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What Vermont Employers Are Telling Us (about the need for natural gas beyond the pipeline)

"Every day we wait costs us $7,000!" the CEO emailed to my new company, NG Advantage. Turns out that trucking compressed natural gas (CNG) to his factory and using it to replace dirty #6 oil will reduce his fuel costs by almost half – more than two million dollars a year. His company spends as much on fuel as it does on raw materials. Some of his competitors are located on natural gas pipelines; they are undercutting him in the marketplace.

"My company is putting new machinery into facilities located on the pipeline," a CFO told us. Unless we can cut the amount we're paying for energy, no new investment is going into our Vermont plant. "When are you going to be able to start delivering?"

"Beginning of 2013," we told him. He wishes it were sooner; so do we.

"We'll pay back the cost of the burner upgrades in the first three months of using natural gas," the plant engineer said. "Our boiler people are all over it. This is something we need to do."

"Our hospital can save about one million a year, half our fuel bill. We were going to have to stop burning #6 oil anyway; it's too dirty."

"It's good to be able to save money and reduce pollutants. We don't think well have much trouble getting our Act 250 permit revised to allow us to reduce our emissions." Our prospects are looking at replacing oil products with much cleaner – and cheaper - natural gas.

"You have competition." The emergence of a competitor selling trucked natural gas from New Hampshire has made our job both easier and harder. When we were the only company planning to deliver this new product, prospects were more skeptical even though they were eager for the cost benefits. Now the question is more whom to buy from than whether to buy. Competition also reassures customers that they will pay reasonable prices and have options if one company doesn't give them good service. That's the way it should be.

"Food processing businesses want a Vermont seal, but they won't open new plants anywhere that doesn't have a supply of natural gas." That quote came from a Regional Development Council which has been bringing us together with their members and helping introduce them to the concept of natural gas.

"We need you to start service ASAP. Why are you beginning with a compressor station in Vermont where everything is hard to permit?" That's a good question. We are also looking at a compressor site in New Hampshire to better serve eastern Vermont, New Hampshire, and Maine. Adjacent territories provide backup for each other and better service for our customers.

One reason we started in Vermont is because we're Vermonters. Another reason is that our planned site in Milton, Vermont is the best place we could find from which to serve customers in Addison, Rutland, Lamoille, and Washington counties as well as adjacent New York State. Even though the pipeline will eventually come to Addison and probably Rutland and will then be the cheapest source of natural gas, businesses in those counties tell us that they need to do something about the high price and uncertain supply of oil products now.

Our CEO, Neale Lunderville, led the state's surprisingly speedy and effective recovery efforts from Tropical Storm Irene. We know that Vermonters, Vermont businesses, Vermont communities, and Vermont state government can move quickly in an emergency. If alternatives to oil for industrial use aren't delivered quickly, our economy will suffer much longer lasting damage than it did from Irene. New energy-dependent companies won't locate beyond the pipeline (which is most of Vermont). Companies which have a choice will shift investment and production to plants located on natural gas pipelines; other companies will simply be unable to compete and have to close. We have to move quickly.

That's what Vermont employers are telling us.

Related post:

Back to Business

The Energy State of the Union Annotated

President Obama recognized the importance of natural gas and the new, disruptive technologies which have made at least 100 years of this fuel available to us; that's the good news from the State of the Union Address. The bad news is that the President appears to have learned a lot of wrong lessons about the proper role of government in innovation and appears poised to take a lot of wrong-headed actions. Here's that section of the speech as reported in The New York Times with annotations by them (NYT) and by me (TE).

POTUS: And nowhere is the promise of innovation greater than in American-made energy. Over the last three years, we've opened millions of new acres for oil and gas exploration, and tonight, I'm directing my administration to open more than 75 percent of our potential offshore oil and gas resources. (Applause.)

NYT: An administration official declined to explain exactly what this potentially huge expansion of offshore activity meant, except to say that the Interior Department would be announcing new lease sales in the coming weeks. Those sales will not include areas the administration has already ruled off-limits, including most areas off Florida and along the Atlantic Coast, the official said, so it is not clear how the president reaches his target.

— John M. Broder, reporter

POTUS: Right now -- right now -- American oil production is the highest that it's been in eight years. That's right -- eight years. Not only that -- last year, we relied less on foreign oil than in any of the past 16 years. (Applause.)

