Tag Archives: LNG

American LNG to the rescue! Not exactly


by Sol Sanders

 When Sec. of State John Kerry tried to lead an LNG posse to rescue the Europeans, blackmailed in the Ukraine affair by their heavy dependence on Russian natural gas, his bluff was soon called.

True, the U.S. has a growing natural gas surplus. Converted, it can move over oceans as liquefied natural gas [LNG]. But we are still years away from multibillion-dollar facilities and a fleet of refrigerated tankers that would turn domestic supplies into a geopolitical weapon.

At the moment the U.S. has only one LNG export operation in Alaska dedicated to the Japan market. A Louisiana facility – ironically revamped in mid-construction from importing to exporting – will go on stream shortly. And while the Energy Department has approved seven applications for building new LNG exporting plants, only one has received the environmental go-ahead. Another two dozen haven’t been vetted.

Americans might seek comfort from the fact that Germany and Europe have evolved energy policies as screwed up as the Americans. But not much, if you consider that cheap energy has been the lifeblood of the U.S. economy from the beginning, when we cut down whole forests to produce heat for survival and steam to speed our industrial revolution.

Obama and company eschewed all that as part of his America “transformation”. He went for higher energy costs to goose-step the economy into so-called alternative sources. Obama’s first Energy Secretary, Nobel Physics Laureate Steven Chu, made raising consumer prices his number one priority — $9 gasoline at the pump! he said.

The death knell for that mangled attempt at Soviet-style planning – what with hundreds of millions of taxpayers’ dollars in bankruptcies of campaign contributors’ solar — came with “fracking”. That technological breakthrough reaches natural gas in rock formation at new lower depths Water, chemicals and horizontal drilling, rather suddenly in the traditional energy timetable, brought huge, still expanding estimates of less polluting natural gas. It promises what every recent president, Democrat or Republican, has championed, a return to “American energy independence” ended in the 1970s. In fact, the prospects for domestic gas and “tight oil” [found along with shale gas] looks to make the U.S. soon a net energy exporter.

With incredible chutzpah, Pres. Obama keeps taking credit for the new energy picture.

But to really maximize this Shale Revolution, the Obama Administration would have to make 180-degree turns. The most dramatic example: the Administration refuses, after five years and studies on top of studies, to weather environmentalist flack to okay the XL Keystone Pipeline. None of the studies so far have raised important environmental concerns, and its sponsors are zigzagging around alleged potential hazards for Nebraska aquifers. The pipeline would not only bring Canadian tar sands oil to Houston refineries, some of it for export. But along the way it would pick up new crude produced in the Dakotas.

All privately-financed, Keystone is the symbol of the Administration’s refusal to acknowledge the extent of the current foul-up. A positive Keystone decision alone would not, for example, solve the problem of the new Dakota oilfields flaring gas, that is burning it at the wellhead in the process of extracting crude. Estimates of that waste now run to a billion a year.

The latest announced Keystone delay by the State Dept. – it holds jurisdiction because the project is trans-border – looks to go well past the mid-term elections, perhaps even 2016. But it’s an index of the general energy confusion that the President is under attack from once staunch trade unionists for the construction jobs the Keystone would provide.

It’s significant, too, that Keystone’s Canadian TransCanada Pipeline, which operates a 60,000-mile network in all the major gas basins in North America, has just launched a $!00-million extension toward Houston. There a swelling petrochemical industry – returning from outsourcing abroad because of cheap gas – waits with open valves. TransCanada spokesmen do not acknowledge the possibility it aims for an LNG installation on the Gulf but that seems likely.

Gas producers enthusiastically support LNG exports, looking to relieve concern the domestic surplus will turn into a disincentive for new prospecting and production. Fracking is expensive and low hanging fruit are already being picked. Yet there are strong political arguments to keep on pumping new gas. Where production has gone rapidly, for example in Pennsylvania, in addition to jobs and associated businesses, fees netted state coffers more than $2 billion since 2008.

So is there anything the Obama Administration could do now with the new found American energy wealth to at least slap Putin’s wrists?

Kerry might take a leaf from Ronald Reagan’s book. When Poland’s Communist government declared martial law in 1981, and the NATO allies refused to join Washington in sanctioning the Soviets, Reagan moved unilaterally against U.S. subsidiaries operating abroad. The West Europeans along with American business howled. Norman Bailey, Reagan’s National Security Council economic ubermeister, won a bitter battle to halt U.S. technology going to new Soviet pipelines. Bailey succeeded at the height of The Cold War, but only temporarily, even then against bitter opposition from West European governments and some elements in U.S. business.

Obviously, saving the Europeans from themselves is going to take much more professionalism. Even though LNG [and its cousin, LPG, liquefied petroleum gas] are in short supply, there are possibilities virtually everywhere with the new shale smarts. For example, Washington has encouraged LNG technology companies to help Britain develop a reserve which could supply its electricity needs for 50 years, if unfortunately located in a populated area just north of London. Other Europeans, including Ukraine, have begun investigating their strong shale possibilities.

