Natural Gas Revolution – Ba Humbug!

There is an opinion piece in today’s Wall Street Journal titled The Natural Gas Revolution written by John Deutch. According to the credit at the bottom of the article, Mr. Deutch is a professor at MIT and former under secretary of the Department of Energy. He currently serves on the board of directors of Cheniere Energy and was formerly on the boards of Schlumberger, CMS Energy and Citigroup.

My reading of the piece is that Deutch is part of the massive effort to persuade Americans that they should not look at the Deepwater Horizon natural gas explosion as a reason to increase the level of caution and oversight that we apply to oil and gas exploration and as a reason to look very carefully at our energy usage patterns. As shown by the brief bio above, Deutch is a full fledged member of the hydrocarbon establishment with a deep motivation to spread a “don’t worry, be happy” message about our addiction to petroleum.

Like many who are spreading this meme, Deutch takes the opportunity to link Deepwater Horizon to Three Mile Island. The problem is that there is NO comparison in actual harm. At TMI, no one got hurt, and the highest exposure was within the normally allowed legal limit for an occupational worker. No dangerous materials left the plant site in concentrations that could cause harm. In contrast, when the methane (aka natural gas) exploded in the Deepwater Horizon drilling rig, it immediately killed 11 people and opened a hole into a vast, and still uncontrolled source of contaminating fluids and gas stored at extremely high pressures by nature. Since the accident, hundreds have been made sick by exposure, countless sea creatures and birds have been killed or made sick, and millions of barrels of oil have been released to a valuable body of water that laps on the shore that is home to millions of people.

However, according to Deutch, the biggest concern that he has is that people just might think such an accident is a warning that should increase the care with which we approach oil and gas exploration and production. Of course, if we take a bit more care, there just might be less profit in the enterprise because more people would have to be employed and they would not be as likely to take cost reducing shortcuts. (By the way, the cost of exploration and production and the price that you pay for energy are not tightly related. The difference between cost and price becomes profit, and we all know how large that can be in the oil and gas industry.)

Paraphrasing and summarizing Deutch’s message, if we take more care with oil and gas exploration and production we might take a hard look at “new” shale gas resources that he says offer us the hope of vast sources of cheap, clean natural gas that can fuel our cars, replace coal and reduce carbon emissions. If we put too many obstacles in the way of this “new” technology – like removing the exemption that the technology has with regard to the Clean Water Act – we might never have access to all of these riches that would allow us to continue burning without to much concern.

Here is a comment that I left on the Wall Street Journal opinion piece.

This is incredible. John Deutch, a man whose brief bio at the end of his opinion piece indicates that he is or was on the board of directors of Cheniere Energy, Schlumberger, CMS Energy (all of which are deeply interested in expanding the market for natural gas) is given space in the premier business journal in the US to advertise the products that his company sells.

How can a man with such deep interests in oil and gas not know that the very first gas well drilled in the United States – in 1821 – was a shale gas well and that we have known for many decades that there were vast areas of shale gas under the continental US. What we have also known is that getting to that shale gas and releasing it required a massive, costly drilling effort and some method of fracturing the tight formation so that it would release the gas. Heck, there was one time when people working on a program called Plowshares used an underground nuclear explosion in Colorado that was aimed at fracturing shale to release its gas. That happened in the 1960s!

The only thing that changed two years ago (the point that Deutch points to) was that gas prices finally got high enough so that drillers determined that getting shale gas out was WORTH the effort and the Potential Gas Committee began including a larger portion of the KNOWN resource as part of its report of “proven, probable, possible, and speculative” reserves. That determination is ONLY valid at high prices – if gas is cheap, the revenue that can be generated DOES NOT pay back the initial investment with enough return to make it worth the effort.

Fracing is not only environmentally damaging because of the massive effort required, it is also EXPENSIVE and not worth the effort to produce cheap gas. Deutch’s piece is severely misleading, almost in the sense of the way that any pusher tries to give potential addicts assurance that the product will not hurt and will be readily available at low prices into the foreseeable future.

Rod Adams
Publisher, Atomic Insights