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Bobby Hefner Basks in Gas Bonanza

By Kennedy Maize

Bobby Hefner, the doyen of deep gas, is back on the energy policy scene in a big way. That’s the only way Hefner has ever wanted to be seen: on a big canvas.

Back in the 1980s, Hefner’s Oklahoma-based GHK company was the prophet of natural gas finds way down below where anyone else had ever expected to drill, down to 24,000 feet. He raised a lot of money, had some success at high drilling costs, and landed in a lot of litigation.

Today, according to The Economist magazine, Hefner said he “feels vindicated.” That’s because the U.S. is awash in natural gas. “I used to say we were awash in gas,” Hefner told the magazine. “Now I say we are drowning in it.” The pessimism about U.S. gas reserves of couple of years ago has been replaced with bounding optimism.

For electric generators, the good news as 2009 rolls to an end is that natural gas – the cleanest, by any measure, of fossil fuels – has defied most predictions and has turned into a most plentiful producer of new, practical electricity. The most recent reports from the U.S. Energy Information Administration found natural gas prices at the Henry Hub at $2.76 per million BTU, an futures prices a the New York Mercantile Exchange September contracts were at $2.91 per MMBTU.

Bolstering the low gas price estimates – after a period in which analysts said natural gas would rise to track crude oil prices – the U.S. Potential Gas Committee issued a report that estimated U.S. reserves at 1.8 trillion cubic feet, the highest in the committee’s 44-year history. John Curtis of the Colorado School of Mines and head of the committee, said that the estimate “reaffirms the Committee’s conviction that abundant, recoverable natural gas resources exist within our borders, both onshore and offshore, in all types of reservoirs.”

The Potential Gas Committee is an independent, industry-funded institution that examines natural gas reserves in the U.S. Said Curtis, “Our knowledge of the geological endowment of technically recoverable gas continues to improve with each assessment. Furthermore, new and advanced exploration, well drilling and completion technologies are allowing us increasingly better access to domestic gas resources—especially ‘unconventional’ gas—which, not all that long ago, were considered impractical or uneconomical to pursue.”

In a press release, the gas committee noted, “When the PGC’s results are combined with the U.S. Department of Energy’s latest available determination of proved gas reserves, 238 Tcf as of year-end 2007, the United States has a total available future supply of 2,074 Tcf, an increase of 542 Tcf over the previous evaluation.”

So Bobby Hefner is ecstatic, although the future gas play appears to be in Devonian shale formations, not at incredible depths offshore, where Hefner made his mark.

The new gas forecasts have put the brakes on enthusiasm for new liquefied natural gas projects in the U.S. The gas glut means new LNG makes no sense in supplying a domestic market for either heating or power generation. Cambridge Energy Research Associates, long bullish on LNG, is backing off considerably, although its reports are not available to those unwilling pay large petrodollars to read them.

Meanwhile, in Canada, prospects of moving gas from the Peace River region of British Columbia to Vancouver have resulted in eco-terrorism. The Economist reports that there have been six bomb blasts since last fall attempting to disrupt the pipeline network that collects gas from the Dawson Creek area in the middle of the province along the Alberta border.

Dawson Creek, notes the magazine, is one of the hottest gas plays in North America, a shale area opened up by modern drilling technology, including horizontal drilling and hydrofracturing. “Nobody has been hurt and the damage has been minor, but the risk of a huge explosion is great,” said the magazine.

Health Care Counts for Obama, Energy Doesn’t

By Kennedy Maize

There’s a new debate developing about the politics of cap’n’trade v. health care: can the administration pass both health care legislation and climate legislation? Alternatively, would failure of the administration’s health care initiative, whatever it ultimately looks like, make passage of energy legislation more likely?

