Subsidize, baby, subsidize!

By Hilton Price

Another U.S. Presidential election is just around the bend and, as always, this is the one that will make or break us for the rest of time. The issues, at least the ones that stir a large enough constituency, are being argued heatedly in sound bites and video snippets every day. The fight continues on social media, where I’m watching friends torn by differing views, and people shunned and insulted for speaking what they feel is right.

Among the issues is one that pertains to me and probably all of you – subsidies. Oil subsidies tend to be the one railed against the most, but any type of economic business assistance tends to have its own pack of nay-sayers. It’s typically argued that there are more deserving places for the money to go, and that the oil industry can support itself. Honestly, that’s not wrong, but it’s irrelevant.

Shell spent billions of dollars securing the right for its recent Arctic drilling attempt. That attempt was abandoned due to ice and equipment damage. I bring it up not to speak ill of Shell, the company was the victim of Mother Nature and circumstance, but to show that this is an industry which is sometimes forced to make a billion-dollar gamble. It’s an industry where day-to-day business costs millions of dollars, a sum not seen by most people in a lifetime. It’s easily one of the most expensive businesses in the world and honestly, shouldn't it be?

Almost everything I do all day long is possible because of the energy industry, and most of the time it’s oil and gas doing the work. From simple room lighting to my car to the phone in my pocket, the energy industry enables my entire life. Above I mentioned there are places more deserving for subsidiary money to go. Teachers are a perfect example. But not one of those teachers will be able to as effectively do their job, if those classroom lights won’t come on.

And yes, I absolutely think teachers need a pay raise and corporate CEOs (many in the energy sector) need a pay cut, but I don’t want to flip the two. Oil and gas execs are welcome to make more money, even a lot more, if it keeps those industries staffed with people who are looking to produce energy effectively. Keep the lights on, and find new and better ways to do it!

There’s an image problem in the oil and gas sector, at least in how the industry is seen by the country, and maybe the world. I addressed it’s need for a make-over in my last post. Being honest about how the industry spends money, and being transparent about the true costs of the business, will aid in that make-over. There are cuts that need to be made, and adjustments that need attention, but they can be relatively minor. The real cost will be the courage to be honest about the industry’s role in our lives.

What's old is new again- Revisiting energy storage

By Dorothy Davis

The electrical grid is a complex network connecting thousands of power sources with millions of consumers all across the U.S. While producing enough power to supply the energy needs of a nation is an extremely difficult task, just as challenging, if not more so, is the need to balance supply and demand on the grid.

Traditionally, the key approach to addressing this issue has been a centralized one, with power generators adjusting daily production based on anticipated levels of demand. But as the supply and demand picture continues to become more complex, emphasis is beginning to shift again toward energy storage - systems that can hold excess electricity until it is needed and then responsively release it into the grid.

The utilization of energy storage in the U.S. is far from new. A report by the Energy Storage Council (ESC) highlights power generators in the 70’s and 80’s recognized the potential of these technologies - creating a base of large-scale storage facilities that accounted for nearly 3 percent of the nation’s electric capacity by the early 90’s. However, the industry suffered major setbacks under the pressures of deregulation causing development to stall.

In the last decade energy storage technologies have enjoyed a resurgence spurred primarily by the burgeoning electric vehicle industry and private investment. Utilities and investors are again recognizing the broad potential benefits of energy storage technologies for power generators as they strive to meet demand.

The potential economic impacts of energy storage are fairly widespread, but the most basic idea is that these technologies will benefit utilities by maximizing power generation and conservation through reliability. Instability can lead to higher electric costs both because of inefficiencies at the generation level and the need for greater maintenance at lower levels.

The prospective benefits of energy storage are also gaining government attention and support. Most recently, the U.S. Department of Energy announced $43 million in funding from its Advanced Research Projects Agency-Energy (ARPA-E) for 19 new projects aimed at developing energy storage technologies.

Energy storage also offers a more cost effective solution for intermittent renewable energy sources like solar and wind, which are incapable of scaling generation up or down in response to changing demand.

At the same time, energy storage also has the potential to allow for more consistent use of coal-fired power plants, which have difficulty adjusting their output based on demand.

Energy storage holds the potential to address many of the key challenges facing the electric power industry. By raising the overall capacity and flexibility of energy storage helps meet the needs of a high demand modern grid by optimizing existing assets.

With such wide ranging benefits, growing the energy storage sector is certain to open up new and innovative opportunities for the electric power market.

Progress as promised...

By Hilton Price

Growing up, I was a good kid. I listened to my elders, asked before doing anything crazy, and pretty much played by the rules. My cousin Steve, not so much. He was a bit of a problem child. He liked mischief, rarely asked permission, and often found himself on the wrong end of a spanking… or worse.

Steve wasn’t a bad kid. He just had trouble staying on task. This made it harder for him even as he got older, and learned some discipline, because everyone around him still thought of Steve as a bad egg. By the time he was entering high school, he was doing well in class, excelling at extra-curricular activities, and becoming a responsible and thoughtful young man. But the stigma from his childhood still stuck around, leading to some people judging him incorrectly for much of his young adult life.

When Hurricane Isaac started heading toward the Gulf of Mexico this summer, the companies working in the region’s deepwater oil fields took notice. They sent crews away, battened down the hatches, and prepared for the storm. And after the winds and rains had died down, they didn’t rush back to the platforms and start flipping on each switch.

The companies working in the gulf began a series of checks to make sure the equipment was able to safely be restarted before production began again in the Gulf. No company rushed back into business, because no company dared risk overlooking some minor damage from the storm that could grow exponentially once the platform was operating again.

At Power-Gen International 2011’s keynote address, reshaping the image of the oil industry was touted as an important goal for the future. Finding lots and lots of oil and using it to power the world was probably also covered, but the “image reshaping” really stuck in my head. I absolutely agree that this industry should be shouting its best practices to the world, especially when they are followed diligently.

But when the companies returned to the Gulf after Isaac, the public knew little to nothing about the extensive checks underway before production began. I know it’s typically the bad news that gets attention, and “Companies slowly checking everything in the Gulf” is a pretty boring headline, but I also remember a young man I knew growing up who also needed all the good P.R. he could get.

To my new eyes on an old industry, the oil industry and my young cousin Steve have something very important in common. Both need to have their successes celebrated twice as loud as their failures, to ensure those watching understand they are doing good work.

The public’s poor perception of the oil industry isn’t without some cause, but it is certainly overkill. Companies within the industry are constantly working to ensure oil is discovered, extracted, and processed in the most safe, secure, and reliable way possible. The people working in those companies live on this planet too, and are trying to minimize impact on Earth while utilizing its resources. These are good and important companies, and this is (overall) a good industry. But there is a lot of bad press, and overcoming it means publicizing every positive moment.

Just as Steve needed his accomplishments touted twice as loud as his failures, to show his progress and promise, so should the industry be ensuring the good news gets out. It’s the best way to reshape an image, allowing companies to grow, much like my cousin, into even more productive and valuable members of society.

