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The Fuel Revolution that Is Changing the World — And Us
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Colorless, odorless natural gas is changing the world geopolitically and economically in ways undreamed of even five years ago.
It is a giant upheaval of which President Obama is both the beneficiary and the victim. He benefits because low natural gas prices are helping consumers and industry. And he is undermined by them because the cheap gas is savaging his dreams of “green” energy alternatives with scads of jobs attached.
The technologies which have brought on the gas boom also are contributing to enhanced oil production in the United States. Who would have believed that North Dakota would become the third-largest oil-producing state?
But the price of gas, now at historical lows, is also a political difficulty for Obama. His energy policy has been based on the old reality of shortage and a need for “alternatives.” In the administration’s scheme of things, the slack was to be taken up by the renewable sources ofenergy, wind, solar and wave power. With natural gas in plentiful supply and pushing out coal and new nuclear, the president is saddled with his failed attempts to push alternatives and to create a plethora of “green” jobs.
Yet without the boost that oil and natural gas are giving to the economy, it would be in worse shape than it already is.
A similar natural resources boom in the North Sea greatly aided Margaret Thatcher’s government and has underwritten Britain’s economy to this day, when production and British prosperity are both in decline.
New technology has brought the gas boom to the world and with it a change in geopolitics, soothing some tensions and exacerbating others.
The biggest excitement is in the Eastern Mediterranean, where there have been huge discoveries of gas — and sometimes oil and gas — off the coasts of Egypt, Israel, Lebanon, and around the Island of Cyprus.
The problems reflect the old tensions of the regions and some new ones, such as the growing estrangement between Israel and Turkey and the projection of Russian interests in the region.
Cyprus, itself a divided island since the Turkish invasion of 1974, is the closest member of the European Union to chaotic Syria and is being courted on several fronts by Russia.
Russia is worried about new gas supplies affecting its monopoly in gas supply in Europe, as well as the future of its naval base in Syria. As a result, Russia is pouring money and people (150,000) into Cyprus to keep its options in the Mediterranean open.
Cyprus would like to become a transshipment point for Israeli gas (when a gas liquefaction plant is built). But claim to reserves in its own territorial waters are being contested by Turkey and the Turkish Cypriots. About 63 percent of the island is controlled by 900,000 Greek Cypriots who claim to speak for the whole island.
With new gas everywhere, there will be a rush to find markets. Europe, for example, is hoping to ease its Russian gas dependence by building pipelines that will bring gas from Central Asia through Turkey avoiding Russia. Others, like Qatar, are looking away from Europe and to Asia for new customers.
The appeal of gas to electric utilities everywhere is undeniable. It burns with about half the greenhouse effluent than oil and coal. The power plants are easily sited, do not need huge cooling structures and the capital cost is low.
However, methane, which makes up 75 percent of natural gas, is a serious greenhouse contributor and needs to be kept out of the environment. The other components of natural gas are ethane, 15 percent, and butane and propane come in at about 5 percent each. Natural gas is the world’s most abundant compound.
While the case against the swing to gas is primarily environmental, there is an economic concern about costs in the decades to come. The environmental case is twofold:
• One, that although it produces less CO2, a principal greenhouse gas, than coal or oil, it still produces half as much as they do.
• Two, that hydraulic fracturing, known as “fracking” affects groundwater, uses too much water itself in the process and may stimulate earthquakes.
Yet the chances of the world or the United States turning away from this new bounty are nil.
If the 19th century belonged to coal and the 20the century to oil, it looks as though the 21st will be the natural gas century. Reports of the death of fossil fuels are wildly exaggerated. — For the Hearst-New York Times Syndicate
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Energy in the Time of Elections: Claims and Counterclaims
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Where there's oil and gas, there's milk and honey.
That is the thrust of the American Petroleum Institute's report to the platform committees of the Republican and Democratic parties. It was previewed in Washington on May 15 by API President and CEO Jack Gerard, the oil industry's man on Earth, known for his tough attitudes to just about everything, but the Obama administration in particular.
In unveiling the report at the National Press Club, Gerard declared that the recommendations were without political slant and were delivered to both parties’ platform committees without favor; although it is generally known that the oil and gas industry — and Big Oil in particular — cares not a jot for the Democrats. In a slip, while reading a prepared statement, Gerard referred to the “Democrat Party,” which is a term used by conservative commentators and members of the Republican Party who cannot stand the thought of Democrats having a monopoly on the word democratic.
As expected, and in line with other recent utterances, Gerard called for accelerated leasing on federal lands, demanded more sensitive regulation, and declared his belief that the United States is potentially the greatest energy producer on Earth.