TE: That is good news but obviously most of the increase in domestic production comes from actions taken before the present administration was in charge. Also a recession-related decrease in demand cut into imports. But still good news.

POTUS: But with only 2 percent of the world's oil reserves, oil isn't enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy. (Applause.)

A strategy that's cleaner, cheaper, and full of new jobs. We have a supply of natural gas that can last America nearly 100 years. (Applause.)

And my administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade. And I'm requiring all companies that drill for gas on public lands to disclose the chemicals they use. (Applause.)

TE: Amazing how he managed not to say the f-word, fracking or even the proper names for the innovations which are unlocking vast stores of both oil and natural gas, hydraulic fracturing and horizontal drilling. He did make a nod to opponents of hydraulic fracturing with the line about disclosure of the content of the fluids used in the process when drilling is done on public lands, actually good policy from my POV.

POTUS: Because America will develop this resource without putting the health and safety of our citizens at risk. The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don't have to choose between our environment and our economy. (Applause.)

TE: Applause! (Interestingly Boehner was applauding during this section the speech but Biden wasn't.)

POTUS: And by the way, it was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock –- reminding us that government support is critical in helping businesses get new energy ideas off the ground. (Applause.)

TE: Ahem. In 1865 Col. Edward A. L. Roberts received the first of his many patents for an exploding torpedo; it was used not for war but increasing production from hydrocarbon formations. He died a wealthy man. The co-inventors of modern fracking combined with horizontal drilling were Joseph Clark and Riley Farris. By vastly increasing the supply of natural gas, they have arguably done more for energy independence, energy abundance, and lower carbon emissions than all the well-intended grant-funded green efforts in the last twenty years. That being said, surely some aspects of government and university basic research must have helped: perhaps studies of geology, sound wave propagation, GPS technology, and many other things. The President is right that government has a role in funding basic research.

POTUS: Now, what's true for natural gas is just as true for clean energy. In three years, our partnership with the private sector has already positioned America to be the world's leading manufacturer of high-tech batteries. Because of federal investments, renewable energy use has nearly doubled, and thousands of Americans have jobs because of it.

TE: Whoops. Wrong conclusion. There were no government incentives for fracking as opposed to other means of gas production, no special tax credits for this technology, no mandates that we use fracked natural gas rather than alternatives, no tariffs to prevent us from buying foreign natural gas when it was cheaper, no DOE-led grant programs tucked into the stimulus bill for hydraulic drilling. The wealth of natural gas didn't come about because of "federal investments"; it is a result of plain old-fashioned marketplace economics. Growth in "renewable use", on the other hand, is only because of government programs, just as the President says; that's why much of it unsustainable and, as the President points out later in his speech, why the "green jobs" created will die back without further subsidies while the direct jobs in drilling for natural gas and building pipelines are here for a long time to come and the indirect jobs in American manufacturing enabled by cheap domestic energy are "sustainable" – as long as the savings are not eaten up by subsidies for energy sources which aren't ready for prime time.

POTUS: When Bryan Ritterby was laid off from his job making furniture, he said he worried that at 55, no one would give him a second chance. But he found work at Energetx, a wind turbine manufacturer in Michigan. Before the recession, the factory only made luxury yachts. Today, it's hiring workers like Bryan, who said, "I'm proud to be working in the industry of the future."

Our experience with shale gas, our experience with natural gas, shows us that the payoffs on these public investments don't always come right away. Some technologies don't pan out; some companies fail. But I will not walk away from the promise of clean energy. I will not walk away from workers like Bryan. (Applause.)

TE: Unfortunately Mr. Ritterby's new job may not last past the expiration of tax credits for wind turbines at the end of this year. Our experience with shale gas (fracked natural gas) shows us that effective technologies can be developed by the private sector with no help from the government other than possible funding of basic research. The example of a government program the President should examine is corny ethanol: that set of incentives, mandates, and protective tariffs has led to less fuel efficiency, higher prices not only for fuel but for food as well, and probably environmental damage. The private sector goes down many blind allies as well; but it can't double down and insist that we use more expensive products – at least not unless it can hire lobbyists to convince congresspeople that such laws are needed. Anyway, it was ethanol the government was "investing" in while the natural gas answer to environmental and economic problems was developed outside the Washington Beltway.

