Category Archives: Natural Gas

Natural Gas– What are the Cost and Supply Prospects Moving Forward? A Community Discussion

Missed this event?  View PPT slides here and a video of the talk here.

 

Natural Gas– What are the Cost and Supply Prospects Moving Forward?

A Community Discussion

 

Monday, August 29th
6 pm
Boulder Public Library
Boulder Creek Room, 1001 Arapahoe Ave, Boulder 

 

Clean Energy Action has pioneered detailed analysis of US coal cost and supply issues. Now we are working to get a deeper understanding  of natural gas supply issues.

CEA Intern and PhD Physics Candidate Molly May will present a detailed look at natural gas cost and supply issues and invite comment and suggestions for future research.

If you want a good foundation on natural gas supply issues, this will be a great way to get it.

If you are already and expert on natural gas cost and supply issues, please come help us learn what you know!

Infrared Video Reveals Gas Leaks

More than Meets the Eye

While the naked eye cannot detect methane, infrared photography can. Forward looking infrared technology – the same thermal imaging technology used by the military  to track targets that give off heat – allows us to visualize large plumes of methane and volatile organic compounds escaping from fracking sites.

Be the Change and Earth Works put this technology to use, surveying 24 fracking sites in Colorado, facilities regulated by state rules that Governor Hickenlooper has called a “model demonstrating the success that can come from collaboration.” The infrared video shows gas leaks of startling size.

Phil Doe, Environmental Director of Be the Change, expressed his skepticism of the effectiveness of these rules in his testimony on the EPA’s methane emissions regulations.

Operationally, these sites are governed by Colorado’s new air quality rules.  Oil and gas interests inevitably refer to these rules, implemented in 2013, as the strongest air quality rules devised by any state to regulate fracking pollution.  They are in fact stronger than EPA’s proposed rules, for they measure more oil field pollution sites, though not all, and are not limited to just new wells as in EPA’s proposed rule.  Still the question remains, is public health and wellbeing actually being protected by the state’s rules?  Will EPA’s weaker rules add any substantive protection for the public’s health?

Watch some of the videos and decide for yourself if Colorado’s rules are serving public wellbeing. If you are struck by the volume of these leaks, know that it is (highly) unlikely that action by the Governor’s Colorado Oil and Gas Conservation Commission will change things for the better. Although the Governor appointed a Task Force to recommend rule changes for oil and gas operations, little material change appears forthcoming.

Rule Changes

A recent letter (full text here) from Jim Fitzgerald, a Bayfield rancher and member of the Commission’s Task Force charged with recommending new rules for oil and gas operations, helps explain the current situation at the Task Force. He wrote to the Commission describing himself as a “very disgruntled member of” the Task Force.

Jim goes on to point out that the Task Force’s recommendations  “are only a small portion of what [the Commission] should be considering for adoption.” Several “important proposals to give local governments more standing have not been considered.” How come?

The Task Force, charged with recommending changes to the rules, had its own rules changed. While decisions regarding legislation were understood to require a supermajority vote, Jim writes that “it was understood by many , if not most of the members that any proposal that did not require new or amended legislation and which received a simple majority of support” would be passed on to the Commission for consideration.

Yet after majority approval of statements concerning the public interest and local regulation, the Department of Natural Resources informed Task Force members that “all proposals would need a two-thirds vote in order to be considered for adoption.” Thus the Task Force’s recommendations exclude common sense proposals like:

  • Recommendation #7: “The public interest is best served when local government land use planning and permit processes work parallel with and in accord with the state oil and gas regulations and processes.”
  • Recommendation #2: “Amend the Rules of the COGCC to acknowledge that local government land use regulations may be stricter than similar COGCC regulations and that such regulations must be complied with by oil and gas operators.”

13 majority-approved proposals absent from the Task Force’s list of recommendations.

The rules governing oil and gas operations may change, as may the procedures for making those rules, but still the question remains: will they address the leaks we can now see escaping from fracking sites in Colorado?

Public Comment Period for Oil & Gas Task Force

Local Control or Big Fossil Interests?

Thursday, September 25th, 4:00 pm – 6:00 pm
Colorado Parks and Wildlife
6060 Broadway, Denver 80216, Hunter Education Building

Remember the compromise that Congressman Polis made with Governor Hickenlooper? Well, the compromise task force has their kick-off meeting on Thursday September 25th (see all scheduled meetings) which will include a period for public comment. Participants will be asked to keep their comments under two minutes.

