John Hanger Credits Low Natural Gas Prices For Helping US Reduce CO2 Emissions in 2012

I ran across an end of the year post about energy worth sharing Counting Down Top 12 Energy Facts of 2012: 3, 2 & 1. It appears on a blog titled John Hanger’s Facts of the Day.

Mr. Hanger claims to be “an expert on energy, environment, green economy, competitive electric markets, and utility regulation with unique experience in and out of government.” He is clearly concerned with influencing public opinion and has political aspirations in the State of Pennsylvania.

Here is a quote from the blog entry that caught my attention:

The low natural gas price caused a substantial shift from coal-fired generation to natural gas power plants this year and slashed carbon emissions and toxic air pollution. It boggles the mind why anyone who wants to reduce carbon emissions right now would oppose shale gas production. Nothing has cut US emissions more than low natural gas prices made possible by the shale gas boom.

And the US has lead the world in cutting carbon emissions since 2006. Indeed, in Europe and Asia, where there is still no shale gas production, natural gas prices are 3 to 5 times US levels, and coal consumption and carbon emissions are soaring.

The rest of the world so far has said no to shale gas and keeps saying yes to more and more coal. In fact, as the war against shale gas continues, the IEA now projects that coal will soon surge pass oil as the world’s leading source of energy.


Since I am quite interested in energy and in the competition between coal, gas and nuclear energy, I thought it was worth my time to respond to Mr. Hanger’s unflinching support for a fuel source that, while good, is not perfect. I also thought it was worth pointing out that today’s price might not reflect long term conditions. (I am pretty sure that it doesn’t, but that position makes me a bit of a far out minority – at least in the non-specialist world.)

Rod Adams said…
I love low natural gas prices and the positive impact they are having on the North American economy. It is terrific that they are lowering the cost of living and, in effect, giving all consumers a rebate that enables them to spend more money in just about all other areas of the economy.

It’s obvious, however, that natural gas suppliers are NOT as happy with the low market prices for the commodity that they produce. The number of drilling rigs focusing on gas production has dropped by more than 50% from the peak in 2009 or 2010. ExxonMobil keeps telling its analysts that the XTO purchase was a good long term investment; they promise that will be proven when (not if) gas prices recover as a result of demand increasing and supply failing to keep up.

There might be as much as 90 years worth of CURRENT consumption left in the ground in the United States, but that does not mean that suppliers are willing to extract those resources so fast that they over supply the market. They have no incentive to maintain a price that is 25% of the price of competitive distillate fuels on a “per unit energy” basis. It is unlikely that they will keep drilling and pumping fast enough to keep prices less than 1/3 of the prevailing price in Europe and less than 1/5 of the price in Japan.

It is especially unlikely that anyone will continue providing the required financing if the sales prices are not high enough to pay back the borrowed money used to drill recent wells.

It is good for the climate if natural gas replaces old coal, but it is not good if temporarily cheap natural gas is used as an excuse not to invest in new nuclear plants or if cheap natural gas results in a company like Dominion deciding to close a well operated and well maintained nuclear plant like Kewaunee.

Rod Adams
Publisher, Atomic Insights

It would be a wonderful thing if natural gas suppliers decided to keep on drilling and producing their product just to spite me and prove me wrong. However, I think it is unlikely that they would give up billions in revenue to prove that an individual in Virginia was a nut case when he pointed to classic economic theory to say that prices will rise when demand exceeds supply and that existing suppliers have an incentive for constraining supplies in order to achieve a rate of return goal that requires higher prices.

About Rod Adams

27 Responses to “John Hanger Credits Low Natural Gas Prices For Helping US Reduce CO2 Emissions in 2012”

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  1. seth says:

    While hanger is correct – conversions to from gas to coal do reduce air pollution and CO2 emissions.

    The price paid is a vast increase in 75 times as potent a GHG as CO2 methane from production to delivery leakage.

    The net result is no effective reductions in GHG’s at all.

    Forbes tells that the cost of gas production is about three times the current market price and keep in mind that cheap gas is only a $2/mcf LNG tanker ride to international markets. Lotsa LNG proposals on the books right now.