POTUS: I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here. We've subsidized oil companies for a century. That's long enough. (Applause.)

It's time to end the taxpayer giveaways to an industry that rarely has been more profitable, and double-down on a clean energy industry that never has been more promising. Pass clean energy tax credits. Create these jobs. (Applause.)

TE: By all means take the" taxpayer giveaways" away from oil (and gas and nuclear and coal) companies. But giving them to new politically-connected industries is exactly the wrong thing to do. Yes, the government should support research into many energy sources including renewable ones. Once these sources become competitively viable – and some of them will, the winning technologies will be good for America and good for the world and its environment – just as natural gas is. Government doubles down when it makes a mistake (see ethanol above); private investors move on to the next new avenue until they find something that works. That's the lesson I wish the President had learned from our recent energy past.

Nevertheless, the President is absolutely right that the abundance of American natural gas is a very, very good thing.

Full disclosure: I have invested in line with my beliefs and will benefit as an investor if inexpensive, clean natural gas displaces oil.

Related posts:

Natural Gas Disrupts the Energy Industry

The Pickens Plan Bill: The Wrong Way to Get the Right Result

Ending Tax Giveaways Isn't Raising Taxes

We Can End Energy Subsidies

Good News for the New Year




Good News for the New Year

The ethanol $.45/gallon tax subsidy is gone! Happy New Year. This could be a small opening wedge for both good energy and good fiscal policy. Bipartisan inaction (a techniques which Congress has mastered) let the 30 year old credit for corny ethanol, which cost us taxpayers $6 billion last year, expire with the end of 2011. This brave inaction was taken BEFORE the Iowa caucuses! BTW, this is a healthy recognition that a targeted tax break is every bit as much a subsidy as a government check.

At the same time the $.54/gallon tariff on imported ethanol was also allowed to expire, and so cheaper ethanol made from Brazilian sugar cane will set a price limit on what American producers of corny ethanol can sell their product for. This competition matters because Congress did NOT eliminate that requirement that refiners add ethanol to our gasoline and diesel supplies. We are still going to buy the stuff whether we like it or not

It took an unusual left-right alliance for this significant inaction to occur. Originally the subsidies were supposed to promote energy independence and prevent carbon emissions. The left was disappointed to find that emissions may actually have increased as a result of ethanol subsidies encouraging the use of more and more of the existing farmland for fuel rather than food and forest land being converted to farms. Also, of course, the price of food has increased as the grain supply has been diverted to ethanol. The right's not-always-consistent suspicion of subsidies was confirmed by a National Academy of Sciences report (as quoted in The Wall Street Journal) saying that grain ethanol "could not compete with fossil fuels in the U.S. marketplace without mandates, subsidies, tax exemptions, and tariffs . . . This lack of competitiveness raises questions about the use of government resources to support biofuels." Even the farm lobby did not fight hard to keep the subsidy, recognizing that all of its subsidies are in danger in a time of general affluence for grain farmers.

Getting rid of the subsidy and the tariff is only two-thirds of the battle; there is still a nonsensical requirement that refiners put a 10% ethanol spike into our transportation fuel supply regardless of whether ethanol competes with other fuels on a miles per dollar basis. Congress would actually have to act to undo this requirement and Congress isn't much good at acting. Under old laws the required percentage of ethanol in fuel keeps going up on autopilot unless and until the EPA determines that there is not adequate ethanol available. So put this in your tailpipe and smoke it: since we are no longer subsidizing the use of ethanol with our tax dollars and since ethanol currently costs more than gasoline and since the refiners are forced to buy ethanol, the price of gasoline and diesel at the pump will go up. We will send this forced contribution to Brazilian sugar farmers and to any American producers who manage to reduce their prices sufficiently. Refiners who don't buy enough ethanol pay a penalty to the EPA, which, of course would get passed on to us.

Refiners aren't likely to have to pay the penalty for run-of-the-mill ethanol since there is enough of it around at prices below the penalty. However, there is a separate mandate for the amount of cellulosic ethanol (ethanol from nonfood crops) which must be blended into our fuel supply. Congress initially set 500 million gallons as the cellulosic ethanol number for 2012, but gave the EPA the ability to reduce the number in case sufficient quantities are not likely to be available. Given that NO qualifying cellulosic ethanol was produced in the US in 2011, the EPA has reduced the target to only 8.65 million gallons. And what happens, you ask, if that quantity is not available? Simple, refiners will pay a penalty of $.78/gallon for each non-existent gallon of cellulosic ethanol they don't buy (and presumably pass this cost on to us).

