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Posts from — June 2012

America’s Bounty vs. Federal Frac Rules: Will We Lead or Lag the World?

Articles on this blog have consistently made the point that shale gas in the U.S. represents an unprecedented pathway to abundant, low-cost, clean energy supplies. In previous posts it was noted that unconventional gas resources, combined with new production technologies, could potentially break the global oil-natural gas price bond, just as has happened in the U.S.

Shale gas is now subject to active exploration in England, Australia, Poland, Ukraine, China, India, and to a lesser extent, South America. Canada has already moved to the development stage with its shale formations in British Columbia (Montney and Horn River). Mexico shares the prolific Eagle Ford shale formation with Texas, but its state-owned PEMEX has done little to develop that resource yet.

Other nations have rejected the gift of unconventional gas. Romania and Bulgaria, both heavily dependent on Russian gas, have said “no” to shale gas production, as has France. [1]

Even with the dropouts and the laggards the International Energy Agency (IEA) sees unconventional gas comprising more than 30% of total world gas output, up from today’s 11%, by 2035:

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Source: IEA, “WEO 2012 Golden Rules Report, Table 2.4

However, IEA stresses the need to adhere to its ‘Golden Rules” so as to achieve the golden age of gas. [Read more →]

June 29, 2012   No Comments

Ignored Science, Neglected Economics: D.C. Circuit Upholds EPA Greenhouse Gas Rules

“The United States Court of Appeals for the D.C. Circuit issued a decision affirming EPA’s first round of greenhouse gas (GHG) regulations in all respects.”

Last year, I outlined  the case being made against the EPA’s issuance of greenhouse gas (GHG) emissions regulations. The case was being brought before the Washington D.C. Circuit Court of Appeals by a group of petitioners which have become collectively known as the Coalition for Responsible Regulation, and made up of large number of businesses, business associations and several states. The petitioners argued on several different grounds that the EPA was wrong in the way that it determined that GHGs were an endangerment to the public health and welfare as well as in the manner in which it was going about issuing regulations.

Earlier this week, the Court handed down its decision—a unanimous finding in support of the EPA on virtually all counts. This was very disappointing. For starters, there are at least two major points of science where the Court went terribly astray. The first deals with whether or not the EPA had to consider such things such as adaptation when making its endangerment finding. And the second deals with whether or not the EPA was “reasonable” in its consideration of the science of climate change.

In the first case, the Court decided that such considerations were not part and parcel of what the EPA had to take into account when determining whether or not greenhouse gas emissions may “reasonably be anticipated to endanger public health or welfare.” From the Court’s decision:

The additional exercises State and Industry Petitioners would have EPA undertake—e.g., performing a cost-benefit analysis for greenhouse gases, gauging the effectiveness of whatever emission standards EPA would enact to limit greenhouse gases, and predicting society’s adaptive response to the dangers or harms caused by climate change—do not inform the “scientific judgment” that § 202(a)(1) requires of EPA.

And the Court further deferred to the EPA on the issue:

As EPA stated in the Endangerment Finding, such inquiries “muddle the rather straightforward scientific judgment about whether there may be endangerment by throwing the potential impact of responding to the danger into the initial question.”

But both the Court and the EPA fail to consider that gauging “public health and welfare” is not strictly a matter of “straightforward scientific judgment.” In fact, human adaptation is an integral part of “public health and welfare.” Public health and welfare grows out of the human response to environmental factors, and cannot be judged in isolation as the EPA and the Court seem to think. You cannot remove the human adaptive response in assessing the impact of an environmental change. If you were to do so, humans would have gone extinct hundreds of thousands of years ago. In fact, our survival and conquest of all climates of the earth grows directly out of our adaptive nature. It is part of us. The Court errs in its opinion otherwise.

A full consideration of human adaptive response is a necessary part of any assessment of the potential human impact of climate change. And, as I have pointed out previously, it is likely that public health and welfare may improve under at least some aspects of a global warming.

Secondly, the Court errs when it considers the EPA consideration of the science of climate change “reasonable.” The IPCC, USGCRP, and NRC assessment reports are neither independent of each other, nor particularly transparent and fair. They are geared towards implicating human GHG emissions in virtually all manner of climate and climate change—despite a large body of scientific evidence that points to other influences, many of them of human origin but unrelated to GHG emissions (such as landscape changes, large-scale irrigation, aerosol emissions) that produce a climate change signal that is quite similar to that anticipated by climate models run under increases in GHG emissions.

And such evidence continues to grow. The Court contends that “EPA is not required to re-prove the existence of the atom every time it approaches a scientific question” but the science of climate change is not at the same stage in its evolution as is the science of the existence of the atom. Instead climate science is subject to a rapidly evolving scientific knowledgebase, and, by no means is it certain that for some key aspects related to human endangerment, what we know today will be the same as what we know tomorrow.