The proposition that health care defeat will push the administration’s energy agenda won support from Republicans in a op-ed summary in a recent edition of the Washington Post. Steven F. Haward and Kenneth P. Green, resident scholars at the American Enterprise Institute, wrote, “Ironically, the difficulties of passing health-care reform may boost the chances that cap-and-trade legislation is revived and passed by the Senate. President Obama and Hill Democrats are going to need a major legislative victory and a way to change the subject.”

To my mind, that’s partisan baloney. On the other had, the administration’s supporters predictably argue that the administration can accomplish both. I’m equally skeptical. I predict that the White House and the Democratic congress will push for health care at the expense of energy legislation, and be prepared to rise-or-fall on health care.

Democratic pollster Geoff Garin, in the same article in the Washington Post’s Sunday Outlook section, suggested that the White House can have its climate cake and eat its health care desert as well. Garin said, “Passing energy reform isn’t any tougher because of the battle over health care. There is broad public support for an energy reform policy that reduces carbon emissions and promotes increased reliance on alternative and renewable energy. Americans believe it is urgent that we end our dependence on oil, especially imported oil, and see the development of alternative energy as offering real potential to create the next generation of American jobs.”

Both the GOP and Democrats’ line of reasoning suggest that, if the health care reform fails, the administration will turn its efforts to its energy and climate legislation and try to force that through Congress.

I don’t buy either argument.

First, it strikes me that the administration has drawn the proverbial political line in the sand over health care. The White House (and most Democrats) will spend every bit of political capital they have over passing health care reform legislation (regardless of the details, including the ‘public option’). They have got to get this done to survive the 2010 mid-term elections. It is crucial.

As for climate legislation – cap’n’trade – it isn’t crucial. Climate isn’t an issue that touches most Americans in any deep way. They understand health care and health insurance. I suspect they don’t understand, and don’t care about, the global climate, as most polls have consistently shown over the past few years.

The climate issue appeals to environmental activists, largely because it provides a rationale for causes they long-ago adopted, such as shutting down coal-fired power plants. Many of them would be devastated if it turned out – and I believe it will – that global warming is not a major environmental problem, as it turned out in the 1970s than global cooling wasn’t a problem and it turned out in the 1990s that acid rain was overblown. The greens, for the most past, don’t fear global warming. They welcome it, they want it.

But most ordinary folks don’t care about whether the climate is warming or cooling – and the figures on both sides are miniscule and marginal to most minds. What the heck does 0.1 degree mean to the average Marylander? All the hand-wringing reports of catastrophes-in-waiting simply don’t register. Why should they?

Health insurance and health care strikes home. Costs of insurance are soaring, coverage is problematic, and rationing already exists at every level. (I don’t have much of a dog in this fight, as I’m covered by Medicare, and even if Congress and the administration make changes to Medicare, it will be for future enrollees, not us already-covered geezers.)

Global energy and environmental legislation will not determine the legacy of the Obama administration. Health care will, and I believe the administration understands that. So I believe the administration will put all of its political gunpowder behind health care, to the neglect of cap’n’trade.

If the administration loses on health care, it could lose on all of its other initiatives, including climate and energy. A loss on health care is existential. A loss on climate is marginal.

Global warming has been very, very good to me

By Kennedy Maize

God, I love global warming.

This spring and summer has been the coolest and wettest since we moved to our current western Maryland farm 20 years ago. My pastures are lush with clover, and we took our lambs to the butcher six-to-eight weeks earlier than normal. We raise 99% grass-fed lambs (a little bit of corn gets them to follow the bucket, since we don’t use sheep dogs). They put on weight this year like we’ve never seen before.

We had really wet conditions in April, May, and June. July was, typically, dry, but we got .5 inches of rain on the 22^nd and another .5 on the 24^th. That’s just unprecedented. August is typically the wettest month of the summer, largely because high temperatures induce thunder storms. Hard to tell whether that pattern will hold. But it doesn’t matter, because my lambs are in the freezer, not on the pasture.

So far this year, we’ve had four days that touched 90 (F). Often, we’ve had that many 90-degree days in April. July, August, and early September typically feature a lot of 90+ days. No so far.

