Tag: fracking

Another stroke of luck (and it’s not Irish)

Because of the snow, it’s sort of a slow news day today. So I was looking for something interesting to comment on and found out that the practice of fracking can now retire, as it’s reached the ripe old age of 65. From Energy Tomorrow:

We celebrate the first commercial use of hydraulic fracturing 65 years ago on March 17, 1949, conducted by Halliburton in Stephens County, Okla., and Archer County, Texas. But the roots of the fracking story stretch back to the 1860s. In a 2010 article for the Society of Petroleum Engineers’ Journal of Petroleum Technology (JPT), NSI Technologies’ Carl Montgomery and Michael Smith write that energy pioneers experimented with oil well “shooting” that would “rubblize” oil-bearing rock to increase flows. Various methodologies were used to fracture rock formations over the years until Stanolind Oil, a division of Standard Oil of Indiana, conducted the first experimental “hydrafrac” in 1947 in Kansas. It involved pumping fluid carrying “propping agents” at high pressure into a well to create fractures that could be held open to free oil and natural gas in the rock.

People have freaked out over this technology over the last half-decade since the oil and natural gas industry embraced it to bring new life to old fields as well as other places where energy exploration was previously deemed economically unworthy due to quantities thought not to be worth the trouble. Yet the root technology was decades old; the confluence of evolving technique with the increase in oil prices to a point where fracking could be cost-effective gave the impetus to the industry. Truthfully, when oil was $15 a barrel and being pumped like crazy in the Middle East a couple decades ago, there wasn’t much demand for domestic supplies.

On the other hand, natural gas that ran about $4 per thousand cubic feet in 1981 only costs about $9 per thousand cubic feet now (although seasonal fluctuations are more severe.) Since that’s not far off the increased cost of living from then to now, this technology has enabled the natural gas market to hold serve despite increased demand from electricity generation, which receives a much better rate than the residential figures I cited. Granted, the recent surge began around the time when natural gas for residential use hit its all-time peak of $20.77 per thousand cubic feet in the summer of 2008, but opening up export markets can make additional fields profitable while stabilizing prices.

Now there is an element of truth to the argument naysayers in the manufacturing and chemical industries make about the potential that exporting LNG to other countries would increase prices here, although I doubt they would triple as claimed. But let’s explore once again the alternative scenario, one which I alluded to a couple paragraphs back.

Oil companies were laying people off and shutting down wells when prices were $15 to $20 a barrel because there was no way to run many of the old wells profitably. Some seem to forget that entrepreneurs go into business to make a profit, so they can make a living. Just like Staples is lopping off a couple hundred of its lagging retail performers, these companies idled wells which were losing money. In one respect it was great because gasoline went back under a dollar per gallon (remember that?) but that was a short-lived phenomenon which ended about the time of the first Gulf War – meanwhile, it took several more years for the oil industry to recover. Like it or not, that’s a vital cog of the American economy just like automakers and other manufacturers, who can use the incentive of energy which is reliable and still relatively inexpensive to create jobs.

So the ideal this time would be to maintain a fairly steady and predictable price while expanding the supply and maintaining those wells which are in operation so they stay economically viable. But if it weren’t for fracking, we would be in the situation of having to import a greater and greater share of our energy, a policy which would quickly drive up prices and perhaps exacerbate our national economic slowdown to a recessionary point once again. A modest increase in energy prices would be a small price to pay for the creation of thousands of jobs with private-sector investment – and who knows, maybe the predicted price increase won’t come. But I’ll bet the jobs would.

Denying the market

To be honest, I’m not sure if I was sent this to provoke a comment or if I just happen to be on a list that gubernatorial candidate Heather Mizeur doesn’t use all that often. I think most observers know I have an interest in energy issues, and this definitely falls into one of them. You just have to ask yourself why Mizeur counts herself among the Democrats are so insistent on denying the opportunity for shovel-ready jobs and investment – I thought that was what they were all about.

First of all, this is what Mizeur had to say about the proposed Cove Point LNG export facility.

(Yesterday), Delegate Heather Mizeur (D-Montgomery), candidate for governor, called on Governor O’Malley to join her in opposition to the Dominion Resources liquefied natural gas (LNG) export facility at Cove Point in Calvert County. She made the announcement during a speech at the Stop Cove Point Rally in downtown Baltimore City earlier today.

