• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Home
  • About
  • Podcast
  • Archives

Atomic Insights

Atomic energy technology, politics, and perceptions from a nuclear energy insider who served as a US nuclear submarine engineer officer

Natural Gas

Atomic Show #286 – Chris Wright, CEO Liberty Oilfield Services

November 6, 2020 By Rod Adams

Chris Wright is the CEO of Liberty Oilfield Services, which recently became the second largest US company performing the work of drilling and completing oil and gas wells in shale formations.

He is a leader in the field of hydraulic fracturing and horizontal well drilling, having been involved in the revolutionary technology development since the days when George Mitchell was stubbornly experimenting in the Barnett Shale.

Among those who focus on the energy industry and attempt to understand its current situation in order to gain some insights into the future, the growing natural gas supply in the US gets a lot of attention. Cheap natural gas gets credit for a steady drop in annual US CO2 emissions as it has pushed a growing amount of coal out of the market.

That same product – cheap natural gas – has also been blamed for reducing revenues enough at a number of existing nuclear plants to push their owners into closing the plants for economic reasons. Despite successful efforts to reduce operating costs at those plants, shrinking top-line revenue from selling electricity into low-priced wholesale markets means they do not make enough money to meet corporate goals.

After hearing Chris Wright on Robert Bryce’s excellent Power Hungry podcast, I realized it would be worthwhile to invite him onto the Atomic Show to provide a deeper explanation of the revolution in natural gas production.

Chris gets into some deep technical details about how technology has dramatically improved in his field. He explains how competition and a relentless focus on providing a better product has driven that improvement.

He is justifiably proud of the benefits that his industry has provided to the world, but he also provides some important support and advice to people who are working to improve nuclear fission energy.

It might surprise many, including some of Chris’s colleagues, to learn that Chris describes himself as a huge supporter of nuclear fission energy. He provides some compliments and some tough love for those of us who are working to improve the technology’s chances of competing and serving customer needs.

I think you will thoroughly enjoy listening to Chris’s thoughts about energy and its importance for human development and prosperity.

As always, I’m interested in hearing what you think. I’m pretty sure this show will provoke some deep thinking in what might be completely new directions, so I’d like you to share some of those thoughts.

https://s3.amazonaws.com/AtomicShowFiles/atomic_20201104_286.mp3

Podcast: Play in new window | Download (Duration: 58:35 — 67.2MB)

Subscribe: Google Podcasts | RSS

Filed Under: Fossil fuel competition, Fossil fuel cooperation, Natural Gas, Podcast

Environmental Defense Fund president has a fundamental misunderstanding of gas markets

November 18, 2017 By Rod Adams 15 Comments

Fred Krupp, the president of the Environmental Defense Fund (EDF), published a commentary in the Wall Street Journal titled How Local Utilities Gamed the Natural Gas Market. The article subtitle briefly explains his theory – They booked large orders and then cancelled at the last minute, which pushed electric prices up by 20%.

Krupp’s commentary did not offer much in the way of explanation for why local gas distribution utilities in New England might engage in this kind of behavior. Instead, he makes a vague accusation implying that the gas distribution utilities purposely acted to “limit the amount of gas available to the generators that produce half of the region’s electricity.”

Since gas utilities do not compete directly against electricity in New England, it’s not clear why the companies would want to limit fuel to electricity suppliers.

Though I am not a New Englander, I’ve lived in the region through a couple of winters. I also have some family members who either still live there or who escaped to Florida after living there for a number of years. I say that as a way of establishing standing when making a comment about winter weather in New England. From memory, from family stories and from reviewing data, I can testify that winter weather can be harsh while also being frequently unpredictable.

Firm Delivery Contracting

Weather fronts can be delayed or accelerated with little notice. It makes perfect sense for a gas utility company that is a regulated monopoly with an obligation to serve its customers to enter into gas pipeline contracts with firm commitments to deliver sufficient gas. Their definition of sufficiency would include meeting expected heat demand plus a bit of extra gas in case the demand greatly exceeds expectations.

If the weather front gets delayed and usage isn’t as high as expected, there might be a small cost to the company that gets passed onto customers, but the cost of having a buffer is probably far less than the potentially catastrophic inability to deliver enough gas to keep people from freezing and gas-dependent businesses from having to close.

Krupp goes on to offer a confusing condemnation of the fact that pipeline companies would be happy to build additional pipeline capacity if they could find enough qualified customers to enter into firm delivery contracts similar to those used by gas utility companies. Those contracts carry a moderate premium price over interruptible delivery. They also require a commitment lasting up to 20 years.

