U.S. Senate Committee pushes oil industry’s antisocial LNG scheme.

Oil & Gas field, Midland, Texas. Photo credit: EcoFlight

How long can the fracking spending spree last?
— Houston Chronicle
headlineSept 14, 2018.

The answer to the Chronicle’s question is: for as long as investors have money to burn. Justin Mikulka, writing Dec 18, 2018, for Desmogblog, puts it this way: “Fracking in 2018 was another year pretending to make money. . . . Whether fracking companies are profitable or not doesn’t really matter to Wall Street executives who are getting rich making the loans that the fracking industry struggles to repay.”

Yet the industry is currently pumping more fracked gas than ever before. The market is swamped and prices are at or below break even (see “Natural Gas Prices Fall Below Zero In Texas” – Oilprice.com, Nov 28, 2018). And now there’s a push to liquify as much of the stuff as possible for shipment overseas to anyone who’ll buy it.

Speaking at a July 11, 2019 hearing of the U.S.  Senate Committee on Energy and Natural Resources on “The Important Role of LNG in Evolving Global Markets”, Nikos Tsafos, Senior Fellow, Energy and National Security Program Center for Strategic and International Studies (CSIS), said:

There is an oversupply of LNG on the market, leading to historically low prices in Europe and Asia . . .  Despite [these] historically low prices today, companies are betting billions to enable the next wave of LNG supply—and this wave will be far bigger, more diverse, and perhaps more politically complicated than earlier waves. . . . [There are an] unprecedented number of proposed LNG supply projects that might reasonably start construction over the next two year.

Since the U.S. Senate is controlled by Republicans, only people supportive of the oil and gas industry and its LNG subset were invited to give evidence at the Senate Energy Committee hearing. The talk was all about how best to promote the industry and take advantage of an imagined “window of opportunity” to strengthen its global competitiveness. There was no mention of global warming or the need to restrain the production of fossil fuels. This is how Steven E. Winberg, Assistant Secretary for Fossil Energy U.S. Department of Energy, summarized his testimony:

“Natural Gas has transformed our Nation and the world for the better. The increased use and production of natural gas has grown our economy, created countless American jobs, and made our air cleaner. Further, increasing exports of domestically produced natural gas to 36 countries around the world has given our allies a stable, reliable and secure source of clean energy.”

Here’s what’s wrong with that picture: Hydraulic fracking is a filthy business, it poisons the water table, adds greenhouse gasses to the atmosphere, and far from making the world better, it makes it bad (see below for specifics on just how bad); The people employed in the industry would be far more constructively employed in building the nation’s renewable energy economy; Natural Gas is not a stable, reliable, or secure source of energy, let alone a clean one — gas deposits are bound to become stranded due to the superior economics of renewables. And considering the political and social pressures surrounding climate change, “our allies” would be well advised not to get hooked on it.

Renewables are displacing fossil fuels. During this transition, the U.S. has more than enough natural gas to satisfy its current domestic needs. That’s what energy security means. The push to export LNG is not about energy security, or even about making money, it’s about building expensive infrastructure (pipelines, liquefaction plants, terminal facilities, etc) to keep the Oil & Gas Industry in business. Pitching the benefits of investing in this LNG boondoggle is Charlie Riedl, Executive Director of the Center for Liquefied Natural Gas. Here’s part of his testimony before the above mentioned Senate hearing on LNG markets.

“The U.S. is now home to four LNG export terminals in operation, six projects under construction, and seven projects that are permitted and awaiting Final Investment Decisions. There are another fourteen projects in the [Federal Energy Regulatory Commission] FERC queue. Each of these projects individually represents billions of dollars of investment in America’s energy future. . . . Technological breakthroughs in the oil and natural gas industry have unleashed an energy renaissance, establishing the United States as the world’s largest natural gas producer – and domestic production continues to grow. We have enough natural gas to supply affordable energy domestically for at least 100 years with current technology, as well as to significantly increase U.S. participation in the global market for LNG.” (my underlines)

Mr. Riedl paints a picture of a world living indefinitely on fossil fuels, a world much to the liking of the Oil & Gas Industry. He does not mention the impact of global warming or the Paris Climate Accord which calls for a sharp reduction in the total use of fossil fuels. The International Energy Agency’s ‘Sustainable Development’ estimate of World Energy Demand to 2040, shows no increase in natural gas consumption beyond 2020 (see post of July 6, 2019, titled Oil & Gas Industry aims to make global warming even warmer).

