Cheap Natural Gas Leads to Falling Consumer Electricity Rates

Plunging oil prices may have hit some energy companies hard and have some oil-producing nations worried about their budget deficits, but it has been a boon to the average American consumer as electricity rates have dropped 1% nationwide to an average of 12.4 cents per kilowatt hour, the first nationwide decline in energy prices in decades.

electricity_rates

As developed nations move away from burning dirty coal for energy as a result of the efforts to meet international greenhouse emission caps, cleaner burning natural gas plants and alternative energy sources (wind, sun, geothermal, etc) are filling in the gaps. Natural gas is now the major source of fuel for energy producing plants, and a 28% drop in the price of natural gas for energy producers over the first half of the year has translated into big gains for consumers nationwide.

However, the replacement of coal burning plants with plants that use natural gas and a plunging price in hydrocarbons is not the entire story. Solar and wind energy in particular continue to become more efficient with advancing technologies, and are taking an increasing share of national, and international, energy production. This year the United Kingdom produced more energy from solar panels than from burning coal, and marked the first day since 1882 that no energy was produced from the burning of coal across the entire nation.

The state of Texas has enjoyed an even greater drop in consumer electricity prices, down 6% to 11 cents per kilowatt hour, thanks to easy access to plentiful supplies of cheap natural gas and a deregulated market. The deregulated market has allowed producers to adjust their prices sooner to reflect the lower cost of natural gas, and then pass these savings on to the consumer.

New England, which has a similar share to Texas of energy produced by natural gas, saw a similar decline in electricity rates over the year. However, the biggest decline of 12% was observed in the state of Hawaii, which uses oil for the vast majority of its energy production. The steep decline in the price of oil helped to bring electricity rates down substantially, albeit from a position that was far above the national average as a result of the state’s remote location and the difficulties that its geography causes for the installation of energy infrastructure.

 

Natural Gas To Surpass Coal As Source Of CO2

Natural gas is expected to soon surpass coal as a source of CO2.  As natural gas continues to replace coal as a fuel for the production of electricity for the nation’s electric grids, the total amount of emissions coming from natural gas activity will pass that of coal in 2016.

coal nat gas and CO2

Energy related CO2 emissions from natural gas are expected to exceed that of coal by 10% in 2016.  The total amount of electricity generated by natural gas reached record highs in the U.S. in July of 2016.  The nearly 5,000 gigawatts per day surpassed the previous record in 2015 by around 9%.  This was due partially to high temperatures as well as the continuing price advantage of natural gas over coal.  For the year, electricity from natural gas is expected to account for around 34% of power output compared to 30% for coal.

As ever tightening federal mandates force coal plants to either modernize or shut down, coal based electricity output has been in a multi-year down trend in the US.  This is expected to continue in the years to come. Much of this lost production has been replaced by renewable sources of power such as solar and wind.  The latter is particularly the case in Texas.

This all comes on top of another trend that has seen overall electricity sales declining thanks in part to greater energy efficiency in residential construction as well as federal energy efficiency mandates.  Lower peaks in electricity demand tend to favor cleaner sources of power. Coal and natural gas are considered more responsive sources of power generation and more likely to be ramped up in times of greater peak demand.

Electricity Rates

The gradual shift of electricity production away from coal and toward natural gas and renewable sources of power has not put upward pressure on electricity rates.  The national average for electricity for July 2016 was 13.0 cents per kwh.  By comparison, a 12 month electricity plan can be found for 6.3 cents per kwh in the Dallas, Texas area as of the time of this writing.

 

Texas And Oklahoma Ban Fracking Bans

frackingIn Texas, where electricity rates have been on the decline, the natural gas boom has brought about both cheap electricity and bolstered the state’s economy.

The technique of “fracking”, or injecting water in high-pressure jets to fracture shale deposits and release pockets of oil and gas to the surface, has been widely touted by its supporters as a way to achieve energy independence from foreign sources of fuel. We all remember cries of, “Drill, Baby, drill!” echoing throughout the land. In the wake of 2005’s Energy Policy Act, fracking started taking hold, and it has been growing ever since.

