Years ago, when the US thought they would have to import LNG’s from abroad there was a massive build out of over 24 LNG plants for regassification. Thanks to horizontal drilling and hydrologic fracturing, the US will not have to worry about LNG imports for the next century at the earliest. Converting these regassification plants to be export terminals makes economic sense and environmental sense. With the exception of Sabine Pass in Louisiana who was just recently granted permission to export, all that equipment now sits idle along the gulf coast.
At the heart of the issue is the fact that American gas now sells for $3.40 per MBTU domestically but over $12 in Europe and up to $20 in Asia. Turning American nat gas to LNG cost about $5 per MBTU, so exports of LNG can be beneficial to the economy. Furthermore, the glut of natural gas has actually forced producers to stop producing until the supply dwindles or demand picks up. Tapping the international markets would allow this process to balance out. Of course, there is steady opposition to LNG exports from uncommon bedfellows of environmentalist and business proponents who respectively oppose fracking on environmental grounds and who want to maintain their access to cheap fuels.
I have gone back and forth on the subject of fracking several times now but generally agree with the economic arguments set forth in this article. While I am not a proponent of fracking, the following issues deserve mention:
Nat Gas is priced on a regional market as opposed to a global market. The lack of export infrastructure acts as a subsidy thereby keeping the price of gas artificially low and promoting inefficient use of the fuel. Increasing LNG exports will increase the price but will hopefully establish a free and transparent market. The revenues of the fuel trade should be used in clean technology research and developing next generation technologies.
With cheap nat gas prices in the USA, developing nations have been leaning towards coal to fuel their consumption. Access to natural gas will hopefully reduce the emissions in the developing world more than if the gas were kept in the US.
These two points rely on the assumption that fracking remains legal. As I write this, a moratorium on fracking (bill A.5424-A) was just passed by the Assembly and will go before the NY State Senate and then on to the Governor for signature.
Clean technology has never been more affordable or accessible to the masses. Policy makers are now realizing the national security and economic concerns of relying on fossil fuels. Clean, distributed sources of energy combined with sustainable development are our best options for a healthy, prosperous future.
While a big victory for the environmentalists, it has angered upstate residents and land owners who were looking for economic development or to simply lease out their land to natural gas companies. Mr. Cuomo is caught between a rock and a hard spot on this issue because of his committment to economic prosperity and job creation on one hand, and his environmental conservatism on the other. With both sides fervently pushing to allow or deny fracking on the New York region of the Marcellus Shale, the Governor decided to review more data and let the facts make the decision for him.
I say, “Congratulation Mr. Cuomo! Thank you for not bending to one political pressure or another and instead reviewing actual science and data. This is something that has been missing from many of the major political arguments recently.”
America really needs to learn the facts about natural gas – do not base your decision on a 30 second tv commercial sponsored by the Natural Gas Alliance. Get out and do some research. This is such a big deal for America’s economy and our environment. If fracking is for the public good, then a public health study of the effects of fracking is exactly what the doctor ordered.
FULL DISCLOSURE: I must admit that I was originally in favor of fracking in certain areas and more importantly, in favor of natural gas as a “transition fuel” until renewable sources were cost competitive. I saw the economic benefits and job creation associated with fracking as outweighing the environmental degradation. Since then I have changed my opinion. I have to ask myself, why are we taking a bunt when we could be swinging for the fences in terms of renewable energy technology. Natural gas will still play a large role in America’s future – after all, we need a diversified energy portfolio. But now I see the economic benefits of renewable energy technology being even more important to our economy. Instead of risking potential poisoning to our fresh water supplies and still being dependent on the spot price of a commodity, our renewable energy future will protect our most vital resources and at the same time create a demand for good, high-paying jobs in science, engineering, and operations and maintenance of distributed, renewable energy systems.
An interesting article in the 9/3 Bloomberg Businessweek introduced a new method of coal mining that has the potential to provide energy while limiting GHG pollution and completely avoiding mountaintop removal – one of the most destructive practices known to man. Underground Coal Gassification (UCG) technology actually dates back more than a century but is only now gaining momentum thanks to the advances in technology as a result of the fracking boom. UCG involves drilling well into a deep coal seem, igniting the fuel, and harnessing the gas released through combustion. The CO2 is then pumped back into the ground to keep it from entering the atmosphere. Many of the most harmful substances such as arsenic, mercury, and lead are left in the ground alleviating the problem of what to do with the waste (remember the TVA holding pond disaster?).