Witnesses to the Senate hearing, including Mr. Riedl, refer to natural gas as a clean fuel. It isn’t. Here’s how it compares to other fuels in terms of CO2 emissions:

Lbs of CO2 emitted per million BTU of energy: 
Coal (anthracite) – 229 Lbs
Gasoline – 157 Lbs
Natural Gas – 117 Lbs
Solar (wind or PV’s) – zero emissions

During its production cycle, natural gas also releases methane, a greenhouse gas 80 times as potent as CO2. Last month, the Trump Administration announced plans to weaken existing rules designed to curb the release of methane. That’s not all. Natural gas is routinely flared (burned off) or vented when emitted from wells drilled primarily for oil. The following table from Bloomberg News June 12, 2019, shows the amount of gas flared by certain companies operating in the Permian Basin oil field of Texas:

Table showing gas flared (as a percentage of gas produced) by oil companies operating in Texas
Gas flared (as a percentage of gas produced) by oil companies operating in the Permian Basin of Texas. Original source: Rystad Energy

An article in Bloomberg Businessweek Sept. 10, 2019, by Ryan Collins and Rachel Adams-Heard, contains the following passage: “Gas flaring globally emits more than 350 million tons of carbon dioxide equivalent in a year, according to the World Bank. . . . In the U.S., flaring accounts for an estimated 9% of the greenhouse gas emissions of the oil and gas industry. In addition, the practice spews particulate matter, soot and toxins into the air that have been shown to be hazardous to humans.”

Fracking natural gas is bad for the climate, bad for the country, bad for the world. The current scramble to increase — at any cost — LNG production and shipping, is nothing more than a hostile and antisocial scheme by the Oil & Gas Industry to prolong its own life by delaying an orderly transition to renewable energy. It’s an industry scheme that’s being eagerly supported by the Oil & Gas-dependent Republicans in Congress and their like-minded buddies in the Trump Administration.

Gas flaring. Image: Dallas Morning News

Carbon Capture — Big Oil’s bogus response to global warming

Carbon Capture cartoon
Carbon Capture. Image credit: Pilita Clark, Financial Times, Sept. 9, 2015

The Oil & Gas Industry wants us to keep on burning fossil fuels, come hell or high sea level. To divert attention from that sorry objective, the industry is promoting a techno-fix that policymakers and investors can get behind — it’s called Carbon Capture and Storage, CCS  for short. It’s a ruse, a scam. CCS won’t change industry’s behaviour, won’t cause emissions to drop.

Last April, a group of U.S. Senators — 8 Democrats, 4 Republicans — sent a letter to the Senate appropriations committee requesting “robust funding” to develop carbon capture, utilization, and storage (CCUS) technologies “that will address COemissions from coal, natural gas, and industrial facilities.” The letter contains a mixture of false statements, dubious claims, and baloney. Examples follow:

▲ The Senators claim that the UN Intergovernmental Panel on Climate Change (IPCC) has identified CCUS as “a critical component of the portfolio of energy technologies needed to reduce carbon dioxide emissions worldwide.” The claim is false. Here are the facts:

The Paris Climate Agreement, signed Dec. 2015 by 95 countries, set a goal of “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.” Global average temperature has already exceeded 1.0°C. Last year, the IPCC prepared a special report on the impacts of global warming to 1.5°C and on the CO2 emissions pathways that could limit warming to that temperature. Here’s what the report’s ‘Summary for Policymakers’ says  in its single statement (item C.2.2) about the use of Carbon Capture and Storage (CCS):

In 1.5°C pathways with no or limited overshoot, renewables are projected to supply 70–85% of electricity in 2050. . . . [T]he use of CCS would allow the electricity generation share [from] gas to be approximately 8% (3–11%) of global electricity in 2050, while the use of coal . . . would be reduced to close to 0%.

In other words, the IPCC views the use of CCS, not as a critical component of efforts to reduce CO2 emissions, but as a bit player, and not even an essential bit player. What the IPCC does predict is that ‘natural’ carbon dioxide removal (CDR) techniques, such as reforestation and soil carbon sequestration, will play the major roles.

The Senators state that “Like the wind and solar industries, a combination of federal incentives such as tax credits and federal funding for research, development, and demonstration, will be needed to improve [carbon capture] technology so that it can be cost-competitive with other forms of low COemitting technologies.”

