Energy

America, bursting with energy!

The U.S. energy juggernaut, powered by new technology and common sense, keeps rolling on.

Gains in energy production and productivity probably account for much of the projected 3.5% increase in the gross national product in the last quarter of 2013. Of course, even if it doesn’t get he expected adjustment downward later, the gains represents only a small part of the race to recoup the losses of the past seven years since the 2007-08 financial crisis hit. Nor unfortunately is energy production in itself much of a labor intensive activity, making little contribution toward the most horrendous unemployment problem since the end of World War II or maybe the Greart Depression. And it is very much still with us despite some masterful Administration playing with statistics [that notorious form of lying!]..

But what would be laughable if not such a tragic reflection of the Obama Administration’s war on the economy, are the claims in the President’s state of the union address for effecting the energy progress. In fact, this Administration has done just about everything it could to inhibit the expansion of fossil fuel development. Nevertheless Administration efforts to hike prices in order to force the markets into still high cost so-called green energy sources and away from fossil fuels has come a cropper. The enormous strides of deep drilling recovery from shale have worked a revolution in energy, the heart and soul, of course, of the American economy. As one spokesman for the industry said at a Congressional hearing a few days ago, until now our gas recovery in America had been largely the oozing from these shale deposits. Now the industry is going after the heart of the reserves deep in the earth.

But gas hasn’t been the only energy source that has had to overcome Washington’s efforts to stifle cheap fuel. The President’s stacked Environmental Projection Agency has waged a war against our vast coal reserves – possibly unconstitutionally — instead of speeding the search for new ways of burning and utilizing our almost limitless energy resource. It has stifled leasing of government lands for oil and gas development. [Luckily the successful movement into shale gas and oil production has had private lands for a playpen to demonstrate an entirely new source of energy.]  It has thrown up barriers to oil and gas exports which would permit the energy companies to use the cheaper American domestic sources in surplus, not only to enhance energy profits but by lucky coincidence to defanging a half century’s use of oil to abet jihadist politics by Middle East producers.

The President’s exaggerated claims for “alternative energy” advances are largely fiction. Hundreds of millions from the Administrative stimulus package have gone into bankrupt entities which even the President has admitted had few “shovel ready” projects as he had earlier claimed, Furthermore, fossil plants are still needed to meet increased energy demands in even this relatively stagnant economy. For when the wind doesn’t blow and the sun doesn’t shine electricity demands still have to be met. Never mind the horrendous cost and endless litigation for new high voltage networks that nobody wants in their backyard to carry these “alternatives’ production from their origin where they cannot be stored to the urban markets where they are needed.

No more did the ballyhoo of the liberal media die down over an empty rhetorical State of the Union drama – shamelessly ending with an appeal to every patriot’s tears with an endorsement of the struggle of a heroic wounded soldier – than there was a new ringer. The State Department, somehow charged with the audit because of the involvement of our neighbor and near-twin, the Canadians, announced there are no environmental constraints against building the Keystone XL Pipeline. It is the fifth time a government inquiry has said the $5.4 billion project, to be funded entirely by the private sector, has been given an environmental stamp of approval. Some fifteen thousand pages of scientific and technical evidence published in four environmental analysis reports since 2010 had already concluded the project would have minimal impact on the environment. The trajectory from Canadian tar sands through the Dakotas – where it would pick up increasing oil production from one of the largest finds ever in the U.S. – toward refineries in Texas looks like a thunderbolt, zigzagging to avoid supposed local environmental hazards. Even organized labor, what had been Obama’s most loyal constituencies. has been pressing the Administration to go ahead for the tens of thousands of construction jobs it would produce. The proposed 1,179-mile pipeline extension would run from Hardisty, Alberta, to Steele City, Neb., and then join up with a southern link already completed in January this year to the Texas refining and petrochemical complex and ports. The 485-mile southern section of the pipeline operated by Calgary-based TransCanada did not require presidential approval because it does not cross a U.S. border.

What the Administration could have been doing instead of diddling with this obvious decision is devoting its subsidies to pipelines to carry our now huge surplus of gas in the form of liquefied natural gas’LNG] to a new network of filling stations around the country. Japanese and Hong Kong taxis have been using imported Indonesian LNG successfully and with great economic benefit for more than half a century. We have a few municipal bus and truck fleets around the country using it, ironically, largely because of environmentalist pressure for the reduction of carbon emissions which results from gas rather than other heavier fuels. In fact, again, it has been the growing substitution of gas for old style coal burning turbines – largely for purely economic reasons – that permitted the President to trumpet the fact that the U.S. has succeeded in the goal more than any other country in reducing carbon emissions. But that has not not, as he hinted, taken place because of anything the government has done. [Mandated higher mileage for Detroit’s automobiles which the Administration crows about is a minimal contributor, if at all. What it has done is drive manufacturers toward lighter weight vehicles, hopefully not ahead of the meticulous and difficult development of stronger metal alloys and crash-resistant design.] In fact, some auto engineers point out transforming a 1960s standard gasoline engined car to LNG would only be a matter of a thousand dollars or so The hitch is a network of filling stations to dispense the LNG from transcontinental pipelines..

