UNREALISTIC TAXES AND LEGISLATION ARE PIPE DREAMS ABOUT NATURAL GAS
Friday, November 13, 2009
Natural gas surge, Is it a pipe dream?
Patrice Hill
Climate change legislation in Congress appears to be based in part on the optimistic view that the United States has a plentiful supply of natural gas and would push businesses to switch to gas from coal, critics say, even before the supply has been secured.
The legislation takes a cue from industry proponents who proclaim the United States has a century’s supply of natural gas — a clean, efficient fuel that could help solve the nation’s energy problems — from climate change to dependence on Middle Eastern oil.
But some environmental groups, scientists and analysts say the industry is raising false hopes, as fracturing techniques for releasing the gas found in shale rock underlying much of the country are not yet proved to be economical or safe, and could contaminate groundwater.
Natural gas is abundant in shale rock running from the Appalachians to the Rockies, but it has remained largely untapped because of the difficulty in reaching it. But in recent years, fracturing techniques have been developed that cause the shale to release the gas so it can be pumped to the surface.
Gas not only is cleaner and more efficient than coal or oil in generating energy, but it also produces the least amount of carbon dioxide — the principal greenhouse gas — when burned.
T. Boone Pickens, a Texas oil billionaire who has devoted himself to campaigning for greater energy independence, is one of the biggest proponents of diverting the nation’s energy consumption into natural gas and away from imported oil. He advocates reducing oil use by using compressed natural gas to run more buses and trucks.
“America is the Saudi Arabia of natural gas. Its time for us to use this abundant resource to end the cycle of foreign oil dependency and addiction that is making us less safe and more economically insecure,” Mr. Pickens said. “With new drilling techniques and technology giving us access to the incredible reserve of natural gas contained in the shale fields, we have more than 100 years’ supply of natural gas.”
He has been joined recently by former President Bill Clinton and his aide John Podesta, now chief executive of the Center for American Progress, in urging Congress to adopt a strategy of relying more on natural gas to increase energy independence and to reduce greenhouse gas emissions and generate “green” energy jobs.
Following their recommendations, climate change legislation pending in Congress would cap carbon dioxide emissions, pushing power plants and other businesses to switch to natural gas from coal for heating and electrical generation.
Industry enthusiasts point to a June study by the Potential Gas Committee, a panel of industry specialists, which found that the United States has about 2,074 trillion cubic feet of natural gas resources, much of that in shale underlying the Appalachian basin, the midcontinent, Gulf Coast and Rocky Mountain areas. That amount of gas rivals the amount of proven reserves in Russia, the world’s largest gas producer, and is the highest estimate of U.S. gas resources in 44 years.
The report “shined a credible spotlight on the staggering amount of natural gas that exists here in our own country,” said David Parker, president of the American Gas Association, a gas utility group. He said the study should encourage legislators who are trying to find inexpensive and proven solutions to climate change.
But critics say the industry may be leading the nation down a dead-end street. They point out that optimism about an abundance of gas resources has been proved wrong in the past. And they note that the federal Energy Information Administration — the official arbiter of the nation’s energy resources — still has not recognized that large amounts of shale gas are economically feasible to develop.
A Congressional Research Service report last month said shale gas is only marginally economical to tap at today’s low natural gas prices. More wide-scale production of shale gas will occur only if natural gas prices increase, it said. The report also noted that “no systematic assessment of shale gas resources has been conducted in the United States.”
“Shale gas is the next panacea being pushed onstage,” said Frank Clemente, professor at Pennsylvania State University. “Before policymakers jump on the bandwagon, they should take a careful look as to the vagaries of natural gas forecasting. … Climate change policies founded upon erroneous energy projections are doomed to failure and will lead to expensive and unreliable energy across the country.”
The natural gas industry in the past predicted huge discoveries and abundant supplies that never materialized from a variety of sources ranging from offshore wells to liquefied gas imports, Mr. Clemente said.
Optimism about the availability of gas in the 1990s led to the construction of a generation of power plants fueled by natural gas. But when the power plants came on line in the early 2000s, the price of gas spiked and led to record-high fuel costs for consumers. Prices were so high that many gas-dependent industries closed down, laid off workers and moved overseas.
“Do we really want to bet our energy future on this record?” Mr. Clemente asked.
While some environmental groups are backing the drive to produce more gas, other groups are attacking the hydraulic fracturing technology used to break up shale rock and release the gas. The technology involves injecting water and chemicals underground at high pressure to fracture the rock and liberate the gas it holds.
Opponents say drilling for gas should be banned in watersheds where untreated groundwater is used for drinking water for major cities.
“There are a number of cases in the U.S. where hydraulic fracturing is the prime suspect in incidences of impaired or polluted drinking water,” said Gwen Lachelt, director of Earthworks’ oil and gas accountability project, citing instances in Alabama, Colorado, New Mexico, Virginia, West Virginia and Wyoming.
She said Congress exempted the technology from regulation under the Safe Drinking Water Act in 2005, but congressional Democrats have introduced legislation this year to close that loophole. Industry groups say they can adopt safeguards to protect groundwater and avoid other pollution problems caused by drilling.
But even some industry proponents agree that Congress should be cautious about mandating the use of gas in transportation and power generation, since it may prove to be less abundant than thought.
Cal Dooley, president of the American Chemical Council, worries that congressional mandates to use gas could push up prices to prohibitive levels again, leading to further steep job losses in the chemical industry and others that depend heavily on natural gas as a feedstock and source of energy.
“Power companies are already in a dash for gas,” based on their expectation that Congress will enact caps on carbon dioxide emissions that severely raise the cost of using coal, Mr. Dooley said.
“Placing a price on carbon will increase the use of natural gas. This is already happening. Natural gas demand for electricity was up 62 percent from 1997 to 2008, a trend that will accelerate as the United States seeks to further reduce greenhouse gas emissions. Additional incentives to entice utilities and others to use more natural gas are unnecessary.”
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