Here the Senators make the absurd implication that energy from fossil fuels  can be made cost-competitive with energy from renewables (solar, wind) by throwing money into carbon capture research. The fact is, energy from fossil fuels cannot compete with energy from renewable today; adding carbon capture technology — no matter how well researched — to fossil fuel exhaust systems, will result in energy that is even less competitive tomorrow. No amount of funding will change that certainty.

▲ The Senators state that “Innovators across the United States are already developing a wide range of CCUS technologies that can improve the efficiency of electricity generation and utilize carbon dioxide emitted by power plants and other sources for more efficient resource development and valuable products, such as algae-derived chemicals, plastics, and fuels.”

Here the Senators are trying, but failing, to show that CCS can pay for itself. The reference to “more efficient resource development” points to ‘enhanced oil recovery’, a process in which captured CO2 is injected into existing wells to force more oil out of the ground. When the recovered oil is burned, it releases as much or more CO2 into the atmosphere as was captured in the first place. The process has nothing to do with true carbon storage, nor with serious efforts to reduce global warming CO2 emissions.

As for the reference to “valuable products”, the world is awash in chemicals, plastics, and fuels, all derived from fossil carbon feed stock (oil, gas, coal). When that fossil carbon feed stock is burned, its carbon is released into the air. The claim that that same carbon (captured from the emissions) can form the basis for new or different products, makes no sense.

▲ The Senators claim that “Investment in carbon utilization technologies will transform carbon dioxide into an economic resource, lower the cost of reducing emissions, create jobs, save consumers money, and safeguard our environment.”

At least the part about jobs is true. Scientists will work on anything, no matter how nutty the project, just so long as they get paid to do it.

Photo of U.S. Senate building
U.S. Senate. Image: Senate.gov

The Senators’ letter is dated April 4, 2019 and signed by Sens. John Barrasso (R-Wyo.), Michael Bennet (D-Colo.), Christopher Coons (D-Del.), Kevin Cramer (R-N.D.), Steve Daines (R-Mont.), Tammy Duckworth (D-Ill.), Cory Gardner (R-Colo.), Tim Kaine (D-Va.), Angus King (I- Maine), Joe Manchin (D-W.Va.), Jon Tester (D-Mont.) and Sheldon Whitehouse (D-R.I.).

If the Senators had actually read the IPCC’s 2018 special report’s ‘Summary for Policymakers’, they would have discovered that holding global average temperature to 1.5°C by 2050 requires action on restricting CO2 emissions NOW.  Pushing CCS technology on behalf of the fossil fuel industry will not do the trick. Here’s what the ‘Summary for Policymakers’ says on the matter:

Avoiding overshoot and reliance on future large-scale deployment of carbon dioxide removal (CDR) [e.g., reforestation] can only be achieved if global CO2 emissions start to decline well before 2030 (item D.1).

The lower the emissions in 2030, the lower the challenge in limiting global warming to 1.5°C after 2030 with no or limited overshoot. The challenges from delayed actions to reduce greenhouse gas emissions include the risk of cost escalation, lock-in in carbon-emitting infrastructure, stranded assets, and reduced flexibility in future response options in the medium to long term (item D.3).

In other words: ignore the carbon capture ruse, focus instead on reducing fossil fuel production. That’s the real challenge for policymakers. Are they up to it?

Oil & Gas Industry aims to make global warming even warmer

Photo of oil well pumps
Oil well pumps. Image credit: CBC

There’s a growing mass mobilisation of world opinion against oil, which is “beginning to … dictate policies and corporate decisions, including investment in the industry” Mohammed Barkindo, the secretary general of OPEC said. Climate activists are “perhaps the greatest threat to our industry going forward”, he also said.
— from The Guardian and other press reports, July 5, 2019.

Mr. Barkindo is like the arsonist who sets fires for money and then complains that fire engines are threatening his business. He should know that ‘climate activists’ are not the only people delivering unwanted messages to the Oil & Gas Industry about global warming. Similar (although milder) messages are originating from within the industry’s own ranks. The problem is that, as yet, most of the industry’s bosses refuse to listen.

The International Energy Agency (IEA) is an intergovernmental body established in 1974 following the 1973 oil crisis. The agency’s purpose at the time was to respond to disruption in the supply of oil. Its mandate has since expanded and the agency now acts to provide member states, as well as as Russia, China, and India, with information and policy advice on energy security, economic development, and Environmental Protection.