    Even with the low gas prices the gas producer SCANA was able to convince its regulator that its VC Summer nuke project at 7.5 cents a kw LCOE was the same as its gas cost in getting the necessary approvals.

    Oddly the EIA more accurately renamed the Energy Industry Association or just plain BOPT (Big Oil Propaganda Team) while agreeing with SCANA gas pricing never budges from its absurd claim that American nukes cost 11.5 cents a kwh.

    • daniel says:

      @ Seth,

      Maybe when you take into account the end of the line consumption is natural gas seemingly less of a CO2 emitter tha coal. However, the craddle to grave analogy would suggest that a lot of methane gets lost along the fracking cycle …

      I am not so convinced that natural gas is thus a lower emittter than coal.

    • Engineer-Poet says:

      cheap gas is only a $2/mcf LNG tanker ride to international markets.

      It’s just a liquefier away from the fuel tank of a heavy truck, displacing diesel fuel costing $28/mmBTU.  The USA used about 25 quads of natural gas in 2011.  If we assume that essentially all of the 8.2 quads of distillate consumed went for diesel fuel or other use for which CNG or LNG is a substitute, a large chunk of the N. American gas surplus could get taken up very quickly by users quite insensitive to even a 5x increase in price.

      • Cyril R says:

        Isn’t the liquifaction tech, and conversion of engines, expensive? Considering the big cost difference, and well established liquifaction tech, you’d wonder why so few long range trucking companies have switched to LNG.

        • Peter Geany says:

          Ciril R You can’t convert an engine designed to run on diesel to gas. But Cummins Engine Co (the worlds only independent engine manufacturer left) has developed a range of Gas only engines and clever duel fuel engines that can seamlessly substitute diesel for gas and back again on the fly. These engines still use diesel as the ignition source but can offer savings and versatility, and run on diesel when no gas is available. Emissions remain constant. (and I’m only referring to the harmful ones)

          Gas only engines are spark ignited just as a petrol engines, and need good infrastructure to support them. This is why you see few in line haul trucks and most in buses and municipal vehicles. I don’t see this situation changing until acceptance of the duel fuel engines.

          Duel fuel engines are also being made available for large industrial engines in the 1500 to 5000hp range for Locomotives and large mining equipment.

          Given that these developments are hitting the market now demonstrates that the shale gas boom is not something that is recent but been with us for some time and that to invest so heavily in gas means their is a fair confidence this is a long term requirement.

        • Engineer-Poet says:

          This ball is starting to roll.  There is a network of LNG stations being built out right now (follow links to earlier posts with more details) and conversion of a number of truck fleets to LNG (search terms:  LNG truck site:greencarcongress.com).

          California’s insistence on low-carbon fuels and clean air will drive LNG adoption there, and that guarantees a supply of COTS engines and fuel systems.

          • Peter Geany says:

            Engineer-Poet

            This is an area where I am expert not you. Let me say it again slightly more qualified this time.

            You cannot convert a heavy duty EPA or Euro certified diesel engine to run on gas. End of story. In fact you can’t convert pre certified engines without costs exceeding the purchase of a new engine. Nor can you convert a modern Car or light van diesel to run on gas without excessive cost.

            Your link above quotes the following

            May need to improve cooling system efficiency
            May need engine oil cooler
            May need new valve seats, guides and seals
            May need new pistons and rings
            Engine compression must be lowered
            May need a new camshaft
            Ignition system must be installed
            Cylinder head modifications are needed to install spark plugs
            Custom cam or crankshaft position sensors must be made
            That is a new engine. In fact you will need new head and new pistons as diesel compression ratio generally twice that of a petrol engine.

            It is obvious from the list above that this company is not refereeing to the same engines in the same market as I was referring to. They are marginal and irrelevant. Your understanding is way off the mark. Most operators will aim for 1 million miles from their EPA certified engines, and that may take between 5 and 10 years depend on whether they are double shifted. I don’t know a single operation that could afford the disruption or cost of converting a million mile truck to gas. They go to the secondary market. The second line operators will be the last to convert to gas by dint of the fact that they operate off the beaten track and infrastructure is going to take tens of years to install. And the other thing to be aware of just as happened in Europe once operators were hooked into gas the governments just can’t help themselves and always tax the gas. Once gas prices creep up there is then no advantage due to the lower calorific value in gas, and the hassle factor in handling it.