Is Fracking Causing Earthquakes?

In the Dallas metro area, which had seen almost no earthquake activity in the 58 years prior to 2008, there have been more than 130 temblors since.  Irving, Texas recently experienced 11 quakes in 24 hours. Oklahoma has been hit particularly hard: Having only had a handful of quakes measuring a magnitude of 3.0 or greater on the Richter scale per year from 1975 to 2008, it has seen a huge increase in seismic activity: In 2009, there were 20 earthquakes measuring 3.0 or greater; in 2011, among almost 60 such quakes, the largest earthquake in Oklahoma’s history, a 5.7 magnitude tremor, occurred. The number of earthquakes has shot up even more since then: 2013 saw 109 such earthquakes, and in 2014 there were 585. Based on numbers so far this year, it’s possible that Oklahoma will have 900 such earthquakes.

In a report issued early in May, researchers at Southern Methodist University (SMU) in Dallas concluded that oil and gas activities are “most likely” the cause for the increased seismic activity in the area they studied around the towns of Azle and Reno, near Fort Worth, which sit atop the Barnett Shale, an oil-and-gas-rich geological formation into which 17,500 new wells have been drilled over the past 15 years. The specific activity that could be linked with the quakes is not the fracking itself, but the disposal of wastewater by-product by injecting it, also at high pressure, into deep wells, which apparently causes shifting around existing faults, thereby causing the tremors.

While the SMU report resists drawing a definite conclusion as to cause, the United States Geological Survey doesn’t hedge: A USGS report released in April states that, “Earthquake activity has sharply increased since 2009 in the central and eastern United States. The increase has been linked to industrial operations that dispose of wastewater by injecting it into deep wells.”

States Prevents Cities from Banning Fracking

In its most recent legislative session, The State of Texas passed a law prohibiting local communities from enacting bans on any fracking or drilling activity–including the use of injection wells. This law is seen as a reaction to a municipal ban enacted by the town of Denton in North Texas, whose citizens were concerned about wells that were being drilled in residential areas. The oil and gas industry felt that this ban impinged upon their property rights, and The Texas Oil and Gas Association (TXOGA), along with the state’s General Land office, filed a lawsuit against the City of Denton the day after the ban was passed.

The industry went to the Texas legislature to head off any further municipal uprisings, and House Bill 40, which prohibited any further bans, was born. Passed by the Republican legislature and now signed into law on May 18 by Republican Governor Greg Abbott, who characterized the legislation as a move to limit government bureaucracy.

Denton Residents say the wells have polluted the local water, and there has been increased drilling within 200 feet of schools, public parks, and even homes.

For its own part, after years of denying any link between the burgeoning seismic activity and the growth of the fracking industry, specifically the use of wastewater injection wells, Oklahoma has taken a surprisingly strong step in acknowledging it. The Office of the Oklahoma Secretary of Energy and Environment has created a website called Earthquakes in Oklahoma ( http://earthquakes.ok.gov/ ), which features an interactive earthquake map that shows how earthquakes have gone from being very few and scattered around the state in the pre-fracking era to being numerous and concentrated in very specific locations.

Although the map itself does not state that these are the areas in which fracking activity is also concentrated, the section of the website labeled “What We Know” does affirm that the recent rise in seismic events can’t be attributed fully to natural causes and goes on to state that “The Oklahoma Geological Survey has determined that the majority of recent earthquakes in central and north-central Oklahoma are very likely triggered by the injection of produced water in disposal wells.”

However, the state of Oklahoma has followed Texas with similar legislation against fracking bans. A week after Abbott signed off on the Texas law, Oklahoma’s Governor Mary Fallin, signed a bill into law that would prevent municipal regulations of drilling activities, causing Norman, OK Mayor Cindy Rosenthal to voice concern that cities might not be able to regulate the disposal of wastewater into the drainage basins of municipal water supplies.

In Texas, natural gas is the largest source of electricity generation electricity companies and consumers have both benefited from cheap natural gas in the last several years.

