Game changer 6: Will shale gas save the climate bill?

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"Game changer 6: Will shale gas save the climate bill?"

The NY Times — and U.S. Senate — have caught up to Climate Progress with this piece last week, “Is Shale Gas the Climate Bill’s New Bargaining Chip?“:

Natural gas from shale formations is the new magic phrase in the oil and gas industry, as new technologies have led to stunning increases in potential resources and anticipated profits.

Now some want to see if it carries any political magic.

With new discoveries of the fossil fuel in massive but difficult to drill shale deposits, advocates claim that climate legislation means a job boom for gas engineers and drillers, and revenue for producers. They say a cap on greenhouse gas emissions could lead power plants to switch to gas from coal, which emits about double the carbon dioxide of gas.

Some experts — but not all — say that a strong mandate to expand wind power and other alternative energy generation could be a boon for natural gas generators, which are a likely future source of backup power for renewables.

At the same time, some politicians on Capitol Hill are pushing for new natural gas incentives in climate legislation moving through Congress. They note that the fuel resource sits in many states, like Michigan and Pennsylvania, whose lawmakers are needed for passage of a bill.

“If you took a map of swing-state senators and look at where these new gas finds are, they match,” said Sen. Mark Udall (D-Colo.). “It’s more than ironic.”

This echoes many key points of my series on gas.  There appears to be a lot more natural gas than previously thought (Part 1) and therefore unconventional gas makes the 2020 Waxman-Markey target so damn easy and cheap to meet (Part 2), which is great for low-cost climate action, bad for coal (Part 3).  As Part 3 discusses, natural gas is the critical low-carbon “firming” resource that can enable deep penetration of both windpower and concentrated solar thermal power.

Last month I noted that many of the key fence-sitting Senators come from states with major unconventional gas reserves, including Arkansas, Louisiana, and the Dakotas and that “If a serious climate bill passes the Senate in the next several months “” and I believe it will “” then activism by the natural gas industry may prove decisive.” [see Tim Wirth to natural gas execs: "You don't have the right to sit back and do nothing" about climate change. "We are in very deep trouble, the edge of catastrophe, and you can help." (Part 4)].

Here are more excerpts from the NYT piece on this very subject:

He said he and his colleague Sen. Michael Bennet (D-Colo.) are working with other senators on provisions to promote natural gas in global warming legislation.

New benefits for gas are “going to be an essential part of my support for a bill,” Bennet said yesterday. The first-term senator is himself a possible swing vote on a climate and energy package.

Another potential swing voter, Sen. Kent Conrad (D-N.D.), also said yesterday that he would like to see more legislative text favoring natural gas. Such a plan could be one of many bargaining chips that get lawmakers behind a climate and energy bill in the Senate, he said.

‘Bigger than nuclear’

A former U.S. Senate aide who has been in close contact with Capitol Hill offices said natural gas “could be much bigger than nuclear” in getting politicians on board.

Legislation sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.) passed the House last month establishing a mandatory cap on greenhouse gases, but the fate of the measure remains uncertain in the Senate. A bill draft has yet to be released in that chamber, and Democratic leaders are searching for 60 votes to block a filibuster.

Many natural-gas advocates believe that a carbon cap will benefit natural gas by default, but the industry also is pushing for things such as fewer carbon offsets in a climate bill. Offsets allow emitters — such as big coal-dependent utilities — to meet carbon caps by paying for projects outside their own factories, like forestation projects overseas. That offsetting allows them to avoid switching to gas as an alternative fuel.

Rod Lowman, president and CEO of the newly formed America’s Natural Gas Alliance, said in a recent interview that he was “concerned” about the number of offsets allowed in the Waxman-Markey proposal.

The shale discoveries brought natural gas to the political forefront.

In recent years, the oil industry developed technologies to drill horizontally into gas-bearing shale seams and fracture the rock with high-pressure water injections, called hydrofracturing. These techniques make it possible to recover shale gas reserves that were separated in many tiny pockets that could not be tapped economically before, said John Curtis, a Colorado School of Mines professor.

According to a 2008 report from the Potential Gas Committee, estimates of gas resources surged from more than 1,300 trillion cubic feet (tcf) in 2006 to more than 1,800 tcf last year. Much of that jump came from shale gas, which made up 616 tcf of the 2008 total.

Some politically convenient geology

The geographic locations of these new shale gas resources overlap with the home states of many Senate lawmakers, like Sens. Arlen Specter (D-Pa.) and Blanche Lincoln (D-Ark.), who could make or break the outcome of global warming legislation.

