Oil, gas, and the US economy

At the WSJ, via NorthcentralPA.com:


NAMPA, Idaho—The staccato of nail guns echoes across a cavernous building here as workers piece together manufactured houses with easy-to-clean linoleum floors and rugged interiors for muddy oil-field workers.
There is no oil and gas production in Idaho, but that doesn’t mean the U.S. energy boom has bypassed this bedroom community west of Boise. Fleetwood Homes of Idaho, a subsidiary of Cavco Industries Inc., has increased production by 25% since last fall at its Nampa factory, hiring 40 workers and adding hours for employees. It is building the extra-insulated “Dakota” model for shipment 1,000 miles east to the Bakken oil field in North Dakota.
Were it not for the new demand for oil-field housing, factory manager Jeff Chrisman says he would be handing out furloughs, not overtime. Instead, “We’ve been able to bring back people that we hated losing a couple of years ago,” he says.
An energy boom is revving up the U.S. economy. The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. U.S. oil production is rising for the first time in decades. Natural gas has become so plentiful that prices recently plunged to a 10-year low.
The economic benefits of rising energy production are spreading far beyond the traditional oil patch, to Ohio and Pennsylvania, Nebraska and New York, North Carolina and Idaho. Truck drivers from pretty much anywhere can find work related to the surging energy business. Private-equity firms completed $24.8 billion of energy deals of all types last year, up from $8.5 billion in 2010, according to data tracker Preqin. Manufacturing plants are returning to the U.S. to take advantage of cheap natural gas, spurring major investments in petrochemical and steel production in the Gulf Coast and Midwest....

Mass hysteria?

Kevin Williamson in the NYPost:


Learning how to exploit the rich vein of natural gas buried in the Marcellus Shale beneath Pennsylvania, Ohio and New York has been a boon to the nation, but another remarkable discovery’s gone along with it. The Keystone State has devised a system of environmental-protection regulations that actually works.
Exploiting shale gas to its full capability has the potential to radically alter some fundamental economic and national-security equations. After all, oil imports account for about half of the total US trade deficit, and US policymakers suffer insomnia every time some random ayatollah starts making scary noises about the Strait of Hormuz.
Environmental ones, too. About half of US electricity comes from burning coal — which, on its best day, is a lot more environmentally problematic than natural gas (something to think about while tooling down to Trader Joe’s in your 45 percent coal-powered Chevy Volt or Nissan Leaf).
Then there’s the jobs...
...So what’s not to love?
The problem is hysteria over the gas-drilling technique known as hydraulic fracturing, or “fracking..."
...There are real environmental concerns about gas drilling, says John Hanger, an environmental activist, former Pennsylvania environmental secretary and sometimes sharp critic of the gas industry — but the concerns have little to do with fracking...


From USA Today, via ABC News:


Get ready for another round of pain at the pump: $4 (or higher) gasoline.
After rising 19 cents a gallon in the past four weeks, regular unleaded gasoline now averages $3.48 a gallon, vs. $3.12 a year ago and $2.67 in February 2010.
Prices could spike another 60 cents or more by May. "I think it's going to be a chaotic spring, with huge price increases in some places," says Tom Kloza of the Oil Price Information Service. Kloza expects average prices to peak at $4.05, although he and other industry trackers say prices could be sharply higher in some markets...

...Lisa Margonelli, author of Oil on the Brain: Petroleum's Long, Strange Trip to Your Tank, says consumers will be vulnerable to rising prices until the U.S. develops alternative fuels such as natural gas.

Credibility gap?

Click on the images to embiggen:








Dryden redux


The Town of Fremont, NY is heading toward a vote to ban hydraulic fracturing. Fremont is in Steuben County, and a ban would adversely affect the property rights of rural landowners in the township.


Under current New York State law, a vote to ban fracking by Freemont would be illegal. There are currently two cases in New York’s Supreme Court where similar municipal bans are being challenged in an attempt to re-establish that state law takes precedence over local law in regulating drilling. That is, unless new legislation on “home rule” introduced into the NY legislature becomes the new law (see this MDN story).
In the meantime, the taxpayers of Fremont should be prepared to spend money on lawyers to defend the town’s action if they decide to pass a ban.


Fracking and "science"

Jon Entine in a NYPost column:

The academic face of the anti-fracking movement — Cornell marine ecologist Robert Howarth — increasingly looks like he’s willing to turn science into farce...

...In an interview, Howarth told me his goal was to make the anti-fracking movement mainstream and fashionable. He said he met with the Ithaca-based foundation two years ago, agreeing to produce a study challenging the conventional wisdom that shale gas is comparatively clean.