The new leadership needed in energy

By Dorothy Davis

I was recently invited to participate in an energy focused panel for the University of Tulsa’s newly launched Master of Energy Business program. Being in the middle of wrapping up the Summer issue of PennEnergy's EnergyWorkforce magazine, I was inspired by its theme of the Big Crew Change. What had been planned as a presentation on the increasing trend toward integration in the industry became instead a call to my peers to take up the mantle of leadership.

As a member of the PennWell team I am fast approaching my sixth year of being engaged in energy. In my role as content director for one of the most comprehensive energy news portals in the world, I am immersed in all segments of this industry. I live and breathe it. While it is abundantly clear that it is a good time to be in energy, it’s also clear we are on the cusp of change that goes far deeper than our standard boom or bust cycles.

Energy touches everyone. It is as vital, pervasive and complicated as agriculture in its global influence. Energy today, not in some unspecified future, desperately needs to cultivate its next thought leaders. On the near horizon is the loss of close to half of our industry professionals. While this is unfolding, global energy demand is poised to nearly double. Energy professionals both in outlying roles such as mine and in more direct fields such as engineering or the geosciences will need to fill those gaps with fewer tangible resources. It will require a leadership armed with a new set of dynamic guiding principles.

Diversity, collaboration and innovation are the words to remember. While functional and technical specialists will always be needed; those beginning or continuing their professional lives within energy must bring more to the table. For the energy industry to continue to thrive it must extend that table to accommodate more than its traditional business models.

The burdens of a strained global economy, environmental issues, resource limitations and the need to modernize are not petroleum problems or utility problems - they are global challenges. As our industry moves ahead in finding ways to connect and integrate diverse sources across large and small networks to meet these challenges, those of us who strive to lead must do the same with our business approach.

We must adopt an all-of-the above tactic in all things energy. I do not say that lightly. Those words are deeper than a proposed policy or some biased political statement. It is a way forward that respects the heritage of the energy industry while taking the necessary steps to ensure it continues to flourish.

A culture of diversity, collaboration and innovation is required for the years ahead. What once constituted business as usual no longer applies. Business is anything but usual. It is indeed a good time to be in energy, but it’s an even better time to be a trailblazer.

But Syriasly, folks…

By Hilton Price

Nearly a year and half ago, Syrians began an uprising against their government. The protests and armed conflicts revolve around the Ba’ath political party, which many in Syria see as corrupt and beholden to Islamic militant group Hezbollah. The protestors want the Ba’ath party out, and many international governments seem to agree with this sentiment.

It’s hard to know what the U.S. really wants here, due to some baffling maneuvering from Washington. Earlier this month, the U.S. announced new sanctions against the Syrian government and the country’s state-run oil company. However, as sanctions traditionally limit the economic and political options available to a group or country, these latest sanctions seem to be intended to show American concern over the conflict, but not any interest in actually getting involved. They are largely “symbolic,” even according to U.S. officials.

It all reminds me of a bad parenting decision I made a few weeks back. When my little girl refused to go to sleep one night, I found myself struggling to choose a fitting punishment. A time-out would keep her out of bed longer. A spanking would only exacerbate the situation and delay sleep even more. So, as I stood in my daughter’s room, determined to find some way to make her understand she needed to close her eyes and try to sleep RIGHT NOW, I reached for the first toy I saw. With her Etch-a-sketch in my hands, I looked sternly at my little girl and said, “I’m taking this toy away until you can go to sleep.” With that, I closed her door and walked back to the living room.

It took another hour before she finally went to bed. Later that night, I stared at the taken toy wondering what, if anything, I could have done differently. Suddenly, I realized I could not remember ever seeing her play with the Etch-a-sketch.

I called her mom, and sure enough, she also could not remember the toy being used. Grandma, grandpa, and Aunt Judy also had no recollection of seeing the Etch-a-sketch being played with. It was now no wonder my daughter wasn’t bothered by me taking the toy. She didn’t even like the toy!

To my new eyes on an old industry, symbolic sanctions are like punishing a child by taking away a toy it doesn’t like. It may look like a serious action, but it’s really a meaningless gesture.

Punishment has to mean something, or anyone with basic problem-solving skills will see the emptiness of the gesture. I know, because I’ve spent the past couple years with a little someone who has only basic problem-solving skills, and even she would think these sanctions were pointless. Of course, she doesn’t know what a sanction is, but honestly, why would I dare spoil that. I wish I didn’t know what a sanction was. Ah, the ignorant bliss of childhood…

Sorry, where was I? Oh yeah, fake-punishing Syria…

If the U.S. wants to stay out of this conflict, that’s fine. It’s the right of any sovereign nation to determine its involvement in the actions of others. Likewise, if the country wants to say, “We don’t like this, but we’ve got way too much going on right now to deal with this,” I’m okay with that. I don’t remember Syrians jumping into our civil war. Of course, they weren’t an independent country until 1946…

My point is, my little girl knew taking her etch-a-sketch away meant nothing. It wasn’t something she cared about, so losing it was not a problem. The United States’ symbolic sanctions against Syria are the same type of thing. Since they will be meaningless to the Syrian government, they will accomplish nothing.

New swaps definition provides needed exemptions for energy industry

By Dorothy Davis

In 2010 Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act with the primary goal of re-regulating the financial system with stronger consumer protections and greater transparency. But the act's broadly written rules also inadvertently folded in an array of day-to-day transactions carried out by the U.S. energy industry, which frequently uses derivative contracts that are not easily standardized.

Of major concern to energy companies was the possible inclusion of physically deliverable forward contracts as swaps and being designated as swaps dealers if the notional value of their transactions fell into ranges as low as $100 million annually.

Energy companies often enter into long- and short-term physical transactions to buy and sell electricity, natural gas and other fuels to serve customer needs, and sometimes use financial hedges to manage volatile prices, outlines Reuters.

After two years of deliberation, federal regulators have at last approved a definition for swaps under the Dodd-Frank Wall Street Reform and Consumer Protection Agency, which includes crucial exemptions for many energy companies.

The two agencies overseeing the implementation of the new rules - the Commodity Futures Trading Commission and the Securities Exchange Commission - approved the rule on Wednesday, setting in motion more than 20 separate regulations that were waiting only on a definition for swaps.

The financial instruments are intended to help control the risks facing companies by exchanging two distinct streams of revenue. However, there were some worries that certain contracts allowing energy companies to purchase fuel in response to changing consumer demand could fall under the definition, potentially raising costs around the country.

Risk magazine notes that the CFTC ultimately proved receptive to concerns from the energy industry about unnecessarily raising costs in a sector that relied on swaps contracts for legitimate hedging, both with the definition of swaps and the inclusion of an end-user exemption to clearing requirements.

Businesses meeting the newly revised definition of a swap dealers will have 60 days to register after the final rule is published.

