Hello all, and welcome to another weekly edition of “What’s the Deal?”, the blog that isn’t dependent on foreign material. (see what I did there?)
This week’s blog discusses the new investments and projects in extracting American Oil from new places and the economic and environmental impact of the new “oil rush”.
If you recall from my previous blog entry “What’s the Deal With “Fracking”?, I explained how the potential for the large scale operations in extracting natural gas from shale rock in the U.S. could be huge for business, pending more research and investigation.
Much about the U.S. natural gas production potential remains unknown, confirmed by the consensus reached by the U.S. Energy Information Administration’s 2011 Annual Energy Outlook Report:
- Most shale gas wells are only a few years old, and their long-term productivity is untested. Consequently, reliable data on long-term production profiles and ultimate gas recovery rates for shale gas wells are lacking.
- In emerging shale formations, gas production has been confined largely to “sweet spots” that have the highest known production rates for the formation. When the production rates for the sweet spot are used to infer the productive potential of an entire formation, its resource potential may be overestimated.
- Many shale formations (particularly, the Marcellus shale) are so large that only a portion of the formation has been extensively production tested.
- Technical advances can lead to more productive and less costly well drilling and completion.
- Currently untested shale formations, such as thin seam formations, or untested portions of existing formations, could prove to be highly productive.
Yet the 2011 Oil Rush is On!!!
Well, apparently the market has spoken (probably after reading my blog entry and because of an increased popular public feedback to natural gas media promotion), and large-scale operations have begun in a new oil (read. natural gas) rush that has risen domestic oil production to more than half of U.S. consumption, and by 2017, economists are predicting the U.S. could outproduce Russia. After NY Governor Andrew Cuomo approved legislation allowing Natural Gas production to commence in some of the state’s poorer regions, and Pennsylvania saw its revenue rise by $1 billion, the expansion of natural gas production has really has come down to jobs and revenue, something every state needs right now. This means that for the foreseeable future, hydraulic fracturing operations will grow substantially and that environmental concerns such as water contamination and further air pollution from fossil fuel use will take a back seat.
Let’s take a big leap backwards and take a look at a previous fossil fuel “rush” in the U.S. with the “precious seed” coal. We’ll use the discovery of a rarer form of coal that burns with less smoke to make a nice connection with natural gas.
Anthracite coal was discovered and used not as a fuel, but as paint and for firing clay for pottery by native peoples of the Pennsylvania, the Iroquois federation and there predecessors for thousands of years. The coal was not used as a fuel source however. The discovery of anthracite coal by a European in 1790 was made by accident, as Necho Allen saw his campfire continue to burn around him as he camped in the hills of Pennsylvania, 2 hours from modern day Philadelphia. The anthracite coal is a purer carbon compound with less hydrogen than the more abundant bituminous “soft” coal which makes it harder to ignite, but which also makes it cleaner burning (releasing less organic carbon and sulfur compounds). This region (Pennnsylvania, W. Virginia, Ohio, Kentucky, and New York) thanks to some spectacular geologic activity happened to have one of the only sources of anthracite coal, along with a huge abundance of bituminous coal seams.
The coal rush of the early 19th century in the U.S. was “sparked” by a few key factors. First, the British, thanks to their own bituminous coal deposits, had begun to use coal as a fuel and heating source after their minimal woodlands had been cut down. The same wood shortage eventually affected Americans in the urban areas of the East Coast, and a similar swoon began to take place to oust the soft and anthracite coal from the ground (some of it stuck right out of the ground along river beds!). The advent of Watt’s steam engine and widespread use in Britain and the U.S. shook the world of production, and coal became the hottest commodity around causing mines and coal prospectors to grab their pick-axes and to dig up the black gold. The construction of canal systems and rail line only made coal easier to distribute to the populous east coast, and so the very substance that was being transported was also the energy source for the transportation!
So the cause of the coal rush was three fold:
- A shortage of wood fuel
- The invention of steam engines and the more efficient use of burning coal to power them.
- Widespread use and popularity from new transportation and manufacturing methods.
Of course, there was and still is a down side to coal in its use as an energy source (other than the unfortunate children who found lumps of coal in their stockings). Even in its earliest days of use as a fuel, people lamented its main by-product: smoke. Smoke and dust accumulated everywhere and in cities that grew up from coal like Pittsburgh and Chicago, residents suffered lung diseases, lack of sunlight and Vitamin D deficiencies produced children with rickets, sulfur-dioxide overexposure, along with the inherent injuries from the mining of coal and the dangerous industrial life that came from it.
