Energy News

Coal or Natural Gas? – from SeekingAlpha.com

The U.S. uses a lot of oil. With only 5% of the world’s population, the U.S. consumes 25% of total worldwide oil production. In 2009, America sent $265 billion overseas for oil. In 2008 oil nearly hit $150/barrel and gasoline was over $4.50/gallon in many parts of the country. The U.S. foreign oil bill in 2008 was a gargantuan $465 billion. America obviously has an oil crisis. Combined with fiscal and monetary mismanagement by the Federal Reserve and a dysfunctional Congress, the oil crisis has led to a severe economic crisis, a jobs crisis, and a country that has saddled future generations of Americans with a horrendous debt load.

One doesn’t need an economist or a Federal Reserve study to know what to do. Simple logic would dictate that America must reduce foreign oil imports and adopt a strategic long-term comprehensive energy policy.

Meantime, global warming grabs the headlines and the talk is all about solar and wind energy. While I certainly support wind and solar energy, they produce electricity, not gasoline. Since 70% of American oil consumption is used in the transportation sector, solar and wind energy won’t reduce American dependence on foreign oil unless electric cars (EVs) are deployed. However, fully electric cars have their own set of problems:

Ø Range – the U.S. is a very large country.

Ø Power – batteries will run down quickly in mountainous terrain or for consumers pulling boats, trailers, and other recreational vehicles.

Ø Expense – fully electric cars will be very expensive and the middle class has already been whacked – who can afford a new fully electric car?

Ø Battery dependence – many of the elements used to build electric batteries, like lithium, are not found in large quantities in the U.S. We may find ourselves trading our foreign oil dependence for foreign battery dependence.

Ø Availability – where are they?

It is clear we’ll need all alternatives to the solar/wind/electric car architecture if we want to significantly reduce our foreign oil imports over the next 5-10 years.

So, if it’s going to take many years to build out solar, wind, and nuclear power infrastructures – what’s the plan to reduce foreign oil imports? According to President Obama and U.S. Energy Secretary Chu – the answer is “clean coal” and electric vehicles. Many others (including your correspondent) believe natural gas is a superior solution. So it’s game on. Should it be natural gas or coal? This is the big and important battle being fought today. So, who is winning and why?

If you’re a coal producer or a coal based electric utility executive, you’ve got to be feeling pretty good these days. You’ve been effectively subsidized since the Carter administration and as a result you’re sitting on mountains of cash and enjoy broad and deep political cover. President Obama and U.S. Energy Secretary Chu believe (or at least support…there is a difference…) the myth of oxymoronic “clean coal”. Despite the coal fly-ash release at the TVA plant in Kingston, TN (probably the worst environmental disaster in the history of the continental United States) most people have been conned into believing if we simply sequester coal’s CO2 emissions in the Earth wah-la! – we have “clean coal”.

Of course this is ridiculous because the inconvenient truth about coal is the toxic heavy metal particulates which must be dealt with after combustion. One “solution” is to simply release this toxic sludge into the Tennessee River and destroy it for generations to come. Apparently this is OK, because the country doesn’t seem to be worried about it (or acid rain, or mercury in their water, or the smog over Knoxville, etc. etc). In addition to these advantages, coal executives must also be content with the mountain of legislation that has been passed over the years at the EPA and elsewhere that effectively keep natural gas vehicles and natural gas conversion kits either unavailable or very expensive.

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Obama in nuclear energy push – Financial Times

President Barack Obama redoubled his efforts to promote nuclear power as a clean energy source on Tuesday, saying that $8bn in loan guarantees for the first nuclear power plant to be built in three decades was “only the beginning”.

Portraying nuclear energy as a key part of cutting carbon emissions at the same time as creating new, high-tech jobs, the president appealed for bi-partisan support to build more reactors. The push for nuclear power is part of the Obama administration’s efforts to pass climate change legislation.

“On an issue that affects our economy, our security, and the future of our planet, we can’t continue to be mired in the same old stale debates between left and right, between environmentalists and entrepreneurs,” Mr Obama said at job training centre in Maryland.