Dumping Oil Speculation (and Other Bad Habits)

New Eyes on an Old Industry
By Hilton Price

This year, I finally managed to do something I’d wanted to do for years; quit smoking. Before I worked for the greatest website in the oil & gas sector, I was in television news. If you’re unfamiliar with the behind-the-scenes goings-on of a TV news station, allow to me to impart one important fact: Quitting smoking is next to impossible when you work in TV news. I always promised myself once I left the industry I’d finally quit, and a few short weeks after beginning my tenure with PennEnergy, I made good on my promise.

I remember being a smoker very well. I remember the anticipation of my next cigarette break, especially if it meant getting away from my daily workload for a few minutes. I remember the soothing feeling nicotine had on me, truly a sign of my (at the time) serious addiction. Most of all, I remember how I always knew how bad those little sticks were for my health, and how I smoked them (sometimes eagerly and happily) despite this knowledge.

I bring all this up because in learning about the oil & gas industry, I have been reminded my former tenure with cigarettes. Smoking cigarettes is a lot like oil price speculation. If my new eyes on an old industry understand this right, neither makes any logical sense and seems to only cause harm, yet the practice continues largely unabated every single day.

The process of speculation is headache-inducing due to its complete lack of regard for supply and demand. Oil pricing revolves around futures, essentially a pre-set price for a delivery sometime down the road, making the classic supply/demand model no longer applicable. Now, oil sellers need only offer a price that they believe the buyer will agree to, no matter how the price is determined. The final price could be determined by a gust of wind, conjured from animal bones, or simply pulled from the ether by the imagination of an inebriated hobo. As long as the buyer agrees, congratulations! You just set the price for oil!

It’s a wonder every business across the globe hasn’t adopted this approach to pricing. If they could, I’m sure every store at my local mall would love to implement this. Instead of paying $120 for a pair of jeans today, shoppers would now agree to buy a $500 pair of jeans in 5 years. Denim futures would create a whole new generation of millionaires. Personally, I think having to sign promissory notes would make the whole shopping mall experience a lot more interesting. And don’t get me started on the food court. Panda Express would be the new high-water mark in upscale dining, with reservations made 3 years in advance.

Smoking (and exaggeration) wasn’t my only pointless habit. I’ve also always been a bit of a collector (trading cards, comics, games,) so I understand that sometimes things are priced excessively high. Every comic book store has a few books hanging behind the counter because they are “collectible.” The demand may not be obvious and immediate, but since the book is rare, it can demand a higher price than others.

But we’re not talking about some niche collector market. This isn’t baseball rookie cards or obscure comic books from the 50s. This is the one commodity, besides food, that nearly everyone in every industrialized nation is using. So, we’re essentially ignoring the demand on one of the few items that will always have demand. The growing interest and shrinking cost of renewables means demand for oil will one day be replaced by demand for something else. So, not only are we ignoring the massive demand for oil, we’re failing to take advantage of that demand while it exists! Save the futures and speculator nonsense for 100 years from now, when every home has solar panels and our cars are powered by canola oil. That will be the time to charge prices pulled from thin air. That will be the time to sucker buyers with talk of future pricing. Today is not the time for imagination in pricing. Today is the time to sell the oil to the people that want it for a reasonable price.

But, instead, the success of our speculator market has other countries interested in their own game of financial make-believe. Much like younger friends I had who once considered smoking because they saw me do it, now other countries are considering picking up our bad financial habit. Although, the U.S. is younger than China, so the metaphor is getting a little shaky. Point is, speculation has been successful for some, and now others want in. Meanwhile, there may be a chance that rational thinking could one day return to our own markets.

President Obama, always a favorite topic around the office, announced plans to crack down on speculation. At least, I think I saw that somewhere. As the 24-hour news cycle does, it was soon replaced with other stories. But I swear he said that, and whether it’s a political ploy or a real concern for the man, it’s very much needed. People are getting rich making stuff up, and not in a cool way like Stephen King or DEVO or those guys behind LOST. Their making up pricing, and we’re playing along because we think there’s no other way.

I remember another time I felt like I did something because there was no other way. I smoked cigarettes. Why? Because I had smoked for years, and I was addicted, and it was just part of who I was. Well, then I quit. Now, I don’t smoke. It’s dumb and dangerous and I don’t want any part of that. Speculation is the same. Together, as a planet, we need to quit, and keep our friends, the other countries, from starting. It’s dumb and dangerous and trust me, we don’t want any part of it.

The Path More Regulated: EPA rules generate debate, but little else clear

By Dorothy Davis

One of America's most critical resources is the nation’s electrical grid, an engine of commerce across essentially all industries. The less popular side of the electric generation industry is its role as one of the country's biggest sources of emissions.

While everyone wants to keep the lights on, consumers now more than ever are demanding cleaner energy. In response, the U.S. Environmental Protection Agency (EPA) took decisive action last year to reduce emissions. The new regulations are spread across several major new proposals covering both the energy industry and several other related sectors.

Perhaps the most widely-reported rule has been the Mercury and Air Toxics Standards (MATS), which the EPA hails as the first overarching regulation of emissions of toxic substances ranging from mercury to arsenic. Technically the EPA implemented rules governing mercury emissions under the Bush administration, but these regulations were challenged by local and environmental groups for failing to meet standards set out by the Clean Air Act.

On top of these new emissions limitations, the EPA also imposed restrictions on emissions that travel across state boundaries. The Cross-State Air Pollution Rule (CSAPR) would replace the Clean Air Interstate Rule (CAIR) from 2005 and requires more than two dozen states to reduce their emissions of sulfur dioxide, nitrogen dioxide and ozone. CSAPR has been challenged in court and the industry is currently operating under CAIR while the case is reviewed.

Lastly, a more specifically targeted rule would require that all businesses using boilers and large incinerators to meet specific emissions standards for chemicals such as mercury and other substances like soot, known as the Maximum Achievable Control Technology or MACT standards. Most boilers already meet these standards, but some 1 percent would need maintenance, modification or replacement.
Each of these new rules would be implemented under the timeline laid out in the Clean Air Act, requiring full compliance with the law within three years, with the possibility of a one-year extension at the discretion of the EPA.

The debate over these new rules has involved vehement arguments on either side, with the EPA touting huge potential health savings and many energy companies insisting the costs of implementing these new regulations could prove economically catastrophic.

The impact on electric generation capacity alone could reach a substantial level. The North American Electric Reliability Corporation estimates that, between derated power plants and retirements, the MACT standards alone could lead to the loss of anywhere from 2.9 gigawatts (GW) to 17.6 GW of generation capacity. The CSAPR regulations, meanwhile, could lead to the loss of between 2.8 GW and 7.2 GW.

Combined with all other new regulations the report predicts anywhere from 40 GW to 76 GW of lost capacity. According to the EIA, the highest figure represented more than 7 percent of the country's electricity generation capacity in 2010.

