Stanford’s University’s New Natural Gas Initiative

It is virtually impossible to get an educational institution to understand something when its revenue depends on its audience not understanding it.

– Rod Adams, Stanford’s New Natural Gas Initiative, Atomic Insights, May 30, 2015

Aside: In case the allusion doesn’t work for you, the above is deliberately structured to align with a quote from Upton Sinclair, I, Candidate for Governor: And How I Got Licked. End Aside.

On April 6, 2015, Stanford University’s new Natural Gas Initiative held its inaugural symposium. This initiative is a joint effort created by Stanford’s School of Earth, Energy & Environmental Sciences and Precourt Institute for Energy.

When I learned about that event, my first thought was, “Aha. Now I understand why Dr. Mark Z. Jacobson, who is employed by those same institutions, works so hard to promote a non-nuclear energy vision that will increase sales of natural gas.”

Not surprisingly, when I expressed that thought on my Twitter feed, I received a prompt response from a professional natural gas marketer who tweets under the handle of @ShaleGasExpert. He told me that Jacobson was anti-fossil fuel as well and that I shouldn’t take it personally.

We engaged in a short conversation in which I expressed my theory that thought leaders like Jacobson who promote an “all renewables, all the time” energy system are effectively promoting the increased use of natural gas. As we all should know by simply observing the world around us, the sun often does not shine with an intensity that matches human energy needs and the wind is so unpredictable and capital intensive that highly sophisticated sailing vessels with zero fuel costs were rapidly displaced by primitive coal burning steam engines more than 150 years ago.

It saddens me to recognize that the world’s most powerfully concentrated industry — the multinational hydrocarbon industry — has engaged in sustained skillful marketing and effective use of its vast grant making capacity to gradually hypnotize some of the most extensively educated people in the world. The unreliables marketing campaign has made them ignore their own senses and fail to notice the inherent limitations associated with trying to power a modern, increasingly affluent society with weather dependent, diffuse, uncontrollable sources of natural energy flows.

So far, I have not found any evidence indicating that Dr. Jacobson’s research is specifically funded by an individual or an organization with direct financial interests in expanding the use of natural gas, but the visible existence of the Natural Gas Initiative and its direct relationship with the Stanford University-related organizations that employ Jacobson combine to provide strong evidence that at least some of his resources come from people that believe that they should be capturing markets that could be more cleanly, affordably and reliably served by atomic fission. Money is fungible.

Perusing the Natural Gas Initiative web site provides a sense of the quantity of resources that has already been invested in developing the program. There is a large list of associated faculty members, some powerful and expensive advisors (like George Schultz), and an impressive, 10-page marketing brochure titled
The Stanford Natural Gas Initiative Corporate Affiliate Program.

A search of that brochure for the word “nuclear” reveals two intriguing passages. As a thoughtful reader of ideas located “between the lines,” I could not help but notice the fact that nuclear energy is about as welcome as a skunk at a garden party. Here is the first, amazingly inaccurate statement from page 6 of the brochure.

Done properly, the development of unconventional gas resources can reduce the carbon footprint of this industry—as measured by air pollution, greenhouse gas emissions, and even water use—relative to other fossil fuels and nuclear energy.
(Emphasis added.)

One has to be thoroughly confused to believe there is any way that power supplied by burning natural gas — a process represented by the chemical equation CH4 + O2 -> CO2 + 2H2O + heat — can produce a lower carbon footprint when compared to nuclear energy. Even the most pessimistic life cycle analysis, the often discredited study known colloquially as Storm-Smith and its derivatives, shows that lifecycle emissions from nuclear energy are no higher than 144 gms CO2/kw-hr (a more accurate estimate is 5-20 gms CO2/kw-hr).

According to a paper titled Externalities and Energy Policy: The Life Cycle Analysis Approach published in 2001 by the International Energy Agency, natural gas-fired plants produce life-cycle emissions between 389 – 511 grams of carbon dioxide-equivalent per kilowatt-hour.

The most optimistic analysis of natural gas CO2 production is more than 2 times the most pessimistic estimate for nuclear energy; a more realistic comparison by the World Nuclear Association indicates that modern nuclear power plants produce 1/15th as much CO2 as modern gas plants.

Here is the passage that includes the second mention of the word “nuclear” in Stanford’s appeal to “Corporate Affiliates”.

Factors that may influence decisions about exporting natural gas may include resource costs, approval of LNG terminal siting, Russian natural gas strategy and demand from the European Union, Asian nuclear capacity and coal retirements, new developments in Latin American countries with rich natural gas reservoirs, energy reforms in Mexico and Argentina, and climate change policies in developed and developing countries around the world.

Anyone that pays close attention to the natural gas industry, particularly the LNG segment of the industry, will have noticed that there is an inverse relationship between Asian nuclear plant output and LNG related revenue. As their nuclear plant production increases, countries like Japan, South Korea, and Taiwan buy less LNG, driving down both sales volume and unit price. When cargoes that would have supplied Asian customers are not needed, they move to other markets, increasing the competitive supply and driving down prices in other areas.

One of the most lucrative events for the LNG industry in recent history was the abrupt withdrawal of 54 operating reactors in Japan as a result of the damage to four of those reactors after being inundated by a tsunami. Though it appears that the four-year long shutdown — with its associated step increase in LNG sales and revenue — may be slowly ending soon, the LNG industry banked about $50 billion per year in increased revenue during that period.

