IQ2 Debate – No Fracking Way: The Natural Gas Boom is Doing More Harm Than Good

Intelligence Squared US, an Oxford style debate program modeled after a London program of the same name, recently chose to discuss the following motion – No Fracking Way: The Natural Gas Boom is Doing More Harm Than Good.

In between trips to the Children’s Museum of Richmond, across Southside Virginia to toss out the contents of our refrigerators and to rescue some cats, to the Virginia Aquarium, and to the beach, I managed to watch the archived video of the debate. It was fascinating for an energy geek, but also worth watching for anyone who prefers a thoughtful, well-moderated discussion about a complex issue over the kind of shouting that often passes for a debate program on popular media outlets. If you prefer to read debates, here is the link to the transcript.

Here is my theory – multinational petroleum producers know that the biggest long term threat to their continued market dominance is a revived nuclear power plant construction industry.

There were two teams; one for the motion (which was phrased so that someone for the motion was actually against the booming use of hydraulic fracturing of shale rock for natural gas extraction) and one against the motion. The studio audience voted both before and after the debate with three choices – for, against or undecided. The winner of the contest was declared based on the shift between before and after voting; presumably the people who provided the most cogent arguments would change the most minds.

Since the debate has been available for several days, I am going to risk being a spoiler; here are the results of the studio audience voting.


Position Before After Swing
For 38% 53% 15%
Against 38% 42% 4%
Undecided 24% 5% 19%

Based on the swing of 15%, the “for” team was declared the winner. It is important to note that the “undecided” vote nearly vanished; this topic is not one that allows much middle ground once you have heard the arguments.

There is a continuing vote being taken online, but that one does not provide a before or after choice. As of 5:17 EDT on July 5, 2012, the online tally is 80 for the motion (believing that the fracking enabled gas boom has done more harm than good) and 152 against the motion (believing that the gas boom has done more good than harm).

I just cast my vote for the motion, but I am pretty sure that my reasoning would surprise the debaters on both sides. Like Deborah Goldberg on the “for” side, one of the things that has bothered me most about the fracking boom is the fact that it is a boom – the speed with which development is taking place has outrun the market, resulting in prices that are too low for profitable operation.

It is bad for the environment when people who are engaged in potentially hazardous industries are squeezed at the margins; in that situation it is a very human tendency to resist every improvement that might cause costs to increase. Even if the increased cost seems small to people outside of the business, it is quite possible that it will make the difference between a profit an a loss when there is already a small delta within which to work. Booms also have a disturbing tendency to pop without warning, leaving behind both an environmental and economic mess.

However, like Joe Nocera and Sue Tierney on the “against” side, I believe that low energy prices are beneficial to society, providing us with the power that we need to do good work and have resources left over for other activities. I am deeply concerned about the geopolitical implications of an inescapable dependency on continued injections of energy fuels via fragile supply and delivery systems controlled by people that have different priorities than I do.

I also agreed with the notion that natural gas is a wonderful raw material; the fact that its price is low enough in the US to encourage manufacturing companies that want to use it to build new factories in the US and provide good jobs domestically is a gift that can overcome a number of disadvantages.

On the “for” side, Kate Hudson’s clear distaste for the petrochemical industry and its jobs did not win any points from me. She is probably one of the people who actually thinks that the sun and the wind can produce useful power magically, without a massive need for manufactured materials, intrusive collection and delivery systems, and backup from systems that continue to burn valuable, but polluting hydrocarbons. She might even be one of the people who cannot understand why we need to make anything. Believe it or not, there are people who think that our economy could be healthy if we were all office dwelling lawyers.

If I was a short-term thinker who believed that 100 years is a long time, or that companies drilling for gas were led by patriots who are motivated to keep prices low for the good of the United States, or that the domestic resource base would actually last as long as the gas marketers claim, I might have sided with Joe Nocera and Sue Tierney’s position that the gas boom has been a wonderful thing. If I believed their argument that the only available choice for producing reliable power was between a modern combined cycle gas turbine and old, outmoded coal plants, I might have been swayed in their direction.