In particular, a report from Credit Suisse projects that around 60 GW of coal-fired power plants are likely to shutter. Given that NERC projected lower-than-usual capacity reserves in some of the affected areas, particularly Texas, in its 2011 Long-Term Reliability Assessment, those losses could prove costly.
Certain sectors expect to be hit particularly hard by the new regulations. The American Forest and Paper Association notes an internal report estimating as many as 36 paper mills might be forced to close without the ability to pay to upgrade outdated boilers. Those closures would cost more than 20,000 jobs. The Council of Industrial Boiler Owners projects even more substantial cuts of 230,000 jobs, suggesting that the vast majority of current boilers are entirely incapable of meeting the proposed standards at all. Replacement and improvement costs are estimated at $14.3 billion.

All told, a report commissioned by the American Coalition for Clean Coal Electricity and composed by National Economic Research Associates found that the net effect through the rest of the decade would be a loss of 1.4 million job-years. That amounts to a net loss of around 175,000 jobs. It also projects electricity rates to rise around 12 percent, imposing its own economic costs.

But not all analyses project economic losses because of the rules. Credit Suisse portrays the new regulations as an opportunity to realize larger profits on existing generating capacity that already does or can meet emissions standards, which represents the majority of all generating capacity. This will necessarily mean higher electricity rates for the affected areas, and potential economic costs as a result, but also means greater stability for natural gas-fired power plants and other electricity generators, as well as the potential for greater investment in new capacity that meets emissions standards.

A Bloomberg Government study goes so far as to suggest that the new EPA regulations will have limited impact on the energy sector and similarly minimal effect on actual emissions.

But other analyses project a more substantially positive impact. The EPA estimates the MATS regulations alone will produce 46,000 temporary construction positions and another 8,000 long-term jobs.
A report put together by environmental advocacy group Ceres and the Institute of Clean Air Companies suggest that the total economic impact of the new rules could mean as many as 1.5 million new jobs over the next five years. Many of these would be shorter-term construction positions, while others would come from long-term jobs with power plants or at environmental control mechanism manufacturers. The remainder would represent the broader impact of these new jobs.

The Economic Policy Institute takes a more inclusive approach, accounting for lost positions in the energy sector and their impact, but still finds a net gain of between 28,000 and 158,000 jobs in the same time frame. The energy industry could stand to lose as many as 17,000 positions, while anywhere from 31,000 to 46,000 jobs could be lost because of higher electricity rates.

However, the energy sector could also gain as many as 35,000 positions as resources shift in other directions, while the pollution control industry would add at least 81,000 jobs. With the net-positive impact on industry jobs, the impact on secondary economies is expected to be substantially positive as well.

So where do all these numbers leave the electric power industry and consumers in terms of the far reaching impact of these new regulations? Nowhere near a clear answer unfortunately. What lies ahead is as always determined by what roads are taken now and that road is still being paved by electric power regulators, providers and consumers.

Spare the rod, spoil the oil-producing nation…

New Eyes on an Old Industry

By Hilton Price

Growing up an only child, I missed out on some of the unique elements of living in a sibling-filled household. Luckily, thanks to Iran, I still get to experience the petty and often meaningless tirades of a selfish child on a regular basis. The country has long been home for random acts of foolishness broadcast to the world, but in recent weeks the petulance, selfishness, and downright silliness have gotten out of hand. For these new eyes on an old industry, it’s clear. The naughty children need to spend more time in time-out.

Iran’s decision to halt oil exports to EU nations in lieu of the upcoming EU oil embargo is as classically juvenile as a tactic can get. It’s the world stage equivalent of “You don’t want it? Well, I wasn’t going to give it to you, anyway!” Does the line sound familiar? It should, you probably said it yourself… when you were 9.

Like many of the impromptu and heated words of children, reality often steps in with other plans. Sure enough, after Iran refused to sell some of its oil, the country was left with unsold oil. That seems a poor choice of endgame for an oil-exporting country. Last I read, some of that unsold oil had been sold, but the clock remains ticking to unload the bulk of it or risk it sitting idle on tankers in the open sea. That possibility, and the resulting unpredictability in the oil-trading markets, has led my new eyes to realize something else about this old industry. Supply and demand is useless here, and that is the cornerstone of Iran’s power in this struggle.

When there’s a potential oil shortage, the price at the pump goes up. When there’s uncertainty in reserves, the price at the pump goes up. When there’s potential that a bunch of unsold oil will be sitting around in tankers on the open sea…, the price goes up? Wait…what? I’ve come to realize the markets don’t seem to reflect the actions of the world in any way similar to business basics. It’s all because of “speculation,” a word that seems to give far too much power to analysts. However, I’m new here and still learning how it works. I’ll try to reign in the urge to go running down the street screaming, “The whole thing is fixed! The game is rigged! We’ll never win!” without at least a little more time in the trenches.

It’s this negative effect on the markets that Iran clearly hopes will drive EU countries back to its oil. The problem is, outside of the markets, Iran has almost no power. The country traditionally exports 2.2 million barrels each day. That seems like a lot, until you consider the typical world consumption of 89 million barrels each day. Then, it quickly becomes a drop in a pretty big bucket. Who’s providing the other 86.8 million? Are any of those countries causing trouble? Norway produces almost as much oil as Iran. When was the last time Norway threatened to close any shipping straits? How much “not for weapons (we swear)” yellow cake are the Norwegians going after? I’m pretty sure the country hasn’t done either of those things. Okay, maybe the yellow cake, but it’s probably just moist, delicious, yellow cake. And who doesn’t love cake?

I can’t answer that, but I can tell you who doesn’t “get” any cake; Naughty children. Even as I bring this blog to a close, I’m reading how Iran is refusing to allow nuclear inspectors onto its military bases, even though it’s believed that is where the country is storing nuclear-related items, possibly even potential weapons. This half-assed approach to openness is another childish maneuver. It’s the world-stage equivalent of “I’ll show you how I cleaned my room, but you’re not allowed to look in my closet.”

Enough is enough. I don’t allow this nonsense in my home, and it shouldn’t be allowed in the interactions between nations. It’s time to put the naughty children in time-out. They clearly need to spend some more time thinking about what they did.

Oh, for frac’s sake…

New Eyes on an Old Industry
By Hilton Price

In the upcoming edition of PennEnergy Workforce Magazine, I’ve contributed an article on why I believe public outcry and government legislation have been good for the fracking industry. It’s pretty compelling stuff. You should read it.

During the week I spent researching the piece, I learned a lot about fracking, far more than I had in the preceding 3 months I’ve been working in the industry. Amid that intense study, I realized two things. First, the theme of my submissions in this recurring blog will be my own ongoing education in the oil and gas industry. Second, no one outside the industry is ever going to be entirely comfortable with fracking. The process is too weird for normal human consumption, and the very nature of how it is performed means someone, and most likely many someones, will always oppose it.

The list of fracking chemicals is shrinking. With each unsuccessful frac (or successful legislation), the number of reliable and permissible chemicals is reduced. That’s a good thing. That means less dangerous junk is pumped underground. For instance, the first frac involved Napalm. I don’t have the list of acceptable chemicals in front of me, but I’m pretty sure that’s not on it anymore. You’d be hard pressed to find someone who would say napalm should be used in anything, expect possibly for blowing stuff up.