Krupp is dismissive of the pipeline companies and their traditional position of requiring that they have customers committed to paying for capacity before they will build that capacity. He writes “the developers want their investment to be risk-free.”

The truth is that the developers need financing from investors and banks before they can spend billions of dollars building a pipeline. Those financial backers are the ones that – rather logically – require pipeline companies to have bankable contracts before they will lend them the money they need.

Betting On The Spot Market

Even though more than 50% of the electricity production in New England now comes from burning natural gas, electricity generating companies are not interested in paying the higher prices and making the multi-year commitment. They are better able to compete by gambling on the spot market to deliver gas at the lowest possible price.

Since they are under no obligation to serve, they have a simple answer when pipeline capacity fills up and they either cannot get fuel or have to pay prices that are several times the normal price. They can bid up the price of electricity to levels approaching $1000/MWhr or they stop generating.

Neither of those options are particularly customer friendly. Generating companies work for investors and believe that their fuel contracting practices make the most economic sense.

Krupp Says He Understands Supply And Demand

It was also rather amusing to note the following quote in Krupp’s piece.

“Econ 101 teaches what happens next. When supply goes down, prices go up.”

Perhaps he should hold some in house training and discussion sessions that emphasize that keen understanding. That way, EDF might begin to rethink its opposition to FERC action aimed at keeping nuclear and coal supply in the market. Like other groups that oppose the action, EDF is claiming that efforts to keep temporarily uncompetitive capacity in the market will inevitably lead to higher prices.

Exactly the same page in the Econ 101 textbook that Krupp mentions tells us that the loss of reliable supply will more likely lead to higher prices since demand is unlikely to disappear just because owners of a few large power plants decide that running them is not profitable enough to cover the costs and risks involved.

One of the reasons those reliable generators are failing to earn enough revenue is that they are forced to compete for sales and prices against virtually “fly by night” generators that burn the cheapest available fuel whenever it is available and quit the market when the going gets tough and customers need them the most.

Krupp is probably right to note that if gas fired power generators purchased fuel with firm delivery commitments, wholesale prices would be likely to increase. Customer bills might even go up. Concerns about pipeline constraints and worries about severe supply shortages should also disappear.

A complete presentation of the real effects might enable customers to recognize that it might be worthwhile to pay a little extra for the security and peace of mind that capacity buffers can provide. It would not be surprising if Krupp and his economist friends resisted, system slack and redundancy aren’t aimed at maximizing efficiency.

PS In 2015, the Environmental Defense Fund paid Fred Krupp $545,000 and provided a benefits package worth $62,000. He is one of seven executives whose compensation exceeded $300,000 in 2015.

EDF collected $135 M in contributions and reported a net asset base of $204 M.

Among their numerous contributors are companies like Chevron, XTO Energy (Exxon-Mobil), Valerio, and Transcanada.

NGO’s like EDF may be ‘non-profits”, but they are demonstrably not altruistic organizations. It is possible that some of their positions are influenced by the interests of their donors.

Filed Under: Fossil fuel competition, Natural Gas

Moon Jae-in Making Friends By Promising To Buy More Gas

July 21, 2017 By Rod Adams

During his successful campaign to become South Korea’s president, Moon Jae-in promised to dramatically increase South Korea’s natural gas consumption. Within weeks of taking office, he took several concrete steps towards fulfilling that promise. He announced the near-term closure of 10 coal plants, he allowed the operating license to expire as scheduled for South Korea’s […]

Filed Under: Antinuclear activist, Atomic politics, Fossil fuel competition, International nuclear, Natural Gas, Politics of Nuclear Energy

Do Natural Gas Interests Create Or Amplify Bad News About Nuclear Energy? Will They Continue To Push?

June 26, 2017 By Rod Adams

Consumption of natural gas in U.S. electricity generation

“Don’t wait for a serious crisis to occur. Create one that can be more carefully controlled to your advantage.” Credit: Fictional natural gas futures trader whose last name might be Dulles or Bundy One of my favorite sources for natural gas industry news and opinions is RBN Energy LLC. Their blog is near the top […]

Filed Under: Business of atomic energy, Fossil fuel competition, Fracking, Natural Gas

South Korea’s President-Elect Pledges ‘Nuclear Zero’ by 2060. Actions Have Already Begun

May 30, 2017 By Rod Adams

Nuclear energy in the Republic of Korea is being threatened as a result of the May 9 presidential election of Moon Jae-in. Since at least 2012, when he suffered a narrow election defeat, Moon has advocated a halt to nuclear plant construction, prohibiting license extensions and achieving a “nuclear zero” policy by 2060. With the […]

Filed Under: Atomic politics, Fossil fuel competition, International nuclear, Natural Gas, New Nuclear

Personal paradigm changing discoveries in progress – are petroleum and methane primal compounds?