“I am calling on Gov. O’Malley to take a stand with us today to reject Cove Point,” Mizeur told the audience. “You cannot leave a legacy on addressing climate change and be silent on Cove Point. It’s time for Gov. O’Malley to break the silence and join us in saying no to Cove Point.”

The rally, which was attended by 500 people, was organized by climate, health and anti-fracking activists from across the state, and was one of the largest environmental rallies ever in Baltimore City. It came as the state Public Service Commission begins official hearings on the project.

Mizeur is currently the only gubernatorial candidate to state her opposition to the project. When she announced her opposition in December, both Lieutenant Governor Brown and Attorney General Gansler – the two other Democratic candidates in the race for governor – expressed a desire to build the project without environmental damage, but failed to explain how such a plan would be possible.

Dominion Resources, a Virginia-based energy company, is pursuing the construction of a $3.8 billion facility to serve as a collection point for fracked natural gas from throughout the Mid-Atlantic region, where cargo tankers would then ship it throughout the world.

But the Cove Point facility would release 3.3 million tons of carbon dioxide and other harmful greenhouse gases into the air annually, making it a serious setback to achieving the state’s goals on fighting climate change, including a plan for a 25% reduction of greenhouse gases by 2020.

Mizeur has also called on Dominion Resources to invest $3.8 billion – the construction cost of the proposed facility – in the state’s renewable energy sector. According to the U.S. Department of Energy, clean energy investments create more permanent jobs than exporting fracked gas.

Obviously Mizeur is an adherent to the religion of manmade climate change, a belief system which fails to address why none of the climate models have predicted the lack of warming this century. The fact that they managed to get just 500 people to a climate change rally shows how small the cadre of believers really is – a good Second Amendment or TEA Party rally can rustle up similar numbers without really trying. If this is “one of the largest environmental protests in state history” then we really are letting a tiny minority dictate policy.

But let’s say these guys are really serious – I suppose living in a state foolish enough to believe that artificially limiting its carbon emissions will have an effect on our overall global climate will do that to you. Even if the point source of 3.3 million tons is correct, it doesn’t take into account the reduction in emissions at destination points abroad. Natural gas is cleaner burning than coal, and until we figured out that fracking was a way to supercharge the moribund domestic natural gas market it was a fossil fuel environmentalists weren’t uncomfortable with. To show how the market has changed, the Cove Point facility was originally built in the 1970s as an import facility because the domestic natural gas market was thought to be in an irreversible decline.

On the other hand, the point source investment of $3.8 billion will have a positive effect on the regional and state economies. Last year, in announcing its filing, Dominion claimed the project will create up to 4,000 jobs during the construction phase and perhaps over 14,000 jobs overall, not to mention billions in royalty payments. Because most of the supply would come from regional producers, the entire mid-Atlantic area would benefit (except Maryland and New York, which currently have bans on fracking.) The facility would also provide a needed boost to our export tally to address a persistent American trade deficit, as the LNG is already contracted out to distributors in Japan and India.

Finally, Mizeur complains that the $3.8 billion Dominion is willing to invest in the project could be better spent in the renewable energy sector. Does the name “Solyndra” ring a bell? Despite its best efforts to create a market for offshore wind, companies aren’t willing to make the investment in that area – remember Bluewater Wind? In the area of solar energy, it took billions in taxpayer-guaranteed loans – and mandated renewable energy portfolios such as the one Maryland is saddled with – to get that market off the ground, yet it still produces but a tiny fraction of our electricity needs at a cost several times the going rate for electricity produced from coal or natural gas.

And it’s funny that Mizeur worries about the cost of natural gas going up due to exports, but had no problem with raising the gasoline tax on a perpetual basis. So much for supporting hard-working Marylanders.

So the choices are either zero or $3.8 billion; that’s reality. We can take advantage of proven resources we already have or listen to alarmists whose real goal is to foster dependence on government under the guise of saving the planet. It’s just too bad our little sandbar is energy-poor, unless you deign to call chicken manure an energy gold mine, and even the proponents concede its not as efficient as natural gas.