Thus, the EPA should be required to justify its endangerment finding each and every time it issues regulations, and such justification must be supported by an assessment of the very latest and up-to-date scientific findings—and an assessment that is not influenced by the preconceived agendas of agencies outside the EPA (e.g., USGCRP, IPCC, NRC).

I am sure many other folks have many other issues with the ruling.

Certainly, this will not be the last challenge that will be brought against EPA GHG regulations.

An excellent synopsis of the Court’s decision has been produced by Troutman Sanders LLP, one of the legal firms that was representing the petitioners. That synopsis is included below, in its entirety.

From Troutman Sanders, LLP: [Read more →]

June 28, 2012   7 Comments

‘Determined Gentleman’ vs. Big Wind (E&E News Profiles Droz, Taylor)

In business and in government, lesson after lesson has been learned against trusting the ‘smartest guys in the room.’

Remember Enron, where doubters were told by CEO Jeff Skilling that they just didn’t ‘get it’? … the alarmist climate scientists who have long stated that the science is settled…. the Obama Administration energy decision-makers who know which technologies are ‘environmentally sustainable’ and are ‘commercially promising’?

F. A. Hayek warned against the ‘pretense of knowledge” where an intellectual elite via government coercion plans for the rest of us. Economist/educator Russell Roberts (Mercatus Center, George Mason University) explained what Hayek meant in a Wall Street Journal piece, “Is the Dismal Science Really a Science?”

If economics is a science, it is more like biology than physics. Biologists try to understand the relationships in a complex system. That’s hard enough. But they can’t tell you what will happen with any precision to the population of a particular species of frog if rainfall goes up this year in a particular rain forest. They might not even be able to count the number of frogs right now with any exactness.

We have the same problems in economics. The economy is a complex system, our data are imperfect and our models inevitably fail to account for all the interactions.

The bottom line is that we should expect less of economists. Economics is a powerful tool, a lens for organizing one’s thinking about the complexity of the world around us. That should be enough. We should be honest about what we know, what we don’t know and what we may never know. Admitting that publicly is the first step toward respectability.

Compare planner-worship to the wisdom of masses, make up of countless individuals with each having on-the-spot, decentralized  knowledge. Enter the talented amateurs in the energy debate, dozens of which blog at MasterResource. [1]

In my last quarterly report to the readership, I commented on our stable of windpower critics who often live and work near industrial wind parks. “One particular niche at MasterResource has been giving voice to the growing, articulate grassroot opposition to industrial wind parks,” I wrote. “Our category, Grassroots Opposition, Windpower, is full of confessionals where former wind supporters saw the light of economic and environmental reality.” [Read more →]

June 27, 2012   4 Comments

Pandora’s NAAQS: CEI Comments on U.S. EPA’s ‘Carbon Pollution Standard’

“Some good may yet come of this. A policy crisis over NAAQS regulation of  man-made greenhouse gas would finally make clear that Massachusetts v. EPA created a constitutional crisis by authorizing the EPA to enact policies that the people’s representatives have not approved and would reject if proposed in legislation and put to a vote.”

Yesterday, June 25, 2012, I submitted the following comment on the U.S. Environmental Protection Agency’s Standards of Performance for Greenhouse Gas Emissions for New Stationary Sources: Electric Utility Generating Units, what EPA ideologically describes as the Carbon Pollution Rule. [1]

On behalf of the Competitive Enterprise Institute (CEI), a non-profit public policy group specializing in regulatory issues, I ask that EPA withdraw the Proposed Rule on the following four grounds:

1. The EPA’s proposal would effectively ban construction of new coal-fired power plants, a policy Congress has not approved and would reject if proposed in legislation and put to a vote.

2. The proposal is an underhanded ‘bait-and-fuel-switch.’ The EPA assured stakeholders in March 2011 that it would not redefine source categories to require fuel-switching from coal to natural gas. Had the EPA come clean about its agenda in 2010 and 2011, Senators Murkowski and Inhofe would likely have garnered more support for their efforts to overturn the agency’s greenhouse gas regulations.

3. The proposal relies on weird contortions – a consequence of the EPA’s attempt to use the Clean Air Act as a framework for regulating greenhouse gases, a purpose for which the Act was neither designed nor intended. For example, the EPA pretends that natural gas combined cycle – a type of power plant – is a “control option” and “system of emission reduction” that has been “adequately demonstrated” for coal-fired power plants.

4. The proposal will provide another precedent for establishing National Ambient Air Quality Standards for greenhouse gases, taking America one step closer to policy disaster.