My wife noticed on the Weather Channel (her favorite view) that some parts of Chile had seen snow this summer, a totally new experience this early (or late) in their season. Low temperatures are showing up around the globe, and NASA data indicates we haven’t seen warming in a decade.

Now, global warming evangelists will argue that you can’t extrapolate global data from local conditions. Weather isn’t climate. Fair enough, if they would follow the same rule. Hurricanes aren’t global conditions, nor are tornadoes, or other “extreme” weather events. But the warming advocates are quick to jump on those local phenomena, claiming, against all evidence, that global warming is producing extreme weather. That’s simply bogus.

Golly, does the truth of global climate mean we don’t have ways to scare folks about what’s happening locally into policies that aim to affect global political action? Maybe that undercuts the decades-old environmental credo of “think globally, act locally.”

Some 15 years ago, I wrote a commentary for Electricity Daily, titled “Global Warming Got Your Dog,” taking the greens to task for claiming that every untoward weather event showed the hand of man in pumping CO2 emissions. I got a whiny response from my friend Ralph Cavanagh of NRDC, denying that mainstream environmental groups were making such claims.

Sorry, Ralph, but I called the trend correctly. The greens, including NRDC, were soon attributing virtually every extreme weather event to man-made gloabal warming. Indeed, the politically-correct term is no longer global warming, but “climate change.” The new term encompasses anything one wants: too much rain, too little rain; too warm, too cool; too much snow, not enough snow. It’s all man-made “climate change,” as if the climate hasn’t and doesn’t continually change in ways chaotic, regardless of the works of man at the margin.

In that regard, a recent article by two Aussie scientists and a Kiwi in the Journal of Geophysical Research – highlighted by Marc Morano of Climatedepot.com – provides strong evidence that most of the variation of global temperatures in the past 50 years has an entirely natural explanation: the El Nino Southern Oscillation, also known as ENSO. It’s a powerful article, although difficult for laymen to parse. The journal is published by the American Geophysical Union, and articles are peer-reviewed.

Skepticism about the now-conventional wisdom of global warming appears to me to be growing. The New York Times has published several articles recently about sunspot activity and the possible link to the Earth’s climate, most recently on July 20. Man-made global warming skeptics have long argued that Earth’s climate fluctuates within the 11-year sunspot cycle. We are currently in a very limp sunspot period, which may explain why global temperatures haven’t gone up for the past decade. The Times’s excellent science blogger, John Tierney, has long provided a platform for skeptics (aka “deniers”) to make our case. Tierney hasn’t taken a stand. He’s merely provided a platform. Good for him.

Meanwhile, the Obama administration had to pull out all the stops to win House approval for the Waxman-Markey climate change (and all kinds of other stuff) bill, 219-212.

The prospects for passage in the Senate may be slim. Nebraska Republican Sen. Mike Johanns, former secretary of agriculture in the George W. Bush administration, predicted that the cap-and-trade legislation won’t pass in the Senate, because it will hurt farmers, a potent lobby in Washington.

For those of us daring enough to bring up global warming in our conversations with friends and acquaintances (I do this a lot at picnics and pig roasts, and suffer slings and arrows of uninformed animus), the Marshall Institute has published a useful pamphlet – “The Cocktail Conversation Guide to Global Warming.” If you are bold enough to broach the topic with friends and acquaintences, read this. If you aren’t willing to talk about the issue, fearing fisticuffs, print the pamphlet and distribute copies during the party.

Finally, if what I’ve experienced in the past year is global warming (and, clearly, neither I nor anyone else has a clue about that, although I doubt it) I say: bring it on. I’d like to finance bumper stickers that say: “Burn more coal. Warm the Earth.”

‘Geoengineering’ the Warming Response?

By Kennedy Maize

I’ve been reading a lot lately about “geoengineering,” aka “climate engineering,” as a way to deal with global warming, instead of a cumbersome, bureaucratic international command-and-control regime, or a cap-and-trade mechanism. This is intriguing.

