Category — Energy Sources

Late last month, Georgia Power (Southern Company) filed its eighth semi-annual report on the construction progress of its 2,240-MW two-unit Vogtle nuclear plant to the Georgia Public Service Commission (GPSC).

The already bad news got still worse–not surprising for a project that is all but financially insulated from its own failure. As I previously wrote at MasterResource:

With a pending $8.6 billion federal loan guarantee, a cap on liability, production tax credits and pre-collection of profits this makes Georgia Power the nation’s biggest welfare queen.

Georgia Power’s latest report to state regulators indulges in self-praise, shifts blame for growing problems, and employs misleading analysis. The Company asks the GPSC to approve an additional $737 million in cost and add 15 months to the project’s schedule. Since Georgia Power has 45.7% ownership, the entire $14 billion project has additional cost of over $1.6 billion. [Read more →]

“[T]here is no companion prerequisite that such renewable programs be cost-effective or deliver reliable power…. This program appears designed for the privileged few to enjoy a subsidized electric energy existence, provides those ‘green bragging rights’ mentioned by a solar installer in this courtroom last September, but little else.”

Last May, Dominion Virginia Power petitioned the Virginia State Corporation Commission to introduce a voluntary ratepayer program to support up to 3 MW from distributed solar installations. Dominion seeks to offer the public an alternative to an existing, net-metering, residential solar panel program. This voluntary test Solar Panel Program would be guaranteed for five years at a “buy all/sell all” $0.15/kWh. It would be limited to an initial maximum scale of 0.2 percent of 2010 peak load.

Solar is an intermittent power source that would require storage to be on a stand-alone basis. The Dominion program offers a solar energy buyback on a firm (non-interrupted) basis, which requires cross subsidization from conventional energies.

The $0.15/kWh price is below what the U.S. Energy Information Administration estimates to be the cost of distributed solar, which is north of $0.25/kWh. Multiple tax breaks explain the difference ($0.022/kWh production tax credit; accelerated depreciation, etc.). Solar executive David Bergeron has estimated that the as much as 90 percent of lifecycle solar costs are hidden, due to special government subsidies. [Read more →]

“The technically recoverable coal resources in the United States are unsurpassed and total 50 percent of the world’s coal reserves. At 486 billion short tons, it can supply our country’s electricity demand for coal for almost 500 years at current usage rates.”

Coal produced on federal lands has decreased less than that of oil and natural gas. Coal production on federal and Indian lands peaked at 509 million short tons in fiscal year 2008 and has been decreasing slightly each year since then. In fiscal year 2011, coal sales from production on federal and Indian lands reached 470 million short tons, a 2-percent decrease from fiscal year 2010 and an 8-percent decrease since the peak in fiscal year 2008. [1]

At today’s prices, the value of the government’s estimated coal resources in the lower 48 states is $22.5 trillion for a total fossil fuel value on federal lands of $150.5 trillion. Most of the coal resources in Alaska are deemed to be federally owned and are estimated to be 60 percent higher than those in the entire lower-48 states but are not included in these estimates.

Over 90 percent of coal in the United States is used for electricity generation. Until recently, coal had been used to produce 50 percent of the nation’s electricity, but is losing market share to natural gas and renewable energy as natural gas prices drop, renewable energy is mandated and subsidized, and new environmental regulations take effect.

EPA vs. Improving Coal

The Environmental Protection Agency (EPA) has produced regulations that essentially ban new coal plants and make its continued use in existing plants extremely costly. As a result, coal produced only 42 percent of our electricity in 2011 [2] and is expected to have produced only 38 percent in 2012. [3]

One of the biggest stated concerns about coal is air pollution. Coal produces more emissions than natural gas when burned. However, due to actions taken by industry and technological advances, our air quality is improving and new coal plants are cleaner than ever before. [Read more →]

One of the most hilarious – if not tragic – events that we as Americans witness is when Hollywood attempts to “inform” the public about energy issues, which often takes the form of fanatical opposition to oil and natural gas development.

During a staged protest against the Keystone XL pipeline this past summer, for example, Daryl Hannah and Margot Kidder were arrested while voicing their disapproval of U.S. infrastructure development. The protest also featured a large, inflatable black tube that was intended to represent the pipeline, although none of the protestors – including Hannah and Kidder – were able to explain the fact that petrochemicals are used to produce both the plastic and the paints used throughout the event.

The reason these events are so laughably absurd is that, in addition to the rank hypocrisy, Hollywood “stars” are attempting to drive the public debate on complex engineering processes, about which they have little to no actual expertise. Instead, the celebrity of their names is leveraged to secure headlines, and the public is left with the impression that there are significant technical concerns – all based on the words and deeds of multi-millionaire actors and actresses.

To be sure, there’s nothing wrong with acting or making films. We all love to go to the movies, and then argue at dinner afterwards about which of the previews were the best. And certainly no one is suggesting these individuals don’t have a right to protest. But we should all be concerned that the fact-based conclusions of engineers, geologists, and other technical experts can all be wiped away by what’s essentially a loudest-voice-wins mentality.

This brings us to the latest Hollywood foray into complex energy issues: the movie Promised Land. [Read more →]

“Although we strongly support policy efforts to reduce greenhouse gas emissions and health-damaging air pollution from fossil fuels, we are concerned that the PTC includes support for biomass combustion technologies that both contribute to climate disruption and threaten public health.”

- Letter of December 11, 2012, to Senate and House Leaders from 40 environmental-related organizations (reprinted below)

Biomass energy has been called the air emission renewable. Technical studies have concluded that energy made from plants and woody matter can require so much (fossil) energy and stir up release of carbon dioxide as to negate CO2 reduction.