“See, our competitors are racing to create jobs and command growing energy industries. And nuclear energy is no exception,” he said, pointing to investments in Japan, France, China and South Korea.

Mr Obama’s administration on Tuesday announced it would give $8.3bn in loan guarantees to help Southern Co build two reactors at a plant in Burke, Georgia.

Southern was among four companies named last year as being considered to share $18.5bn in federal loan guarantees to build new nuclear power facilities.

The White House said the Burke project would entail about 3,500 onsite construction jobs and 800 permanent operations jobs. Power generated at the facility would serve about 1.4m people in 550,000 homes, it said.

As his administration struggles with a stubbornly high unemployment rate and endeavours to keep climate change on the political front-burner, Mr Obama has suggested he can kill two birds with one stone by investing in clean energy sources.

After championing nuclear energy in his State of the Union address last month, Mr Obama included in his 2011 budget request a total of $54bn in loan guarantees — tripling the size of the existing guarantee programme — to encourage the construction of as many as 10 nuclear power plants.

There are now 104 nuclear power plants supplying 20 per cent of the US’s energy, but no nuclear projects have been started since 1977.

Mr Obama said that nuclear energy was nevertheless the US’s largest source of fuel that produced no carbon emissions.

“To meet our growing energy needs and prevent the worst consequences of climate change, we’ll need to increase our supply of nuclear power. It’s that simple,” he said. “This one plant, for example, will cut carbon pollution by 16m tonnes each year when compared to a similar coal plant. That’s like taking 3.5m cars off the road.”

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Cities Prepare for Life With the Electric Car – New York Times

SAN FRANCISCO — If electric cars have any future in the United States, this may be the city where they arrive first.

The San Francisco building code will soon be revised to require that new structures be wired for car chargers. Across the street from City Hall, some drivers are already plugging converted hybrids into a row of charging stations.

In nearby Silicon Valley, companies are ordering workplace charging stations in the belief that their employees will be first in line when electric cars begin arriving in showrooms. And at the headquarters of Pacific Gas and Electric, utility executives are preparing “heat maps” of neighborhoods that they fear may overload the power grid in their exuberance for electric cars.

“There is a huge momentum here,” said Andrew Tang, an executive at P.G.& E.

As automakers prepare to introduce the first mass-market electric cars late this year, it is increasingly evident that the cars will get their most serious tryout in just a handful of places. In cities like San Francisco, Portland, Ore., and San Diego, a combination of green consciousness and enthusiasm for new technology seems to be stirring public interest in the cars.

The first wave of electric car buying is expected to begin around December, when Nissan introduces the Leaf, a five-passenger electric car that will have a range of 100 miles on a fully charged battery and be priced for middle-class families.

Several thousand Leafs made in Japan will be delivered to metropolitan areas in California, Arizona, Washington state, Oregon and Tennessee. Around the same time, General Motors will introduce the Chevrolet Volt, a vehicle able to go 40 miles on electricity before its small gasoline engine kicks in.

“This is the game-changer for our industry,” said Carlos Ghosn, Nissan’s president and chief executive. He predicted that 10 percent of the cars sold would be electric vehicles by 2020.

Utilities are gearing up to cooperate with the automakers, a first for the two industries, and governments on the West Coast are focusing intently on the coming issues. Price and tax incentives need to be worked out. Locations must be found for charging stations. And local electrical grids may need reinforcement.

The California Public Utilities Commission, whose headquarters are in San Francisco, has brought together utilities, automakers and charging station companies in an urgent effort to write the new rules of the road.

Much of the attention on electric cars has been on the vehicles’ design, cost and performance. But success or failure could turn on more mundane matters, like the time it takes car buyers to navigate a municipal bureaucracy to have charging stations installed in their homes.

When the president of the California Public Utilities Commission, Michael R. Peevey, leased an electric Mini Cooper, he said, it took six weeks of visits by installers and inspectors before he could plug in his new car at home.

“It was really drawn out and frustrating and certainly is not workable on a mass basis,” Mr. Peevey said.