          • Rod Adams says:

            @Peter

            That is why T. Boone Pickens wants the taxpayers to subsidize the shift from diesel to natural gas so that his company can sell more natural gas compression stations.

            For some odd reason, providing subsidies to companies that make hundreds of billions per year in sales and net profits that sometimes exceed ten digits in a single quarter does not make any sense to me.

          • Peter Geany says:

            @Rod I don’t know a lot about this man T. Boone Pickens but it strikes me he wants the public to take the risk whilst he makes the profit. This is what happens in Banking at present and is call crony capitalism. There is zero need to subsidies a switch to gas. Infrastructure will be provided if there is demand, and demand will occur if gas saves money for transport operators. And as the world’s largest heavy duty engine manufacturer is providing the engines out of its own money there must be demand. And if demand increases the other manufactures we hope in for a cut of the market.

            If Government subsidises infrastructure of this nature before demand then they usually end up having to claw back the cost with fuel duty negating the savings to the end user and slowing uptake. Market distortions of this type always favour the big corporate type companies at the expense of the low overhead small and medium size business that are the real beating heart of any economy.

            Part of the secret to shale gas has been that the prospecting was done by the smaller players who were willing to take a punt. The big boys took no notice of them, and nor did the government. In fact the big boys in energy, your beloved oil companies, were all pretending to be green but were really only interested in securing subsidies in the renewables field.

            Emissions regulations are now shifting focusing towards CO2 as there is little now to be gained on reducing the actual harmful emissions. You know my view on CO2 so we won’t go there, but in a twist reducing CO2 can only be achieve by reducing fuel consumption, and this can only be achieved if there is a moratorium on the harmful emissions front so that the technology coming forward reduces fuel consumption rather than claws back economy lost to emission reduction.

            One of the easy gains is to use gas. But as explained above there are 2 distinct types of gas engine, one that can only run on gas and one that is able to substitute gas when conditions or fuel is available. If the testing to prove reliability and durability is successful this will be the line haul favoured option (and for locomotives) where as I believe many municipals already use full gas engines across the US especially in California where NOX related smog was always an issue. Whilst reducing fuel burn has no effect on the lb/hp/hr (g/kw/hr) emission numbers reduced fuel burn drops the overall numbers and from this point onwards have the biggest impact.

            But whatever there should be no subsidies so that there are no market distortions that drag investment in the wrong direction. Just image, if all the money wasted on unreliables had been put into nuclear just how much better off the US and the UK would be.

          • Engineer-Poet says:

            It’s always interesting to watch what Geany says, and compare it to independent sources.  One can learn quite a bit about his prejudices (or perhaps they are agendas).  It’s particularly revealing when he claims something when there is a commercial product (meaning, people with money on the line) implying the exact opposite.

            You cannot convert a heavy duty EPA or Euro certified diesel engine to run on gas. End of story. In fact you can’t convert pre certified engines without costs exceeding the purchase of a new engine.

            This may actually be true, but likely due to the cost of certification (paperwork).  The Mercedes OM906 conversion costs about $12,000 per Omnitek, compared to an engine price up to $30,000 per alibaba.com.  Omnitek does claim Euro V compliance with catalytic converter, so Geany appears to be wrong about that as well.

            Nor can you convert a modern Car or light van diesel to run on gas without excessive cost.

            D2G offers a kit to convert diesels to bi-fuel operation with fumigated natural gas.  Whether this imposes “excessive cost” depends on information not in hand, but certainly existing.

            The judges haven’t rendered a final score, but it looks like Reality 3, Geany 0.

          • Engineer-Poet says:

            That is why T. Boone Pickens wants the taxpayers to subsidize the shift from diesel to natural gas so that his company can sell more natural gas compression stations.