Longer term, America should probably look to gas as a transportation fuel. Christopher Faulkner, CEO of Breitling Energy, a leading driller, argues for the estimated $5-6 billion needed for LNG filling station pumps. Switching long-haul trucking alone would net annual savings equivalent to recent oil imports. Some municipal bus lines, Washington, D.C., for example, have already gone to LNG. Even though it now costs about $30,000 for recent passenger models [less than a $1,000 for older cars], a switch could reduce the average driver’s tab [driving less than 100 miles a day] by two-thirds. And if done on the Detroit’s production line, it probably would cost far less. Tokyo and Hong Kong taxis have been using LPG efficiently for more than a half century, ironically the result of force-feeding Indonesian LNG production in one of the greatest corruption scandals in petroleum history.

But then logic doesn’t necessarily prevail, especially among intellectuals talking energy. The environmentalists’ infatuation with short-run electric cars ignores the fact that – so far – inventors have not made a revolutionary battery breakthrough. Electricity can be store in relatively small amounts. If, in the unlikely event, millions of American cars would be plugged overnight to recharge, our creaking electrical grid would collapse. Furthermore, non-polluter electrical car advocates ignore the fact almost half of U.S. electricity is still fueled by coal, the bete noire of the environmentalists.

Overarching all this speculation about energy scenarios is the general political intent of the Administration. There is a dark suspicion in many quarters about Kerry’s continuing powwows with Russian Foreign Minister Sergey Lavrov, the announced “success” of which which Putin nullifies almost immediately in public statements. If we are up against more of Obama’s red lines, the LPG weapon may continue to rest in its scabbard.

sws-04-27-14

Advertisements

Ideology, technology, and – coming up a poor third – common sense


Nowhere is the struggle fiercer between half-aspiring ideology and good old common sense than in the Obama Administration’s energy strategy – or lack thereof.
Having been ambushed by intrepid technology in the exploitation of natural gas — – “the shale revolution” — the country’s energy markets are in partial abeyance. The shale gas has blocked the initial Obama drive to raise fuel and energy prices to force consumers to higher [if heavily subsidized even when facing bankruptcy] “alternative energy sources”. At the moment, the U.S. energy economy is poised between the fact that the new technology has brought abundance, even a temporary surplus, of natural gas, and the risk a falling price might inhibit further exploitation of increasingly greater estimated reserves.
The door is still closed for maximum exploitation of gas, the least polluting by far of all the fossil fuels, government fiat [refusal to lease public lands, pipeline certification, etc.]. But there is growing pressure on the Obama Administration’s despite its leftwing base and the problem of “face” for an obvious strategy to bolster a stagnant economy and the worst employment situation since the Great Depression.
Meanwhile, not only is the shale revolution building toward the vaunted calls from every recent president for “energy independence”, but it is creating additional revenues for those states who have defied the Obama Administration and its handmaiden the Environmental Protection Agency’s harassment. Pennsylvania’s more than six thousand unconventional wells, either producing gas or under development, lifted $224.5 million in fees off the state’s taxpayers backs last year. More than $2 billion in state tax revenue has been generated since 2008.
Despite the logic of giving shale gas free rein, the enviromentalistas continue to rant about the possible impacts of fracking – the method of reaching the gas — although there has been no significant pollution episode. That’s not only because of caution and superior technology of the drillers but the fact that the shale deposits generally lay hundreds of feet below water aquifers. Fracking skirts them and then drills horizontally to get at the gas [and sometimes oil]. On the contrary, there have been several disastrous train wrecks in the U.S. and Canada, with the rapidly increasing movement of new found American oil by rail rather than through more efficient pipelines.
Nor do the enviromentalistas concede that the movement from coal to gas turbines for producing electricity has reduced the overall levels of pollution. Nor is there recognition that the cost of failure to authorize pipelines – the most dramatic example, the proposed Keystone XL pipeline which would carry Canadian crude, picking up Dakota oil enroute, to the Houston refineries and a portion, perhaps as much as 15%, into export. A part of that tragedy is that millions of cubic feet of gas are being “flared” – allowed to burn off in the air – in the Dakota oilfields because there are no pipelines or liquefying facilities to carry it to market. Not only do 1500 wells flare an estimated $100 million worth of gas each month, but the resulting pollution represents an unnecessary additional pollution hazard.
In one of the most curious misplaced arguments making the rounds of the talking heads spewing out nonsense on energy is the advocacy of government subsidized electric cars. Until there is a revolutionary breakthrough in battery science, there is no efficient way to store electricity. Recharging the car batteries at their current level of efficiency in electric engines is after all based on the nation’s creaking electricity grid, about half of which is now produced by the devil incarnate of the enviromentalistas, coal. Imagine what would happen in the unlikely event there were millions of electric cars that needed overnight recharging.
Chris Faulkner, Breitling Energy, one of the leading lights in the fracking industry and as much of a mavim on world energy as you will find, argues that $5-6 billion would set up LNG pumps in the nation’s filling stations. Relatively modest changes in 1960s car engines –  at a cost of less than $1,000 a car, $30,000 for contemporary models – would permit them to use liquefied natural gas [LNG]. In fact, LNG is being used by some city bus lines already [e.g., Washington, D.C.]. And imported Indonesian LNG has been in common use in Japan, Hong Kong and Taiwan for almost 50 years. [A French company has just signed a contract to export U.S. LNG to Taiwan.] Faulkner points out that if the large transcontinental trucking companies went to LNG at current costs, the saving would be about the tab of current purchases of foreign oil.
Perhaps someone will whisper the dirty little secret that LNG at the pumps would reduce the average motorist’s fuel tab by up to two-thirds. Is that going to happen before the elections this fall – or will we have to wait for 2016?
sws-04-06-14