The following chart in the IEA’s World Energy Outlook, shows the Agency’s estimate of total world energy demand to 2040 under what it calls its New Policies Scenario (NPS). The NPS, the report says, “Incorporates existing energy policies as well as an assessment of the results likely to stem from the implementation of announced policy intentions.” In other words, the chart represents the IEA’s business-as-usual prediction. The chart shows demand for fossil fuels (Natural Gas + Coal + Oil) steadily rising beyond 2020.

Estimated World energy demand by IEA
Estimated world energy demand to 2040 – business as usual. Image: International Energy Administration (IEA)

The next chart is from the same page of the same IEA report. It shows the Agency’s estimate of total world energy demand to 2040 under what it calls its Sustainable Development Scenario (SDS). The SDS, the report says, represents “an integrated approach to achieving internationally agreed objectives on climate change, air quality and universal access to modern energy.” In other words, the chart shows what the IEA estimates will happen to world energy demand, should the signatories to the Paris Accord follow up on on their commitments. Result: fossil fuel production falls.

The IEA’s estimated world energy demand to 2040 - Sustainable Developmemt Scenario. Image: IEA
The IEA’s estimated world energy demand to 2040 – Sustainable Development Scenario. Image: IEA

In what way is the Oil & Gas Industry reacting to this obvious policy message from a respected industry policy advisor? (1) It tries to ignore it. (2) It works to undermine the message in any way It can. One way it works to undermine the message is to produce estimates of its own showing that the world needs more fossil fuels, not less.

The following bar chart from BP’s ‘2018 Energy Outlook’ shows estimates of GROWTH in total worldwide energy consumption to 2040 according to nine different fossil-fuel focused organizations. All of them predict growth in the consumption of fossil fuels ranging from 0.3% to 0.9% per year. Note that BP has included an IEA estimate (4th from left), but one that is based on the Agency’s business as usual scenario, not on its Sustainable Development Scenario.

Bar chart showing growth to 2040 in worldwide energy consumption according to various organizations
Estimates of GROWTH to 2040 in total worldwide energy consumption according to various fossil-fuel-focused organizations. Image: from BP 2018 Energy Outlook

BP =   BP plc (formally British Petroleum)
CNPC = China National Petroleum Corporation
EIA = U.S. Energy Information Administration
IEA = International Energy Agency (OECD)
IEEJ = Institute of Energy Economics (Japan)
IHS = IHS Inc (a London based ‘Information Handling Services’ Company)
OPEC = Organization of Petroleum Exporting Countries
Statoil = Statoil ASA (Norwegian state oil co. now called Equinor)
XOM = ExxonMobil Corporation

Here’s what  BP says about its prediction labeled ‘BP ET scenario’ (first bar in the chart): Our report’s “Evolving Transition scenario suggests that a continuation of the recent progress and momentum in policies and technologies is likely to cause the growth in carbon emissions to slow markedly relative to the past. But this slowing falls well short of the sharp drop in carbon emissions thought necessary to achieve the Paris climate goals. We need a far more decisive break from the past .” (my underlining)

In other words, BP’s prediction assumes ‘business as usual’ as do all the other predictions shown in the chart. BP tries to distance itself from the implications of its own report by stating that the scenarios in its report “are not predictions of what is likely to happen or what BP would like to happen.” Nevertheless, its business as usual ‘scenario’ is taken by other Oil & Gas Industry heavyweights as a valid prediction that supports the industry’s business as usual behaviour.

For example, while ExxonMobil’s report titled ‘2019 Energy and Carbon Summery’ is peppered with references to emissions reduction and the goals of the 2015 Paris Accord, the company’s true position is exposed by two statements on page 9: “Natural gas will expand its role, led by growth in electricity generation and industrial output” and  “Rising oil demand will be driven by commercial transportation and the chemical industry.” See last bar in the chart.

BP’s ‘2018 Energy Outlook’ contains a surprisingly frank statement (underlined above) concerning the Paris Accord and how to achieve its goals. “We need a far more decisive break from the past” the writer of the report states.  Very true. Thing is, the decisive break from the past is going to hit the industry whether it likes it or not. More storms, more droughts, more floods, and more climate activists will see to that.