Even with napalm and some of the other obviously problematic chemicals removed, the permitted frac fluid list is still littered with a bevy of chemicals not familiar to most people. Unfamiliarity breeds fear. Until the bulk of mankind starts taking a personal interest in high school chemistry, almost every chemical on that list is going to be a source of fear.

Okay, I found the list. There are, admittedly, a few that don’t sound so scary. Take Isopropyl Alcohol, for example. Practically every family has at least one bottle of Isopropyl Alcohol under a bathroom counter in their home. So, seeing that name on the list might not concern everyone. Of course, the chemicals on this list aren’t just sitting on a list or hiding under a bathroom counter, they are being forced into the ground at high pressure and speeds. This brings up the other reason most people won’t ever be “okay” with fracking. It involves pumping stuff into the Earth, a concept that in itself is unsettling to the uninformed.

It’s easy to make assumptions on how people will act, and that’s largely what I’m doing here. So, allow me to add some context. I’m in Tulsa, Oklahoma as I write this. It’s where I live; I didn’t just stop here to write. Over the last few years I’ve grown accustomed to Tulsa’s unique weather anomalies. Severe thunderstorms, epic snowfall, and tornado warnings are just part of the Oklahoma life. Then last year, something else popped up with increasing frequency: earthquakes. I felt two of them, and they were pretty scary. So, I understand why people began trying to find a cause almost immediately. We’re not used to them and we want answers.

Of course, someone from Tulsa posted a story about fracking’s possible link to earthquakes on their social network page. Within minutes, everyone had strong opinions on the topic. It was very cute. Thoroughly uninformed, but very cute. It also exemplified the way people view fracking. The effect of the process isn’t fully understood by people, so the idea of some frac fluid setting off “the big one” makes a weird kind of sense. Geologists have found a connection between fracking and earthquakes, but not in the point-A-leads-to-point-B way the public has embraced. It’s more complex than that, and that complexity, a recurring theme here, is why the public just doesn’t get it.

Lucky for us, the public doesn’t understand a lot of things it discusses, and that’s why in the end we don’t really have to pay too much attention to what they say. From Federal finances to relationships in Hollywood, public discourse is common. Politicians don’t worry about my thoughts during budget debates, and celebrities have never asked for my input on their trysts. As long as the people behind the fracking industry can accept that the process will be discussed by those who aren’t fully informed, it can persevere past the hurdles mass discourse will occasionally toss in its way.

Natural gas prices and shale estimates plummet

While many in the power industry and certainly consumers are grateful for the plummeting prices of natural gas, the news has proven far worse for gas exploration and production companies.

The drop has been attributed to the massive surge in natural gas production from the proliferation of hydraulic fracturing and the recent lull in demand created by an unusually mild winter.

Natural gas prices have slumped from above $4 per million British thermal (Btu) units to below $3 per million Btu; a game changing drop that has prompted many of the nation’s gas producers to begin scaling back operations to focus on higher value resources. All told, the country has 780 natural gas rigs in operation, a 14 percent decline from the same time last year.

Now in an interesting turn of events, the latest estimates of shale natural gas reserves in the U.S. have taken a shocking step backward.Projections released by the U.S. Department of Energy estimate that the country holds around 482 trillion cubic feet of recoverable natural gas from shale basins. That represents a 42 percent decline from the year before when estimates of shale gas reserves were placed at around 827 trillion cubic feet.

Probably the most substantial impact of the updated estimates, however, was the 66 percent reduction in recoverable reserves in the Marcellus shale formation in Pennsylvania, New York, Ohio and West Virginia.

Ironically, it’s the surge in natural gas exploration in shale deposits over the last year that has provided these revised estimates. Last year that basin was estimated to hold 410 trillion cubic feet of gas, enough to fill U.S. gas demand for 17 years at 2010 level. Now, that number has been reduced to 141 trillion cubic feet, or around 6 years.

Nevertheless, the DOE estimates natural gas production will rise even higher than previously predicted despite the smaller resource base.

Powering America: The Critical Need for Transmission Investment to Spur Growth

Economic investment has been a common theme in Washington, D.C., over the past few years as the country struggles to recover from the blow it took in the recent financial downturn. Politicians are pushing for expanded research and development, while physical capital investments have largely centered on base infrastructure such as bridges and outdated rail systems. But surprisingly little attention has been paid, at times, to the critical issue of electricity transmission and distribution.

The Department of Energy (DOE) reports that the U.S. electricity grid spans more than 300,000 miles of transmission lines connecting more than 1 terawatt-worth of generation capacity to hundreds of millions of homes and businesses. While the DOE suggests the system is still 99.97 percent reliable, outages still cost more than $150 billion a year and appear to be steadily impacting more and more people.

With electricity demand outpacing investments in transmission capacity by nearly 25 percent a year for the past three decades and peak demand expected to increase another 20 percent in the next 10 years, the problem only stands to worsen. It is time to stop taking our energy infrastructure for granted.

Energizing Employment

While our transmission and distribution systems serve to bring us the power we have come to rely on for almost every aspect of our daily lives, it is also a significant source of employment. Electrical grid workers are no small part of the U.S. economy. The Bureau of Labor Statistics (BLS) reports that occupations related to electric power generation, transmission and distribution accounted for over 300,000 jobs nationwide with a mean annual salary of over $65,000.

The Working Group for Investment in Reliable and Economic Electric Systems (WIRES) suggests that the country could see a major surge in employment with only a relatively modest investment in our electric infrastructure system. WIRES projects that barring regulatory and permitting issues, the transmission sector is likely to spend between $12-16 billion per year on upgraded transmission. This level of investment would lead directly to between 51,000 and 68,000 full-time jobs annually, with anywhere from 150,000 to 200,000 total full-time jobs produced a year as a result. The total economic return on these investments is estimated at around 250 percent.

In large part this is because transmission, unlike many sectors, is an eminently local industry. The group estimates domestic costs at roughly 82 percent of the total, with construction, design, permitting and most other facets entirely contained within the U.S.  Even materials, which account for 45 percent of total costs are still estimated at 61 percent domestic.

This kind of investment could prove particularly important for the struggling construction sector, which the BLS reports saw an unemployment rate of 14.2 percent in October 2011. The broad installation category saw a far lower rate of 7.2 percent, which still leaves 388,000 people in that sector out of work, though this also includes workers from multiple industries.

Vital to Green Energy

While traditional power sources face many of the strains imposed by an outdated grid, the current limitations of the U.S. transmission system pose an even greater problem for renewable power. Renewable energy sources like solar and wind power must contend with intermittency, generating electricity in inconsistent and often unpredictable patterns. With limited transmission capacity, these power sources can overload the grid at times of unusually high production.