The White House shot back at API almost immediately, claiming it is the oil the industry that is lagging not the government.
Not to be outshot, Gerard said, “Once again, the administration is trotting out claims about idle leases to divert attention from the fact it has been restricting oil and natural gas development, leasing less often, shortening lease terms, and going slow on permit approvals—actions which have undermined public support for the administration on energy. It is also increasing or threatening to increase industry’s development costs through higher taxes, higher royalty rates, and higher minimum lease bids.”
Even if the administration is right this time, it has a hard sell ahead.
In the case of natural gas, there has been a giant windfall from shale seams; but that has been coming for some time, and the administration can take no particular credit. Similarly, oil imports are down from 57 percent to 45 percent, reflecting increased domestic production, something that helps more with the balance of payments than the price at the pump.
Gerard admitted that while natural gas prices are at historic lows because of new recovery and drilling technology, oil is priced internationally and that is no help to American consumers. API and its chief tend to conflate oil and gas to make a point. Likewise, they like to include Canada in “North American” energy.
But the energy claims of the administration are even harder to follow and more dubious. It likes to confuse fossil fuels – coal, gas and oil — with electricity and, in particular, with alternative energy, like wind, solar and, in a manner of speaking, nuclear.
Most energy gurus see the dawning of a switch from oil to electricity for personal transportation, for buses and some trucks. But that dawn is breaking slowly with consumer indifference, battery life questions and other problems, including the availability of rare earths for motors and wind turbines.
Experience suggests that energy is a lousy political issue. It is complicated; each side has its own facts and there is some truth to both sides’ facts.
At the end of the day, the energy debate is reduced not to the amount of drilling taking place on federal lands, or to the virtues of natural gas over nuclear, but to the price of gasoline at election time. If that is lower than it is today, President Obama garners votes. If it is up, no matter why, all the GOP and Mitt Romney have to say is that it is Obama's fault.
The money vote is known already: With a very few exceptions the energy money is on the GOP. But that is not new. What is new is that environment is not on the agenda. Better wait until 2016.
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Natural Gas Is not Exactly Environmentally Clean
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If you live in the United States — almost anywhere in the U.S. — there may be a gas well coming to a site near you. Even on property you think you own, a gas well may be on its way.
Then there is the problem of how much air and water pollution that neighborhood gas well will bring with it. So far pollution has brought the most public outcry, largely because it is the issue that environmentalists are concerned with.
The new abundance of natural gas is a bonanza, but it is not a free lunch. Gas wells near or in your backyard are dividing communities, particularly in rural areas, and could eventually divide the environmental movement.
For decades natural gas has been the benign fuel without the pollution of coal, the geopolitical ramifications of oil, or the politics of nuclear. In fact, natural gas is almost too good to be true — or it has been until this latest chapter in its history opened. New supplies and new ways of liberating them are tarnishing the image of gas as the best energy available.
Traditionally, drilling for gas was like drilling for oil. A hole went deep into the ground until it penetrated a big cavern of gas with tributaries, which would yield more gas if the rock there was broken up. This rock-breaking was called hydraulic fracturing, and this was accomplished by injecting various liquids including water, chemicals and gas that had seeped to the surface outside of the piping.
Fifty years ago, there were even two experimental programs to use nuclear detonations for fracking gas. That method didn't go forward.
Since then, things have come a long way in the search for more gas and new technologies have evolved. Chief among these are seismic mapping and horizontal drilling. The former gives geologists a very exact picture of what is underground, and the latter makes the collection of it much more efficient.
Horizontal drilling finds the lock and fracking turns the key. Whereas once drillers put down one straw and sucked, now they put down one straw and then send out others horizontally in many directions.
Thus enabled, gas can now be exploited where it was previously unreachable — in shale rock. But to get the rock to give up its harvest, fracking is essential. With it come problems, and gas — if you will — loses its innocence.
Fracking is environmentally contaminating:
a. The fracking agent along with the methane could seep into drinking water and alarm farmers and communities.
b. Methane tends to escape around the well and is a major greenhouse gas.
c. A gas well using fracking demands millions of gallons of water. Many pollutants, like mercury and nitrates, are borne to the surface with the discharged water, which is then held in leach ponds.
This negates the big environmental virtue of gas that it burns with half the carbon dioxide emissions of coal and none of the nitrous oxides. The lunch tab has gone from nearly free to quite pricey.
The problem for the environmental movement is that it has favored natural gas for electricity production over its bete noirs: nuclear and coal.
The problem of an unwanted gas well landing on land you thought you owned is an historical one which recognizes "split estates." This was a concept in law that the land had two values: the surface and the oil and gas contained under the surface.