During the House vote, majorities of delegations in Arkansas, Kentucky, Oklahoma, Ohio, Louisiana, Pennsylvania and Texas — sites of major shale gas resources — opposed the Waxman-Markey bill. House majorities from New York and Michigan, where shale gas is also found, backed the bill, and West Virginia’s delegation split evenly.

Reid Detchon, executive director of the Energy Future Coalition, finds it puzzling that the natural gas industry hasn’t lined up more forcefully behind the climate legislation moving in the Senate. Gas figures to be a big winner if climate policy mandates an ambitious renewable energy standard and restraints on power plant carbon dioxide emissions, he said.

In addition to being a potential coal replacement, gas generation is the obvious backup for the fivefold to tenfold increase in wind and solar generation that may be mandated in a climate bill. Gas-fired power plants can ramp up quickly when clouds block the sun or the wind stops blowing.

“Natural gas is best” for that role, said Jeffrey Eshelman, vice president of public affairs of the Independent Petroleum Association of America. “It’s abundant. It’s a natural backstop for renewable energy. It makes all the sense in the world to bring all of it online.”

The Energy Information Administration last year analyzed how energy use would change if the nation were getting 20 percent of its electric power from wind in 2030, and predicted that gas turbine generation would increase significantly to back up wind power, but that more expensive combined-cycle gas generation from coal would be displaced by wind.

True, but with a moderate and rising carbon price — as the climate bill would drive — combined-cycle gas would replace coal.

It’s possible that the shale gas phenomenon is so new that it hasn’t reached its full political weight with Congress.

For example, two of the biggest shale gas plays are the Haynesville Shale in Louisiana and Texas and the Marcellus Shale, extending from New York’s Southern Tier through western Pennsylvania and into Ohio and West Virginia. “Only in the last 18 months have Haynesville and Marcellus proven themselves productive,” said Curtis, who oversees the Potential Gas Supply report.

Norway’s national company StatoilHydro, the world’s largest offshore oil producer, paid $3.4 billion last year for a one-third interest in 1.8 million acres in the Marcellus region. The company said it believes it may recover up to 3 billion barrels equivalent of shale gas, according to OilandGasInvestor.com.

A new Pennsylvania State University report that was requested by state legislators predicts that the Marcellus Shale could add $14 billion to the state’s economy in 2010, create more than 98,000 jobs and generate $800 million in state and local tax revenues. Yet the economic benefits may not come for a while, making shale gas a potential tough sell for lawmakers looking for immediate results.

Actually, passage of the bill would immediately benefit the gas industry, since it would create sufficient long-term price certainty (because of the price floor) for the industry to start signing the kind of longer term contracts needed to replace a large fraction of coal in the electric sectory by 2020 — and even more by 2030.

Note:  The NYT piece was a reprint of a piece by Climate Wire.

For even more, see Game changer 5: RFK, Jr. on “How to end America’s deadly coal addiction “¦ practically overnight” thanks to “a revolution in natural gas production.”

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9 Responses to Game changer 6: Will shale gas save the climate bill?

  1. Mutmansky says:

    While the Shale Gas may be boon, there are those of us who have to live with the pollution it causes:

    http://www.post-gazette.com/pg/09220/989472-114.stm

    I’m not necessarily opposed to the shale gas drilling, but has anyone studied how much it’ll cost to do it the right way and avoid this kind of pollution in our drinking water supplies?

    This problem on the Mon River is particularly exacerbated when the river flow is low and with climate change likely driving hotter summer temperatures into Western PA in the future, I would suspect low flow levels in our rivers would tend to happen more often.

  2. john says:

    Beyond the water pollution, we have to know when we frac the shales to get the natural gas, whether some is escaping and how much, given that methane is 23x stronger as a GHG than CO2.

    Fracturing is an inexact science, and it is done with brute force, not pinpoint accuracy.

    I’m all for using natural gas — it’s a perfect compliment to renewable energy, and it’s relatively low in carbon. But let’s make sure we do it right. Let’s monitor and regualte the process. The undergound injection rules under the Safe Drinking Water Act already give us the authority to regulate this activity. Let’s use it to make sure shale gasses are a solution, not another problem.

    [JR: No argument there. If it turns out there really is a lot of natural gas, then we should be looking at carbon capture and storage for combined cycle gas turbine plants.]

  3. Jeff Huggins says:

    Numbers and Questions

    Has anybody really done a credible, accurate “all in” comparison of coal vs. gas — including this source of gas — including the total amounts of CO2 generated from well (or mine) to electricity generation? I have seen (so many times) people make incomplete and faulty comparisons of “A” vs. “B”, only to find out the problem after committing to one or the other and spending lots of $$$$$.

