Cheap natural gas upsetting wind development plans, and other energy stories

Michael Giberson

Energy stories from around the web.

  1. Financial Times, Gas threat to wind farm growth – “Construction of new wind farms in the US is set to decline next year because of competition from cheap natural gas for power generation, the country’s largest developer of new wind power projects has said.”
  2. Greentech grid, California ISO opens new high-tech control room - “We partnered with Google and we went from your typical map board made of plastic tiles, with digital readouts, to an 81-foot video display wall.”
  3. Reuters, “Japan eyeing plan for solar panels on all new buildings-Nikkei” – Japan may this week announce proposal to require all new buildings to have solar PV panels by 2030.
  4. San Antonio Express-News, “Eagle Ford’s calling card: help wanted” – Fracking not just for natural gas. Oil from shale big in South Texas. “But drilling in the Eagle Ford, a 400-mile-long formation stretching from East Texas to Webb County, has touched off a hiring frenzy in South Texas that is generating thousands of jobs. Now, drilling is moving so swiftly that the scramble for workers has caught some short.”
  5. Houston Chronicle, “Nat gas feud pits prosperous N. Texans against energy industry” – Oil and gas wells not always the best of neighbors.
  6. Reuters, “Chesapeake handed record fine for Pennsylvania gas drilling” – The company was fined a total of $1.1 million for problems at two sites in Southwestern Pennsylvania: $900,000 for seepage from non-shale shallow gas formations due to a poorly-done well casing and cementing job, and $188,000 for violations associated with a fire that injured 3 workers. (See also this Associated Press story.)
  7. Houston Chronicle reporter Richard Dunham, “Why Washington is no help at the pump” – Dunham says “politics as usual” is causing Washington to be of no help in solving our energy problems. (My view: For the most part we’d be better off without Washington trying to “help” consumers. If politics-as-usual is keeping Washington out of the energy business, that is probably a good thing.)
  8. William O’Keefe at the FuelFix blog, “3 Myths About Breaking U.S. Oil Habit” – Counter to some prevailing wisdom (while at the same time affirming popular views held by others) about climate change, energy independence, and resource scarcity.
  9. The Hill’s E2-Wire, “Greens, industry draw battle lines in fight over oil pipeline” – More on the political maneuvering surrounding the Keystone XL pipelines. Environmentalists are mostly opposed to the pipeline since it will mostly be supplied from the Alberta tar sands, and environmentalists are mostly opposed to tar sands development.
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4 thoughts on “Cheap natural gas upsetting wind development plans, and other energy stories

  1. The story continues to mutate far faster than punditry can.

    “As Natural Gas Prices Fall, the Search Turns to Oil” By Daniel Gilbert in the Wall Street Journal on May 23, 2011 at p A2.
    http://online.wsj.com/article/SB10001424052748704816604576333550564888220.html

    “In the past few years, a glut of natural gas has driven down the price to half the 2008 average—a level where it costs a U.S. consumer $2.75 a day to meet a home’s natural-gas needs, according to the American Gas Association. … Natural gas now costs roughly the same as its energy equivalent in coal and a quarter of its energy equivalent in oil.

    * * *

    “Companies use the same type of rig to drill for oil or gas, and allocate equipment according to which fuel is more profitable to produce. The number of land rigs in the U.S. drilling for natural gas is down 8% from a year ago, while oilrigs are up 81%, according to oilfield-service company Baker Hughes, Inc. In April, companies reported more rigs drilling for oil than gas for the first time since 1995, underscoring how oil’s profit margins have fattened.”

  2. Obviously makes a lot of sense to shift to oil if you have or can get a place to drill, the price of oil is about 24X the price of gas. For comparison, the oil price was typically somewhere around 10X the price of gas or less until a year or so ago. Much of the recent new drilling for gas is simply needed to hold a lease signed 2 or 3 years ago (typically if you don’t develop within a fixed time frame the lease will expire and the company loses out on any bonus payments and other up front costs).

  3. “Facing Up to End of ‘Easy Oil’” By Ben Casselman in the Wall Street Journal on May 24, 2011
    http://online.wsj.com/article/SB10001424052748704436004576299421455133398.html

    Saudi Arabia became the world’s top oil producer by tapping its vast reserves of easy-to-drill, high-quality light oil. But as demand for energy grows and fields of “easy oil” around the world start to dry up, the Saudis are turning to a much tougher source: the billions of barrels of heavy oil trapped beneath the desert. Heavy oil, which can be as thick as molasses, is harder to get out of the ground than light oil and costs more to refine into gasoline. …

    That the Saudis are even considering such a project shows how difficult and costly it is becoming to slake the world’s thirst for oil. It also suggests that even the Saudis may not be able to boost production quickly in the future if demand rises unexpectedly. Neither issue bodes well for the return of cheap oil over the long term.

    “The easy oil is coming to an end,” says Alex Munton, a Middle East analyst for the Scottish energy consulting firm Wood Mackenzie. The major oil fields in the Gulf region, he says, have pumped more than half their oil—the point at which production traditionally begins to decline.

    The U.S. Energy Information Administration said earlier this month that world-wide oil consumption would hit a record 88 million barrels a day this year. …

    The U.S. Geological Survey estimates there are some three trillion barrels of heavy oil in the world, about 100 years of global consumption at current levels. …

    “When people talk about how we’re ‘running out of oil,’ they’re not counting the heavy oil,” says Amy Myers Jaffe, who runs the Energy Forum at Rice University’s Baker Institute for Public Policy in Houston. “There’s a huge amount of resource there…It’s just a question of developing the technology.”

  4. “EPA Administrator Confirms: No fracking water contamination” posted at 2:30 pm on May 25, 2011 by Tina Korbe
    http://hotair.com/archives/2011/05/25/video-epa-administrator-confirms-no-fracking-water-contamination/

    At a U.S. House Oversight Committee hearing yesterday, President Barack Obama’s EPA administrator, Lisa Jackson, admitted the environmental risk of hydraulic fracturing is practically nonexistent.

    “I’m not aware of any proven case where the fracking process itself has affected water, although there are investigations ongoing,” she said.

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