Even the environmentalistas of NPR have had to acknowledge the explosion of energy in the northern plain states in a series emphasizing the seamier side of the enormously profitable developments there. That has been not onlya bonanza for the companies but for the lowest unemployment rates in the nation. “National People’s Radio” emphasis is less on the hundreds of thousands of jobs and taxes paid local governments and additional income for farmers, some eirtscrabble poor – and the benefits for energy consumers created by a traditional American oil boom..

But what the government-subsidized network series does underline is that in part because of war against expansion of pipelines, “$1 million a day just being thrown into the air” or “flared”, burned into nothingness as an unused byproduct of the search and development of the golden light crude oil of the region. NPR’s solution to the problem is, of course, more regulation rather than directing federal subsidies toward the rapid creation of new pipelines. That kind of program could carry this wasted gas wealth to newly emerging petrochemical and other manufacturing “in-shoring” from its earlier flight of American industry to more attractive business environments overseas.

Bottom line: even the anti-business, anti-free enterprise, anti-libertarian thrust of the Obama Administration and its often mindless Washington bureaucracy has not been able to squelch the vitality of the U.S. economy. The struggle will go on for at least another three years. But in the energy revolution now going forward despite the statism of the current Washington leadership, American initiative and enterprise is reasserting itself for what one hopes will be its inevitable economic victory in its best U.S. traditions.

sws-02-02-14

 

 

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Another energy revolution in the offing

 

As the shale gas revolution begins to ripple through reordering the world economy, another fossil fuel revolution is in the offing which will again torpedo most conventional wisdom concerning energy. So-called “peak oil”, the end of petroleum exhausted by expanding consumption and diminishing discoveries, the love story of environmental fanatics, has now gone a glimmering.

Projections of petroleum and world energy have been notoriously inaccurate in the past, of course. But already the prospect of skyrocketing U.S. production and still expanding estimates of shale gas and oil around the world is leading to dramatic changes not only in caculating fossil fuel and energy economics but in geopolitics:

  • The U.S. with its monopoly on shale technology  is likely to become not only self-sufficient in energy before the end of the decade – current estimates are that within five years it will be producing more than half of the world’s additional fossil fuel – but it will become a net gas exporter.
  • Short term, and possibly even longer, world real energy prices are likely to decline under the impact of these additional fuel resources as a slow US recovery and a world economy now beset by a wilting China and India and a Europe still unable to cope with its crisis.
  • The Middle East producers, especially Saudi Arabia, but also Iraq straining to significantly boost production from the world’s second or third largest reserves and the partially bottled-up sanctioned huge resources of Iran, are increasingly loosing their grip on world oil and gas prices.
  • Indeed, the Persian Gulf producers may make a concomitant contribution to a dramatic decrease in real energy prices because of their mismanaged economies, with even the threat of financial disaster on Western markets through highly leveraged investments based on earlier export price assumptions.
  • Individual countries – that could include China, Germany, France, Israel – will see their economies restructured through the development of shale gas and oil resources, despite the noisy campaign by environmentalists to restrain exploitation with horror stories of water contamination – an impediment still to be proved in any current production.
  • Old established trade relationships, often problematical, may be dramatically impacted; e.g., the U.S.’ continued trade imbalance with Japan – and perhaps with China — could be dramatically readjusted by exports of LNG [liquid natural gas] from Continental U.S. and even larger prospects for gas in Alaska.

You get some idea of the complexities of the new worldwide energy picture and its rmifications not only from these broad developments, but also from tangential political repercussions. Israel, already turning to gas exports from its conventional deep water strike just a few miles offshore from Haifa, is welcoming new shale gas prospecting by an American-Israeli company including investors Rupert Murdoch, Dick Cheney and the Rothschilds in – of all places – the Golan Heights fronting on Syria. Qatar’s eccentric royal dictator Sheikh Khalid bin Khalifa al-Tha who has thrown $30 billion from the world’s largest LNG exports at al Jazeera, the international radio network once the voice of supreme terrorist Osama Bin Ladin and who still funds Moslem Brotherhood jihadists in Egypt and among Syria’s armed opposition, might just have to pull in his horns.

Yet even as the world begins to digest these economic developments with their unforeseen political consequences, another cataclysmic energy development is coming on stage.