 

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

 

 

Boom! Welcome to the shale gas revolution!


While the Obama Administration has been busy lining the pockets of its campaign contributors with solar power handouts, an energy revolution is taking place even the Washington Luddites and GOSplanners can’t buck. American technology, borrowing offshore deep-water drilling techniques, has started exploiting huge deposits of natural gas buried deep in the earth below shale rock. It would be hard to exaggerate the meaning of this “new” fuel for the American economy – and the world, what with three-quarters of the known new resources outside North America.

These discoveries already dwarf proved conventional gas reserves. A decade of early exploitation by American technological pioneers has produced a domestic natural gas surplus, so much so U.S. prices are a fraction of liquefied natural gas [LNG] prices in East Asia. There appear to be export prospects as soon as ocean terminals designed for LNG imports can be refitted – the first significant exports since the 1973 Arab Oil Embargo.

Billions of investment dollars are already rolling in for both U.S. upstream drilling and pipeline distribution rationalization – including from the savvy Norwegian White Sheikhs’ Statoil to the Chinese government oil companies. Yes, Beijing is not only looking for solid equities but wants technological transfers for their own country’s deposits double current U.S. estimates. A similar story is beginning to unfold from Poland to France – although Paris is hesitant because of competition with its massive investment in nuclear power – to Canada to Brazil, South Africa, Australia, Israel, India and Chile.

The question now is whether the Obama Administration will leave the industry to benign neglect. It’s no secret where the Administration’s heart is; in 2008 Pres. Barack Obama warned of inevitability of skyrocketing energy bills in a scenario to help force a shift from fossil fuels to more expensive so-called renewable “green” energy. You would think what with windmill imports from China and Spain so severe Congress is being asked for tariff protection — after subsidized windpower outfits moved their jobs and technology offshore — and the fiasco in solar energy, the feds and their enviromentalista campfollowers would back off. Logic now dictates their Jeremiah calls of rapidly approaching “peak oil” – the time when increasing demand and depleted fossil fuels would meet – is even more distant.

But warning signs came with the August release by the Obama Energy Department of a 90-day “study” [without industry representation] of safety standards for the new technologies, ignoring already formulated industry “safe practices”. There could be contamination of the water supply, even though most shale gas lies at depths far below the aquifers. And there have been some miscreants. But the industry – well aware of the opposition the enviromentalistas can mount – are already planning self-policing.

What is self evident is increased sources of natural gas – the least polluting of all fossil fuels – is going to revolutionize the whole energy and environmental debate. Although the $2,000 cost of retrofitting a Detroit car to use natural gas rather than gasoline or diesel is a minor stumbling bloc, a network of filling stations would require big investment for a massive U.S. shift. Still, the glitterati’s fascination with electric cars ignores 60% of the nation’s demand is supplied by coal-fired turbines. [There is already a surfeit of recharging plugs for electric cars, selling poorly despite all the hoopla.] And, of course, gas-fired generating plants are the fastest way to meet rapid increases in electricity demand.

Other opportunities for changeover are closer. It is conceivable truck fleets could move quickly to the “new” fuel. A number of new petrochemical plants using broken out elements of shale gas promise new jobs, bringing production back to the U.S. There is growing interest, too, in high-energy requirements for expansion of recycled scrap metal for specialty steels. The international implications, politically as well as economically, are equally promising: Moscow’s attempt to blackmail Western Europe with a gas monopoly and the growing power of the unstable Persian Gulf OPEC LNG producers is going to be eroded.

Bottom line, as Gov. Rick Perry has argued, American recovery demands access to new energy. That’s not new. U.S. development always has depended on cheap energy, from our colonial forests to the development of early 20th century petroleum. Now, again, the shale gas revolution holds out that promise at a time when the economy desperately needs a shot in the arm.

sws-1-21-11