UCG projects are currently underway in Canada, China, New Zealand, and Uzbekistan – areas where natural gas is expensive and the coal seams are hard to reach.
There are plenty of downsides to this new technology – most notably the fact that you are in essence starting an underground mine fire (see Centralia, Pennsylvania). Other concerns are groundwater contamination, water use, and a slew of environmental issues. However, UCG has the potential to increase the USA’s exploitable coal reserves by a factor of 5.
It is well established that coal-burning power plants are some of the biggest polluters in our society but their environmental effects are not limited to the generating facility. From the beginning, whole mountains in Appalachia are blown up to access the coal in the cheapest manner possible. After the coal is spent there is still the problem of disposing of the coal ash that contains toxins and carcinogens.
Until our energy needs are fully met through renewable technologies, we are going to have to experiment with new processes that reduce GHG’s and are more environmentally friendly. UCG is not the cure to our energy problem, but it does address several of the most devastating by-products of using coal as a power source. To that end, it is definitely a technology worth researching.
By now, if you are reading this site, you probably know a little about the economy, energy, and the environment. You might also know that the US is now one of the largest holders of natural gas in the world. Recent technological developments have allowed us to access energy from areas that we thought were previously off-limits – shale gas. The graph at right shows the projected increase in shale gas over the coming years – eventually contributing almost 50% of the US natural gas supply while gas from other sources decline. While we have an abundance of shale gas, the process of getting to it has caused quite a controversy. You have probably heard the term “Fracking” in the news. Fracking is slang for Hydraulic Fracturing, or the process of releasing natural gas from fissures in the shale deep below the Earth’s surface. Fracking entails pumping water, sand, and a cocktail of secret ingredients into a well in order to disturb the gas, capture it, and send it back to the surface. Reasons of concern about fracking are:
1) It is extremely water intensive – thousands of gallons of water are pumped down the well. Often, it takes hundreds of tankers to transport this water to the well resulting in increased traffic on country roads as well as the pollution aspects of this traffic.
2) Companies do not want to share the “secret ingredients” of their fracking fluid. Reports suggest that many times there are harmful or cancerous chemicals that are used and are brought back to the surface along with the shale gas.
3) There are many reports of water contamination (see the film Gasland) resulting in residents being able to set their tap water on fire. Other reports detail sickness in farm animals and people whose land the wells were drilled on.
4) A new study revealed an increase in earthquakes in area with heavy fracking. Yes, you heard that right – Fracking may cause earthquakes.
Now that you are utterly frightened, lets discuss why we must pay attention to this: THE UNITED STATES HAS A LOT OF NATURAL GAS!
I mean a lot of gas. And the good thing about natural gas is it is much less polluting than coal and it is located right in our back yard. No more shipping dollars off to the Mideast and repressive regimes. We can produce enough of this stuff to satisfy domestic consumption as well as export it. Currently, nat gas makes up about 25% of our energy mix, but this should increase based on our supply. I touted the environmental benefits, but Bloomberg Businessweek does a great job of explaining it in chart form below.
So here is my conclusion – horizontal drilling and fracking have created a game-changer, if you will, in the natural gas sector. Currently, shale gas is responsible for almost 30% of our nat gas total and that number is expected to increase in the coming years. So abundant is this shale gas, that the price of nat gas has deceased dramatically and convinced some high-energy users such as steel mills, polymer, chemical, and plastic companies to relocate back to the US. This means jobs for Americans. We can also export this fuel to developing countries where we know there will be a demand, and solve our budget problem at the same time. However, the environmental risks are also plentiful and serious. So lets develop some rules that protect our resources while leading to economic benefit. Designate certain areas “No Fracking Zones”. Make the companies try out non-harmful fracking fluid substitutes. Etc. Etc. The bottom line is this natural gas boom can create bountiful economic benefits, but it can also have grave environmental consequences. There are some big decisions to be made – let’s not frack this up!