Of course, we all know that modern gas plants and old coal plants are not our only choices for reliable, affordable power. Not only are modern, low emission coal plants potentially competitive, but emission free, well proven, incredibly safe nuclear fission power is also a choice. The “for” side did not mention nuclear energy at all, but even the “against” side – which claimed to be for abundant, cheap power – damned it with faint praise. Sue Tierney exposed her antinuclear bias with the following statement that nearly qualifies as a ‘smoking gun’:

If China is able to use natural gas, they may not build as many Soviet-style nuclear reactors.

The last time I checked on China’s world leading nuclear program, it did not include any “Soviet-style” nuclear reactors. It does include a large number of US, French, German and indigenously designed reactors that build on what Chinese engineers have learned by being able to copy from our most modern and innovative designs.

The gas boom and the temporarily low prices that are associated with production that is slightly higher than demand has had a substantially negative impact on the shift in momentum that is required to revive the nuclear power plant construction business. Influential electric power company executives like John Rowe have put a kibosh on plans for new nuclear power plants; stating that they prefer to bet their company’s future on cheap gas. Rowe even told the attendees at the American Nuclear Society annual meeting that he believes cheap gas is going to make new nuclear uneconomic for a decade, if not more.

Aside: Of course, Rowe is clever enough to act differently. He and his company have accumulated the largest nuclear power plant fleet in the country and stand to benefit when the price of gas increases for all of their competitors. My analysis is that they are engaged in the reverse of Tom Sawyer’s method of making fence painting seem like an attractive endeavor. They are making nuclear seem unattractive so that there are fewer competitors. They are also promoting natural gas development so that rising demand causes the price of that fuel to skyrocket. End Aside.

As I explained in a recent Twitter exchange, I am pretty sure that excessive natural gas production is not an accident. There is a reason that large multinational petroleum companies have put substantial quantities of capital into gas drilling in the US – even when there are more attractive markets that can produce higher immediate returns on their investments.

Here is my theory – multinational petroleum producers know that the biggest long term threat to their continued market dominance is a revived nuclear power plant construction industry. They also know that the place that they need to worry most about is the US with its creative, free market system that encourages disruptive innovation. By driving down North American natural gas prices, they can cause a significant delay, increase costs for their competition and keep bright young engineers and businessmen out of a technology than will capture a profit-threatening portion of their market.

If entrepreneurial nuclear energy visionaries can look beyond temporarily low gas prices to understand the strategic moves of their competition, the future might be different than the one that is apparently envisioned by The Hydrocarbon Establishment. Not only will nuclear fission directly replace gas burning in power production, but it has the potential to eliminate the false perception of energy scarcity, displace oil directly in profitable markets like ocean transport, and provide the low cost heat energy needed for coal refineries to make a move into the liquid and gas fuel market.

About Rod Adams

22 Responses to “IQ2 Debate – No Fracking Way: The Natural Gas Boom is Doing More Harm Than Good”

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  1. Daniel says:

    Rod,

    So why is it that China, India, South Korea, England, Poland, Czech Republic, Ukraine and many other countries are forging ahead with nuclear ? It is said that soon 40 new countries will have nuclear power.

    Are you limited in your discourse by the US ?

    Is it lobbying ? Is it corruption ? Is it free enterprise ? Is it the press-media ?

    There has to be an equalizer somewhere. It has to come out.

    There is a lot of positive on the planet regarding nuclear.

    • Rod Adams says:

      @Daniel

      The price of natural gas in North America is about 1/4 of the level in Europe and 1/6 the level in Asian markets.

      In other words, it is only a local phenomenon to have gas prices at levels that make nuclear uneconomic.

      With a moderately efficient natural gas plant, you need about 7500 BTUs of heat to produce a kilowatt hour of electricity. If you know the price of gas in $/MMBTU you can figure the fuel cost component of natural gas fired generation pretty easily by dividing the price by 100 and then subtracting 25%.

