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Friday, July 25, 2014

Oh, the irony.

A study released yesterday by the Center for Strategic and International Studies and Rhodium Group finds that the EPA’s plan to cut carbon pollution from power plants – part of President Obama’s Climate Change Action Plan - could make Pennsylvania an economic winner.

Remaking American Power: The Economic and Energy Impacts of Power Plant Emissions Standards looked at the impact of EPA’s draft carbon rule, which seeks a 30% reduction in carbon emissions nationwide by 2030 based on 2005 emissions levels. The rule would encourage utility companies to switch from burning coal to natural gas.

According to this New York Times story, the study concludes that EPA’s proposed rule: 
…would cut demand for electricity from coal — the nation’s largest source of carbon pollution — but create robust new demand for natural gas, which has just half the carbon footprint of coal. It found that the demand for natural gas would, in turn, drive job creation, corporate revenue and government royalties in states that produce it…
States that produce both coal and natural gas, such as Pennsylvania, would experience an economic trade-off as diminished coal production was replaced by new natural gas production.

Can Pennsylvania be an economic winner under the EPA’s rule? Undoubtedly yes. And a big one at that.  However, current Pennsylvania Governor Tom Corbett is a climate change denier whose policies have caused the state to fail to benefit fully from the resource boom, and who - by opposing the EPA rule - cements the state’s unenviable position as an economic loser

Thursday, July 24, 2014

Update: Oil, gas development in PA contaminated water supplies 243 times since 2007

See update at the bottom of this post.

This Pittsburgh Post-Gazette story by Laura Legere is a must-read. It reports that Pennsylvania state records show that oil and gas operations have damaged water supplies 209 times since the end of 2007, affecting 77 communities.

The story notes that "the number of impacts is small relative to the number of new oil and gas wells drilled during the same time period – nearly 20,000, according to DEP records." That's an overall rate of about 1 percent.

The total obviously includes conventional oil and gas wells, in additional to unconventional ones. According to MarcellusGas.org8,478 unconventional wells have been drilled or are under development. 

So, this overview begs some questions - other than an obvious one about why this information has never been made publicly available before.

How many of the 209 contamination cases were related to conventional gas development? Unconventional? Is one type more problematic than the other?

Is there any relation between the culprit wells and proximity to contaminated water supplies?  And what does that say about current setback and water testing requirements?

Is any level of contamination "acceptable"?  I doubt anyone living in those 77 affected communities would think so.  And neither should regulators nor the industry.

To be sure, Pennsylvania needs to regulate private water wells.  It's one of only two states that doesn't.  But some forensic analysis of DEP's data is in order to answer these - and I'm sure other - questions.

August 29, 2014 update: The Wall Street Journal reports today that DEP has released some details - there are heavy redactions, from a quick eyeballing of some of the linked info - of what are now 243 cases of contamination. The info is posted here.

Wednesday, July 23, 2014

Talking past each other

Replacing oil and coal with shale gas will not cut greenhouse gas emissions, study finds,” says the headline describing a new study by Cornell University researcher Robert Howarth that was published in the journal Energy Science & Engineering.

Then, there’s this blog by David Hone, Climate Change Advisor for Shell that describes – accurately, I think – the importance of time horizons when looking at the serious impacts of methane on climate disruption.

Howarth has consistently demonized gas in his work - which, to give him credit, first raised the essential importance of methane emissions.  Hone appears to suggest that either we limit CO2 emissions, or we focus on methane, but not both.

Neither, in my view, are totally correct.

Howarth blurs the essential question of time horizons and methane emissions that Hone clearly explains.  Horwath also ignores the fact that methane emissions can be minimized with tough regulations and monitoring – neither of which we have yet, but can get to with the right political will.

Hone presents a false choice.  We can -  and must – limit both CO2 and methane emissions.  Now.   

Numerous studies – including the latest one published in the Proceedings of the National Academy of Sciences - find that shale gas burned to make electricity emits half the carbon of coal.  We must seize this opportunity to turn off coal while strongly regulating methane emissions from natgas production and distribution. But that’s not enough to spare us from the worst impacts of climate disruption, and the realities of global coal use.  CCUS is essential for all fossil-fueled electricity.

Can we accomplish all of that? Or will we continue to talk past each other on the existential question of climate disruption?

Tuesday, July 22, 2014

Production and profits on the rise in Marcellus, Utica shales

A new report by ICF International, a provider of consulting and technology services to government and private industry, projects huge increases in natural gas production from the Marcellus and Utica shales. That production is already at record-setting levels in Pennsylvania.
ICF’s report finds that gas production for the Marcellus and Utica shale plays is projected to grow by 36%, from 25 bcf per day in the first quarter of this year to 34 billion cubic feet per day by 2035. Production growth from the Utica wells has been much greater than anticipated and more growth is expected, ICF says.

The reason for this huge growth is improvements in drilling and hydraulic fracturing technology. Longer horizontal laterals, more fracture stages, closer later spacing, and increases in wells drilled per rig continue to increase estimated ultimate recovery per well, which is up 19% in the last quarter alone in the Marcellus and 32% in the Utica.

Exploration and production companies that extract natural gas from the Marcellus Shale will benefit more than natural gas producers elsewhere in North America, even if gas prices weaken, Moody's Investors Services said in a recent report.
The low-cost, highly productive wells of the Marcellus will continue to be economic, said Moody's associate analyst Michael Sabella, author of the study. "Technological advancements since the early 2000s have allowed US natural gas producers to reshape the industry largely through the development of the Marcellus," he said. "The Marcellus has emerged as one of the most profitable regions in the US for producing natural gas," he said, noting that "even if prices return to the weak levels of 2012, producers there will be rewarded."
…As takeaway capacity constraints ease, the performance of the producers should improve…"Pipeline reversals and exports of liquefied natural gas will create additional investment opportunities for Marcellus producers, even while offering only marginal benefits for gas producers outside the region," Sabella said. "Marcellus producers will remain competitive in the fledgling US LNG industry, and production growth will receive another boost once these projects come online."
Drilling support companies are doing pretty well, too

And still, Pennsylvania has no severance tax, and aims low on regulation and economic growth.