Yet WIRES notes that current standards on how much power must come from renewable sources already require doubling the amount of renewable generation by the end of this decade. Under a stricter 20 percent national standard, this growth would be more than 350 percent by 2020 and 450 percent by 2025. Under the more modest current standards the U.S. would still need nearly $60 billion in transmission upgrades by 2025 just to accommodate growing renewables. At the stricter standard, that number would be more than $100 billion. Either way a significant investment in our energy infrastructure is going to be required to sustain reliability.

Facing the Issues

WIRES suggests that transmission companies are likely to spend billions each year on expanding and developing the grid in coming years, which might lead some believe the issue is well in hand. But these investments are only likely to come with the resolution of some serious issues in the development process. Because transmission lines cross numerous political boundaries and are often seen as unsightly, these projects can become major targets of protest, extending the approval process and dramatically raising costs. Many companies also have no realistic ways to recoup the costs of building further transmission lines, as the systems in place are designed at the state or lower levels with monolithic utilities in mind.

The Federal Energy Regulatory Commission attempted to address some of the prevailing concerns with the approval process over the summer, introducing Order No. 1,000 in June. The regulatory agency imposed new rules requiring a greater degree of regional collaboration on transmission development, though also required the costs of these projects be targeted specifically at those who directly benefit from them and that utilities consider non-transmission alternatives first. However, one crucial development for easing the approval process was ending the practice of granting local utilities the first right of refusal on transmission projects.

In addition to these more recent changes, the American Recovery and Reinvestment Act of 2009 set aside more than $1.9 billion for the distribution and reliability improvements to the grid, but many of the procedural concerns loom larger in the industry's eyes than the outright costs.

Nevertheless, a paper produced by the Federal Reserve Bank of San Francisco found the infrastructure investment of the ARRA resulted in substantial job gains in the years since, making addressing the lingering issues in the electrical distribution system an important point for encouraging economic and job growth in the country.

Drilling Down: What Can Geothermal Do for You?

The once overlooked geothermal industry is a fast rising energy sector poised to create thousands of jobs

Geothermal energy is far from new, but only recently has this renewable resource truly begun to garner a more comprehensive look into how it can serve as a viable commercial power source.

Geothermal energy is thermal energy naturally stored within the earth. When utilized to generate electricity, geothermal power is an effective, environmentally sound and sustainable resource.

Research, investments and project developments in the geothermal power industry are on the rise; more importantly, so are the jobs associated with this burgeoning energy sector.

Burgeoning Business

According to the International Geothermal Association, as of 2010 more than 10,000 megawatts (MW) of geothermal power is currently being utilized, a nearly 20 percent increase in active capacity since 2005. In 2010 the United States led the way in geothermal electricity production with more than 3,000 MW of installed capacity from 77 plants.

The Geothermal Energy Association (GEA) recently revealed the findings of new industry reports that show the geothermal industry will add thousands of jobs as dozens of new geothermal power plants come online or enter advanced stages of development. Furthermore, these reports highlighted that the geothermal industry is not just creating more jobs than most conventional energy per megawatt, but jobs that are permanent, full-time and often providing a higher wage.

Growth Potential

The GEA anticipates that 2011 will be a high point of geothermal activity in the US, yielding approximately 500 to 700 MW of power projects in the final construction phase. These projects will add approximately 3,000 construction jobs, primarily in Nevada and California.

Nevada is an excellent example of the rapid and significant potential impact the growth of geothermal can present to a regional economy. In July 2010, the GEA said the growth of the geothermal industry in Nevada alone could be worth as much as $22.5 billion over the next 30 years if current trends continue.

With 14 geothermal power plants in the later stages of development, after groundbreaking these projects would create an estimated 1,400 construction jobs in Nevada.

“This high volume of geothermal projects moving into final stages of development will likely generate a massive geothermal boom in Nevada,” said GEA Executive Director Karl Gawell. “Along with the millions of dollars in federal and private investment, come thousands of new jobs.”

Governmental Support

The GEA report “Green Jobs through Geothermal Energy” also found that the federal stimulus, tax incentives, and strong state renewable standards continue to fuel the growth in geothermal power and job creation. Every geothermal project that came online in 2009 took advantage of the tax reimbursement provisions of the stimulus bill, which helped maintain momentum for new projects and continue to create new jobs in America.

It is also important to recognize that the benefits of the stimulus to the geothermal industry have yet to be fully realized. Nearly 95 percent of the projects receiving American Recovery and Reinvestment Act (ARRA) funding are either less than 50 percent complete or have yet to break ground.

“Recovery Act funding is going to make a huge difference over the next year to push projects to completion and create more jobs. The majority of the ARRA investment will really start to pay dividends for the economy in 2011,” said Karl Gawell, GEA Executive Director. “It is critical that we continue to support these sound policies despite the rancor of several short-sighted initiatives which seek to strip away these tools to help grow our economy.”

Diversified Portfolio

The ARRA also appears to have attracted diverse groups into the geothermal sector. Almost half of the Geothermal Technologies Program awards from the stimulus went to non-industry entities such as colleges and universities; cities, counties, and other state and local institutions; tribal entities; and The Department of Energy’s National Labs.

This trend in diversity within the geothermal sector is only proving to bolster the emerging industry. As more geothermal jobs are being created, a number of educational providers across the country are establishing undergraduate, graduate and certification programs to meet demand.

“To keep creating jobs in the geothermal industry, we must keep getting talented individuals coming into the industry. The programs at these leading schools will develop the next generation of geothermal professionals,” Gawell said.

Geothermal energy has stepped beyond its once understated status into a promising sector with the potential to offer not only sustainable energy, but also sustainable jobs.

Finding the Green Workforce

While there may always be room for debate concerning clean energy initiatives and the long-term merits of a low carbon driven economy, what remains is the fact that the renewable industry is growing rapidly and it requires a substantial workforce.

As renewable energy continues to establish itself in the global market, an emerging concern is how to fill the industry’s need for skilled workers. According to a poll conducted by the Society for Human Resource Management, 40 percent of HR professionals say their organization is currently focused on creating green jobs or adding green duties to existing jobs. Further, a comprehensive report from the American Solar Energy Society forecasts that more than 17 percent of all anticipated U.S. employment could be generated from the renewable energy and energy efficiency industries over the next two decades. The need and opportunity for a green workforce is apparent, but are there enough skilled workers to meet demands?

The good news is there has been a tremendous cultivation of resources for training, funding and development in the renewable energy sector within the past five years. A good number of educational providers have expanded or modified their curriculums to include renewable education and training programs in response to the growing demand.

The U.S. government has also stepped up its efforts, paving the way in funding to support the creation of a competent green workforce through programs supported by the American Recovery and Reinvestment Act of 2009(ARRA). The U.S. Department of Labor’s Program of Competitive Grants for Worker Training and Placement in High Growth and Emerging Industry Sectors has been allotted $750 million through the ARRA to provide competitive grants for worker training and placement. Of that, $500 million is specifically for research, labor exchange and job training projects that will prepare workers for careers in the renewable energy and energy efficiency industries.

Companies in and outside of the renewable sector have also begun to invest in developing their own training courses in the hopes of attracting the workforce they are seeking and repurposing positions for renewables.