      $2.50 gas leads to a fuel price of 1.9 cents per kilowatt hour, but that is the price at the trading hubs, not delivered to the power plant.

      If gas costs what it does in Europe – roughly $10 per MMBTU – the cost of just buying fuel for a gas fired plant is 7.5 cents per kilowatt hour, which is close to the TOTAL levelized cost of electricity from a nuclear plant costing $5,000 per kilowatt capacity.

      When you consider a gas price of $16 per MMBTU, which is what landed LNG costs in Japan, the fuel cost component of a gas plant is 12 cents per kilowatt hour. That is well below the TOTAL levelized cost from an a high capital cost nuclear plant.

      • If gas costs what it does in Europe – roughly $10 per MMBTU – the cost of just buying fuel for a gas fired plant is 7.5 cents per kilowatt hour, which is close to the TOTAL levelized cost of electricity from a nuclear plant costing $5,000 per kilowatt capacity.

        Given the price of oil and the sales prospects to countries like Germany and Italy, it makes one wonder why France hasn’t already embarked on a major nuclear expansion program. If electric vehicles could be charged at night, the higher fraction of base load generation would displace both natural gas and imported petrolelum.

        • N. Thompson says:

          France gets nearly 80% of it’s power from nuclear. They already had the “major nuclear expansion program”. Right now electric vehicles account for a very small portion of the automobile market, and it will probably not increase to a substantial portion of the market for quite some time. However, France could absolutely benefit from some more nuclear power plants, especially to export power to Germany.
          Commercial nuclear power plants also take a long time to start up, so they can not be used to changes in demand throughout the day unless large amounts of energy is stored.

          • Rod Adams says:

            @N. Thompson

            Conventional large nuclear plants are not terribly responsive, but those are not the only kind of plants that can be built. The French are well aware of how to build responsive nuclear; they have had a nuclear submarine force for several decades.

            You also bring up a good point; the ability to store electricity efficiently would be more of a boon to conventional nuclear than to unreliable wind and solar. If I invested in storage, I would want to be able to recharge it reliably whenever power demand fell off so that it was fully charged during those times of peak demand. That is hard to do with power sources that may or may not be available at the time that demand is low.

            (In the case of solar power, one can reliably state that it WILL NOT be available for charging storage during low demand periods between 9:00 pm and 7:00 am.)

        • the ability to store electricity efficiently would be more of a boon to conventional nuclear than to unreliable wind and solar.

          This is a point I have been making for years.  The only pumped-storage plant in the region was built to buffer the output of the Palisades nuclear plant.

  2. Daniel says:

    Rod,

    You know why natural gas is so cheap. No accounting for externalities.

    Drilling for natural gas is exempted in the US from:

    Clean Water Act
    Safe Drinking Water Act
    National Environment Policy Act

    Europe and the rest of the world don’t let that happen. In Québec, fracking was stopped on that issue.

    There is your equalizer. Let’s rub it in.

    • Rod Adams says:

      @Daniel – those are reasons why the cost of drilling for natural gas is low. They are not reasons why the market price of natural gas in the US is so low.

      Look at the history of gas PRICES and you will find that they are detained by the balance (or perceived balance) between supply and demand. They bear little to no relationship to the COST of drilling.

    • Mike H says:

      The Clean Water Act relates to discharges to surface water and any drilling operations that effect surface water sources are most certainly covered by the CWA. It was granted an exemption to the Safe Drinking Water Act because a group of environmentalists sued the EPA in 1998 to have HF drilling operation reclassified as Class 1 injection wells, which they most certainly are not. The The National Environmental Policy Act doesn’t cover anything specifically as its only requires federal agencies to consider potential environmental consequences of human activity which the EPA has done twice now with regards to slickwater hydofracking.

      Two strikes and a ball, care to swing again?

      • Daniel says:

        @ Mike H

        Can’t have 2 strikes and a ball when a homerun was hit on the first pitch.