            Something else the taxpayers could do is change the EPA fee schedule for certifying installers of NG conversions.  Currently, the cost is prohibitive in most cases.

            If the certification was changed to installation of a certified dual-fuel kit followed by a smog test, we could see this cost drop to a few hundred dollars plus the tanks.  What then?  I could see a drop-in system which fumigates NG into engine intake air and intercepts the fuel injector signals to back off liquid fuel delivery as NG is added.  The tanks could even be removable.  A car could easily be like a PHEV, only instead of plugging in for electricity you’d drop in a tank pack and plug in its control cable and fuel hose going to the engine compartment.  With a next-generation Phill (liquid-piston compressor) you could top off the tank at home every night.  If NG replaces 2/3 of liquid fuel, a 25 MPG vehicle becomes a 75 MPG(l) vehicle.  An NG tank holding 2 gallons equivalent (230 kBTU, about 1.6 ft³ at 2400 psi) would be enough for the daily commuter.  The owner could still unplug the hose and cable, remove the tank pack and have the full cargo capacity of the vehicle available at need.

            providing subsidies to companies that make hundreds of billions per year in sales and net profits that sometimes exceed ten digits in a single quarter does not make any sense to me.

            They probably don’t get that way by taking on enterprises which aren’t profitable.  If it makes sense to do something that isn’t profitable under current rules, and incentives are available to all on a level playing field, I’m not sure it’s a bad thing even if Pickens profits.

          • Daniel says:

            @ Rod regarding T. Boone Pickens :

            In recent press releases, Pickens has admitted to losing his shirt to wind and being pro nuclear.

        • Peter Geany says:

          @Engineer-Poet Name calling again. Is that all you can do?

          The OM 904 and 906 are not viable commercially as conversions. Whilst technically possible, who would take a new vehicle with a new engine and the throw all the internals away, invalidate warranty to save what? 4 & 6 litre engines are fitted to city delivery vehicles, some municipal vehicles, city buses and recreational vehicles such as the dodge RAM.

          Given Line haul trucks use engines in the 12 to 15 litre range and gas version are currently available why would anyone do a conversion, especially as expensive as this one. I think most people will get the message

          • Engineer-Poet says:

            Name calling again. Is that all you can do?

            Interesting that you take a bunch of data from suppliers doing what you say cannot be done and dub it “name calling”.  It’s both hypocritical and very, very ironic.

            The OM 904 and 906 are not viable commercially as conversions.

            Let’s see, suppose a conversion costs $10,000.  It replaces diesel fuel costing $4/gallon with NG costing maybe $2/GDe.  This repays the investment over 5000 gallons-equivalent.  In a vehicle with a fuel economy of 6 MPG, this would take 30,000 miles.  I’m sure many municipal vehicles cover that much ground in less than a year.  It also improves noise and air quality.

            who would take a new vehicle with a new engine and the throw all the internals away, invalidate warranty to save what?

            When the engine is being overhauled anyway, there is no warranty to invalidate.  You are the one who attached the caveat “NEW engine”, suggesting—nay, screaming—that you are not an honest interlocutor but have to manufacture objections to sustain your agenda.

  2. Robert Steinhaus says:

    The premise of John Hanger’s claim that natural gas is a cleaner fuel than coal and produces less Green House Gas is incorrect.

    I favor increased use of nuclear power, but if there is no political will to reduce the regulatory obstructions that keep new nuclear from being built, then maybe it is worthwhile to improve the efficiency and reduce the environmental and health impacts of using America’s existing fuels that currently power the US economy, including coal.

    There is a way of using coal called Direct Carbon Fuel Cells that produce less GHG per MWe of electricity generated than the best Natural Gas Powered power plants. DCFCs produce a reduced amount of odorless, clear, CO2 that is pure enough to be directly usable in large industrial chemical processes while releases no mercury, NOx, or SO2, or particulates into the air.

    There is no need to burn the coal, DCFC fuel cells directly extract chemical energy from coal and turn it into electricity at a thermodynamic efficiency of ~80% – a standard coal-fired power plant has a thermodynamic efficiency around 40%, so you get twice the electricity out of DCFCs as you do from burning coal.