Our perspective on the effects of coal burning are different now, but the negative view of the noxious smoke continues. We now know that burning coal can produce acid rain, damage plants and ecosystems directly with overexposure of CO2, and of course produce massive amounts of CO2 green house gas.
So why the natural gas phenomenon? and Why now?
Well, this “rush” is hardly a 2011 phenomenon. Natural gas has been a vital energy source for the U.S. for decades; only in the past 5 years has there arisen a new efficient method of extracting the natural gas from a more abundant source. Speculation for natural gas remained relatively low in the past decade until a number of key factors combined to make it the most desirable fuel available right now:
- The search for more domestic fuel; seeking independence of foreign oil
- The buzz on “cleaner” burning fuels
- The new estimates of a huge abundance of natural gas “right underneath our feet”
- New technology and methods of extraction
- The industry is a vital job creator; a light at the end of the recession tunnel. Domestic fuel extracted by domestic workers.
These factors combined to make natural gas the answer to a whole host of America’s problems: high unemployment/recession, dependence on foreign oil, finding a compromise with environmentalists (not a compromise at all, as any environmentalist will tell you), and being able to extract fuel from previously unreachable sources.
But of course, along with the many positives that natural gas brings, it comes with a package of environmental and health risks that can be played down with a popular belief of “invisible energy”. As we mentioned in the “fracking” blog, natural gas does indeed burn cleaner than petrol, giving off less CO2, but a higher % of methane (CH4, a compound that traps more heat than CO2 as an atmospheric gas). Overall, compared to gasoline natural gas is a cleaner burning fuel and compared to coal, natural gas looks like environmental soap (half the CO2 emissions, almost none of the SO2 particulates, and a smaller % of nitrates/nitric oxides).
Environmentally, the switch to natural gas energy (from oil) for the U.S. is the equivalent of going to the store with the intent on buying a new couch, only to see a free one on the side of the road and pick it up for your living room instead. It’s free, still functions as a couch, and its different than your previous couch, but it doesn’t make your living room any better (or much cleaner). The bottom line is: that natural gas is still a fossil fuel, and will produce carbon and greenhouse gas emissions, albeit at a lower percentage. It is not a fix-all for climate change as it is still not a sustainable fuel.
The boom of workers rushing to the new shale fields in North Dakota, the sands of Canada, the Barnett Shale formation in Texas, and the Marcellus Shale in the Mid-Eastern states are all part of this new American Oil Rush which in this economy seems like a chance to get rich quick, or in the case of some, just get a job quick (something I wouldn’t mind doing). Investors see American independence of Middle Eastern oil as the future, just as investors in coal saw it as the fuel of the future after the Great Eastern American Forest had been demolished by the middle of the 19th Century.
As the history of energy use in the world has shown us, change is slow, and “if it ain’t broke, why fix it?” We still use coal for 43.5% of our electric power and developing countries still use charcoal (read. burnt wood) as their primary heat source. The relative abundance of fossil fuels and the existing infrastructure that is built around them is too developed to break completely overnight to complete energy reliance on solar, wind, water, and nuclear power. Change will continue to be very slow, but what will be interesting to see is if there is enough natural gas within the shale formations to give the U.S. a higher level of domestic energy production. If there is, count on slower change from fossil fuels, but a better economic outlook sooner. If it turns out there isn’t, count on more reliance on Canadian, Brazilian, Venezuelan, and Middle Eastern Oil. Don’t count on the switch to sustainable energy sources. Again, change is slow, especially with energy.
Well folks, hope you enjoyed this insight into our energy use, and the natural gas use. Now if you’ll excuse me, I’ll be grabbing my overalls, pick-axe, and shovel and heading for the nat’ral gas fields, ’cause I hear they have jobs out thattaway.
Until next time,
Your Faithful Historian,
Eric G. Prileson
- Daniel Yergin, The Quest: Energy Security, and the Remaking of the modern world
- Barbara Freese, Coal: A Human History
- http://www.eia.gov/forecasts/aeo/IF_all.cfm#prospectshale, 2011 Annual Energy Outlook Report, Natural Gas.
- Electric Power Monthly: a publication by the EIA