Freezing as its own reward

A number of Delmarva Power customers who enrolled in the Energy Wise Rewards program were rewarded yesterday morning, on the coldest day thus far this winter with wind chill values well below zero, with no heat. That’s because their thermostats were remotely told to ignore the cold temperatures inside the home to save electricity.

For their part, Delmarva Power threw electric grid operator PJM Interconnection under the bus, saying PJM originally asked Delmarva Power to comply. However, a couple hours later Delmarva restored the thermostat control, probably after complaints poured in. And while they had been repeatedly warning customers about the need to conserve electricity due to record winter demand, people were caught unaware that something they could live with during the summer could also be used in the winter.

I’ve written before about this Energy Wise Rewards program, which gives customers a proverbial thirty pieces of silver in return for the installation of these remotely programmable thermostats. Lo and behold, I even asked if this would someday extend to heating and here’s my answer.

Given the reaction and the fact this move made the evening news, I suspect this chilly morning was more routine for most. Obviously, though, there’s a big difference between having a home which is sweltering a little more than normal in the summer and having the risk of freezing pipes and perhaps fires from alternate heat sources being used in the winter. In the television segment, one of those affected put her roast in the oven to add a little heat to the house – seemingly defeating the purpose of having the thermostat turned down (unless it’s a gas oven, of course.)

So when the swallows return to Capistrano and your mailbox receives yet another solicitation for Energy Wise Rewards, do what I do – laugh and toss it in the trash (well, perhaps after I blog about their latest pathetic attempt at control.) I’m not saying conserving energy is a bad thing, but this is the state which mandates we save energy while refusing to exploit a reliable source of electricity for these same utilities because of essentially unfounded environmental concerns. We can frack our way out of this problem.

That’s a cold dose of reality right there.

2014 Maryland dossier: part 4 (energy policy)

Today I work into the fourth part of my series, on energy policy.

It’s clear to me that if the state wants to become more successful at improving the standard of living of its citizens, we have to find ways to make energy more accessible and less expensive for the average consumer. That’s the starting point for my critique on energy policy.

There are many points the Republican candidates seem to agree on, which is to be expected.

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David Craig: Craig said it is also time to stop studying fracking and enable natural gas extraction to take place in Western Maryland in an environmentally-responsible manner. (press release, October 4, 2013)

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Harford County Executive David R. Craig, who also is seeking the Republican nomination, said estimates show fracking in Garrett and Allegany counties will bring as many as 14,000 jobs.

If the state continues to study the issue, the people of Western Maryland will suffer as business go to frack in neighboring Pennsylvania, Ohio and West Virginia, he said. (Gazette, September 19, 2013)

Ron George: Make Energy More Affordable, Available, and Less Dependent on unstable governments half way around the world. This includes developing natural gas resources and using clean coal for our own needs. (campaign site)

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“I have to let you know that I’ve really struggled with the issue and studied the issue, I’ve listened to the fears and looked at the science,” he said. “And I’ve come down on the side of natural gas drilling for ourselves, for Maryland’s use.”

Fracking now will help the state with its energy costs and diversify its alternative energy production, said George, a GOP candidate for governor.

“We have to have other alternatives that are clean,” he said. (Gazette, September 19, 2013)

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“Before we go building 40 of these [wind turbines] offshore, let’s do this step by step,” said Del. Ron George, R-Anne Arundel. He offered an amendment to build one wind turbine to study the viability of offshore wind in Maryland. He said the Virginia legislature approved a similar plan on Wednesday.

“It will test the economics of large scale offshore wind projects, it will test the mechanics of construction and issues related to offshore wind projects, and it will study the ability of offshore wind projects to withstand weather conditions” 11 miles off the coast of Ocean City.