 

 

ERCOT Releases The 2014 Breakdown Of Electricity Generation In Texas

West Texas wind energyJust 10 years ago, the majority of electricity generated in Texas was derived from the burning of coal. Since then, the state has taken great strides to diversify away from the high carbon-emitting energy source.

The electricity production numbers are now available for 2014. Last year Texas generated 36% of its electricity from coal, 41% from natural gas, 12% from nuclear plants and 11% from wind.

Texas is the largest producer of wind energy in the U.S., accounting for 20% of all wind energy produced in the nation. As additional transmission lines get more of West Texas and the Panhandle connected to the ERCOT grid, that number should continue to grow.

See Also: New Transmission Lines To Bring West Texas Wind To Dallas And Austin

 

University of Texas-San Antonio Releases Report on Economic Impact of Eagle Ford Shale

In a report released by the University of Texas-San Antonio (UTSA) entitled “Economic Impact of the Eagle Ford Shale”, researchers from the Center for Community and Business Research at the University’s Institute for Economic Development found that extraction of oil, condensate, and natural gas from the Eagle Ford Shale in South Texas generated over $87 billion in total economic output for Texas in 2013, including $42.8 billion in gross regional product for the 21 counties involved in the study.

In 2013, shale activity from Eagle Ford provided over $4.4 billion to state and local governments and supported almost 155,000 jobs, and UTSA projected that over the next ten years, the industry will support as many as 196,660 full-time-equivalent jobs and generate more than $137 billion for the region, far exceeding the $89 billion originally projected for 2022 in last March’s report. UTSA explains that the upward adjustment was a result of a continued rise in production that has exceeded expectations, as well as growth in the development of support industries such as refineries, processing and ports, among others.

Production from the Eagle Ford Shale has grown exponentially; oil and condensate production rose from 581 barrels per day in 2008 to over 1.1 million barrels per day as of June 2014, and natural gas production puts up equally impressive numbers, at more than 4 billion cubic feet per day. The report covers 21 counties that benefit economically from development in the Eagle Ford Shale; in addition to the 15 most directly-involved counties, in which 3,311 wells were actively producing in 2013, there are six surrounding counties that have seen a boom in economic growth from the development of related service and support industries.

The forecast for continued healthy growth has attracted more capital investment to Eagle Ford than to any other shale field in the country. Robert McKinley, UTSA Associate VP for Economic Development, said the revenue would provide the ability to develop and improve infrastructure that would benefit rural communities, such as roads, schools, broadband internet, and medical facilities. The report cautions that these infrastructure improvements are vital to the sustainability of communities in the region and recommends that community leaders should actively partner with state legislators to ensure that those communities can get support from revenue sources such as the Economic Stabilization Fund and from allowable city and county taxes.

The report also recommends that area communities should consider aesthetics, as well, and perhaps attempt diversification in less industrial-feeling investments, like olive farming and olive oil production, tourism, and recreation, to keep their surroundings attractive and enjoyable. Keeping the needs of local residents in mind rather than just focusing on the very impressive numbers will ensure that stability and economic success are long-lasting not just for investors, but for the whole community.

See Also:  U.S. / Texas Oil Reserves At Highest Levels In Decades

 

World’s Largest Carbon Capture Facility To Be Built Near Houston

The world’s largest carbon capture facility is coming to Texas.  The US Department of Energy has announced that work will soon begin a project to capture up to 90% of the carbon emissions from the W.A, Parish Generating Station; a coal-fired power plant southwest of Houston Texas.   Once captured, the CO2 will be pumped underground at the West Ranch oil field.

Pumping the CO2 underground will serve two purposes.  By injecting CO2 into pockets of hard to extract oil, the oil is liberated in a way that makes it easier to extract.  The process also results in the CO2 being sequestered underground rather than being released into the atmosphere.

The CO2 will be captured by processing the power plant’s exhaust gas through a solution of amines.  The amines will bind with the Co2 allowing it to be separated from the sulfates.  Later the amine solution will be heated; a process which releases the CO2.  The amine is recycled while the CO2 is pressurized and piped to the oil field where it will be used to help extract the hard to reach oil.