But let's look on the good side: we're two for three; the subsidy and the tariff are gone.

This is a great precedent for NOT passing any of the proposed subsidies for natural gas, which I believe will contribute greatly to solving energy, economic, and environmental problems without a government handout so long as there is reasonable, effective, and speedy regulation of extraction. Credits and subsidies for various forms of "renewable" energy are expiring; RIP. It'll take congressional action but existing tax and other subsidies for oil and nuclear power ought to also be repealed (and subsidy-free projects like the XL Pipeline be allowed to proceed). Heck, pretty soon we'll be taking tax breaks away from hedge fund managers. That'll be a real new year.

Related posts:

Natural Gas Disrupts the Energy Industry

The Pickens Plan Bill: The Wrong Way to Get the Right Result

Ending Tax Giveaways Isn't Raising Taxes

We Can End Energy Subsidies

Smart Meters Enhance Physical Privacy

As a Board Member of the Stowe Electric Department, I get occasional questions about Smart Meters from my neighbors.

"About Smart Meters and privacy…" a woman began.

"So long as the data from the meter's encrypted," I began without letting her finish the question.

"Huh?" she asked. "What's encryption have to do with anything? What I don't like is people tromping over my yard to read the meter. They won't have to do that when we have Smart Meters, right?"

"Right," I said.

"Yeah," a man chimed in. "My dogs don't like the meter readers at all. They'll be glad to have Smart Meters."

"I have a neighbor with a seasonal house and a locked gate. They don't like people knowing when they're there and when they're away. And they don't like meter readers going around the gate, either." This from a third person.

No one asked me about cyber security even though I would've been happy to give them a detailed answer about why they don't have to worry about their meter data being stolen. No one asked me about electromagnetic radiation from meters, which is safe and far, far less potent than holding a cellphone to your ear.

I explained that Smart Meters give the utility data which allows faster restoration of service in an outage; people were interested in that. I explained how better information reduced cost to the utility which means, in the long term, rates lower than they would be otherwise and that automating meter reading saves us all money. "Yeah, I'm for lower rates," someone said politely.

I told a story about querying my Smart Meter data remotely to find that a pump in my house was malfunctioning while I was away. People drifted off to the bar.

I mentioned that electric cars will be simply impossible if we don't have smart meters to make sure they don't all charge at once and bring down the grid. The conversation changed to cars, the non-electric kind. I decided not to be a bore.

Funny the things people are really interested in, like keeping their property private.

Related posts:

Irene Lesson # 1 – Smart Grid Great for Power Restoration

House Flatlines – Smart Grid to the Rescue

What's a Smart Grid and Why Does It Matter?

What The $69 Million Smart Grid Grant Will Mean to Vermont

Don't Like Smart Meters; Opt Out at Your Own Expense

The Economics of Lowell Mountain Wind: The Video

This is the video from an interview I did on WCAX 6PM news last night. Darren Perron did a good job with his questions. As always on TV, there wasn't enough time to say everything I'd have like to have said. So two additional points here:

  • Vermont can have an economically bright and CO2-light energy future if it becomes an energy corridor for Quebec Hydro and buys more from that source, expands its use of natural gas now abundantly available from the nearby Marcellus shale, takes advantage of the coming statewide SmartGrid to pass through the very low price of off peak electricity. Allows the Public Service Board to examine Vermont Yankee relicensing on its nonpolitical merits, and spends state energy dollars on projects with a real return like solar hot water, geothermal, and natural gas vehicles.
  • Even though the economics of Lowell Mountain Wind are inferior to other available clean sources of electricity, the project has had its day in court before the Public Service Board and other regulators and has been approved. I disapprove of the tactics of protestors trying to slow the project and think they ought to be liable for any extra expense they cause. In this case the extra expense to ratepayers could be considerable if project completion is delayed beyond the end of 2012 because that is the deadline for being eligible for a 2.2 cents/kwh federal subsidy (although this IS an expense we will bear as taxpayers).

If you don't see the video above this paragraph, you can view it by clicking on this link.