I suspect this engineering approach is another policy dead end, but it is worth contemplating and discussing. Ultimately, it looks like geoengineering is pie-in-the-sky in terms of what it can accomplish and what it will cost. But there will be major R&D expenditures, mostly from the U.S. Department of Energy, to examine the technologies.

John Tierney, the estimable science writer and blogger at the New York Times, has looked at the issue recently. My colleague Robert Marritz recent connected with an engineer, who provided a very thorough primer on geoengineeringing. My view is that Tierney is the best science writer in the US, and he’s the gold standard for subjecting various claims to hard-nosed scrutiny.

Is “geoengineering” or “climate engineering” the solution to global warming? Who knows? There are plenty of reasons to prefer hard science – engineering – to the known flaws of international political regulation. Al Gore’s Kyoto Protocol was, by any definition, a failure. There are good reasons to believe that any kind of regulatory follow-on, when the world convenes in Denmark in December, will be a fallacy of regulatory fantasy-land.

But is hard engineering – spraying the atmosphere with sulfates, inoculating the oceans with iron, and so forth – a viable alternative? Several national and international groups are looking at the issue, and I suspect they will come up with inconclusive results.

Should the U.S. or international bodies decide to seriously examine engineering approaches to climate change, I suspect they will confront the need to conduct environmental impact statements such as have never been seen before. Recent analyses of engineered approaches to climate change have simply ignored the costs – in time and money – of required environmental impact analyses.

All this reminds me of Edward Teller’s ambitious attempts in the 1960s to use H-bombs to rearrange the landscape to meet the needs of mankind. Teller posited the ability to dig new harbors in Alaska, create gas storage in Pennsylvania, and dig a new, sea-level Atlantic-to-Pacific canal in Panama. He believed he could control the radiation from the blasts. It was the “Plowshares” project, turning nuclear swords into civilian plowshares.

Teller was wrong at every incidence, and managed to violate some international treaties along the way. In the end, he accomplished nothing. He then went on to advocate his “Starwars” space-based missile defense plan, another technical dead end. The Reagan administration bought it, but it ultimately failed to meet the tests of practicality.

Engineers and scientists are noted for technological hubris. Maybe geoengineers can tweak the climate through various large-scale chemical and physical projects. Maybe not. I’d bet on not.

For me, a global warming skeptic, I oppose any big measures – physical or governmental – to try to regulate the climate. I advocate adaptation, the least-cost approach to climate mitigation.

There is no question that the climate is changing. It always has and always will. The contribution of mankind to the change is trivial. So the policy choice is, to my mind, pretty simple: adapt or spend. There is plenty of time for adaptation, and mankind (and biokind) has demonstrated for thousands and thousands of years, that it can adapt to climate change.

So let’s adapt, rather than spend and bend our economies and twist our foreign relations to a non-problem that allegedly faces the world. Let’s get real.

When Congress Comes Marching Home Again

By Kennedy Maize

When Congress comes back to D.C. after Labor Day, it will face important strategic decisions, as will the Obama administration and the Democratic leadership. In particular, they will face the decision whether to focus on health care legislation or energy policy.

I’m betting heavily on health care. I suspect that the administration’s plan for a cap-and-trade bill to take to the December Copenhagen global warming contentious and cantankerous climate confab will have vanished. Passed the House and now passe.

On so many issues — chief among them energy and health care — the administration has deferred to the Congress to craft the details. In the House, this has given House Speaker Nancy Pelosi (D-Calif.), one of the most liberal and least likely to compromise Democratic leaders, the reins in driving legislation. That’s probably been a mistake.

The deference to Pelosi has led to Obama legislative successes that may undermine his future legislative agenda, particularly on energy. Pelosi (and her House Energy and Commerce Committee chairman Henry Waxman (D-Calif.) colleague) were able to bend arms and promise so many future goodies so that the House narrowly passed — 219-212 — a totally incoherent bill. Even the greenest of greens (NASA’s Jim Hansen) acknowledge the House bill won’t work.

