning coal derived power to natural gas levels will cost around $30 per tonne. The European price today could not support that, and more to the point, there would be no certainty as to the price years hence.
So, over half a decade of European cap-and-trade experience is not encouraging. The US Congress flirtation with such a scheme was dead on arrival even in a Democrat controlled House. Today, with DC painted red, the prospects are essentially nil. As for a tax, that is even more inconceivable.
BC could soon stand for Beyond Carbon: A very interesting piece in the Economist describes some early success for a British Columbia experiment in carbon mitigation. In 2008, the sitting Prime Minister Stephen Harper was re-elected in part because of his stance against a carbon tax. Pretty conventional political wisdom at work here. Almost unnoticed at the same time the province of British Columbia had a governor, Gordon Campbell, who introduced a carbon tax. At first pilloried by many, it now is seen as a success by all factions. The two key elements to success appear to be as follows. First, and likely most important, the entire revenue from this was ploughed back into tax refunds to individuals and companies. Second, the initial tax was modest at $10 per tonne of carbon dioxide, with a prescribed annual rise of $5. It will be $30 in 2012. The predictability goes right to our point earlier: it is capital investment friendly.
The BC experiment appears to be a success story, although it is still Year 4. Per capita fuel consumption is down by 4.5%. Economic indicators are all positive, albeit in a petroleum rich province. Campbell was re-elected a year after this was instituted, and the new governor, from the other side of the aisle, kept all the elements of the popular program. The current tax of $25 is 25% higher than the effective price in Europe and yet acceptable.
So, what makes British Columbia different? All Canadian politics is skewed to the left no matter the party. And yet, Harper appeared to have been elected in part due to the platform of no carbon tax. BC is more temperate in climate than the rest of the country, so per capita energy use is likely less, not unlike California and Oregon, who have had their successes with energy policy. This entire rationalization aside, the trick probably was the re-use of the revenue to benefit the public and industry. The province of Alberta does something similar by taxing bigger producers and putting the revenue into a fund for improving the environment. This too is a popular measure, but less far reaching.
Now Australia takes the plunge: Australian Prime Minister Julia Gillard just this month announced a tax of A$23 per tonne on the 500 worst polluters, mostly coal mines and steel companies. She needs the Green Party support in Parliament, and this was a factor, as it was for Angela Merkel in Germany on the decision regarding no new nuclear plants. When all the teeth gnashing is done, some bare facts are illuminating. The net addition to the price of coal is estimated to be A$1.50 per tonne against the backdrop of a near all-time high of A$300 per tonne feeding a voracious Far East market. The proverbial drop in the bucket. High quality Australian iron ore is currently also at a high, with prices in the range of A$150 per tonne, against a cost to produce of A$40. In general, the Australian economy is on a high; unemployment is low and exports strong despite an incredibly strong Australian dollar. Taxing industry in this situation is a lot easier, especially when the resulting revenue is being returned. In fact, in the next four years, the related expenditure will exceed the revenue substantially. But this economy can afford it.
The key to any acceptance of the Australian scheme is, once again, the manner in which the revenue is used. Half will be used to reimburse consumers for increased electricity cost due to it. Another 40% will go to aiding the transition of the hardest hit companies to cleaner technology. The plan will pass Parliament but may not at first be popular with the public. But nor was it so, in the early days in British Columbia. The plan may endure with the right results, but Australia’s first female prime minister may not survive the next election. She was elected this time around on a firm platform of no carbon tax. Opponents will be keen to remind the public of that.
Impressions from Plug-In 2011
July 26th, 2011 § Leave a Comment
Plug-In 2011 was held in Raleigh, NC, the first time ever outside California. The attendance was just short of last year’s at San Jose. The Public Night drew 1,300 folks, on par with the San Jose event. So, the experiment may be deemed a success. Next year: Texas. They will have tough shoes to fill.
On balance, the programming was a good mix of depth and breadth. The competitive spirit between Nissan and Chevy was something short of collegial. This was disappointing for a forum such as this. At this stage, with just two entrants, the task is to get the public enthused about the genre. The Volt and the Leaf have dramatic differences that allow choice. Leave it at that.
One speaker made the observation that young girls were particularly enthused about electric vehicles. This is interesting because cars and trucks used to be the domain of little boys. When the observation was made from the floor that soon girls would be playing with zinc die cast cars, Chelsea Sexton wryly raised her hand from the podium. OK, so Chelsea, unmistakably of the female gender, was one such, but we all know that she is unique! The trend, if verified, holds the promise of another breach in the science and mathematics wall that young women face in today’s society.
Batteries will be the difference: A prediction was made by a speaker that battery costs could drop to $200 per kWh by 2018. This is in keeping with our own view. A scant two years ago this figure was believed to be around $950. A recent report from the UK offers evidence for Nissan batteries costing about $375. The report cites GM, Ford and Toyota, all being bearish about numbers below $500. Admittedly several factors are in play for this seemingly steep drop to date. Mass production inevitably dropped the cost. Further, Nissan, in partnership with battery giant NEC since 2007, could well have made breakthroughs in manufacturing. This is all to the good because battery cost and performance will be the key driver for electric vehicle uptake.
Cost aside, the key attributes of batteries in play are range, energy density (size for a particular range), speed of charging and discharge characteristics as linked to ultimate life. Depending on how these play out, the choice between hybrids such as the Volt and all-electrics such as the Leaf will be impacted. Take speed of charging. If a 22 kWh top up could be accomplished in say 20 minutes, Range Anxiety gets a dose of Valium. This is because 22 kWh will give you about a 100 miles and one could envision “refueling” stations in sufficient number to allow longer drives. Lest this sound like wishful thinking, know that at least two outfits are working on improving the lithium iron phosphate cathode to accept a blindingly fast charge rate. If this came to pass, the comfort of the gasoline backup in the Volt could be less of a factor. In fact, the 40 mile electric-only feature begins to look puny in terms of low cost emission free range.