        In 2005, Cheney made sure that gas drilling received an exemption from the Clean Water Act‏.

        Batter up.

      • Daniel says:

        @ Mike H

        More on Cheney’s ‘Halliburton Loophole':

        The federal Energy Policy Act of 2005 contained a provision that has come to be known as the “Halliburton Loophole,” an exemption for gas drilling and extraction from requirements in the underground injection control (UIC) program of the Safe Drinking Water Act (SDWA). Other exemptions are also present in the Clean Air Act and Clean Water Act.

        • Mike H says:

          The EPA’s evaluation of slickwater hydrofracking began in 1988 and by the time they issued the report, there had been nearly 6 years of study into the subject. From the former assistant administrator for water at the Environmental Protection Agency Benjamin Grumbles:

          “The career employees reviewing the report were quite comfortable with the integrity and product of that commissioned report. So, they recommended to me that hydraulic fracturing was not the type of threat that should be as high a priority as other types of threats to drinking water supplies. They took great offense to some of the other accusations that were made that the commission was biased in some way. ”

          So, much like scaremongering about radiation, the “Halliburton Loophole” is more fiction than reality.

          The remainder of your post was taken from “Clean Water Action”, a high quality source to be sure, but perhaps you could point me to the specific exemptions in the Clean Air Act and Clean Water Act … I seemed to have missed them in the “Clean Water Actions” copious footnotes.

        • Daniel says:

          @ Mike H

          My entire post timestamped at 10:02 pm was a cut & paste from the WEB to answer your point and I cannot give you the chapter and verse of each of those Acts that would match to the Halliburton Loophole.

          You seem very knowledgable about all of these Water Acts.

          I really appreciate every glass of water that I drink coming from a country that has more than 20% of the world’s fresh water supply. I know that daily, millions of people don’t have access to clean water. (It causes me the same outrage knowing that those same people often do not have electricity.)

          US citizens for example would be very thirsty today if it were not from the MASSIVE imports of fresh water that comes from Canada. And I do mean MASSIVE, and I do mean thirsty and I do mean today.

          I just don’t understand, Halliburton Loophole or not, why US citizens don’t take the necessary steps so that fracking stops now to preserve their fresh water supply.

          Being right or wrong on the lineage of how things happened to the alphabet soup of Water Acts that you have in the US is beside the point in my mind and I will let you win this argument.

          Wars will be fought over fresh water supplies in 25 years or less when 66% of the world population will be thirsty. Will the US invade Canada ? Its been tried before.

  3. E. Michael Blake says:

    If “Soviet-style” is taken to mean VVERs based on the design originally developed in the Soviet Union, China has two in operation and two more committed for construction, all at the Tianwan site. If it is taken to mean RBMKs, China has none. So far Rosatom has not been the key player in China’s nuclear expansion, but this appears to be not for lack of trying.

    • Rod Adams says:

      @E. Michael Blake – the Soviet Union fell more than 20 years ago. Only someone who is intentionally – or unintentionally due to groupthink – trying to scare people would refer to a modern VVER as a “Soviet-style” reactor. The design has been substantially improved – enough so that Rosatom believes that it has at least some hope of obtaining a US design certification. (Which might be true if the only issue was the technology.)

  4. DV82XL says:

    The ultimate question that needs to be answered to determine if plentiful/cheap methane is going to do more harm than good is if the atmosphere can serve as an unlimited sink for the GHG this will produce.

    In other words, even if it can be successfully argued that current climate models that show evidence of AGW are wrong, can we then assert with any degree of certainty that we can continue to dump GHG into the atmosphere in ever increasing amounts without precipitating some major shift in climate patterns, and if not will those changes necessarily be benign, or at least tolerable.

    That is the bet that is being made here, and in my opinion it is a poor one given that the chances that there will be serious repercussions in the form of irreversible changes with large scale economic and human impacts are very high if it’s a lose.