Commercial development of “fire ice”  – the vast quantities of what is so new to the layman’s energy lexicon that it is variously  known as methane clathrate, methane hydrate, hydromethane,etc. – is now foreseeable. These are huge deposits of methane gas outcroppings on the ocean floor trapped at great depths in ice crystals. In some areas gas bubbling up from the earth’s interior produces a carpet of slush containing gas. Already located by intrepid prospectors in a number of environments around the world, fire ice not only has the advantage of producing less carbon emissions when burned, but methane hydrate contains a higher caloric value than other forms of fossil fuel

The big news is that this spring Japanese researchers successfully extracted and burned natural gas from methane hydrate drawn from a depth of a thousand feet 30 miles from central Japan in the Nankai Trough, a 600-mile-long trench lying off HonshuIsland. This gash in the ocean’s surface is produced by the colliding geological plates which make Japan so earthquake prone. It’s estimated that in that deep gulley alone there is enough methane to meet Tokyo’s needs for more than ten years. In addition, there are other deposits in the seas surrounding Japan.

The Japanese gambit has not gone unnoticed. U.S. Department of Energy researchers have also been working at methane hydrate research, and, in fact, earlier on suggested the possibility of commercial exploitation within 15 years. Despite the fact timid bureaucrats in the now highly politicized Obama Energy Department refuse to respond to enquiries about what Tokyo’s sponsorship has done for fire ice commercial development prospects, they were on the scene to observe the Japanese. There are hints their present reluctance to talk about commercialization may have to do with the Administration’s policy of attempting to boost energy costs to force the economy into what have been its disastrous and often corrupt “green energy” investments.

Still, the Obama war on fossil fuels has been highly unsuccessful because of the shale technological breakthrough, luckily for the country and the world mostly on private U.S.land. The Administration has virtually shut down new development on government land, granting ne exploratory rights on reluctantly under great pressure from state governments who desperately need the tax revenues.

American scientists last year did experiment on the North Slope of Alaska with injecting a mixture of carbon dioxide and nitrogen into underwater gas crystals to promote release of natural gas. This follows on estimates of enormous deposits of fire ice in the Arctic region. Furthermore,  a U.S. expedition in 2009 estimated there was around 6,700 trillion cubic feet of gas trapped in gas hydrates in two sites in the northern end of the Gulf of Mexico. [A measure: the U.S consumed 25 million cubic feet of natural gas in 2012.] In fact, an estimate of 700,000 trillion cubic feet of methane trapped in methane hydrates worldwide is staggering since it would top all the combined estimates of all worldwide fossil fuel reserves – including coal.

The busy and as always methodical Japanese now believe they can bring fire ice into commercial production in six years. That promises the same sort of technological and economic breakthrough which was largely unanticipated by even the most astute energy observers about shale gas only a decade ago. Tokyo’s government-backed research and production team has every reason to push the fire ice development: Japan’s reliance on foreign gas imports has peaked since the 2011 Fukushima Daiichi tsunami nuclear disaster producing an ambiguous strategy concerning its 54 nuclear power plants that once provided 30 percent of Japan’s energy.

It remains to be seen how fast the major oil producers will move on the fire ice development. They are obviously going to get no help from an Obama Administration which is still diddling on the issue of transporting Canadian tar sands [and incidentally picking up enroute North Dakota and Montana shale] oil to Texas refineries The economics would produce, in part, new exports to now energy hungry east Asia. Private industry is moving ahead to invert former liquefied petroleum and LNG terminals only a few years ago destined for imports into exporting operations.

Although local resistance from environmentally conscious state governments has virtually disappeared ion the tar sands route and Obama is feeling the heat from his own trade union supporters over loss of jobs, the White House is still resisting Congressional pressure – including from some leading Democratic Senators – to okay the Keystone XL Pipeline down from Canada. But as the U.S. resumes its former traditional role as an energy exporter, it will become more and more difficult willy- nilly to make any economic or political argument for the Obama policies.

In the end, commonsense tells us that investments for expensive environmental considerations – if they are to be implemented – are going to require a healthy, growing economy to foot the enormous and growing bill. And that now, as in the American past, depends on cheap energy which the Obama Administration is ideologically deadset against. It remains to be seen how long it will take for logic to carry the day in the U.S. political process. Ironically, as is their custom, Obama Administration spokesmen are already claiming credit for the.shale gas revolution even though their policies would have blocked it had the irony of fate not put the ball in the private sector’s court.

Meanwhile, melting fire ice is likely to again blow apart all the conventional wisdom on energy as it unplugs a new avenue for eventual additional resources to re-energize the world economy.

sws-05-26-13

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