This problem has been long recognized in the environmental community. “Although biomass is a renewable resource, much of it is currently used in ways that are neither renewable nor sustainable,” stated Chris Flavin and Nicholas Lenssen in 1994. [1]

In 2001, the International Energy Agency (Organization for Economic Cooperation and Development, 2001), concluded:

Biomass energy is generally considered to be CO₂-neutral, as long as it is consumed in a sustainable manner, i.e., the stock of biomass does not diminish. This is not the case in many developing countries, where over-consumption of biomass fuels leads to deforestation and hence to the reduction of forest-based CO₂ sinks. [2]

And the debate/controversy continues. Last week, a letter to the House and Senate leadership from 40 left-of-center environmental-related nonprofits, groups, and businesses urged that biomass be excluded should the renewable-energy Production Tax Credit be extended past its year-end expiration date.

Addressed to Majority Leader Reid, Minority Leader McConnell, Speaker Boehner, and Minority Leader Pelosi, the December 11, 2012, letter read: [Read more →]

The anti-industrial “green” movement, which once played nice with natural gas, is at war against hydraulic fracturing (fracing). Peak gas fears may be gone, and parasitic wind energy would crash without gas-fired generation to fill in, but an anti-energy agenda rules. What should be good news is parlayed into bad by the enemies of modernism.

Technology Jump–Societal Benefits

Horizontal drilling and hydraulic fracturing have boosted shale gas production from zero a few years ago to 10% of all U.S. energy supplies in 2012, observes energy analyst Daniel Yergin. Fracing has also increased U.S. oil production 25% since 2008 – almost all on state and private lands, and in the face of more federal land and resource withdrawals, permitting delays and declining public land production.

In the process, the fracing revolution created 1.7 million jobs in oil fields, equipment manufacturing, legal and information technology services, and other sectors. It will generate over $60 billion this year in state and federal tax and royalty revenues, reduce America’s oil import bill by $75 billion, and save us $100 billion in imported liquefied natural gas, concludes a new IMF Global Insight analysis. [Read more →]

[Ed. note: An important front in the energy-policy debate concerns the moral case for rich, dense, plentiful, reliable energy that is handmaiden to industrial society. In addition to the post below, see the contributions of Alex Epstein at this site.]

The duplicity and hypocrisy of environmental pressure groups seem to be matched only by their consummate skill at manipulating public opinion, amassing political power, securing taxpayer-funded government grants, and persuading people to send them money and invest in “ethical” stock funds.

In the annals of “green” campaigns, those against biotechnology, DDT and Alar are especially prominent. To those we should now add the well-orchestrated campaigns against Canadian oil sands and the Keystone XL Pipeline.

Background

Oil has been seeping out of Northern Alberta soils and river banks for millennia. Native Americans used the bitumen to waterproof canoes, early explorers smelled and wrote about it, and “entrepreneurs” used it in “mineral waters” and “medicinal elixirs.”

Today, increasingly high-tech operations are extracting the precious hydrocarbons to fuel modern living standards in Canada and the United States. Enormous excavator/loading shovels and trucks used in open pits during the early years are giving way to drilling rigs, steam injection, electric heaters, pipes and other technologies to penetrate, liquefy and extract the petroleum.

The new techniques impact far less land surface, use and recycle brackish water, and emit fewer air pollutants and (plant-fertilizing) carbon dioxide every year. Water use for Alberta oil extraction is a tiny fraction of what’s needed to grow corn and convert it into ethanol that gets a third less mileage per gallon than gasoline. [Read more →]

“I can’t downplay this. It’s obviously very exciting for us…. This is opening up a new chapter in Alaska’s oil and gas history that is literally starting today.”

- Pete Slaiby, Shell Alaska. Quoted in Jennifer A. Dlouhy, “Shell Begins Drilling Well off Alaska,”  San Francisco Chronicle, September 9, 2012.

Profit-seeking, consumer-directed business is proper, necessary, and heroic. Free-market-based energy enterprises (oil, gas, and coal) are quite unlike government-dependent (crony) businesses (ethanol, windpower, and on-grid solar). Ken Lay’s Enron is (was) a leading example of the latter; Koch Industries’ Charles Koch, writing in the Wall Street Journal yesterday, epitomizes the former.

Shell has scaled back its (scarcely profitable) renewable energy investments and is back to its oil and gas roots. Its advertising is no longer about pie-in-the-sky energies and more about here, now energy. LET’S GO! The company found out the hard way that self-styled environmentalists are really anti-industrial and obstructionist when it comes to producing the energy needed by world consumers.

The expense and delay of Shell’s ambitious plans to drill offshore Alaska have been huge. But that chapter is largely over. It is GAME ON for Arctic drilling. LET’S GO!

[Weak] Opposition

The argument against drilling is hypothetical and borders on postmodernism. Stated Greenpeace: [Read more →]

“Intermittent generation may be consistent with a liberalized market, as long as generators are required to bear all the direct and indirect costs of their production. Otherwise, competition is doomed to become an irrelevant feature of a system that becomes more and more politically driven.”

Can an intermittent source be integrated into a liberalized electricity market?

Yes, it is technically feasible, but no otherwise. If subsidies enter into play, intermittent generation might undermine the very design of the market. This is what happened in Italy with the boom of solar power, which last year alone skyrocketed from 3.47 GW to 12.75 GW, with the annual cost of subsidies increasing from 800 million euro in 2010 to 3.9 billion euro in 2011 (about $975 million to $4.75 billion at today’s exchange rate).

These very generous incentives (which have been cut back in the last year for complex legal reasons) led to an over-investment in solar power in the country.

“Perfect Storm” for Malinvestment

Italy’s perfect storm of so little electricity at so much cost had three causes: [Read more →]

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:

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 →]