The polluting impact of shale gas revolves around one key issue: how much methane gas is released during extraction. Methane has more short-term global-warming impact than any other fossil fuel. Howarth emerged from academic nowhere when he claimed shale-gas wells leak like sieves, venting methane half the time, spewing 7 percent to 8 percent of reserves into the atmosphere...

DSEC interview with Pundit Press

Pundit Press kindly asked for an interview—here it is:


Pundit Press is proud to present interview number 51 in our ongoing series. Today we're interviewing Tracy from the Dryden Safe Energy Coalition. The DSEC's mission is:
To offer balanced, data driven information on safe energy development, to logically and numerically evaluate benefit-to-risk ratios, free of emotional bias or ideology, and to bring together people interested in an analytical approach to energy issues.
1. When and why was the DSEC started?
In the summer of 2011, to bring data-driven, factual information to the public about energy development. We tend to favor drilling because of its economic benefits locally and nationally, but we expect adequate safeguards against factual environmental risks. We also try to bring people together who are interested in an analytical approach to energy issues.
2. How does the natural gas drilling experience in Pennsylvania affect the debate in New York?
Many of the early environmental problems in PA were incurred before the technology had evolved to its current state. However, many of the generalizations and mis- and dis-information are presented in the NYS debate as though nothing had changed from that time period in PA. This is disingenuous. One of the other results from the problems in PA is that NYS is formulating even stricter regulations than PA...


Gary Lash of SUNY Fredonia on fracking

At The Observer, in Dunkirk, NY, via MDN:

..."I have to admit that I am not surprised by the overwhelming response to the recently ended comment period," said Gary G. Lash, Department of Geosciences Professor at SUNY Fredonia and Director of the SUNY Fredonia Shale Research Institute. "Sadly, this entire process has been strong on the political side and woefully weak on scientific discussion. I have no problem with whatever side of the debate a person falls on, yet too much of the discussion has been grounded in fear"...

"...fractures are not going to migrate far from the zone of interest, the Marcellus," he said. "The upshot of this is that it is extremely unlikely that artificially induced fractures would propagate high enough to interact with a water table. The vertical migration of the very dense fluid, which even after the addition of a great amount of fresh water via the fracing process may have a salinity of in the range of 250 plus parts per thousand (the normal salinity of sea water is 35 parts per thousand), is difficult to imagine"...

Read the whole thing.

How fracking lies triumphed

Article at the NYDN about the bumper-sticker issue and TANSTAAFL:

...If fracturing were as dangerous as opponents claim it is, it stands to reason that we’d have dozens, even hundreds, of examples of groundwater contamination all over the country. Instead, we have a handful of claims.
From a public relations standpoint, the opponents of fracturing are winning the debate because they have a simple and effective message that sows fear of an industry that Americans are predisposed to loathe. It could easily fit on a bumper sticker: “Big Oil wants to pollute your water.” The mere notion scares people...

...Here’s the punch line: There’s no such thing as a free lunch in the energy business. Hydraulic fracturing is a water- and diesel fuel-intensive process. Can the drilling sector guarantee that it will never have an accident? Of course not. But it’s equally obvious that the debate over drilling in New York combines two substances about which there is infinite potential for demagoguery: water and energy...

Read the whole thing.

JLCNY Letter to Senator Seward on Home Rule

Great letter to Jim Seward explaining the history of NYS pre-emption on oil and gas drilling regulation and why his "home rule" bill is a bad idea:

...The JLCNY would like you to consider the following information related to oil and gas drilling and your Home Rule bill.  We hope you will realize how damaging your proposed legislation would be to New York and our landowner members.
In the 1970s, New York experienced many problems with the regulatory program for the oil and gas industry when municipalities began their own regulatory initiatives. This local regulation of the oil and gas industry resulted in several problems...
...In 1981, the New York Oil, Gas and Solution Mining Law was amended to include the following supersedure provision in ECL §23-0303(2):  “The provisions of this article shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law”...
...There are 2 cases pending in the New York State Supreme Courts, Cooperstown Holstein Corporation vs. Town of Middlefield and Anschutz Exploration Corporation vs. Town of Dryden and Town of Dryden Town Board. These cases will define the parameters of ECL §23-0303(2)...
...Many municipalities in New York have been persuaded by those opposed to drilling to enact drilling bans.  Most of the local legislators supporting these bans have little or no knowledge about the oil and gas industry. The City of Binghamton recently enacted a ban. Not a single member of the Binghamton City Council has ever visited a well site. This is exactly the scenario that the 1981 legislation sought to avoid. Your bill threatens to return New York to the period of chaos that existed prior to 1981...


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