September 1, 2016 By Rod Adams 104 Comments

Loyal Atomic Insights readers might wonder why it’s been more than a week since I last wrote a post here. Those who follow @atomicrod on Twitter might have noticed a few hints about what I’ve been busily doing for the last ten days or so. It seems likely to me that Thomas Gold, Dimitri Mendeleev, […]

Filed Under: Fossil fuel competition, Natural Gas

Atomic Show # 255 – Powerful fuels can enable human freedom and prosperity

July 8, 2016 By Rod Adams 7 Comments

Some people who are not well versed in human history believe that fossil fuels are inherently evil, costly and harmful to human health. They ignore the side of the accounting ledger that documents the incredibly beneficial effects concentrated fuels have provided to overall human freedom, happiness, self actualization and reduction of dependence on nature. Those […]

Filed Under: Alternative energy, Climate change, Fossil fuel competition, Fracking, Natural Gas, Podcast, Politics of Nuclear Energy

The Worth-It Threshold – When gas or gas + renewables is as bad for climate as a coal plant

April 9, 2016 By Guest Author 104 Comments

The following article dovetails nicely as support for several articles that are in the queue. Those articles will describe a global case of ill-advised groupthink about a future energy supply system consisting of unreliable wind and solar power generation. My interpretation is that the “100% renewables” goal is a seductive mirage that has been carefully […]

Filed Under: Climate change, Natural Gas, Solar energy, Unreliables, Wind energy

Vermont Yankee power output has been replaced by natural gas

April 1, 2016 By Rod Adams 59 Comments

Activists rally outside the Statehouse following a vote by the Vermont Senate to retire the Vermont Yankee nuclear plant in 2012. Since the plant’s closing, energy derived from natural gas has increased more than 5 percent.

By Michael Bielawski When Vermont Yankee closed at the end of 2014, it was largely with the understanding that renewable energy sources were going to take its place. According to data supplied by regional grid operator ISO New England, such has not been the case. Over the past two years, about 5 percent of New […]

Filed Under: Vermont Yankee, Fossil fuel competition, Natural Gas

Reliable partnership between natural gas and renewable energy

January 14, 2016 By Rod Adams 27 Comments

Naomi Oreskes is the Professor of the History of Science and Affiliated Professor of Earth and Planetary Sciences at Harvard University. She is also the author of the December 16, 2015 opinion piece published in the Guardian titled There is a new form of climate denialism to look out for – so don’t celebrate yet. […]

Filed Under: Alternative energy, Natural Gas, Solar energy, Unreliables, Wind energy

Natural gas leak polluting Porter Ranch in LA county since October 23, 2015

December 15, 2015 By Rod Adams 4 Comments

Earlier today, I found a link in one of my news feeds to a December 14, 2015 MarketPlace story titled A Natural Gas Leak With Seemingly No End. It describes an event near a community called Porter Ranch in Los Angeles county, California that has been in progress since October 23, 2015. Here is the […]

Filed Under: Accidents, Book, Climate change, Health Effects, Natural Gas

U. S. State Department Bureau of Energy Resources input on energy and climate at Central Europe’s Tatra Summit

November 5, 2015 By Rod Adams 17 Comments

Tatra Summit is an initiative of the Center for European Affairs (CEA), begun with the immodest goal of shaping the future of Europe. Launched in 2013, it periodically brings together a diverse group of leaders to discuss important European topics. There is a meeting happening now during the period of November 4-6, 2015. This morning, […]

Filed Under: Climate change, LNG, Natural Gas

  • Go to page 1
  • Go to page 2
  • Go to page 3
  • Interim pages omitted …
  • Go to page 10
  • Go to Next Page »

Primary Sidebar

Categories

Join Rod’s pronuclear network

Join Rod's pronuclear network by completing this form. Let us know what your specific interests are.

Recent Comments

  • Eino on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin
  • Rod Adams on Can prototype nuclear reactors be licensed in the US under current rules?
  • Rob Brixey on Can prototype nuclear reactors be licensed in the US under current rules?
  • Jon Grams on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin
  • Rod Adams on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin

Follow Atomic Insights

The Atomic Show

Atomic Insights

Recent Posts

Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin

Atomic Energy Wells

Enough with “renewables!”

Can prototype nuclear reactors be licensed in the US under current rules?

Atomic Show #303 – Bret Kugelmass, CEO Last Energy

  • Home
  • About Atomic Insights
  • Atomic Show
  • Contact
  • Links

Search Atomic Insights

Archives

Copyright © 2023 · Atomic Insights

Terms and Conditions - Privacy Policy