The BBC (British Broadcasting Corporation) is one of the most respected news sources in the world. Its status as a media tax supported organization that does not completely depend on advertising dollars has allowed it to maintain investigative journalism departments, to continue to cover the world and to produce high quality dramatic shows that do not necessarily attract mass market audiences. Among well-educated people who fill leadership positions in government, academia and business, it is a “go-to” place for general information about topics that they want to understand and be able to discuss with their friends.
At least, that is my overall impression. This morning, however, I was a disappointed to read a story titled All change as gas reserves soar that reported, almost without question, that natural gas reserves had suddenly increased to the point where gas could massively substitute for coal in European power generation and provide an almost immediate drop in CO2 emissions.
“If Europe was to convert all coal-fired power stations to gas they would reduce emissions by 40%,” he claims, pointing to how gas power stations emit about about a third less than modern coal-fired power stations and about two-thirds less than old ones.
(Speaker being quote in the article is Rune Bjornson, head of Statoil’s gas division.)
Lest the reader recognizes that this opinion might be a minority opinion provided by a man with a very strong economic motive for advocating this kind of enormous market share shift from coal to gas (increasing the unit sales volume and almost certainly increasing the price per unit for exactly the product that he is responsible for producing and marketing) Jorn Madslien, the BBC reporter, tells us that this opinion is shared by the Potential Gas Committee in the United States and by Peter Dea, chief executive of Cirque Resources in Denver, Colorado.
For journalistic “balance” Mr. Madslien provides a couple of inches of column space to Arthur Berman, a man who has made himself personna non grata as a former columnist for an energy industry trade publication by expressing skepticism about the abundance of natural gas. Here is how he diminishes Mr. Berman’s analysis, returning his article back to its original premise that gas is abundant.
Such sceptical voices do not ring loud in energy circles, however.
Advocates argue that the ability of shale gas to help curb carbon emissions makes it a worthy, and in macroeconomic terms worthwhile, risk to take.
Just in case the targeted reader does not have time to digest the full article – after all, BBC audiences can be busy people – the editors at the BBC pulled out the following quote for a one of those quote blocks that are used to pull readers attention:
“As shale gas fields come on line in the next five years, it is likely that European prices will drop in half”
(Paul Sterne, managing partner of mergers and acquisitions advisers Sterne & Co)
The editors were also careful to select optimistic phrases for bold print; here are some of the section headlines chosen to highlight key concepts: Plenty of gas, ‘Game changer’, Energy security, Falling prices, and finally, Winners and losers. I was most disappointed with the discussion under “Winners and losers”. That discussion provided the conclusion to the article; conclusions are generally the second most read parts of any journalism piece:
Consumers might find that an appealing prospect, particularly in some of the world’s poorest countries. Such sharp price falls should go a long way to relieve fuel poverty and indeed hunger.
But elsewhere, notably in Russia, many ordinary people could also see their lives transformed in less-than-desirable ways as it could lead to a painful reversal of the country’s recent economic prosperity, which was based largely on highly-priced gas and oil exports.
The geopolitical implications are both obvious and enormous, so it is far from certain that a sharp and sudden rise in global gas supplies will be a blessing rather than a curse.
But if the gas is there, do not expect such concerns to prevent it from being extracted.
Knowing what I know about the nuclear renaissance and about nuclear energy’s proven capability to displace coal, oil and gas from markets in electrical power generation, home heating, and ocean transportation, I believe that the gas industry is working hard to slow down its competitor. The gas industry is highly motivated to increase its sales through a full court press that includes both purchased advertising and public relations efforts that result in pieces like the one discussed above. Though the article quotes Mr. Bjornson as believing that low carbon sources of power, including nuclear, will become “leading power suppliers in the future” it makes it quite clear that the near term belongs to gas and that people who are not excited about using more gas in electrical power production are outsiders as demonstrated with the following quote:
“If you’re not in on these plays (talking about shale gas), Wall Street says ‘well, what’s the matter with you guys?'”
My reason for being riled up by this rather obvious public relations effort is that the decision makers who buy gas or encourage its use may not be people who maintain a questioning attitude. They may overlook the qualifier on the 100 year supply claim that it is based on “current consumption” and will be a gross underestimate if natural gas consumption rates increase by following Bjornson’s advice of replacing coal combustion with gas combustion. They might even believe that 100 years is a very long time, even though there are already people on the planet today who will still be alive then. Most dangerously, they might put off decisions about investing in new nuclear plants. They might tell themselves and their boards that if gas is cheap and abundant now and may get cheaper in the future, they can afford to procrastinate.
If you do not believe this attitude is gaining sway in the electric utility company board rooms, go back and review the testimony provided to the US Senate by John Rowe, CEO of Exelon and a thought leader in that business. Of course, if everyone puts off investing in long term projects, they will never get built until AFTER such time as we have gone through a very painful period of supply constrained price increases.
If you happen to sell natural gas, however, you might not think of a period of high gas prices as being particularly painful.