“It is really doing the next step, so we don’t go wasting money, and we make sure we do it right,” George said. (Maryland Reporter, March 29, 2012)

Charles Lollar: I support development of Maryland’s Marchellus shale natural gas reserves. (campaign website, “Natural Resources”)

Demand that public utilities be held accountable to their customers. (campaign website, “Accountability”)

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In order to reduce (energy prices) Lollar wants to remove subsidies and allow all forms of energy to compete on their merits. This includes allowing fracking in Maryland’s Marcellus shale so that natural gas can lower the state’s energy costs. He sees O’Malley’s subsidies for wind energy as a way of picking winners and losers in the market, and opposes to the handouts. (Real Clear Markets, September 3, 2013)

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Lollar said the state could quickly come out of its perennial deficit if it allowed fracking in Maryland. Lollar emphasized the practice would have to be well regulated, but not so much so as to stop businesses from existing. (SoMDNews, November 1, 2013)

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“We absolutely need to take advantage of that resource, not just as another energy source but to put people to work,” Charles Lollar, Republican candidate for governor, said of natural gas. (Gazette, September 19, 2013)

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I think they [Pepco] have an unfair relationship advantage. I’m not prepared to blame the Democratic party but I am prepared to blame the individual people that have made the system what it is. I do believe that when you have an unbalanced system that heavily favors one party over another, this is the kind of response that you get. There’s a lot of strong-arming. There are strong and forceful relationships that are literally causing people to do things that in their right mind, they would not do.

The power held at the highest levels of our state is incredible and it’s crushing good elected officials and appointed commissioners that want to do the right thing. Let’s put the blame where it needs to be. This idea of charging someone a fee before they get appropriate services is wrong no matter what party you’re from. (Bethesda Now, November 7, 2013)

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Insofar as energy policy goes, our friends across the aisle greet the issue with reactions ranging from radio silence (Anthony Brown) to a belief that poultry waste can be a “responsible investment” (Doug Gansler) to a pedal-to-the-metal emphasis on so-called “clean energy” and outright hostility to fracking (Heather Mizeur). None of these proposals meet the twin tests of reliability and market worthiness that coal, oil, and natural gas do. In particular, one has to ponder the viability of poultry waste as a fuel after the Waterkeeper Alliance picked on one family for months in an losing effort to make an example of them, a move one local environmental advocate said “definitely sets us back.”

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So what I believe had “definitely set us back” is the de facto moratorium on fracking Maryland has had in effect for the last few years, as the state continues to twiddle its thumbs and study the issue at length in “setting an extremely high bar for industry.” Meanwhile, Pennsylvania has seemed to find a reasonable balance between environment and energy; thus natural gas exploration and extraction is creating jobs and revenue for those counties fortunate enough to sit atop the Marcellus Shale formation.

I think David Craig gets this part of the picture, but there’s a lot more to energy policy than just fracking. It would be good to know where he stands on other market-based reforms like repealing the wind energy bill and renewable energy portfolio – as you’ll see in a future segment David has his eye on restoring a balance between economy and environment. So I give him 4.5 of 8 points.

Ron George took a while to come down on the side of fracking, but also seems to foresee more of an “all-of-the-above” approach. Included in that was advocating a single-unit pilot project for offshore wind, despite the fact the bill he attempted unsuccessfully to amend, if passed, had a fiscal note which warned “State expenditures…increase minimally beginning in FY 2013 and significantly beginning in FY 2017 due to higher electricity prices.” Perhaps his view on this has evolved, however, as he did not offer the same amendment in 2013 and voted against O’Malley’s bill. As you’ll see below, he should get credit for weighing evidence.

But it’s difficult to reconcile George’s stance with his previous votes on the subject. Maybe he’s reached a level of satisfaction with the state’s regulations and if so he’s a little more for red tape than my taste would dictate; for that answer I need more guidance. At this point I’ll score him as a solid 4 of 8 points.

Charles Lollar stands with the rest of the Republicans on fracking, which is good. He also makes it sound like O’Malley’s wind folly would be terminated, which is great. But there’s one piece of the puzzle which troubles me greatly.

It’s noted in the Bethesda Now story, where Lollar was quoted as saying “charging someone a fee before they get appropriate services is wrong,” that the forum was intentionally held without a PEPCO representative present. Had Lollar studied the issue more carefully he would have known this rate increase was based on an executive order from Governor O’Malley, who touted the increase as “hardening” the electric grid. The idea is to accelerate the process of preparing the grid for major weather events, which may have been the point brought out by a PEPCO spokesperson had one been invited to the event.