I. Introduction

The proposed rule requires new fossil-fuel electric generating units (EGUs) to emit no more than 1,000 lbs of carbon dioxide (CO2) per megawatt hour (MWh). About 95% of all natural gas combined cycle power plants already meet the standard, according to the EPA.[2] No existing coal power plants come close; even the most efficient, on average, emit 1,800 lbs CO2/MWh.[3] [Read more →]

June 26, 2012   6 Comments

Postmodern Climatology: Paltridge Weighs In

“It’s not a coincidence that activist climate scientists don’t simply stop at defining the climate system and offering up even-handed, philosophically diverse thoughts…. They virtually invariably come to the very same policy proposals that are deeply left-leaning and are basically a carbon-repacking of a dozen other pre-existing, left-liberal policy dreams.”

A guest essay at Judith Curry’s Climate Etc. by Garth Paltridge, Science Held Hostage in Climate Debate, zeros in on the problems plaguing climate science. I’ve made similar points over the years (see here and here), but Paltridge brings them together nicely. His post has attracted 500 comments to date, becoming a very hot topic among practitioners and laypersons alike in the blogosphere.

A retired Australian atmospheric physicist, Paltridge argues that the physical climate sytem is non-ergodic and inherently impossible to really understand fully. Given this, social pressures take over where the utility of climate change becomes an excuse to push pre-existing policies. The result? The climate-science community goes far out of the realm of “normal” science and into the realm of extreme, postmodern science.

Paltridge explains:

To the extent that there is such a thing as normal science, it relies upon accurate observations to verify its theories. Accurate is the operative word here. Climate research has to rely on spectacularly inaccurate data from information on Earth’s past climate.

Even though there are vast amounts of atmospheric and oceanographic data to play with, together with lots of proxy information from tree rings and ice cores and corals and so on, abstracting a coherent story from it all is something of a statistical nightmare. It gives a whole new meaning to the old saying “lies, damn lies and statistics.” [Read more →]

June 25, 2012   2 Comments

‘Peak Rock’: The ONION Goes Neo-Malthusian (Fixity/depletion curse expands)

“We are on a collision course to a world without rocks. Only take as many rocks as you absolutely need.”

        - Dr. Victoria  Merrill, author, No Stone Unturned: Methods For Modern Rock Conservation

“Think about it. When was the last time you even saw a boulder?”

         – Henry Kaiser (ge0logist and Onion expert)

The easy oil has been found. There are no more mega-fields. Costs up … prices up … economic stress … crises.

We have such certain knowledge from the smartest guys in many rooms: Paul Ehrlich, John Holdren, Colin Campbell, Jean LaherrèreRichard Heinberg, Chris Skrebowski, Matthew Simmons, …. and Kenneth Deffeyes.

Oil output peaked on December 16, 2005, in case you did not know it, according to geologist Kenneth Deffeyes in his 2010 book When Oil Peaked, available at Amazon in hardcover for one penny (yes, one penny!).

Deffeyes in this book updated his analysis from his previous tomes, Hubbert’s Peak (2001) and Beyond Oil: The View from Hubbert’s Peak (2005).

Two quotes from Princeton University-affiliated Deffeyes are highlighted at Wikipedia:

  • “Crude oil is much too valuable to be burned as a fuel.”
  • “The economists all think that if you show up at the cashier’s cage with enough currency, God will put more oil in ground.”

Onion Weighs In

Well, the Onion has taken Deffeyes logic to a new level. Yes, rock exhaustion is hard to imagine right now, but the fixity/depletion principle is indisputably at work. The article follows: [Read more →]

June 22, 2012   9 Comments

Wimp Power: Some Quotations from Wind’s Critics

Energy and environmental issues need to be addressed using logic and scientific thinking, not emotion, wishes, and depiction.  On a realistic basis, industrial wind energy fails to deliver the goods. By this I mean that windpower:

1) Is not a technically sound solution to provide us electricity, or to meaningfully reduce global warming, and

2) Is not an economically viable source of energy on its own, and

3) Is not environmentally responsible

When you take away the wind lobbyists’ fast-talking shenanigans, their con comes down to these two things: They are telling us what we want to hear, and we’re not really verifying the truth of what they’re saying.

The intellectual conjurers have a clever one-two marketing campaign. First we’re told that the planet is facing imminent catastrophe. And then a salesman comes to our community with a solution! The spiel is that we can do something consequential to help prevent this global disaster — and we can create jobs doing it, and make some easy money in the process.

What a deal!

Wind magicians go into a rural community and carefully cultivate the idea that anything coming from them is found money. The trick is that it’s not coming from them at all, as it’s entirely paid by taxpayers and ratepayers.