Related posts:

Energy for Jobs – Vermont Version

Green Mountain Power Sets Good Precedent on "Bad" Project


I’ll Be on @WCAX 6PM News Talking About Vermont Energy Policy

The live interview, which'll probably be around 6:20PM, is a followup to my post saying that, even though I think the Lowell Wind Project is bad economically and bad energy policy, those who seek to impose extra expense on it (and on ratepayers) by physically delaying it should be liable for the extra costs since the project DID get its permits and certificate of public good from the Public Service Board.

There is no streaming video of this show but segments are posted online after the fact, so I'll supply a link when I have one.

Related posts:

Energy for Jobs – Vermont Version

Green Mountain Power Sets Good Precedent on "Bad" Project

Green Mountain Power Sets Good Precedent on “Bad” Project

Green Mountain Power says that it will try to collect damages from those who obstruct its already-permitted and approved Lowell Mountain wind project. It would be a wonderful precedent for Vermont if the cost of post-permitting delays were born by those who cause the delays. There's no good reason why Vermont ratepayers should be saddled with both the extra cost of wind power and the extra-extra cost of harassing delay tactics by project opponents. If we establish the principle of delayer pays once a project has been approved, we will be able both to protect the environment with tough standards and attract good projects, whose sponsors will appreciate the certainty once approval has been achieved.

I actually don't think the 21 turbine Lowell project is a good idea. It will supply a negligible amount of amount of not-very-dependable power at a high price even after various subsidies. We can literally get hundreds of times more carbon-free kilowatt hours reliably at 20% of the price with no further subsidies just by keeping Vermont Yankee open. But I – and other opponents – had the opportunity to make our case before the Public Service Board and failed to do so. We didn't succeed in convincing the Vermont legislature to be responsible about Yankee or to be realistic about the cost of "green" electricity. The town of Lowell voted overwhelmingly in favor of the project, despite the fact that they'll be able to see the turbines on the ridge. We opponents lost; we don't have a right to impose penalty costs on the project now that it's been approved – although we can catalog the actual costs and try to block similar projects from being approved in the future.

Every project of any consequence is in someone's backyard. Every project will have opponents. Some projects shouldn't get approvals for environmental or other reasons. Opposing a project during the hearing and approval process is both legitimate and necessary if you think the project is harmful. Projects like Lowell Wind, which impose extra costs on ratepayers in return for dubious benefits, merit opposition. But, once a project has won approval and assuming it complies with the conditions of approval, we don't have a right to impose penalty costs and delay on the developer.

Related posts:

America's Industrial Revival

Google Finds Nothing is Shovel Ready, Not Even for Free Fiber Build

Irene Lesson #2: Nothing in America is Shovel Ready – Until It Has to Be

Scale Matters

Don’t Like Smart Meters; Opt Out at Your Own Expense

If you stand nine feet from a smart meter for twenty-four hours/day for a year and a half, you'll get about the same dose of radiation that you get during a ten minute cellphone call when you're holding the phone to your ear. (math below).

A smart electrical grid is a good thing. It gives us consumers more information and choices, ways to save money, more net-metering opportunities for those who want to generate some of our own electricity, and the opportunity to replace oil for both home heating and transportation. Jobs will be created as businesses discover ways to reduce the energy-cost of their operations. Even if we choose not to make use of the smart grid information ourselves, we will still benefit because our local utility can use the information to fix outages faster and more cheaply than before (often before sleeping consumers even report them), reduce the amount of power which has to be purchased to meet demand, smooth out expensive peaks, and eliminate the cost of manually reading meters. Lower costs for our utilities mean lower rates for us – perhaps not lower than they have been but certainly lower than they would be otherwise.

So what's not to like?

Part of implementing a smart electrical grid is the installation of smart meters: electronic replacements for the electromechanical meters we've been using almost forever. Unlike the old meters, the new ones communicate information about demand and line voltage back to the utility in near real-time. The timely information from these meters is essential to the benefits the smart grid can deliver. In much of Vermont and many other places, low-power radio is the most practical way for the meters to communicate with the rest of the grid.