A number of North American LNG export terminal proposals were specifically aimed at serving the lucrative markets that were paying 3-6 times the going rate for pipeline gas in the US. Many of those proposed projects are being reconsidered as a result of the recent collapse in LNG prices. That price collapse is the result of numerous influences including lower demand in South Korea and China with increased nuclear plant output, pending Japanese nuclear plant restarts, increased Japanese coal consumption, and a collapse in the world price of oil.

The target organizations for Stanford’s marketing brochure are less than enthusiastic about the impact of growing Asian nuclear plant capacity. One of the scariest things about growing nuclear plant capacity is that it gets used and permanently displaces hydrocarbons. Compared to all other energy sources, nuclear plant have much higher average capacity factors.

I keep referring to Stanford’s brochure as a marketing pitch; the monetary “ask” is located on the final two pages. Here is an example from the last page.



THE NGI AFFILIATE PROGRAM

The NGI affiliate program offers companies and institutions the following benefits of membership. These benefits will vary depending upon a member’s level.
Corporate members ($75,000 per year) receive the following benefits:

  • Access to informed research from inception to outcome
  • Participation in research conferences, short courses and other events
  • Meetings with professors who enable in-depth investigations of specific topics
  • Facilitated access to complementary programs at Stanford in energy and the environment
  • Direct access to student recruitment and diversity initiatives at the school level

Sustaining members ($250,000 per year) receive the benefits listed above in addition to the following benefits:

  • Serving on the governance board of the Natural Gas Initiative to help establish research priorities and recommend projects for seed funding
  • Research-in-Progress Program: Teams of advanced PhD students and Stanford faculty will visit affiliated partner company sites to give technical presentations and interact with industrial colleagues on the research being carried out under the Natural Gas Initiative.
    The site presentations and all information, data and results arising from such visitation interactions will be shared with all members and the public

  • Industrial Visiting Scholar Program: Short-term residencies at Stanford for industrial researchers will promote in-depth interaction between academic researchers and professionals in the field in accordance with Stanford’s Visting Scholar policies.
  • Fellow/Mentor/Advisor Program: This program will help forge stronger connections between Stanford graduate students and faculty advisors and outstanding researchers from industrial partner companies

I like natural gas. It is an excellent, relatively clean burning fuel and an important industrial raw material used to produce a host of valuable products. The dramatic improvements in natural gas extraction technology during the past decade have been remarkable and might help make the US a more prosperous and generous nation.

I’d love to see more natural gas fueled vehicles and more efforts to use our natural gas abundance to produce liquid fuels that can compete directly with imported oil. Unfortunately, entities that own most of our natural gas production capability profit directly from the massive enterprise of importing oil to US refineries and selling petroleum products made from those imports to American and European consumers.

I’m convinced that many participants in the natural gas industry are driven by short term financial considerations to do everything they can think of to increase their sales without harming the sales from other divisions of the same or partner companies.

That is logical enough and even admirable up to the point at which they use deceptive tactics to demonize competitors and use tools like price wars to capture market share with the unspoken intention of allowing “the market” to establish significantly higher prices once the competition has been firmly pushed out of the market.

It’s very easy to find examples of nuclear power plant owners who claim that the profitability of their existing nuclear plants are threatened by low natural gas prices. Kewaunee and Vermont Yankee have already been permanently removed from service, despite the fact that both of them had already extended their operating licenses and could have been producing the equivalent of 150-200 million cubic feet of natural gas every day for the next 18-20 years. As many as 20 more plants might be prematurely shutdown if the natural gas industry successfully sustains its price war for another year or two. Once those plants are removed from service, they will not come back into the market.

Once gas demand has increased enough to soak up the current overproduction, prices will increase. Under current regulatory constraints, it will take ten years from an investment decision until any new nuclear plant will be operating and taking back market share. Here is one more intriguing passage from Stanford’s brochure that does not specifically mention nuclear energy, but which carries some sinister connotations for people who fully understand the previous sentence.

To the fullest extent possible, solutions ought to preserve the attributes of the regulatory environment that made it a locus of technological innovation and economic growth. Crafting regulatory regimes with adequate enforcement appears to be a key challenge in the context of poorly financed institutions.

There is a strong focus within the Natural Gas Initiative regarding the regulatory environment, which is an important aspect of continued natural gas development. My guess, however, is that some of the people involved will recognize that meddling in the regulatory environment for competitive sources of power — like nuclear energy — can be an activity that provides a healthy return on investment.

I’ve categorized this post as a smoking gun. There is no doubt that Stanford’s interest in promoting its natural gas expertise, research, and educational efforts would be hampered if it admitted an easily proved fact: nuclear energy has numerous advantages over natural gas in a variety of applications, especially in producing large quantities of electricity from stationary power stations with an ultra low CO2 footprint.

It’s sad, but true, that Stanford is not the only venerable educational institution that has been captured by natural gas money. As I was writing this post, I recalled producing a similar piece about MIT a few years ago.

Addendum: (added at 12:25 on May 30, 2015) Got an interesting reaction from Alan Nogee, former Union of Concerned Scientists Clean Energy Program Director, to my tweet about this post.

This gives me a chance to expound on one more of my theories about natural gas marketing. I believe that there are some within the anti-fracking community that are setting up the rest of the movement to be the scapegoat for rapidly rising natural gas prices.

Here is my rational line of thinking. When the gas industry’s marketing effort succeeds in building enough demand to exceed supply, they plan to avoid some of the inevitable backlash — especially within the segments of the business community that get hurt by high natural gas prices — by claiming that they could be producing more gas and keeping prices down if only “the environmentalists” hadn’t created so many restrictions on fracking and put so many promising plays off limits.

In my opinion, Jacobson is too smart to be oblivious to the way the law of supply and demand works in selling fuel commodities.

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