    Also, have people compared, rigorously, the coal plants that would go off-line with the precise gas plants (new, old, efficient, not?) that would replace their electricity generation? What bona fide, unbiased, credible engineering contractor has done that comparison, and where can I read about it in published reports?

    [JR: Full life-cycle looks to be at least 50% reduction (see here, and note the coal plant is supercritical PC, which is NOT the plant gas would be replacing, so you can probably add 10% to the number in that analysis for typical coal plant. Also, by doing massive efficiency like W-M, you don't actually increase gas production, just switch its use, while slashing coal use, so I'm not sure how much of the CH4 emissions should even count. And, of course, it is a much more short-lived GHG.]

    Also, has this way of smoothing electricity production (to complement the availability of wind and solar) been compared to the latest sources of thermal energy storage and electricity storage? There are a number of means of storage (of thermal energy or electricity itself), and they are getting better, and it’s not clear to me that (by the time we build all this) we wouldn’t be able to do the necessary supply management (of electricity) with solar, wind, geothermal, and storage, with not-very-large amounts of other things to fill in any remaining gaps, IF we put our minds to it.

    In other words, IS gas, REALLY?, the best way to go for this transition period, because it’s “better than coal”, even though it’s not as good as solar, wind, and so forth? Are we SURE? Does that conclusion consider the fact that gas is not a renewable anyhow, so we’ll have to make the rest of the transition in the future to solar, wind, geothermal, nuclear, or whatever? So, we’ll have two transitions, in a sense. OR, instead, is a large part of the “wisdom” of this gas option tied to the notion that, politically speaking, we think we’ll have to make people who own gas “happy”, to get them on board for something that they SHOULD be on board for anyhow (i.e., caring about the planet, and future generations)?

    I’d like to know: Is it the “best” solution as we transition from source to source to source, OR is it mainly a political compromise that is fairly far removed from what we really SHOULD be doing?

    Joe, are you saying that you know the answer to that question, and that this IS the best solution, not some sort of political compromise? Or, are the answers still “out”, subject to much more analysis before anyone concludes that this jump to gas is a good idea?

    [JR: Yes, I think we know the answer. I have written thousands of words on this subject with multiple links to original studies, so I'm not going to repeat of those year when the original post are available for anyone to read.]

    And again, have any of the big engineering firms, or McKinsey for that matter, done a holistic analysis of this thing, or are we working from different sub-analyses of different parts of the “elephant”, possibly missing some, possibly not well-integrated, and possibly flawed in some major way, and possibly not comparing to the better or next-better options in accurate fashion?

    I ask because, any solution that just relies on more hydrocarbons (that create CO2) raises “red flags” in my mind, gives me concerns of several sorts, makes me worry about multiple transitions, and certainly isn’t sustainable.

    Be Well,

    Jeff

  4. Bill R says:

    Joe…

    http://www.riverreporter.com/issues/08-12-04/fracking.pdf

    Have you done a complete entry that covers the dangers to groundwater from fraccing?

    Being someone who is convinced we are facing serious “energy descent” from Peak-Oil, and who is equally disturbed by how close we are to a tipping point with the climate… I’m pretty interested in the possibilites of shale gas.

    But…

    If we poison the groundwater over vast areas to do it, it’s not going to be worth it. So if you have run across good studies convincing us that this extraction can be done without destroying groundwater I would be interested.

    Thanks!

  5. Erik S.G. says:

    Natural gas may play a role, but I think the role should be quite limited and I think these posts exaggerate it’s potential. These posts, while interesting and informative, have two serious blind spots: first, a solid understanding of the mechanics of upstream and midstream natural gas production, processing, transmission, and distribution and, second, a realistic evaluation of how the politics will define the end-result policy.

    On the first blind spot, the claim that full life-cycle pollution from natural gas is 50% of coal is simply *not* well substantiated. The weak link in the life cycle isn’t the downstream point of combustion, but the upstream and midstream production, processing, and transmission of natural gas. The upstream and midstream components of the natural gas life cycle contain myriad leaks. Indicative of the problem, and the deficiencies in the few existing life-cycle analyses which are premised on extremely course and inaccurate top-down data, the Final New Mexico GHG Inventory and Reference Case Projections, 1990-2020 explains that:

    “The sheer number and wide diversity of oil and gas activities in New Mexico present a major challenge for greenhouse gas assessment. Emissions of carbon dioxide and methane occur at many stages of the production process (drilling, production, and processing/refining), and can be highly dependent upon local resource characteristics (pressure, depth, water content, etc.), technologies applied, and practices employed (such as well venting to unload liquids which may result in the release of billions of cubic feet of methane annually). With over 40,000 oil and gas wells in the State, three oil refineries, several gas processing plants, and tens of thousands of miles of gas pipelines in the State – and no regulatory requirements to track CO2 or CH4 emissions – there are significant uncertainties with respect to the State’s GHG emissions from this sector.”

