Part 2 - Youth - Deploring fossil fuels are misguided and lack a mature understanding
Before writing this article reread from the Christian Bible’s new testament in the book of Matthew the Sermon on the Mount. It gave me pause, reflecting on recent energy events, talk about mixed messages and collision with reality.
In what context does current economic theory emphasis on the pursuit of profit and return to the shareholder merit primacy. Does supporting a helter-skelter energy policy reward excessive or wasteful consumption. What of the call and claim for US energy independence, are we any closer this July Fourth than in 1976? One could argue if we had a coordinated long-term energy policy structured on Natural gas and renewables it is achievable. However, the fixation on the short term, maintaining the political and economic status quo by vested players produces the many paradoxical “mixed messages” of this Independence Day. Several brief snapshots to illustrate.
Price of oil is fluctuating around $40 per barrel. Pre-covid-19 the Saudis leading OPEc limit their production raising price allowing US higher cost production to be profitable. With covid-19 they OPEC saw the opportunity to turn on the proverbial faucet and along with Russia flood the oil market with lower cost oil, now US shale oil producers have cut back production. The result the rig count in the oil shale fields went from 539 active in March to 165 this July 4th. Multiple exploration and production companies including Chesapeake are declaring bankruptcy. According to Reuters “Saudi Arabia, and Russia have to perform a balancing act as they push up oil prices to $50/bbl. to avoid encouraging a resurgence of rival U.S. shale production. Bloomberg reports bankrupt companies are rewarding senior management teams with bonuses. Some 35 executives are set to receive nearly $50 million dollars in extra pay.
Back in Texas, the state is acknowledging a high rate of natural gas venting and flaring (the deliberate burning off the gas into the atmosphere). Texas regularly allows companies to burn or vent gas in excess of regulations. It has issued more than 35,000 flaring permits since 2013 and has not denied any, according to the commission. Good news for shale gas producers in our area, that means less gas from the south in the pipelines and higher prices here. Last year in the Permian Basin flaring and venting totaled nearly 300 billion cubic feet.
Remember how the coal companies when they extracted the coal in our area, degraded water quality of many peoples water supply and the streams continue to run red. The coal companies are long gone and we the taxpayers are left with the cost of cleanup. A related issue in the gas and oil industry is abandoned wells. Well plugging costs are again making headlines. Yes, there is bonding in place but grossly insufficient to cover costs. Across the country it is hundreds of thousands of unconventional wells.
Reportedly more than 200 oil and gas companies have filed for bankruptcy since 2015. Old wells are to be plugged however, often they are abandoned, or “orphaned” but not plugged. Who will pay to plug? North Dakota regulators are currently seeking federal money to pay for hundreds of newly abandoned wells.
Back in Pennsylvania the Attorney General has released a Grand Jury report regarding the DEP and its inspection and regulating effectiveness over the shale gas industry. According to some it is scathing and proves the industry is under regulated and gets special treatment. Others view it as political grandstanding and not accurate. The plan is to dedicate an article to discussing the report and the opposite views.
In neighboring Ohio, the Columbus Dispatch reports the proposed cracker plant in Belmont Ohio, like the Shell facility here in PA in Beaver County is attracting negative press. A group of eight experts, economists, engineers, policy analysts, and policymakers have sent a letter to the governors of Ohio, Pennsylvania and West Virginia warning that the cracker plant will not bring a petrochemical jobs boom to Ohio.
A counter DOE report was issued by the Trump administration released on June 30, purporting a strong future for both petrochemicals and coal in the U.S. region of Appalachia. “There are tremendous opportunities on the horizon because of the shale gas revolution and the regions abundant coal reserves’, according to Mark Menezes the U.S. under secretary of energy.
On the wind side Royal Dutch Shell announced last week a major consortium of companies to bring major offshore wind farms off the coast of New Jersey and Maryland. Offshore is something that is in the DNA of Shell so says Etienne Deleroix director of Floating wind for Shell.
Watch for more fireworks. Masked or not, it seems fair to ask the question could there be a better way to manage our energy future. Further discussion is safely saved for another day.