The West Ranch oil field, which has been in operation for over 75 years, has seen its production rates fall through conventional production techniques.  The carbon dioxide will reduce the oil’s viscosity and force it out of tight spots where it can be more easily extracted.   The oil will them be processed to remove any CO2 that has become mixed with the oil.  The CO2 can then be re-injected into the ground.

The size of the project was scaled up from original plans and will now entail capturing the CO2 from 240 MW of electricity production, making it the largest such operation in the world.   The DOE will be providing financial assistance for the project, whose principals include a subsidiary of NRG Energy.  NRG Energy is the parent company of Reliant Energy, a Texas electricity provider.

Although coal has long been the predominate source of electricity generation in the U.S., it has seen its market share slide in recent years as the abundance  of cheap natural gas has created a cheaper and cleaner alternative.   In Texas, the natural gas boom has helped electricity rates fall substantially since their highs in 2008.

See Also:  U.S. / Texas Oil Reserves At Highest Levels In Decades
See Also: Largest Federal Wind Farm To Be Built In Texas
See Also:  Reliant Energy Rates in Houston

 

U.S. / Texas Oil Reserves At Highest Levels In Decades

According to data recently released by the U.S. Energy Information Administration, crude oil reserves in the U.S are at their highest level since 1976.  In 2012 alone the U.S. added 4.5 billion barrels.  This represents the highest one-year increase since 1970 when Alaskan crude oil was added to U.S. reserves.

Texas alone added nearly 3 billion barrels, thanks to a number of factors including advances in technology for developing so-called tight oil plays, and continued high prices for crude oil which encourages exploration.   The expansion in Texas oil reserves largely reflect development of the Western Gulf and Permian basins.

While most of the country saw increases in reserves, Alaska saw a decline of 500 million barrels and California saw a decline of 33 million barrels.

 

 

New York Power Plant Could Go From Coal To Natural Gas

A troubled coal burning power plant in western New York could get a new life as a natural gas burning power plant.   The facility in Dunkirk should be refitted to burn natural gas according to a study commissioned by the plant’s owners, NRG.

According to NRG the conversion, which would cost about a half billion dollars would result in a 5% reduction in western New York electricity rates.  Across the entire state ratepayers could see a 2% reduction in electricity costs as a result of the plant being repurposed. 

According to the report, the switch would reduce the state’s dependence on higher cost electricity and eliminate the need for a proposed $2.2 billion project to import power from Quebec to New York City.

The New York power market is beginning to experience a taste of what Texas has been dealing with for a while.  An oversupply of natural gas has brought about cheap electricity rates making it more difficult for energy producers to make money; especially with coal burning power plants.  The power plant in Dunkirk faces shutdown in 2015 if NRG doesn’t take drastic steps such as the conversion to natural gas.

Once practically the only game in town for electricity, coal is rapidly loosing its position to natural gas.  The EPA has aggressively gone after coal in recent years with new rules that have added substantially to the cost of coal energy.  The combination of free market dynamics and regulatory overhead for coal has shifted the economic equation in favor of natural gas.

The study suggests that New York rate payer will save an estimated $142 million per year as a result of the lower wholesale electricity prices.  If the decision is made to pursue the conversation, it could also mean a jobs boost to the region.  According to the company, such a project would result in about 1,200 new jobs.

Photovoltaic Far More Efficient Than Biofuel For Electricity Production

According to research performed by University of California – Santa Barbara Bren School of Environmental Science & Management and published in the journal Environmental Science & Technology, photovoltaics outperform biomass in just about every metric – and it isn’t even close.

The research was done to address the question of how to most efficiently power alternative fuel or battery powered electric vehicles.   It’s an important question considering electric vehicles are ostensibly better for the environment than traditional gasoline powered vehicles.

When you switch from a gas powered vehicle to an electric vehicle pollution from tailpipe emissions is effectively eliminated.  But things aren’t as straight forward as that.  The source of the electricity used to charge the electric vehicle’s battery can have a substantial impact on the true environmental cost of your commute.

Most Texas electricity (the vast majority in the U.S in fact) still comes from coal or natural gas.  As a result, the environmental savings of electric vehicles, while still positive, are not as great as they could be.   To truly maximize the impact of electric powered transportation the electricity needs to be sourced from truly clean and renewable energy sources.

