Unconventional Energy a Hot Topic in Texas

 

This piece is by Kathy Warbelow, who attended the Natural Gas in Texas and Unconventional Energy Hydrocarbons, a conference on the feasibility of increased natural gas usage in the power, transportation and residential sectors. 

Texas finds itself in the middle of an emerging energy revolution, as newer drilling technologies unlock vast supplies of natural gas in shale formations deep below ground.

“There are big opportunities, but also big unresolved questions,” said Ramón Alvarez, a senior scientist in the Texas office of the Environmental Defense Fund and a speaker at the McCombs School of Business's Oct. 19 conference on natural gas unconventional energy hydrocarbons. 

The 240 conference attendees heard a wide variety of perspectives on the promise and challenges of natural gas, including views from academics, environmental leaders and utility and industry executives. The event was underwritten by a grant from the Cynthia and George Mitchell Foundation and the Energy Foundation.

Natural gas is efficient, low-priced, and cleaner than other fossil fuels. But there are also numerous challenges including open questions about the environmental impact, especially of so-called fracking (a drilling method that has stirred concerns in several states), and regarding the economics of natural gas energy.

Shale gas drilling is causing a reappraisal of global energy supplies, said Dr. Fred Beach, a UT energy research fellow. With fracking, “there will be a six- to tenfold increase in potentially recoverable gas worldwide,” he said.

That gas could be used for everything from powering commercial truck fleets to increased residential applications and replacing dirtier and less efficient fossil fuels to produce electricity, Beach said, while pointing out that currently there are practical obstacles to wide adoption of some of those ideas, such as the lack of refueling stations for CNG-powered vehicles.

Beach also outlined the “cons,” including the 4 million to 5 million gallons of water needed for each fracking well and the methane level in natural gas; while natural gas is a comparative good guy among fossil fuels, methane is a potent greenhouse gas.

Complicating the picture is that fracking has brought wells into urbanized areas – within sight of schools and playgrounds and abutting residential backyards. Wells on the downtown campus of the University of Texas at Arlington have been pumping natural gas from the rich Barnett Shale since 2008.

That proximity has amplified concerns over the environmental impact, said Alvarez. They include concerns about poor well construction, spills and pipeline leaks, and the nature of the chemicals injected into the wells, along with water and sand, under extremely high pressure. “What is being used in the fracturing fluids? The public has a right to know,” he said.

(To underscore that point, the day after the conference, the U.S. Environmental Protection Agency said it would develop rules to regulate the chemical-laced wastewater and the backflow from fracking.)

“If we can get these issues resolved, the public will be more accepting of the industry and recognize the upside” of natural gas, Alvarez said. “There is a tremendous opportunity for our country if it is produced responsibly.”

Texas, no surprise, is well-positioned to be a leader in the natural gas revolution, several speakers said. It has decades of energy experience and knowledge, and already is well down the road. Five years ago, 19 new coal plants were proposed in Texas, said Robert Gibb, an Austin-based associate director in the fuels group of Navigant Consulting and a former executive at TransCanada Pipeline. This year, there are none.

Since 2004, Gulf of Mexico gas production has fallen by half. Why incur the costs of underwater drilling, Gibb asked, when you can go to Arkansas or West Texas and drill in shale formations?

“The last five years have been incredible in terms of change,” Gibb said. Texas, he said, will be the model for how the nation shifts to natural gas.

Natural gas is part of a worldwide seismic shift on energy, said Dr. Chip Groat, part of an interdisciplinary UT team working on a wide-ranging report on unconventional energy sources. “Nobody was thinking about the Eagle Ford 10 years ago the way they are now,” Groat said, referring to the South Texas shale oil and gas formation that has been called one of the biggest energy discoveries in decades.

The report, which could be completed by the end of the year, will outline the options for and issues raised by various unconventional energy sources. “There are mindboggling projections for things like oil shale and methane hydrate, but the environmental concerns scare the daylights out of some people,” Groat said.

Some of the other issues speakers addressed:

If cheap and relatively clean energy is desirable, why isn’t everyone jumping on the natural gas bandwagon?

High oil prices mean better returns for investors, and that focus isn’t likely to change anytime soon, said Ron Zboril, an investment banking associate covering the oil and gas industry at J.P Morgan. “We’ve seen a lot of rigs shift from a gas play to an oil play,” he said. “The price disparity is a long-term phenomenon.” If oil fell to $60 or $65 a barrel, that could cause a shift back to gas, he said.

Kyle Sawyer, a manager with pipeline giant El Paso Corp., also said it takes years to develop and build pipelines to transport gas, starting with securing long-term commitments from customers and undergoing an intense regulatory review.

Would more environmental regulation discourage investment in natural gas?

The costs associated with environmental regulations “are not going to be a significant enough factor to deter investment, Gibb said. “The industry will be willing to take those on.”

What are the bigger-picture questions about natural gas and Texas’ energy needs?

Five key questions need to be addressed, said Laura Huffman, executive director of The Nature Conservancy of Texas: “Cost, reliability, impact on the air, on the land and on the water.” Huffman also said there is a “desperate need for a better, bigger picture” of the state’s energy future.

Texas has a “terrific” state water plan, but no money behind it, she said. With energy, there is high investment but no plan for a state whose population is expected to double to 50 million in 50 years.

Disclaimer

The views expressed are those of the author and not necessarily The University of Texas at Austin.
 

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About The Author

Kathy Warbelow

Independent editor, writer, media professional, (freelance)

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