Some people are afraid of the electromagnetic energy generated by the meters during communication. They shouldn't be. If you stand 9 feet from a smart meter while it is transmitting (at most one twentieth of a second every 15 minutes), you are exposed to a power density of about 4 microwatts per square centimeter (µW/cm2). For comparison, if you hold a cell phone to your head during a conversation, you are exposed to anywhere from 1000 to 5000 µW/cm2. Stand one foot away from your microwave while it is operating (not even close enough to look in), and you are in a force field of 200-800 µW/cm2. So if you stand nine feet from a smart meter for twenty-four hours/day for a year and a half, you'll get about the same total dose of radiation that you get during a ten minute cellphone call when you're holding the phone to your ear, assuming the low end emission for a cellphone. All numbers here are taken from a study done by the California Council of Science and Technology (CCST) entitled Health Impacts of Radio Frequency Exposure from Smart Meters. CCST points out that, even if your smart meter somehow got stuck in transmit 50% of the time and you were standing a foot from it forever, you would not receive more radiation than the FCC guidelines allow.

Some people are afraid that their privacy will be violated because their utility will be able to determine short-term electricity use. It is true that monitoring electricity use can be an indication of when you came and left home, when you dried the laundry, and perhaps other aspects of your behavior. Even with dumb meters, for example, police sometimes use extreme electricity demand to indicate that someone is growing large quantities of pot under grow lights. There do need to be limits on how this data is used and who has access to it. There also need to be rules to assure that you have access to your own data. However, compared to what your Google searches reveal about you or the trail of electronic crumbs your cellphone leaves behind even when you are not talking, this is a very fixable privacy problem with small risk.

Reasonable or not, some people just don't want smart meters. That leaves us with four choices:

  1. Deny everyone the benefits of smart electric grid because a few people don't like smart meters.
  2. Require everyone to have smart meter if they want to buy electricity, just as we require everyone to have a dumb meter today.
  3. Allow anyone who doesn't want to have a smart meter to say "no thanks" and have everyone pay the extra cost of manually reading his or her meter and less grid management information.
  4. Allow anyone who doesn't want to have a smart meter to say "no thanks" and charge those who make the choice the extra costs they are imposing on the system as a whole. In other words, if you don't want a smart meter, you don't get a share of the benefits of the smart grid.

Central Vermont Public Service has proposed choice #4 to the Vermont Public Service Board. Their calculation of the extra cost is $10/month. Stowe Electric Department (of which I'm a board member) has not yet filed a proposal with the PSB on this issue nor has the Board taken a position However, speaking only for myself, I think it's good to give people a choice when choice is possible – and I think people need to be responsible for the cost of their own choices. I'm for option #4.

Related posts:

Irene Lesson # 1 – Smart Grid Great for Power Restoration

House Flatlines – Smart Grid to the Rescue

What's a Smart Grid and Why Does It Matter?

Irene Lesson # 1 – Smart Grid Great for Power Restoration

At 1:36PM yesterday the lights went out for 1103 members of Vermont Electric Coop (VEC) in South Hero, including us at our summer place on the Lake. No surprise; tropical storm Irene was raging up Vermont. No need to call VEC in a panic, though; I could see immediately from their website that they knew about the outage including the exact number of customers affected. VEC was the first utility in Vermont to install smart meters and they know immediately when a meter goes silent. Unlike other utilities who haven't installed smart meters yet, VEC doesn't have to wait for customers to call in. Equally important, they can tell from their monitoring system almost exactly where the break is BEFORE the trucks roll so the linepeople can go straight to the problem rather than having to search along the road or through the woods.

At 8:15PM with the wind still raging, the lights came back on for most of us. It's likely some intrepid person went up in a cherrypicker in the storm and made a repair (thank you!). Immediately the outage website showed that 199 South Hero customers were still without power; something must have happened downstream from the original break. Without smart meters, the crews probably wouldn't have known about the second break for quite a while since the people who were cut off by it would have just assumed that the original problem hadn't been fixed yet and wouldn't have called in again until they lost patience or saw their neighbors' lights on.

Within two years most Vermonters should have smart meters thanks partly to a $69 million stimulus grant awarded to Vermont utilities. We'll probably be the first state in the nation to have a near 100% smart grid. Outage management is only one of the many benefits of adding electronics to the power grid that we'll see. But yesterday and today outage management is a very large benefit indeed. Kudos to VEC for installing smart meters for better customer service even before they got a grant and helping to show the whole state what the advantages of a smart grid are.