    Notably, this language was a basis for New Mexico promulgating a GHG reporting rule, but the data acquired by that rule’s reporting program will take time to digest and understand.

    Furthermore, I haven’t gotten my hands on the study, but James Lovelock referenced a 2004 Society of Chemical Industries report indicating that 2%-4% of natural gas is leaked to the atmosphere. This is quite significant and should be fully accounted for in evaluating the true benefits — and any necessary limits — of relying on natural gas. While the residency time of methane is shorter than CO2, it’s also around 25x as potent as CO2 and, when CH4 breaks down, it breaks down into CO2.

    On the second blind spot, I don’t doubt that natural gas has a role to play. But I think that role is limited and that the issue is far more complicated — technically and politically — than your posts acknowledge. The natural gas industry just isn’t going to content itself with a “transition” role but is going to want more and more and more and will be able to muscle politicians to get what it wants.

    For example, Colorado Governor Bill Ritter recently stated (http://www.hcn.org/articles/cozies-up-to-natural-gas) that “Natural gas is a vital part of the new energy economy, a permanent part,” Ritter told hundreds at the Colorado Oil and Gas Association’s annual conference in Denver on July 9. “Not a bridge fuel, not a transition fuel, but a mission-critical fuel.” The only way to counteract the natural gas industry’s effort to entrench itself as a climate “solution” is to make sure we properly frame the issue, now, before the natural gas industry gets it’s act together. Respectfully, these posts don’t do that.

    I do note that the Center for American Progress has recently released a memo (http://www.americanprogress.org/issues/2009/08/pdf/naturalgasmemo.pdf) explaining a role of natural gas. This is a positive first step, but its also incomplete and we need to think more carefully and get better analysis to ensure that we don’t drink too much of the natural gas kool-aid (being distributed by the likes of T. Boone Pickens) in our drive to get climate legislation through Congress.

    Back to the grind,
    Erik S.G.

  6. We are just making the least bad choices.

    I trust we all know that ANY carbon fuel combustion is deleterious.

    All carbon combustion should be directed toward installing no polluting energy systems.

  7. Shelly T. says:

    Are you kidding me? Natural gas is a finite fossil fuel that emits CO2. The words “gas” and “solution” should not appear in the same sentence. I can’t understand this love affair with natural gas and this biased paranoia against nuclear power. It’s flat-out baffling. As for natural gas being “clean” — nonsense. (Who is funding this blog and those in Congress pushing natural gas, anyway?)

    Who labeled natural gas “low-cost carbon action”? How utterly WRONG.

    “Each shale gas well on average requires some 4.5 million gallons of water, and there can be many wells at a single site.
    Hundreds of trucks transport water into drilling sites. They then truck the recovered water, with grit and chemicals mixed in, back out for disposal. How is it disposed of? Well, it‚’s difficult to find an answer and Texas reportedly has no regulations covering it.
    Documented reports of contaminated well water are growing, as are indications that the water table in the Fort Worth area is falling. Both are mortal threats to farmers and ranchers, as well as the region’s general population, and they’re not the only mortal risks associated with shale gas drilling and production, topics which will be explored further next week in Part Two. ”

    http://tinyurl.com/pc4f5x

    Sacrificing water for another fossil fuel — dumb.

    Get real. It’s weird how this blog is becoming a mouthpiece for a lot of really bad ideas.

  8. Chris Winter says:

    Nice blog, Shelly T. I’ll comment further over there.

    You write: “As for natural gas being “clean” — nonsense.”

    I’m not aware of anyone here saying natural gas is clean. What we say is that it’s less dirty than coal, hence a worthwhile source of energy during the transition to a truly carbon-free energy economy.

  9. Natural gas is easily distributed to places where heat can be used, in fact, it already is. Many of us use it to heat our houses.

    Not using this to first generate electricity is a wasted opportunity.

    Compared to central power plants, household level cogeneration can double or triple the amount of electricity per unit of natural gas.

    If there is enough natural gas to justify widespread development of such systems, much can be accomplished at modest cost.

    The cost could be modest because the basic machinery for cogeneration could be available in hybrid cars.