These two estates could be split and a landowner could sell the rights to the subterranean estate. Historically, many have done so. Now with the value of shale gas rising in 30 or more states, homeowners are finding that grandpa or a previous owner may have tried to capitalize too early by selling the underground rights.
As Amy Mall of the Natural Resources Defense Council told a meeting on fracking in Washington this week, the law's results can be devastating. A family in Wise County, Texas, lost all value in their 10-acre holding when a gas company, which leased the mineral rights from neighbors who had bought them earlier, set up a rig and occupied five acres of land for their operations.
This is part of the back story on the new bonanza of natural gas that is giving so many so much hope for our energy future. The new gas is not your father's gas and while it is a boon, it is not all blessing. – For the Hearst-New York Times Syndicate
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Israel Set To Join the Rich Countries’ Club
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From Israel, there is good news and bad news.
The good news – and it is huge – is that Israel will soon be awash in natural gas. Gas discovered on the country’s outer continental shelf will turn the country from being hydrocarbon-deprived to being a net exporter.
Indeed, Israel is set to become so rich that it is laying the groundwork for creating a sovereign wealth fund for overseas investments in order to protect the country from inflation and the shekel from getting too strong.
The bad news is that with Hezbollah poised to control Lebanon’s government, Iran has de facto arrived on Israel’s northern border. Even without an Iranian nuclear weapon, this is a grave deterioration in Israel’s security.
Already Lebanon has asked the United Nations to guarantee that Israel does not violate the integrity of Lebanon’s outer continental shelf, where Iran plans to help Lebanon drill for gas.
Geology is about to change the political geography of the world’s most combustible neighborhood.
The two huge gas discoveries are in the Tamar and Leviathan fields. Taken together, the gas reserves are estimated at 26 trillion cubic feet or 10 times larger than Britain’s North Sea discoveries.
Since its creation in 1948, Israel has drilled on land for oil and gas with very little success. While the Arab Gulf countries have found and produced massive quantities of oil and gas, Israel has scrounged in the international markets for its hydrocarbons, including coal. But its isolation has made this difficult and expensive.
In recent years, Israel has bought gas from Egypt. Now Egypt will lose its good customer.
Turkey, Israel’s only Moslem friend until the botched seizure of a humanitarian ship bound for blockaded Gaza, will be affected too. There were plans for a pipeline that would carry gas from Azerbaijan across Turkey and undersea to Israel. That economic boost will not go to Turkey, but instead will probably go to Greece and Greek Cyprus. There have been preliminary discussions between Israel and Greece about shipping gas through Greece–by an undersea pipeline or a liquefied natural gas train–as an entry point into Europe.
Cyprus is a possible export-staging destination, as the Leviathan field, 86 miles off the Israeli coast, is nearby. But Turkish Cyprus, on the north side of the island, is not onboard.
The Tamar field is 50 miles off the Israeli coast and there are two smaller fields, potentially subject to claim by a free Gaza or a Palestinian state.
The gas will change Israel itself. Its defense force will have to defend the gas installations and the miles of pipes, pumps and other infrastructure. Israel has no domestic heating market, so all the new gas bounty will go to electric generation. The government hopes to make Israel the first 100-percent electric car country and the new gas will speed that transformation.
Credit for the Eastern Mediterranean gas discoveries goes to Houston-based Noble Energy. It is the technical leader in a consortium of Israeli companies. Now the world wants in before a whiff of the new gas has come onshore. Gazprom, Russia’s gas behemoth is keen to have a piece as an investment and to protect its European markets.
The Israeli government expects an influx of U.S. and European companies to supply piping, pumps, controllers and construction equipment and materials. It is not just private companies that are salivating: The Jerusalem government has just passed a law to tax gas profits at 62 percent.
Israel’s hostile neighbors want in too. The Eastern Mediterranean is in play in an area where play is rough.
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The Future of Drones
May 13th, 2013
Guests Claude Salhani, journalist and Amitai Etzioni, The George Washington University
Europe; its Problems and its Promise
May 6th, 2013
Guests Annette Heuser, Executive Director, Bertelsmann Foundation; Darren Gersh, Journalist; Arnaud de Borchgrave, Center for Strategic and International Studies
What’s Ado in Washington
April 29th, 2013
Guests Joe Madison, SiriusXM Radio
A Discussion of the Anti-terrorism College at the National Defense University
April 22nd, 2013
Guests Michael Bell and Sebastian Gorka, College of International Security Affairs, National Defense University
Balance In The Media
April 15th, 2013
Guests Frances Stead Sellers, The Washington Post; Adam Clayton Powell III, University of Southern California