Energy roundup

By Kennedy Maize

Having just returned from three weeks of vacation, where I paid no attention to power issues, here are some items I’ve discovered since my return. I hope my take will spark some conversations.

First, “Climategate.” This flap of major proportions, threatening to unravel the alleged scientific consensus behind global warming, blew up while I was gone. My email queue was filled with messages about it when I returned.

What to make of the apparent scientific fakery behind the work of the climate scientists? My recommendation is to read Bob Peltier’s commentary in the current issue of Coal Power magazine. He paints the problems the revelations of the UK’s Climate Research Unit quite lucidly, and predicts, I think accurately, that the action will also move to the U.S.

Global warming evangelists are, predictably, trying to downplay the messages depicting the massaging of the scientific data. “No big deal,” they claim. “Science is messy. Beside that, the National Academy of Sciences vetted the work in 2006 and found it valid.”

No quite. I covered the 2006 NAS report, and it was not a clean bill of scientific health for the climate hysterics. As the emails discuss, one of the issues facing the scientists working with Michael Mann to built the “hockey stick” curve was how to deal with anomalies. Tree-ring data indicate that 1,000 AD was hotter than today, with no significant man-made carbon dioxide emissions. So the scientists manipulated the data to hide the inconvenient truth.

The academy said in “Surface Temperature Reconstruction for the Last 2,000 Years” (ISBN: 978-309-10225-4) that there is pretty good data for the temperature of the planet from the past 400 years. “Less confidence can be placed in large-scale surface temperature reconstructions for the period from AD 900 to 1600, although available proxy evidence indicates that temperatures at many, but not all, individual locations were higher during the past 25 years than during any period of comparable length since AD 900,” said the NAS report.

The scientific solons added, “Very little confidence can be assigned to statements concerning the hemispheric mean or global mean surface temperature prior to about AD 900, primarily because of the scarcity of precisely dated proxy evidence.”

Next, smart meters. Matt Wald in the New York Times Dec. 14 reported that smart meters are prompting consumer revulsion and revolution. “Consumers in California are in open revolt, and officials in Connecticut and Texas are questioning whether the rush to install meters benefits the public.”

In California, Pacific Gas & Electric has installed 4 million smart meters and plans another 6 million in the next three years. One part of the problem is that the utility bills the customers immediately in rates – at about $220 per meter – but any real customer savings from the technology are years away. The only immediate savings flow to the utility, as the meters allow remote reading, cutting costs. For consumers, the meters alert the utility when a customer has lost power.

Wald’s report notes that Connecticut Attorney General Richard Blumenthal has convinced state utility regulators and Connecticut Light & Power to run a pilot program before a widespread roll-out of smart meters. In Texas, the Office of Public Utility Council, a state consumer-protection agency, persuaded the state’s utilities to mount a multi-million dollar education program on advanced meters.

Will the revolt against smart meters spread? Stay tuned. My guess is that it will.

Finally, more on the subject of shale gas. The news is that oil-and-gas giant ExxonMobil is buying natural gas company XTO Energy for $31 billion in stock and assumption of $10 billion of XTO debt.

Based in Fort Worth, Texas, XTO has become a major player in both the Barnett shale reserves in Texas, and the Marcellus shale formation in Appalachia. The company says Appalachia will be a major focus of its production in 2010 and beyond.

I’d look for more M&A action in oil and gas in coming months, as shale gas continues to be the hottest play on the planet. Big oil has the resources to gobble up independent gas companies. I’d look for a bidding war for Chesapeake Energy, a major player in Appalachia and the Marcellus shale.