One thing about being an elected official is that you generally hear all sides of the story as part of your duties in office. On the other hand, coming in without that experience means you have to work at the issue. On his front page, Charles claims his goal is to “bring together people of different political beliefs, talents and backgrounds to develop solutions to difficult problems.” Yet he attended a forum where a party to a dispute is sandbagged, and that’s disappointing.

It’s populism to pick on a utility without hearing their side of the story. So my question is whether “well regulated” for fracking will be determined by the hype or the facts. Based on this concern I can only give Charles 2.5 out of 8 points at this time.

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The next portion is something I would anticipate the candidates do quite well in: Second Amendment rights. I’m hoping to follow that up with a discussion of what the candidates would do about Obamacare, and for that answer I had to ask directly.

It’s also worth pointing out that this process would evolve. In his answer to my Obamacare question, Ron George elaborated a little on education so I believe I should add that portion in. It wouldn’t surprise me as the campaign rolls along that these pieces might be revised once or twice along the way; you should expect no less.

Where the boom is allowed to happen

This post starts out with a video. Watch it and then read what I say next.

Call it propaganda from oil company shills, but the fact remains: North Dakota leads the nation with the lowest unemployment rate – even better than Washington, D.C. They have 3% unemployment, which is 0.9% better than the next state on the list (Nebraska) and a full 3.8% better than Maryland’s number. The BLS also notes that “the largest over-the-year percentage increase in employment occurred in North Dakota (+6.8 percent).”

I will caution that fracking isn’t a panacea for all unemployment ills – Pennsylvania could eventually add over 200,000 jobs related to the energy industry by decade’s end but still has a higher overall unemployment rate than Maryland does.  Part of the reason for North Dakota’s success is that it really had few other job producers before energy companies invested heavily into the Bakken play; as one observer notes in the video it wasn’t all that long ago that young people left the area because no jobs were available.

And note that not all the jobs are directly related to energy extraction, with one entrepreneur featured in the video opening her own diner and others getting work from the surge in construction. Obviously that industry will mature as supply catches up to demand but there will be other needs which will eventually have to be addressed in a growing area.

Maryland has a small piece of the Marcellus Shale formation; unfortunately the state seems to be dragging its feet on allowing its exploitation. The two counties which would stand to most benefit, though – Allegany and Garrett – have unemployment rates just about the state average as of April, with both coming in just above 7 percent. Granted, we aren’t talking about a large population center – the two counties combined are just a shade larger than Wicomico County by itself and only a small fraction of Maryland’s overall population. But imagine the impact of 2,000 new jobs in that area – I’m not saying that would necessarily be the case with fracking but that’s certainly in the realm of possibility.

It can’t hurt, can it? Moreover, cheap and abundant energy can bring industry – unlike far-off North Dakota, the western edge of Maryland is within a day’s drive from a number of large markets because of its reasonable highway access. And their success would make life just a little easier on us in the rest of the state as Annapolis can have another source of income besides raising taxes. A rising tide lifts all boats.

Why should the barren, frigid wasteland of North Dakota have all the energy fun? Let’s open Maryland up for business.

Environmentalist doesn’t tell the whole story

A good friend of mine tipped me off to this op-ed in the Baltimore Sun from March 5 and encouraged me to write a rebuttal. The paper wouldn’t take it as an op-ed nor run a shortened version as a letter, so in the spirit of never letting good writing go to waste I’m posting it here.

As the energy industry has arrived in our state in hopes of extracting the natural gas which lies underneath in the Marcellus Shale formation, the term fracking has become part of our vocabulary. As a Maryland resident who has no stake in the energy industry, aside from my role as a consumer of those elements used to create the gasoline and electricity I need for my various jobs and the heating oil I use to heat my hot water and household, my main concerns are twofold: reliable energy which doesn’t cost me an arm and a leg. I suspect those concerns are shared by a vast majority of us.

The cost competitiveness and abundant supply of natural gas gives Americans a great asset, but only if we choose to take advantage of it. This choice, though, is one environmentalists want to frighten us away from because natural gas is not a renewable source. And it’s obvious that some people just can’t stand prosperity as a recent op-ed by Sierra Club executive director Michael Brune demonstrates.