Related posts:

House Flatlines – Smart Grid to the Rescue

What's a Smart Grid and Why Does It Matter?

What The $69 Million Smart Grid Grant Will Mean to Vermont

More Natural Gas or Less?

"Geologists Sharply Cut Estimate of Shale Gas" is the headline of a New York Times story today on a report from the United States Geological Survey (USGS).

"USGS boosts amount of Marcellus Shale gas reserves" was the headline of a Wall Street Journal reprint of an AP story on the same USGS, which ran Tuesday.

Hmmm…. Time to check the original sources.

According to a press release from the USGS which accompanies the report:

"The Marcellus Shale contains about 84 trillion cubic feet of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids according to a new assessment by the U. S. Geological Survey (USGS).

"These gas estimates are significantly more than the last USGS assessment of the Marcellus Shale in the Appalachian Basin in 2002, which estimated a mean of about 2 trillion cubic feet of gas (TCF) and 0.01 billion barrels of natural gas liquids.[hiliting mine]

"The increase in undiscovered, technically recoverable resource is due to new geologic information and engineering data, as technological developments in producing unconventional resources have been significant in the last decade. This Marcellus Shale estimate is of unconventional (or continuous-type) gas resources."

You'd have to agree that 84 trillion is a lot more than two trillion. Note that these two estimates are only nine years apart. The old one wasn't wrong for when it was written; just didn't take fracking into account.

However, the NYT's headline isn't technically wrong, just sloppy in comparing apples to oranges. From the lede of their story:

"Federal geologists published new estimates this week for the amount of natural gas that exists in a giant rock formation known as the Marcellus Shale, which stretches from New York to Virginia.

"The shale formation has about 84 trillion cubic feet of undiscovered, technically recoverable natural gas, according to the report from the United States Geological Survey. This is drastically lower than the 410 trillion cubic feet that was published earlier this year by the federal Energy Information Administration (EIA)." [hiliting mine]

You have to read two-thirds of the way down the NYT story to find that the previous estimate from USGS was two trillion cubic feet. On the other hand, the AP story quoted by the WSJ doesn't mention the disparity between the numbers given by USGS and the EIA. According to the NYT, the EIA plans to revise its number downwards. "They're geologists; we're not. We're going to be taking this number and using it in our model."

So why the difference in editorial bias? And why does it matter?

First things first. The facts about supplies of accessible natural gas matter enormously to energy policy. If we are going to have cheap and abundant natural gas for at least the next few decades, it is very hard to justify huge investments in new nuclear, solar, and wind energy – all of which are much, much more expensive for generating electricity than natural gas at current domestic prices and none of which are directly useful for heating our homes or powering road vehicles. Domestic natural gas directly replaces imported oil from unfriendly places and produces much less CO2 when burned than oil and much, much less than coal. As a bonus NG is very light on other pollutants found in coal and oil smokestacks. Oh yeah, natural gas makes corny ethanol look even dumber than it already looks.

On the other hand, if NG prices are only temporarily low or NG extraction has unacceptable environmental consequences, then promoters of more expensive alternatives – and seekers of subsidies for more expensive alternatives – have a better case to make. The energy competition doesn't like natural gas – especially abundant, cheap, accessible natural gas. It is highly disruptive to their plans.

The New York Times has run a series of articles hostile to natural gas, one of them, by Ian Urbina who also wrote today's article which is quoted above, was so badly done that it drew a rebuke from their own public editor. The NYT editorial policy has been highly in favor of continued subsidies and mandates for "renewable" – i.e. currently uneconomic wind and solar. Their news judgment seems warped by the threat NG poses to any conceivable argument for deploying technologies which are not yet ready for the market place, which drive up the price of electricity, and which don't directly displace oil.

WSJ is against subsidies for ethanol, wind, and solar (not so clear about nuclear). They have IMHO been pretty evenhanded in covering potential problems with NG even though the AP story they ran was not thorough. Today's edition, for example, gives prominence to an SEC investigation of disclosure of risks associated with fracking for natural gas: "SEC Bears Down on Fracking".

It is of huge consequence to national policy to determine how much domestic natural gas can boost our economy, reduce dependence on foreign oil, create jobs not just in extraction but in energy-dependent industries, and lower emissions of many kinds. We need the best reporting we can get. We must all remain skeptical and keep asking ourselves "what vested interest does this story serve?"

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