Quotations from the Trenches

Realistic assessment is needed in the PR arena.  To this end, different bloggers at MasterResource provided some analogies to describe what wind power really is compared to consumer-chosen, market-proven energy.

“Wind energy can be likened to the wayward child. It’s unavailable when needed, shows up when unexpected, and when it does arrive it often behaves erratically. As a result, wind cannot be relied on as a primary fuel source.”

     – Lisa Linowes, Industrial Wind Action [Read more →]

June 21, 2012   12 Comments

New Oil & Gas Talent Needed: Students, Retirees Take Note (industry needs freed renewable-energy talent too)

“It’s been my experience in 17 years of recruiting in the oil and gas industry [that] this is the ‘sweet spot,’” [Tim] Cook wrote in an email, referring to the 10- to 30-year range. “These are the individuals that companies are wanting to hire, and because of the downturn in the mid-’80s to mid-’90s, this is the missing generation in the oil and gas industry.”

Talent needed! Jobs available! Training required! Students: please major in petroleum engineering. Retirees, we need you back. University of Phoenix–start your oil and gas engines. Staffing professionals–help us please!

This is the good news, the great news, from the energy sector. And it is the reality that President Obama and public-policy makers at all government levels should understand–and heed.

First, some background. Environment & Energy News has a daily subscription service that a lot of us must read each workday: E&E Daily, Greenwire, E&E News PM, and ClimateWire. And most recently, due to marginal resources in the energy world shifting decidedly to oil and gas, E&E News added a new service: EnergyWire.

EnergyWire provides the latest oil and gas developments that those outside of the industry (analysts, lobbyists, lawmakers, pundits, etc.) need to know.

In the June 18th edition was the article: WORKFORCE:  Energy Industry Attempts to Weather a ‘Silver Tsunami’ by Pamela King. “Silver Tsunami” means that the industry has an aging workforce that must be replaced by a new generation of oil and gas talent. (MasterResource has previously described the oil/gas worker opportunities and shortage.)

Ms. King begins her article: “After years of decline, the now-booming U.S. petroleum industry is struggling to find new hires to replace an aging workforce.” She then tells the story about how previous industry instability resulted in a talent exodus that must now be replaced: [Read more →]

June 20, 2012   9 Comments

“Nothing is more fungible than a good idea” (U.S. as global high-tech oil/gas leader)

In 2008, Candidate Obama campaigned against Republican-era high gasoline prices. Now that pump prices are high with a presidential election looming, President Obama disclaims responsibility. “We cannot drill our way to lower gas prices,” he says.

Crude oil is a fungible commodity, the argument goes. So why should we Drill, Baby, Drill when any domestic supply we might add is a relative drop in the bucket? Nice argument, except that it could be used against having any new production. (And U.S. CO2 emissions at the margin are a drop in the bucket, right Mr. President? ) And as the economic revolution of the 1870s taught, economic value and thus prices are set at the margin.

Marginal Economics

The United States is the world’s #3 oil producer. Domestic policy decisions in the U.S. can impact the global supply/demand picture, which in reality is quite narrowly balanced.

Every barrel of domestic production clearly benefits energy security, but lately the debate has shifted to whether U.S. drilling can impact the globally set price.

But whether or not our incremental production can move the market, the U.S. is the world leader in petroleum technology. We have incubated and nurtured new and innovative drilling and production methods that are used worldwide. We are one big petroleum laboratory: new ideas often get their first test in our oil fields. Our technology advances unlock reserves worldwide. [Read more →]

June 19, 2012   3 Comments

“Wind Farms Canceled, Layoffs Starting” (government dependence is risky business)

The major federal tax and grant subsidies for windpower and other qualifying renewables are scheduled to expire at year-end. And claims of robust economics, competitiveness, and growth have given way to fear of a freer, less preferential market in 2013 and beyond. Wind’s artificial boom/upcoming bust is the risky business of political capitalism.

Last Friday’s edition of Environment & Energy Daily ran this story (sub. req.):

The American Wind Energy Association estimates that 10,000 jobs will be lost by September — primarily among manufacturers of wind turbines and components facing a dearth of orders for next year. By the end of the first quarter of 2013, the industry will have shed about 37,000 jobs without quick action on a PTC renewal, according to a widely cited study AWEA commissioned from Navigant Consulting. The industry estimates it employed about 78,000 people at the beginning of this year.

So in the next six-to-nine months, nearly one-half of the industry’s jobs will be gone just because a special tax break has lapsed? How lousy is this industry? What have we gotten for decades and tens of billions of dollars expended to date?

And what is the plan for the inevitable task of dismantling the industrial wind turbines that no longer spin but look like some industrial death scene from Planet of the Apes? [Read more →]

June 18, 2012   12 Comments