One wonders how a task force comprised mostly of politicians and fossil representatives could properly represent the views of the hundreds of thousands of Coloradans who wanted local control. Or how a two hour public comment period can effectively hear those voices…. if you are concerned about this you should tell Governor Hickenlooper directly.

Oil & Gas Rulemaking Public Hearing & Comment Session

Come to the Colorado Air Quality Control Commission Public Hearing

February, 19th 12:00 pm – 3:00 pm and 5:00 pm – 7:00 pm
Aurora Municipal Center
15151 East Alameda Parkway, Aurora, 80012

The Colorado Legislature has declared it to be the policy of the state to “achieve the maximum practical degree of air purity in every portion of the state,” to attain and maintain Federal standards on air quality, and to prevent the significant deterioration of air quality in places where the air quality is better than federally mandated. The Air Quality Control Commission of the State of Colorado is charged with making these policies into enforceable regulations. This is a commission of 9 volunteers appointed by the Governor who care passionately about air quality. This is not the Colorado Oil and Gas Control Commission, who some see as having the interests of a small group of constituents at heart. The Commissioners of the AQCC are working hard to ensure that the air quality regulations they enact are the best possible regulations for public health.

Rewind to November, when Governor Hickenlooper stood with representatives of Environmental Defense, a former EPA Region 8 administrator, and the “big three” oil and gas developers in the state, Anadarko, Encana, and Noble Energy. These groups worked to come to a consensus on rules that will positively impact public health as well as will be attainable by the developers. Do these rules promise to allow zero oil and gas emissions to escape into the air? No. Will they go a long way toward cleaning up the VOC’s and methane that are part of today’s development? Yes. They can be stronger, but they must not be any weaker.

Over the past three months, small developers and industry groups have worked hard to attack these rules in hopes that they will be weakened. The rules are long and tedious, but can be understood to address two issues. First, they will require the oil and gas industry to use better technology – technology that the big three may already be using – to reduce VOC and methane emissions. Second, the rules require the industry to inspect their infrastructure and fix leaks when they are detected.

Continue reading Oil & Gas Rulemaking Public Hearing & Comment Session

Now We’re Hedging With Wind

Price is not the only economic variable to consider in deciding what kind of generation a utility should build.  Different kinds of power have different risks associated with them.  This is important even if we set aside for the moment the climate risk associated with fossil fuels (e.g. the risk that Miami is going to sink beneath the waves forever within the lifetime of some people now reading this).  It’s true even if we ignore the public health consequences of extracting and burning coal and natural gas.  As former Colorado PUC chair Ron Binz has pointed out, risk should be an important variable in our planning decisions even within a purely financial, capitalistic framing of the utility resource planning process.

Utility financial risk comes largely from future fuel price uncertainty.  Most utility resource planning decisions are made on the basis of expected future prices, without too much thought given to how well constrained those prices are.  This is problematic, because building a new power plant is a long-term commitment to buying fuel, and while the guaranteed profits from building the plant go to the utility, the fuel bill goes to the customers.  There’s a split incentive between a utility making a long-term commitment to buying fuel, and the customers that end up actually paying for it.  Most PUCs also seem to assume that utility customers are pretty risk-tolerant — that we don’t have much desire to insulate ourselves from future fuel price fluctuations.  It’s not clear to me how they justify this assumption.

What would happen if we forced the utilities to internalize fuel price risks?  The textbook approach to managing financial risk from variable commodity prices is hedging, often with futures contracts (for an intro to futures check out this series on Khan Academy), but they only work as long as there are parties willing to take both sides of the bet.  In theory producers want to protect themselves from falling prices, and consumers want to protect themselves from rising prices.  Mark Bolinger at Lawrence Berkeley National Labs took a look at all this in a paper I just came across, entitled Wind Power as a Cost-effective Long-term Hedge Against Natural Gas Prices.  He found that more than a couple of years into the future and the liquidity of the natural gas futures market dries up.  In theory you could hedge 10 years out on the NYMEX exchange, but basically nobody does.  Even at 2 years it’s slim!

Average Volume and Open Interest in NYMEX Gas Futures Contracts

Continue reading Now We’re Hedging With Wind