The University of California study compares two such potential sources; photovoltaics and biofuel.  Both methods work by extracting energy from the sun.  Photovoltaics achieve this by directly converting solar radiation into electricity while biofuel relies on photosynthesis to extract energy from the sun’s light.   From there, biomass can be used to create fuel (such as corn ethanol) for internal combustion engines or it can be used to generate electricity.

One of the study’s findings was that acre for acre, solar cells produce around 30 times more electricity than the most efficient biofuel crops.  This means the land use efficiency of solar vs. biofuel is better by a factor of 30.   For some of the least efficient crops, the land-use efficiency of solar power is about 200 times greater.  Compounding the effect, consider that solar cells don’t have to be placed on agriculturally valuable land.  They can be installed within cities and on roof tops.

Adding to the case for solar over bio is the fact that this gap in efficiency is likely to continue to widen.  The best photovoltaic technology currently converts about 10 percent of the solar radiation it receives into energy.  As the technology continues to advance this conversion ratio is only likely to improve, even as prices come down.  Biofuels however are hamstrung by the fundamental limitations of photosynthesis which only converts about 1% of the sun’s radiation it receives into energy.

See Also: Data Shows Electric Vehicles Could Strain Electricity Grid
See Also: Have We Seen The Peak In Carbon Emissions?

Pollution Levels Soaring in Industrialized World

Filthy airThe act of balancing economic growth and protecting the environment is a very precarious one. While mass-production is important, what are the long term effects? With the U.S. Environmental Protection Agency reporting more than 1,300 toxic federal Superfund sites, and nitrogen levels in China more than doubling in the past 30 years, according to Nature.com, things are getting scary. Remediation company Sevenson Environmental’s Michael Elia has helped spearhead the reduction and removal of some of the most dangerous sites, but plenty still must be done. The prospect of living, eating and bathing in toxic slurry is enough to gross out even the fattest of fat cats. No matter what your political stance might be, we can’t keep creating toxic waste at this rate.

Each year, 140 million tons of nitrogen is added to the environment, which, according to the United Nations Environment Programme (UNEP) has a number of effects on public health and the environment. UNEP estimates this causes up to $2 TRILLION dollars of damage in the world each year (yep, that’s the largest amount we’ve ever seen quoted in an editorial too).

A Crash Course in Nitrogen

A simple gaseous element that takes many forms, nitrogen or nitrates can be present or result from waste (human and other), manure, chemical manufacturing, exhaust, fuel combustion, fertilizers, and a whole host of other compounds we have come to rely on. Although small amounts are necessary, nitrites decreases the oxygen carrying capacity of blood in humans, and act as a major free-radical, among other suffocating traits.

To the environment, nitrites are basically the relentless villain in the heroic story of the Earth’s saga, theoretically entitled “Am I Sustainable?” We don’t know if the ending is a happy one.

Bigger, Faster, More, Now

The allure of great wealth, accomplishment, and of course, consumer demand has propelled industry since the industrial age. But at what point will the pendulum of “manufacture more” swing too far? Each pork producing company, on average, discharges 26 million tons of dangerous waste into the environment—and that’s just in the U.S. In China the pollution from various industries has made life so bad that flights have had to be canceled due to poor visibility. Although Spiegel Magazine has referred to China as “The World’s Toxic Waste Dump,” pollution is a serious concern for more than just a few industrialized nations—it’s a health risk for the world. According to a study by the World Wildlife Fund, we will need two more Earth-sized planets by the year 2050 if we keep using resources at our current rate.

What Happens Next?

The reality of the world is a scary one, but before we abandon our civilized life and run to the woods in tears, take some time to learn about things we can do to help reduce the massive onslaught of pollution problems we are facing. The EPA is a valuable resource for learning about the state of the environment in your community. From there teach other people to make small changes that make a big impact. You don’t have to be a millionaire philanthropist to incite a mini-environmental revolution. You could just be an average Joe who feels passionately enough about it to submit an article to an environmentally conscious blog.