Such issues are being hashed out here first. The San Francisco area is home not only to a population of early technology adopters but to companies like Coulomb Technologies and Better Place that are developing the networks and software to allow utilities to manage how cars are charged.

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Drilling Tactic Unleashes a Trove of Natural Gas—And a Backlash – WSJ.com

SHREVEPORT, La.—A mounting backlash against a technique used in natural-gas drilling is threatening to slow development of the huge gas fields that some hope will reduce U.S. dependence on foreign oil and polluting coal.

The U.S. energy industry says there is enough untapped domestic natural gas to last a century—but getting to that gas requires injecting millions of gallons of water into the ground to crack open the dense rocks holding the deposits. The process, known as hydraulic fracturing, has turned gas deposits in shale formations into an energy bonanza.

The industry’s success has triggered increasing debate over whether the drilling process could pollute freshwater supplies. Federal and state authorities are considering action that could regulate hydraulic fracturing, potentially making drilling less profitable and giving companies less reason to tap into this ample supply of natural gas.

Exxon Mobil Corp. placed itself squarely in the middle of the wrangling when it agreed last month to acquire gas producer XTO Energy Inc., a fracturing pioneer, in a deal now valued at $29 billion. Wary of the rising outcry, Exxon negotiated the right to back out of its deal if Congress passes a law to make hydraulic fracturing illegal or “commercially impracticable.”

On Wednesday, Exxon Chairman and Chief Executive Rex Tillerson faced questions about the environmental impact of hydraulic fracturing at a Capitol Hill hearing on the merger.

“We can now find and produce unconventional natural-gas supplies miles below the surface in a safe, efficient and environmentally responsible manner,” Mr. Tillerson told members of the House Energy and Commerce Committee.

Criticism of hydraulic fracturing was muted at the hearing, with most representatives focusing on the potential benefits of increased gas use. But the merger has given drilling opponents a new target.

“It puts Exxon at front and center of this whole issue,” said Michael Passoff, associate director of As You Sow, an environmental-minded investment group.

Even before the Exxon-XTO deal, the controversy over hydraulic fracturing, also known as “fracking” or “fracing,” was growing.

Oilmen were injecting water into wells to free up valuable oil and gas as far back as the 1940s. But in the past decade the technique has really taken off. First in East Texas and in the outskirts of Fort Worth, companies began pumping water under enormous pressure to see if they could break open dense shale-rock formations to release gas.

These initial efforts were largely welcomed by communities, with homeowners and landlords often receiving lucrative checks for the mineral rights that allowed companies to drill on their land.

When early efforts succeeded, the companies began running bigger fracturing jobs, using more water and higher pressure—and in turn searching for even more gas-bearing shale deposits.

This took the gas industry into places where drilling was less common in modern times, including downtown Fort Worth, northeastern Pennsylvania and within the city limits of Shreveport, La.

Hydraulic fracturing and some other technology improvements have created a way to tap a domestic fuel source that has proved abundant. U.S. natural-gas production has risen about 20% since 2005 in large part because of these developments, making gas a much bigger player in energy-policy planning.

Natural gas heats more than half of U.S. homes and generates a fifth of America’s electricity, far less than coal, which provides the U.S. with nearly half its power. The industry and its allies are promoting natural gas a bridge fuel to help wean the U.S. off coal, which emits more global-warming gases, and imported oil until renewable fuels are able to meet the demand.

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Update on Shale Gas from Davos – Reuters

DAVOS, Switzerland (Reuters) – New technologies to extract gas from shale rock have altered the U.S. energy outlook for the next 100 years, Tony Hayward, chief executive of BP, said on Thursday.

Energy chiefs speaking at the World Economic Forum differed about the prospects for future oil supplies — with Iraq placed to account for up to 10 percent of that — but agreed new “unconventional gas” would be a huge fillip.

Unconventional gas includes natural gas extracted from shale and methane reserves in coal mines, which together are set to play a huge role in satisfying rising global energy demand.

“(It’s) a complete game-changer in the U.S. It probably transforms the U.S. energy outlook for the next 100 years,” said Hayward.

Peter Voser, chief executive of Royal Dutch Shell, said such new reserves were “global and necessary.”

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