In his piece Brune disparages the entire natural gas industry with a palette of half-truths and wild assumptions. But the bad news for Marylanders is that Brune seems to have the ear of Governor O’Malley. It’s obvious that both are only too happy to impact the coastal environment of the Atlantic as well as areas of western Maryland by building noisy, unreliable, and unsightly windmill farms because they’re perceived as the politically correct thing to do, but those tried and true methods of getting the energy and job creation our state desperately needs are unappealing to them.

And the allegations that Brune makes don’t stand up to scrutiny. For example, hydraulic fracturing has been used in more than one million oil and natural gas wells in the United States since the 1940s, and despite Brune’s strictly anecdotal reports to the contrary not one confirmed case of groundwater contamination stemming from fracturing has been documented, according to a recent University of Texas study. And regarding his shrill warnings about the dangers of piping the natural gas he fails to mention that natural gas is already piped to points across the country via a network spanning well over 300,000 miles nationwide – including almost 1,000 miles lying under Maryland and Washington, D.C. An existing pipeline already services the Cove Point LNG terminal!

One has to wonder why Brune isn’t telling you those facts I easily found with a little bit of research. Perhaps it’s because he wants us to “invest in” (read: subsidize with taxpayer dollars) sources like wind, solar, and geothermal, as well as emphasize energy efficiency. Most of us realize taxpayers can pump all the money we want into these sources but we can’t spend our way into making the wind blow just the right speed to make turbines work effectively all the time, nor can we compel the sun to shine 24 hours a day. Geothermal energy is more promising, but has a limited amount of effectiveness and also requires hazardous pipeline fluid chemicals to handle the wide temperature swings.

And while we should strive for cost-effective energy efficiency, it shouldn’t come with a price tag of reducing our standard of living. A shuttered coal plant is neither efficient nor a job producer, but it’s a badge of honor to a radical like Brune. For those placed out of work by the closure, though, it’s only their economic livelihood they’re losing. No doubt Brune and O’Malley would gladly “invest” government dollars into teaching them the skills needed for a non-existent “green” job.

Environmentalists could be taken more seriously and provide a better service to residents by not obfuscating their argument with scare tactics. Most people have the sense to know that fossil fuels won’t be around forever, but for the foreseeable future the market favors reliable sources of energy including natural gas. If you’re enjoying the current decline in natural gas prices and the resulting extra money in your pocket, you can thank hydraulic fracturing because it’s that decades-old “new” technology increasing supplies, driving down prices, and actually bringing back a discussion about helping our nation’s balance of trade by exporting natural gas.

Who would have ever thought we could beat OPEC at its own game? Let’s put Maryland to work building for the prosperity of tomorrow by making use of that which we have in abundance.

Odds and ends number 43

More of the small stuff you love! Let’s begin with this.

Up in the Second Congressional District, GOP candidate Larry Smith is challenging his four rivals to eight hour-long debates on various issues. But considering he has more to gain than two of his rivals (who serve in the Maryland General Assembly) that’s probably a pipe dream – not to mention they would likely be in session several nights a week.

But the key complaint Smith has is simpler: “This election should not be decided on who has the most insider endorsements, but rather who would be the best representative of the voters of the district.” All that is true, but if these debates were to come to pass I would hope that a conservative runs them, rather than the debacles we have seen with the GOP Presidential debates and their “gotcha” questions.

I wish Mr. Smith the best of luck in going to Washington.

Continue reading “Odds and ends number 43”

In print: Don’t put politics above security

This is a column I submitted to the Daily Times. A slightly longer version was submitted to another Maryland outlet.

In the 2011 session of the Maryland General Assembly, members of the House of Delegates tried and failed to get the Marcellus Shale Safe Drilling Act of 2011 through the legislature. Undaunted by that legislative defeat, in early June Gov. Martin O’Malley signed an executive order to study an oil and natural gas-field process called hydraulic fracturing, with a final report not required until August 2014. It’s a demand to study a process used in more than one million U.S. wells during the past 60 years.

In layman’s terms, “fracking,” as the procedure is better known, uses a solution forced into hard underground rock formations to create tiny fissures. The fissures allow energy resources — in Maryland’s case, natural gas — to be released and extracted.

(Continued at delmarvanow.com…)