    DCFCs could be used on a national and global scale to produce abundant amounts of energy while reducing in half that impact of GHGs on the climate.

    DCFC Technology over view -
    https://www.llnl.gov/str/June01/Cooper.html

    FAQs on DCFCs by Dr. John Cooper –
    http://www.osti.gov/bridge/purl.cover.jsp?purl=%2F15011582-M5wXbp%2Fnative%2F

  3. Robert Steinhaus says:

    The premise of John Hanger’s claim that natural gas is a cleaner fuel than coal and produces less Green House Gas is incorrect.

    I favor increased use of nuclear power, but if there is no political will to reduce the regulatory obstructions that keep new nuclear from being built and to reform NRC, America’s nuclear regulator, then maybe it is worthwhile to improve the efficiency and reduce the environmental and health impacts of using America’s existing fuels that power the US economy, including coal.

    There is a way of using coal called Direct Carbon Fuel Cells that produce less GHG per MWe of electricity generated than the best Natural Gas Powered power plants. DCFCs produce a reduced amount of odorless, clear, CO2 that is pure enough to be directly usable in large industrial chemical processes while releases no mercury, NOx, or SO2, or particulates into the air.

    There is no need to burn the coal, DCFC fuel cells directly extract chemical energy from coal and turn it into electricity at a thermodynamic efficiency of ~80% – a standard coal-fired power plant has a thermodynamic efficiency around 40%, so you get twice the electricity out of DCFCs as you do from burning coal.

    DCFCs could be used on a national and global scale to produce abundant amounts of energy while reducing in half that impact of GHGs on the climate.

    DCFC Technology over view -
    https://www.llnl.gov/str/June01/Cooper.html

    FAQs on DCFCs by Dr. John Cooper –
    http://www.osti.gov/bridge/purl.cover.jsp?purl=%2F15011582-M5wXbp%2Fnative%2F

    • Cyril R says:

      Things have been awfully quiet around DCFC technology in the past several years. There were a lot of publications up to 2002-2003. Has the tech become abandoned?

  4. John Tucker says:

    There is still some uncertainty surrounding the reductions with gas. I think he is correct – but unfortunately coal exports also increased for the period so who is to say where we are in the grand scheme – slightly better off perhaps but no where near where we need to be. And still not working on the technology or infrastructure necessary to solve this to any meaningful degree.

    • John Tucker says:

      Natural gas is also far from “safe” in a rural field in my region another pipeline blew this morning.

      Crews contain gas leak in rural area west of Melbourne ( http://www.floridatoday.com/article/20121226/NEWS01/121226001/Natural-gas-explosion-reported-rural-area-west-Melbourne )

      There have been several incidents involving severe injury this month in the US.

      Gas infrastructure not worth investing in when nuclear power is available. People need to push harder now for new nuclear.

      • John Englert says:

        Wow! That’s not far from me at all. I guess I need to pay a little more attention to the local news.

      • Cyril R says:

        Life if full of risks. Natural gas power is much safer than coal, overall, so it reduces risk to society. If we can replace coal power with domestic gas power, then that’s a good thing.

        But my critique of fracking production capacity stands. I doubt that the US could produce enough fracking gas, and continue to do so for many decades (keeping in mind all well sources have declining production rate), to provide even today’s natural gas demand.

        So I agree with Tucker that we should push harder for more nuclear plants rather than wasting chemically valuable gas for lowly (albeit much needed) baseload power.

  5. William Vaughn says:

    We’re not talking about US warming here, but global warming. Replacing coal burning with natural gas burning doesn’t impact AGW emissions one bit if we export the coal so that someone else can burn it.

    Forget cap and trade fiascos. We have to go with “tax and dividend” if we really want to attack this AGW problem. That is, tax carbon as it comes out of the ground and let the producers pass on the costs to transporters, refiners, utilities and ultimately consumers. Then 100% of this tax fund is periodically paid back to citizens of the country that produced the hydrocarbons.

    If hydrocarbon fuels have to pay their external costs, then people will eventually demand that better options be pursued, like, say, clean, green, renewable energy.