Now for the bad news; although there is an existing abundance of resources to support the establishment of a multi-level green workforce, there are far less available to bring these initiatives together or provide information to help establish realistic industry standards for recruitment. Which begs the question, is there truly a shortage of qualified workers or simply a shortage of renewable focused information, standards and hiring resources?

To move forward in creating the workforce needed for the renewable sector there must be a collaborative effort to establish a framework for industry knowledge, recruitment and training that will evolve into recognized standards as the industry matures. Establishing an understanding of just what quantifies a green job will lead to helping to define what is required to fill one. Developing resources to share information between industry insiders, education providers and recruiters will help balance expectation, shape training programs and, more importantly, highlight how existing skills can be re-tooled to benefit the emerging green industry.

One of the more attractive aspects of renewable energy is how balanced the industry is in providing career building paths across a vast array of skill sets. Low- to medium-skilled workers are needed for manufacturing, installation and maintenance; while highly skilled employees are needed for research, development and leading the commissioning of renewable services.

The issue does not appear to be a lack of workers to fill these roles but a lack of information and expectations on the part of those seeking workers. Until standards are established and enough time has elapsed to develop a seasoned body of workers within the industry, it’s simply not plausible for companies and recruiters to require advanced degrees in specific renewable niches or the equivalent amount of experience in service to it.

An available option is to take a more realistic inventory of the existing workforce with the purpose of grooming it for the green industry. Among those who are unemployed or underemployed there is the opportunity to utilize existing skills or higher-level disciplines that can be restructured to work within the renewable energy sector. Veteran solar engineers may not be numerous, but environmental engineers are certainly available.

Recent technical or college graduates are in a unique position to offer fresh perspectives, a clean learning slate and innovative thinking to an industry that is still forming itself. Those entering the workforce as unskilled laborers will not only benefit from highly subsidized training in a growing sector but can also provide the industry with the workforce needed to build its infrastructure through apprenticeships and vocational rehabilitation programs.

Meeting the demands of the renewable industry is not only attainable, but under many circumstances requires a very manageable investment on behalf of the industry. Finding the green workforce could be as simple as utilizing what is right in front of us.

The Necessary Good that is Nuclear Power

Just as the power industry appeared to be on the cusp of a nuclear renaissance, events in Japan forced governments, utilities and consumers to pause and re-examine the role of nuclear energy more thoroughly than ever. Nearly half a year after the natural disasters that triggered a series of meltdowns at the Fukushima Daiichi nuclear complex it’s more important than ever to refocus attention on the benefits of nuclear energy as a resource to meet global demands.

When looking at the future of nuclear power it is important to avoid doing so only through the lens of past accidents. While there are important lessons to be learned from such events these do not come close to representing the nuclear industry as a whole.

While most energy industry professionals already know this, the next critical step is to effectively share the full story of nuclear power with consumers and government officials. Failing to do so could mean the loss of one of the most innovative, clean and abundant energy resource available to the world.

The truth is, in its more than 50-year history there have been only three major reactor accidents concerning civil nuclear power - Three Mile Island, Chernobyl and Fukushima. These are the only major accidents to have occurred in over 14,500 cumulative reactor-years of commercial operation. There is not a single other power resource that has the same proven track record of reliability while also boasting the same exceptional level of safety.

Meeting Demand

As of this posting there are 440 commercial nuclear power reactors operating across 30 countries. Collectively these reactors supply approximately 14 percent of the world’s electric generation, according to the World Nuclear Association (WNA).

In addition to commercial nuclear power plants, the WNA outlines there are about 250 research reactors operating in 56 countries, with more under construction. These have many uses including research and the production of medical and industrial isotopes, as well as training.

Nuclear power plants also need significantly less fuel than those generating power through the use of fossil fuels. One ton of uranium can produce more than 40 million kilowatt-hours of electricity, which is equivalent to burning 16,000 tons of coal or 80,000 barrels of oil.

Uranium is also abundant and can even be recycled, making nuclear energy an integral part of ensuring the future of sustainable global energy.

Nuclear power is the only proven resource that can provide utility scale electric generation cleanly, reliably and economically in a time when the supply of energy is continually under pressure, the cost of fossil fuels are increasing, resources are tenuous, and the limitations of renewables are still numerous.

Environmental Advantages

Another important benefit of nuclear power is its low environmental impact. Extensive regulations and stricter standards concerning greenhouse gas emission are being implemented globally, and the fact is nuclear power is the only proven, grid-ready resource for clean, utility-scale power generation currently available.

Even when considering the entire life-cycle of a nuclear power plant, which includes mining for resources, operation and decommission, nuclear power remains extremely competitive.

According to an International Energy Agency analysis, nuclear power’s life-cycle emissions range from 2 to 59 gram-equivalents of carbon dioxide per kilowatt-hour (CO2 per kWh). That puts nuclear power on par with renewable energy resources such as hydropower (2 to 48 grams of CO2 per kWh) and lower than wind (7 to 124 grams of CO2 per kWh) and solar photovoltaic (13 to 731 grams of CO2 per kWh).

Within the US, nuclear power plants also support a broad range of environmental programs, including land and water preservation, wetlands recovery as well as wildlife protection and recycling. This level of environmental stewardship has not only added to the preservation of the environmental integrity of their locations but also in certain situations even served to improve them.

Economic Benefits

Nuclear power also presents tremendous economic benefits. The jobs, taxes, and direct and secondary spending associated with nuclear power plants serve to bolster the economies where they are located and contribute on a broader scale in providing low-cost high volumes of electricity.

The Nuclear Energy Institute (NEI) estimates that private investment in new nuclear power plants has created 14,000 to 15,000 clean energy jobs over the last few years in the US alone. Operation of a nuclear power plant not only generates 400 to 700 permanent jobs, but they are jobs that pay as much as 36 percent more than average salaries in the area they are located

The NEI also outlines that construction of a new nuclear power plant will provide a substantial boost to suppliers of commodities like concrete, steel and manufacturers of hundreds of components. That translates to the creation of 1,400 to 1,800 jobs during construction, with peak employment as high as 2,400 jobs.

Further, studies show that nuclear power is also the lowest-cost producer of baseload electricity. The NEI highlights that costs for the production of nuclear power have remained steady for more than 10 years, averaging 2.14 cents per kilowatt-hour in 2010. This includes the costs of operating and maintaining the plant, purchasing fuel, and paying for the management of used fuel.

Nuclear is Here to Stay

When considering the advantages of nuclear power in meeting increasing energy demands, environmental standards and economic sustainability, there is little room for dismissing the importance of its continued role in the global energy mix.

When also factoring in the massive potential of emerging nuclear technologies such as small modular nuclear reactors, thorium-fueled reactors, and advanced fuel recycling and reprocessing, it becomes clear that to phase out this incredible resource would prove to be a severe global misstep.