In the mean time, there’s only one way to meet the Paris climate goals and that is to cut fossil fuel production. Taxing carbon emissions will not do the trick; that’s just a silly game and the fossil fuel pushers know it. Taxing fossil fuels at the well or mine head and/or at ports of entry will work. Better still, mandate the elimination of fossil fuels as some jurisdiction are already beginning to do. One thing for sure: don’t expect help from the fossil fuel crowd. They are not part of the solution, they are the problem.

Oil & Gas elephant spooked by EV mouse — for good reason

Photo of EV charging station
Electric Vehicle charging station. Image: City of Hoboken NJ

The oil and gas industry is losing market share to clean energy technologies such as wind and solar. But it’s the electric vehicle (EV) that poses the most pressing threat to the industry. Here’s why:

The car-owning public reacts negatively to high gas prices. Politicians of all strips are sensitive to that fact. Even politicians who recognize the environmental need to reduce fossil fuel production are reluctant to take actions that could drive up prices at the pump. Taxing the carbon in fossil fuel emissions rather than taxing the carbon content of fossil fuels as they are produced is an example of this reluctance — it distances the politician from the effect. And even that feeble political action is further weakened by the failure to set the carbon price high enough to cause meaningful reduction in fossil fuel use. A switch from gasoline to electric powered cars will remove the political fear of pump prices and leave the oil and gas industry vulnerable to direct carbon pricing.

Many of the country’s newer natural gas powered electricity generating plants might last for another thirty years or more. This means that the complete replacement of fossil fuel power with cheaper renewables could take decades. The situation with electric vehicles is different. The average life expectancy of a car is 10 years or less. As EV prices drop and public acceptance increases, a shift to EVs could result in a complete replacement of the existing fleet of vehicles within a period of 10 to 15 years. Motor gasoline accounts for about 24% of total fossil fuel energy currently used in the U.S., a big chunk of the fossil fuel industry’s market. The shift would, at the same time, create new opportunities for wind and solar powered electricity generation.

Oil and gas industry executives are well aware of the threat posed by EVs. It explains the industry’s hatred of the EV incentive program. The program, introduced in 2015 under the Obama administration, offers a tax credit of $2,500 to $7,500 per new EV purchased for use in the U.S. Initial funding for the program was capped at about $2-billion. The oil and gas industry, concerned that Congress may decide to extend funding for the program, has ramped up its propaganda machine to try and prevent that from happening. As usual, when it comes to spreading disinformation about climate science and clean technologies, the industry calls on its mercenary propaganda troops to do the lying for them (see Apr.21 post — How the Oil and Gas Industry gets others to fight for its life). The propaganda effort described below shows the lengths the industry will go to fight what is a relatively small program.

A coalition of 34 fossil-fuel-funded, free market advocacy groups (see image below) delivered a letter May 9 to Congress (addressed to Senators Grassley and Wyden, and Representative Brady and Neal) urging members to protect “all American families by opposing an expansion of the electric vehicle tax credit.” The coalition is led by the American Energy Alliance (AEA), a not-for-profit organization that, according to its website, “engages in grassroots public policy advocacy and debate concerning energy and environmental policies.” The AEA, according to Desmogblog, is run by a former lobbyist for Koch Industries. The letter claims that the EV subsidy is unpopular, overwhelmingly benefits the rich, and amounts to a wealth transfer to California at the expense of all other states. It also claims that electric cars are not cleaner than cars powered by internal combustion engines.

Image of 34 fossil fuel funded, free market advocacy groups logos
Coalition of fossil fuel funded, free market advocacy groups organized to oppose expansion of the federal EV subsidy program. Image: eenews

As mentioned above, the U.S. EV subsidy is relatively small. Since its start in 2015, the program has handed out a total of about $20-billion in the form of income tax credits. By comparison, the U.S. fossil fuel industry receives about $27-billion annually in direct federal subsidies. The industry letter to Congress says nothing about that. The following bar chart shows the amount of annual subsidies each of the G7 nations currently hand out to support their fossil fuel addictions. It’s time they sought treatment.

Bar chart showing how G7 countries subsidize fossil fuel industry
Image: Natural Resources Defense Council (NRDC)

Note that the bar chart above shows only the direct subsidies to the fossil fuel industry. The industry also receives a massive indirect subsidy due to the fact that it does not pay the cost of damages — global warming, climate destabilization, etc. — caused by the burning of its products.