In the meantime, the Senate has given no indications of where it will go on energy legislation, despite the dominating position of Sen. Barbara Boxer (D-Calif.) as chairman of the Senate Environment and Public Works Committee. Boxer, a green ditz of the California persuasion, has a problem: coal interests are far more formidable in the Senate than the in House.

Senate coal interests, which are bipartisan and regional, are likely to tie the Senate into political knots in September, as the Obama administration loses interest in its cap-and-trade program in order to focus on rescuing its health care initiatives. Republicans — specifically Sen. Jim DeMint of South Carolina — have proclaimed health care Obama’s signature battle.

DeMint calls it Obama’s “Waterloo,” a reference to the 1815 battle between Napolean Bonaparte’s French forces and the British military, in Belgium. The result ended the reign of the Emperor Bonaparte. DeMint clearly wants to end the reign of Obama, to be accomplished in a partisan battle on the ground of public opinion.

It’s clear that the Congressional Republican have staked out health care legislation as their bulwark. Is that wise? I don’t know. I suspect it is an error, as most Americans seem to believe that their health care is deficient. Polling shows that some 70% of Americans favor a single-payer health care plan, although I doubt they know, and I don’t, what that means exactly.

On the other hand, the Democrats appear to have missed the best way to advocate their health care cause. They have concentrated on the folks who do not have access to health insurance — a clearly worthy minority — instead of the vast majority of citizens who have health insurance and are seeing their costs go up year-after-year with no understandable improvements in care.

But that’s not my area of expertise (I’m covered by Medicare. I have my socialized medicine, and like it, so I don’t have a health-care dog in this policy hunt).

But I suspect that what this means is that when Congress returns in September to wrap up is work prior to adjourning until 2010, the focus will be on health care legislation, not the 1,400-word House-passed energy bill.

Arguably, the Obama administration bit off far too much policy meat that it can chew in the first few months in Washington. That’s understandable. The conventional political wisdom is that new administrations need to move quickly, before their alleged mandate expires. That appears to be what has driven the Obama administration.

But it’s possible to be too ambitious. That may hasve happened to the Obama White House. They pushed enormous economic bailout programs — surely needed — through Congress. They advanced big-ticket and pork-laded energy legislation in the House — driven by Speaker Pelosi and unconnected to true national needs. Then they unveiled a top-to-bottom overhaul of U.S. health financing policy, which probably should have gone ahead of their incoherent energy plan.

As best I can tell, talking off-the-record to Obama officials and advisers, they will put their political capital behind health care when Congress returns in September. “Energy legislation is a sideshow,” one said. “This administration could rise or fall on health care. That’s the existential fight.”

Zito, Gretzky, and Renewables

By Kennedy Maize

The Wall Street Journal’s estimable environmental and energy blogger Keith Johnson reports that the Sun Day Campaign, a solar advocacy group, claims that renewable energy has topped nuclear energy in the total U.S. energy mix.

Misleading math prestidigitation, as Johnson points out.

One way to describe this is “hoax.” Another phrase is “intellectually dishonest.” I prefer the second, as I don’t believe these folks are perpetrating what they believe is false information. I believe they are pushing information that they haven’t examined, and don’t want to examine, or perhaps are incapable of examining, for its veracity.

The sun worshipers point to U.S. Energy Information Administration data that purports to show that renewables in April 2009 “exceeded the amount contributed by nuclear power” to total U.S. energy production. Buzz, buzz, buzz. Time out.

As Johnson notices, that figure includes both electric generation and fuels used for transportation – cars, and trucks and airplanes, etc., which are scored against electric-generating nukes. We’re talking apples and hand grenades here.