    The next step is to convince people that nuclear energy is exactly the clean, green, renewable
    energy option that they are looking for, notwithstanding the expected protests from the environists.

    If we continue to insist that we extract all the hydrocarbons that money can buy, it will give us just enough time to get the all deck chairs arranged just the way we want them.

  6. Cyril R says:

    The problem with natural gas is that everyone wants it. Natural gas for fertilizer, for heating homes and industrial processes, for chemical reduction, for fuelling electric plants…

    Clearly we must look at whether the production capacity exists, or will likely exist, for rosy predictions like shale gas replacing all the coal plants in the USA.

    My own research does not indicate such production potential to exist, even using the rosy industry estimates (which we’ve recently have learned to have exaggerated their production potential per well). The reserves are very large but no one is talking about the production limits. Fracturing gas wells are similar to conventional easy gas wells: it runs out. You drill a well, and get a good high rate of production, but then it declines just like oil wells. From my own research it appears that, using the most rosy estimates, fracking gas could at best deliver enough natural gas for today’s uses for an extended period (decades), but not enough to replace coal plants.

    Natural gas is a valuable fuel and we cannot waste what limited production capacity we have to generate electricity, when we’ve got a good solution for generating electricity already: build more nuclear plants. Natural gas could help close down coal plants faster, if it’s production capacity is sufficient, but we must be carfeful not to lock ourselves into natural gas forever. This is what happened in my country, the idea was to quickly use up natural gas as transition fuel to nuclear plants. But then we decided that nuclear power is evil and so we’re end with a “bridge fuel to nowhere”. Wind and solar need 5 to 8 kWhs of natural gas for every kWh of wind or solar electricity, so that’s just further enforcing natural gas lock-in.

    • Engineer-Poet says:

      I’m with you on the replacement of NG by nuclear for the electric grid, but I would say that we shouldn’t stop there.  In the Northeast, anything beyond immediate electrical demand in winter could be dumped to resistance heaters, replacing natural gas, fuel oil and propane; smart thermostats could select the heating method to use based on utility reports of excess supply and the load on the local substation and feeder.

      Petroleum is even more precious than methane, so if NG can be carbureted into car and truck engines to replace gasoline (partially or completely), nuclear could help to reduce oil imports and clean the air.  This is an idea orthogonal to the PHEV, which may be quicker to roll out in quantity than anything that uses large batteries.

  7. John Tucker says:

    The point needs to made also there is a overcapacity of natural gas generation in electricity generation venues. Much more coal could likely be shuttered without adding more gas capacity or infrastructure.

    Natural gas is 41% of capacity yet only generates 25 percent of power.

    Coal is 28% of capacity yet generates 42 percent of power.

    Nuclear is only 9% but in comparison generates a whopping 19 percent of US electricity.

    ( http://www.eia.gov/energy_in_brief/article/nuclear_industry.cfm )

    As is there is no good argument for additional gas capacity that I know of. There is a very good argument for more nuclear, less subsidies to all fossil fuels and a carbon tax.

    • John Tucker says:

      Hot off the EIA press today :

      Uprates can increase U.S. nuclear capacity substantially without building new reactors

      Uprates may be implemented incrementally or in combination with each other. The new capacity from nuclear uprates can be put into place quickly, as compared to new plant construction, and only as needed by actual demand growth. Although not restricted by NRC regulations, the total uprate potential of any reactor generally will not exceed 20% of the original licensed capacity of the reactor.

      All but six of the 104 U.S. reactors have applied for an uprate, and two reactors, Vermont Yankee (near Brattleboro, Vermont) and Clinton (near Clinton, Illinois), applied and were approved for full 20% extended uprates. Susquehanna Units 1 and 2 (near Berwick, Pennsylvania) and Edwin I. Hatch Units 1 and 2 (near Vidalia, Georgia) are the only reactors to have received separate NRC approvals for all three types of uprates. ( http://www.eia.gov/todayinenergy/detail.cfm?id=9410# )

      This is fine I think but we need new reactors and new reactor technology. Also things like new SMRs can be deployed in more hazardous areas and in areas where new hazards could be developing.