    Robert Gauthier

  5. SteveK9 says:

    There are estimates that the break-even cost for ‘unconventional’ methane are $8/MMBTU, due to the expensive nature of the drilling and the rapid depletion rates. That is without externalities, like environmental damage, release of methane to the atmosphere, or burning a fuel that produces CO2.

    http://www.theoildrum.com/node/8212

    You can find other analyses like this. This looks a lot like any other speculative boom … the music may stop a lot sooner than people expect. Exxon/Mobil can hang in there and maybe make a good buck when prices go up. In the interim it will be brutal for the smaller companies … they will go bust. Even the ‘market leader’ Chesapeake looks awfully shaky if you go by the stock price.

  6. Michael R. Himes says:

    AIRS data on ascending CH4 (Methane) in the Arctic and related Exxon Fracking in Siberia (See Link).
    http://www.arctic-news.blogspot.com/2012/02/january-2012-shows-record-levels-of.html

    Exxon exploration Fracking in Siberia is the single largest contributor to this ugly picture. Methane becomes CO2 and Water Vapor in the Stratosphere. Increased clouds block Solar heat and the CO2 forced into the Mesosphere radiates heat into space and returns cold to the surface.

    Noctilucent Clouds of water ice with dissolved CO2 in the Mesosphere are beautiful but deadly. Not global warming but quite the reverse! This does not take into account Clathrates and their potential to cause a run away Methane release. They already have started to bubble under the Arctic Ice. You might focus on the release of Methane rather than the market for the Gas?It could become a cold day in Hell after all this global warming hype.

  7. Daniel says:

    Enjoy 2 contradictory articles based on nuclear output this July 6th, 2012:

    1) Nuclear Power at record levels despite Fukuhima :

    http://www.cbc.ca/m/rich/business/story/2012/07/05/f-nuclear-power-post-fukushima.html

    2) World Atomic Output Falls by Record in Fukushima’s Aftermath

    http://www.businessweek.com/news/2012-07-06/world-atomic-power-output-falls-by-record-in-fukushima-aftermath

    Give me a break.

    • John Englert says:

      So which is it; the glass is half empty or half full? Which of these publications is dependent upon oil and gas companies purchasing advertising?

      • Rod Adams says:

        Actually, they both probably receive a significant amount of their ad dollars from hydrocarbon advertising. It is hard to be a publication that accepts ads and NOT get money from people who like the status quo and are pretty directly tied to companies that locate, finance, extract, transport, refine, or market hydrocarbon products.

        However, in the case of the Bloomberg BusinessWek story leading with a statement about how world atomic power “dropped by a record 4.3 percent last year”, the problem seems to be a reporter quoting a report issued by an “independent” group who slants their reports about nuclear energy enough to the negative side to earn Amory Lovins’s seal of approval – on the top right corner of the home page!

        http://www.worldnuclearreport.org/

        “A vital public service… a uniquely independent, thorough, and timely assessment.”
        Amory B. Lovins, Chairman, Rocky Mountain Institute, USA

        I saw the report and said “duh” when I realized that it was talking about a comparison between 2010 and 2011. Is anyone shocked by finding out that nuclear power output fell in aftermath of an accident that put 4 plants out of commission and resulted in immediate, irrational shutdowns of a few dozen more and the gradual, temporary shutdown of more than 50 plants in Japan?

        The other report is more current and shows how nuclear energy use is bouncing back after a bad year of production.

  8. Michael R. Himes says:

    Since AIMS and OCO satellite launch failures we are left with GOSAT (Ibuki) See Link.

    https://data.gosat.nies.jp/index_e.html

    CLICK to see animation. Mesosphere CO2 shows in summer only when it is -60 C colder than winter. This is not extrapolated from data like the AIRS data based upon temperature.
    You may access the latest data and see what this summer is showing…don’t blab about it to the media since it will be called inconclusive. This winter view the AIRS data to see how we are progressing toward much colder extremes. Yes, Johnny, IBUKI indicates you need to bundle up this winter because they are Fracking in the Arctic.

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