Of course, nukes don’t generate transportation fuels, as the sun devotees ought to know. Some renewables – notably ethanol, now required to be blended at 10% will all U.S. gasolines supples – are part of transportation fuels, whether that make anything other than political sense or not. On the renewables side, the scoring also includes hydroelectric generation, which is verboten among most clean greens, but not by the more level-headed analysts at EIA.

Johnson observed, on the money, that “adding the total energy contribution of things like hydropower, wind power, and biofuels and comparing it to nuclear power is a little like celebrating the fact that Barry Zito has won more Cy Young awards than Wayne Gretzky.” For the sports-impaired among our readers, Barry Zito is a terrific baseball pitcher, and the Cy Young Award is the top award for pitchers. Wayne Gretzky is the greatest hockey player of all time. He’s never thrown a pitch in a major league baseball game.

The Sun Day campaign has been around since 1992, based in Takoma Park, Md. (which some refer to as the People’s Republic of Takoma Park, as it once declared itself a “nuclear free-zone” and also once launched a plan to capture rogue rats in “have-a-heart” traps and exile them to the Maryland suburbs). The Sun Day organization’s stated goals begin with: “phase out the use of nuclear power;” suggesting that it is more interested in killing nukes than promoting solar. So be it.

The group’s further policy advocacies: “eliminate the need for oil, natural gas, and other energy imports, stabilize climate change by reducing greenhouse gas emissions by 60-80%; and enhance national security, provide good-quality jobs, and improve environmental and public health” These do not mention solar power, so it appears reasonable to question what the sun has to do with the “Sun Day” organization. Strangely, given its other statements, the group does not mention coal. Do they assume that coal is simply off the table to start with?

Nevermind. Not politically correct.

It’s indisputable that nuclear power plants, as the WSJ Johnson blog observes, generate about 20% of U.S. electricity efficiently and with a safety record at least as good as coal and natural gas, which also have very low injury and fatality rates. Renewable energy resources also have very low worker safety problems. The electric generating industry has long known about its risks to workers, and has done a great job of dealing with worker safety.

As for the contribution of renewables to the energy mix, there is a lot of a fudging and finagling of data. Many greens don’t want to count big hydro as renewable energy. But, according to EIA figures, of the 10% that renewable electricity that makes up in the U.S. renewable energy electricity contribution, most of that (70%) is big hydro. So only a tiny increment consists of wind and solar and geothermal and biomass (this is something those of us who have followed the issue for many years have known, but it doesn’t get much attention).

The WSJ’s Johnson says, quite correctly, “For all the buzz” about renewable electricity generation, “it’s still a minnow – accounting for 0.015% of American electricity generation so far this year.” That means that small increments of increase look like major percentage jumps. The increases are often what gets reported, and it’s difficult for uninformed readers, listeners, or viewers, to understand. A major percentage jump of a very minor share of the market doesn’t represent very much at the end of the energy day.

According to many analysts, scoping out the current economy, the market share for renewables in the rest of the year could decline, not grow. Financing costs of new renewables and transmission infrastructure – mostly for wind – are daunting and the price of natural gas is declining. That’s why Boone Pickens has scrapped his highly-touted wind and natural gas plan, and is looking for a fire sale for the $2 billion in wind turbines he has on order.

On the other hand, nuclear generation isn’t likely to grow either. The financial costs of new nuclear power are overwhelming (see my colleague Bob Peltier’s blog at MasterRecources), and the government doesn’t look like it will step in to guarantee financing. The loan guarantees in the 2005 Energy Policy Act have proven chimerical.

So the only growth in generating capacity is likely to be in backup power, and that means gas peaking generation. Welcome to the late 20^th century. In the words of the great American philosopher Yogi Berra, “it’s déjà vu all over again.”

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Bobby Hefner Basks in Gas Bonanza

Health Care Counts for Obama, Energy Doesn’t

Global warming has been very, very good to me

‘Geoengineering’ the Warming Response?

When Congress Comes Marching Home Again

Zito, Gretzky, and Renewables

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