Energy Exchange

Steven F. Hayward and Kenneth P. Green’s report “Texas Energy and the Energy of Texas” written for the Texas Public Policy Foundation and published last week is pseudo-economics underwritten by the Koch brothers (some of the world’s biggest polluters).  The report simply ignores the health and economic costs of the pollution caused by coal production.

Most egregiously, the report claims that “only modest Nitrogen Oxides (NOx) reductions – if any – [will] be achieved by switching from coal to natural gas” (page 11).  The fact is that in 2009, using data from the EPA’s public emissions database, natural gas power plants in Texas emitted 73% less NOx than did coal-fired power plants per unit of electricity produced.  In addition, reducing Texas’ use of coal by switching to natural gas would reduce emissions of Sulfur Dioxide (SO2) by 99.9% and eliminate 100% of power plant mercury emissions.   These estimated environmental benefits say nothing of the economic benefits of new jobs related to natural gas exploration and production as well as increased royalties and taxes for the state.

Every year of delay in a switch to natural gas means Texas sends another $1.91 billion to out of state to coal companies in faraway places like Wyoming.  It protracts the challenge to cities like Dallas-Ft. Worth, San Antonio, Houston and Austin to comply with federal clean air standards, making it harder for them to attract new businesses and increasing the cleanup burden for businesses already located in Texas.  

I have one thing to say in response to Hayward and Green’s “If It Ain’t Broke, Don’t Fix It” conclusion:  Come down and tell that to the children losing funding for health, education and wellness programs, their mothers and fathers who fear losing their state jobs or the almost 4 million living with lifetime asthma in Texas.

We want to commend  Lt. Governor David Dewhurst who announced his interest last week  in increasing Texas’ use of its abundant natural gas resources by using market-based incentives to shift power plants from burning coal to natural gas.

This move would have a tremendous impact on the Texas economy when we need it most.  We can finally stop the one way train filled with the $2 billion Texas sends to other states every year in exchange for coal that provides no real benefit to our economy and pollutes our air.  Natural gas will help create jobs through exploration, construction and maintenance of new facilities.  It is homegrown and could help solidify Texas’ continued energy dominance as we reduce our dependence on imported fossil fuels and focus on Texas’ domestic energy resources, including renewable energy.  

Texas could maximize the economic benefits of natural gas if the Legislature would adopt proposals to reduce the unnecessary waste of natural gas.  An October 2010 report by the US Government Accountability Office says that 4.2% of gas produced on federal leases is lost through venting or flaring.  And at least 40% could be captured with available technologies that pay for themselves with the additional revenue from selling the captured gas.  As noted in the Comptroller’s recent “No Regrets” report, changing state policy to require the economic capture of vented and flared gas – meaning that 40% of the 4.2% now vented or flared would be captured — could enable the state to collect an additional 1.7% in income from royalties and severance taxes.   We estimate that this would translate to a range of $50 million to as much as $100 million for the state over the biennial budget period.  As the 82^nd Legislature scours the budget, program by program, those millions of dollars mean more teachers in classrooms or more doctors in our hospitals.

Yesterday I was interviewed on an energy-related television show about natural gas drilling in the U.S. and some viewers thought I was too pro-drilling, others thought I was too anti-drilling. My reaction to that is: PERFECT! That was precisely my intention – to be a balanced voice in the discussion of hydraulic fracturing (HF). HF may be an important process to extract what may be a cleaner-burning fuel source for our country; but if it is developed, adverse impacts for gas drilling must be reduced to assure public safety and to protect the environment.

Currently, the environmental impact of natural gas development is unacceptably high. From polluted water wells in Pennsylvania to an exploding home in Ohio, there are numerous recent examples of environmental disasters from natural gas production.

I said in the interview that HF can be used safely “IF” it is regulated more closely and companies are more transparent about the fluids they use. Regulation may be done state by state, but if states aren’t up to the task, it will need to be regulated at the federal level. So industry needs to step up to the plate and improve its practices. While there are issues with HF, many of the problems with gas are more widespread. A framework is needed that focuses on well construction and operation that goes beyond even HF to broader well construction issues and cementing. Additional issues that must be addressed include getting the cement and pipes right in the wells, and proper management of pressure. Additionally, for hydraulically fractured wells it is important to be sure wells are situated beneath a satisfactory cap rock — one or more layers of rock that’s sufficient to prevent toxic chemicals from migrating into drinking water. Some areas are so important, such as drinking supplies for cities, that they need to be off-limits for fracking.

If natural gas is to fulfill its potential, we need much cleaner drilling practices. Results will be gauged by the improved health and safety of citizens and the earth in the short and long term. Stay tuned for more discussion on this vital topic.

The Fort Worth Star-Telegram’s Mike Norman wrote an excellent piece that shines a spotlight on industry tactics evident at the meeting of a committee advising the City of Fort Worth on a study to better characterize the emissions from natural gas production in the city. 

I happen to serve on that committee, and here is my take on this week’s events. 

The City of Fort Worth wants to conduct a study to obtain much-needed data on the actual emissions from gas drilling and production taking place in the city. Getting accurate and representative measurements of air emissions from an industry with more than 1,200 actively producing wells in the city (and 500 more already permitted) will be a challenging and costly undertaking. Read More »

No one can fault the natural gas industry for trying to make its case before influential policy makers and the public. But there’s a certain responsibility associated with billing yourself as the purveyor of “facts:” Your information needs to be true. Loose use of facts will backfire on the natural gas industry.

Last week, I went to a presentation by the Barnett Shale Energy Education Council at the Texas Capitol. The Council represents over a dozen companies including the seven largest producers in the Barnett (Devon, Chesapeake, XTO, EOG, Quicksilver, EnCana, and Range). This briefing for legislators and their staff was billed as the first installment of a road show bringing the “facts” about natural Read More »

The town of DISH, Texas (population circa 200) is located in the midst of the major natural gas drilling boom occurring in the Barnett Shale. DISH recently attracted national attention after publicizing results of air pollution measurements taken near a natural gas facility within the city.  DISH leaders hired a consultant to analyze air quality due to concerns about possible harmful effects of emissions from natural gas production on the health of its residents. Their measurements uncovered more than a dozen chemicals at levels that exceeded the Effects Screening Levels used by the Texas Commission on Environmental Read More »