Nuclear power is here to stay mainly because it has to. Global energy demand is increasing at a rate that can only be met with the inclusion of nuclear power. Even understanding that, the goal of those in the energy industry should be to ensure that nuclear power also remains a part of our energy future because it is properly understood and supported. Doing so will mean the difference between being dependant on the nations that aggressively embrace and develop nuclear power or being among those that have secured for themselves a reliable, safe, economic and cleanly abundant nuclear foundation.

Are renewables worth it?

It ain’t easy being green. That once gently sung lament of a childhood icon has taken on a whole new meaning for me. Sifting through hundreds of pages of power related content a week for PennEnergy.com; it’s not difficult to recognize that renewable energy is a hot topic. What is rarely publicly addressed is just how expensive and difficult renewables are to currently utilize.

The administrative and public push for lean, green energy is growing stronger every day, but the viability of renewables as a reliable and economically sound resource has not kept up. Don’t get me wrong; I’m sold on implementing renewables. I truly believe they are an invaluable part of revitalizing industry and responsible power production/consumption- when and if they can be executed properly.

Quick, what is the first image that comes to mind when you hear the words renewable energy?

I would wager the picture you most likely summoned is of a towering wind turbine in a vast open area beset by a gorgeously hued expanse of sky. Pretty, right? Pretty expensive, noisy, and erratic many would argue.

It seems most of us are buying more into an image than a real renewable plan. Renewable energy can be fantastic, but as things stand they are still quite cost prohibitive and difficult to implement effectively. I want to see renewables grow. In fact, I’m certain doing so will bolster manufacturing sectors, offer new opportunities to displaced workers and strengthen our economy. Not to mention all of the obvious environmental benefits. Promising stuff, but as of today the cost to produce and distribute power from those sources still woefully outweighs the returns. Those are not just opinions either, they’re facts. Math is quirky that way in its total disregards for people’s opinions.

While renewable power sources have been steadily improving, problems remain with consistency and cost versus output; yet billions of dollars continue to be funneled into large-scale projects utilizing these under developed resources. Seems a little horse before cart in my humble opinion.

As things stand most hydrocarbons still beat out renewable energy resources by at least four to one in cost, implementation and output. So why the rush to implement such massive renewable projects that cannot reasonably offer sound financial or production returns? Especially when these large, fast tracked projects may end up costing us more as significant improvements to existing technologies are made. Even the best of us fall victim to a bit of pomp and circumstance at times.

So is the vigorous pursuit of green energy really worth it? Yes and here is why I think so-

Renewables seem to have reached the awkward teenage stage of their development; full of potential and requiring incredible investments of time and resources with seemingly little initial return. If we stick with it though, make the right choices and focus on developing its strengths we will in fact find ourselves one day looking at a mature well-rounded set of clean resources that will have a tremendous amount to offer the world.

Instead of throwing money at an ideal we should be investing in creating and implementing truly functional energy resources. Research and development are vital. A lot more should be going toward finding out how to get the most out of renewable resources before we dot every open expanse with expansive biomass factories, wind farms and solar panels.

In the meantime there are still jobs to be had, smaller scale opportunities offering sounder returns and the sort of contentment that comes with the knowledge that the good being developed is for the long term and not simply an industry trend to garner funding.

We also need to get a grip on the real role renewables will play in our energy future. I don’t know who keeps pushing the idea that green energy is the white knight that has been charged with slaying the hydrocarbon dragon, but its time to put the fairy tales aside and get back to reality.

As already mentioned Renewables at this stage of the game simply cannot offer what hydrocarbons can. Worse yet the rumors of it being able too have been wildly exaggerated. Energy independence and sustainability is a complicated issue that will require sophisticated and balanced solutions. Most experts actually point toward a strategic energy mix and the development of hybrid technologies as the road to success, not the blind championing of any set of resources over another.

Renewables can be developed into reliable energy providers and hydrocarbons can in fact be utilized responsibly with enough innovation, investment and patient dedication.

See, its cake. Now all we have to do is solve that pesky power infrastructure and distribution issue…

US East Coast joins the LNG liquefaction, export race

Dominion (NYSE:D) has filed an application with the Department of Energy to make its Cover Point LNG import and gasification terminal in Maryland bi-directional, allowing the facility to liquefy shale gas production and export it globally.

Dominion Cove Point LNG

Dominion hopes to build liquefaction units at the existing facility, with a processing capacity of 1 billion cubic feet of LNG a day or 7.82 million metric tons a year.

"Dominion Cove Point has connections to several interstate pipelines and is well-positioned to provide export customers access to abundant and diverse domestic gas supply," said Thomas Farrell II, chairman, president and CEO of Dominion. "The facility is particularly well-situated to export gas production from the prolific Marcellus Shale and promising Utica Shale formations."

The Cove Point LNG facility is well positioned, in comparison to the proposed Gulf Coast LNG projects, to receive natural gas production from the Marcellus Shale in Pennsylvania and emerging Utica Shale in Ohio. Additionally, Dominion can use existing pipeline to move the natural gas.

Increasing production from vast shale resources has created a natural gas glut in the United States, and various downstream companies are looking to create an international market for US natural gas by turning it into LNG and exporting it by tanker.

Canada also has a number of LNG projects ongoing to export its shale resources.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

North American shale may soon find an international market via LNG

Until Liquefied Natural Gas (LNG) technology was developed, natural gas production was regional because the hydrocarbon had to be transported via pipeline. While European and Asian markets realize a growing demand for natural gas, the North American natural gas market has been glutted by ever-increasing production from various emerging shale plays.

In fact, increasing production in the Marcellus Shale, Barnett Shale, Haynesville Shale, Horn River Shale, Fayetteville Shale and others has forced some producers to pull back on drilling campaigns and even shut-in production. By not producing all of the unconventional natural gas in these formations, producers can limit production and affect the supply-demand curve.

While natural gas prices have substantially dropped since their highs in 2008, prices have remained somewhat steady above the $4 mark on the Henry Hub for some time now.

In an effort to connect this production with eager markets abroad, nine LNG import facilities on the US Gulf Coast have submitted applications with authorities to convert or add LNG liquefaction and export capabilities.


Sabine Pass LNG

Most recently, British producer BG Group has formed a joint venture with Southern Union and applied for federal approval to convert its Lake Charles, Louisiana LNG import facility into an LNG liquefaction and export facility.

At its Sabine Pass LNG project, Cheniere Energy (NYSE:LNG) is working to add liquefaction and export capabilities to its facility, as well, lining up LNG buyers in Asia and Europe, as well as South America.

Furthermore, Freeport LNG located near Houston, Texas, has received permits to re-export LNG shipments that are currently being held in storage due to lack of demand.

Additionally, Apache Corp. (NYSE:APA), EOG Resources (NYSE:EOG) and Encana Corporation (TSX:ECA) (NYSE: ECA) are working to build a pipeline to connect Horn River Shale natural gas in Canada to a proposed Kitimat LNG export facility on the Western Canadian coast.

As companies work out the commerciality to transform North America into an LNG supplier, producers in the US and Canada are eagerly awaiting the development of a new market for their natural gas production.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.