An improvement in energy density helps both types of vehicles, but likely more the all-electric. Presently the all-electric is advantaged in weight because it loses a lot of heavy equipment such as the internal combustion engine, transmission, gear box and so forth. But the larger battery adds significant weight. Energy density improvements will help, although the temptation may be to give more range for the same weight and volume.
Motors could be the difference: Not in the same way as batteries, advances in motors could nevertheless have a material impact. Shown at the conference were in-wheel motors. Fitting in any 18 inch wheel, these allow elimination of the differential and could provide very precise four wheel drive capability.
Most of the motors today use permanent magnets with the Rare Earth elements Neodymium and Dysprosium in it. In fact, the Prius has up to 25 pounds of Rare Earth elements. Neodymium in particular is a problem because the price has quadrupled in the last year. Substitute elements are being sought for the magnets. But an entirely different avenue is to eliminate the use through the use of induction motors. Nicola Tesla invented this back in 1888. For proper functioning, it requires precise computer aided controls. Only recently has it been rendered truly functional and economical. The Tesla Roadster has one such and several companies including BMW are planning on having one. Aside from non-reliance on Rare Earth elements, no permanent magnet means no need to cool the unit (permanent magnets do not function well at higher temperatures). This type of motor may not need a gear box, as is the case in the Tesla.
Plug-In 2011 exuded optimism. All data to date, including consumer feedback, appears to justify it.
ELECTRIC VEHICLES USE LESS ENERGY
July 6th, 2011 § 1 Comment
The most obvious benefit of electric vehicles (EV’s) is the replacement of imported oil with electricity. The zero emissions at the tailpipe are another plus, but as is often pointed out, the problem is merely shifted to the power generating plant. Carbon sequestration is more tractable at such locations than at the vehicle.
A relatively less known fact is that electric vehicles use less energy than conventional cars. To be specific, EV’s expend fewer units of energy to travel the same distance. This is important because simply using less energy to receive the same gratification is a powerful arrow in our carbon mitigation quiver. So, how much less energy do they in fact use?
In a departure from blogs of the past, we will calculate this right here. We will use the following facts and assumptions:
- A gallon of gasoline has 116,100 BTU which equals 34 kWh
- The average car being replaced delivers 35 miles per gallon
- For years the dogma has been that EV’s use 0.2 kWh per mile. Nissan claims that the Leaf averages 0.25 kWh per mile. As in all electric and hybrid cars, stop and go gives better mileage than continuous operation. So, that number could be higher in some cases. We will use the 0.25 number for this exercise.
- Refining oil to give gasoline consumes 20% of the energy in the oil
- Coal fired plants have efficiency of 40% (by using coal not gas we are being conservative, but this figure is that of newer supercritical combustors)
- Electricity lost in transmission is 8%
- Energy to get the oil out of the ground washes with coal mining. Had we used the less conservative gas source for electricity, the offset would have been precisely correct
So, energy losses for gasoline prior to being consumed in the vehicle are 20%. Energy used after combustion is: 34 kWh in a gallon divided by 35miles to the gallon, further divided by 0.8, equals 1.25 kWh per mile
Energy losses for EV’s are 60% at the generating plant, minus 8% in transmission, equals 32%. Energy used by EV’s equals 0.25/0.32 equals 0.78 kWh per mile
Ratio of these two puts it at 1.6. In other words, a conventional vehicle uses 60% more energy as an EV for the same purpose. Is this exactly right, probably not, but it is not off by much. The key take away remains that the EV advantage has a facet that is not commonly recognized in quantitative terms.
Implications to other oil replacement means: The other principal avenues to replacing oil for transportation are: natural gas fired vehicles, biofuels and gas-to-liquids derived fuel. For the latter two, the energy used to produce is certainly worse than for conventional gasoline or diesel. So, the EV advantage holds in this regard. Natural gas powered vehicles offer some interesting possibilities. The energy to produce should be somewhat less than for gasoline. But the intriguing possibility for additional efficiency is in taking advantage of the high octane rating of around 125. Diesel type compression ratios (14 to 22) would certainly provide more work per unit volume of gas, although I know of no move to capitalize on this opportunity. But the sheer inefficiency of the Carnot Cycle will doom it to always compare unfavorably with EV’s.
The foregoing notwithstanding, oil replacement is too important an objective to not pursue all the alternatives. For one, the alternatives discussed can be retrofitted to the current fleet. EV entry will necessarily be slow and conventional vehicles will continue to be built. We need to provide alternatives to imported oil to power them.
Implications to federal targets on vehicle mileage: A recent story reports on negotiations between the White House and the auto industry on mileage standards. The proposed target of 56.2 mpg by 2025 is almost double of the average today. On the face of it, the only real impact of EV’s is that of an effectively very high mileage to offset the guzzlers. I am not clear on how they calculate the mpg for EV’s given that no liquid fuel is involved except for Plug-In Hybrids when not in electric drive mode. One way to do it would be to use the data shown above.
The Nissan Leaf drives 100 miles using 0.24 X 100 = 24 kWh. Gasoline has 34 kWh per gallon. So the gasoline equivalent of 24 kWh is 24/34 = 0.705 gallons. So, the equivalent mpg for the Leaf is 100/0.705 = 141.8 miles per gallon.
The mileage target has two purposes: reduce import of oil and reduce emissions. The latter is recognized in that EV’s have zero tailpipe emissions, but we need also to take into account that the overall energy used is less. Since the majority of electricity is produced using fossil fuels, using less per mile driven is a direct reduction in fossil fuel based emissions. This somehow needs to be recognized in the mileage target debate.
