Export Delusions: Why the rush to export natural gas is a fool’s errand
May 29, 2014
Click the thumbnails to view slideshow. © J Henry Fair, flights provided by LightHawk
On a sweltering day in May last year I sat dumbfounded at a US Senate Energy & Natural Resources Committee meeting. Pat Outtrim, VP of Cheniere Energy, was arguing for fast-tracking approval of Liquified Natural Gas (LNG) exports because it would benefit energy consumers… in Great Britain.
A year later and the drum beat for approving LNG export operations is reaching a crescendo. This time it’s spurred by claims that we must save Europeans from the grip of Russia, who is using its position as the primary natural gas provider in Europe to annex Crimea and assert its power in the region.
In both cases, the rationale is the same: The US has an over-supply of natural gas—thanks to an explosion of hydraulic fracturing (“fracking”) for previously inaccessible shale gas—and it’s our duty as international citizens to make sure that our friends in Europe (not to mention Asia) can benefit from our lower-cost largesse.
Ostensibly in response to the crisis in Ukraine, two bills have been introduced in Congress: Senate Bill 2274, introduced by Mark Udall (D-CO), and House Bill 6, introduced by Cory Gardner (R-CO).
Gardner’s bill is, frankly, a little nuts—calling for the Department of Energy to simply approve “without modification or delay” all LNG export terminal applications that were submitted before March 6, 2014, due diligence be damned.
Udall’s bill is a little more measured but I confess to being even more chagrined by it, considering that Udall’s late brother Randy was one of the few voices in the country who recognized that the so-called “shale revolution” is really just a short-term phenomenon.
(If you can find the time, I highly recommend watching this brilliant and expansive lecture on shale gas by Randy Udall just a few months before his death: “Halliburton is Fishing in the Mancos Sea.”)
Despite plans for massive expansion of LNG export facilities, the U.S. is still a net importer of natural gas. © J Henry Fair, flight provided by SouthWings
Take action to stop massive expansion of US gas exports.
LNG exports have become a hot-button issue and enmeshed with the fate of an energy efficiency bill and a vote on approval of the Keystone XL pipeline. It’s pitted Democrats against one another, though interestingly the split is between those from states where drilling is taking place (export proponents) and those from manufacturing states who hope that cheap and abundant natural gas supplies can bolster their economies.
What seems to be entirely missing from the debate are a few realities that should render this debate moot:
Reality #1: The U.S. is still a net importer of natural gas. Yes, you read that right. In 2013, we produced 24.28 trillion cubic feet (tcf) of natural gas, but consumed 26.03 tcf. Now, the gap between production and consumption has been shrinking in the last decade as shale gas drilling went into overdrive, but our storage of natural gas supplies (needed in preparation for the cold winter months) is at alarmingly low levels—more than 40% lower than it was just a year ago. The idea that we have a surplus of natural gas to export is bogus.
Reality #2: By the time these LNG export terminals are completed, the “shale revolution” may have come and gone. As Post Carbon Institute has documented in painstaking detail, shale wells deplete at breakneck speed—on the order of 70% for a typical well in the first year and between 30-50% for entire fields. That means industry must replace nearly half of production each year just to maintain current levels. But there are only so many economically viable drilling locations. Unless drilling rates grow dramatically, it appears that all the major shale gas plays—with the exception of the Marcellus—have already peaked. It’s likely that by the end of the decade, US natural gas production will again be in decline.
Reality #3: The industry is losing its shirt at current natural gas prices—the real motivation behind the LNG export push. The shale gas drilling frenzy led to a steep decline in natural gas prices; this was great for utilities and consumers but has led to a lot of companies writing off assets and even more to rely on debt to keep the drilling treadmill going, since many of these operators are losing money. Exporting natural gas would raise prices domestically, something the industry badly needs in order to earn a profit.
Reality #4: While the benefits are fleeting, the costs will be borne for generations. There is a lot of debate about the climate and health impacts of shale gas drilling, with studies showing conflicting findings (for a great, albeit wonky, resource for peer-reviewed papers on shale gas check out this library put together by PSE Healthy Energy). But a few things are difficult to dispute:
1. Whether or not water contamination has already occurred, well casing failure is an inevitability 100% of the time. It’s just a matter of when.
2. The millions of gallons of fresh water that are used on average for each shale gas well drilled can’t be returned to the hydrological cycle. Whether or not industry gets better at recycling their waste water for use in other frack jobs, we’ll never again be able to drink that water or use it to grow food.
3. The boom and bust phenomenon that comes with the shale gas (and tight oil) drilling frenzy can create huge, negative social and economic impacts—increased crime, inflation, blight, infrastructure costs, and social services that can no longer be maintained by tax revenue once the boom ends. Export advocates are essentially arguing for sending all the benefits of fracking abroad while keeping all the costs here at home.
Fracking a single well can require over a thousand trucks. The hope that cheap and abundant natural gas supplies can bolster economies has prompted investment in ancillary equipment used in extractive processes. © J Henry Fair, flight provided by LightHawk
When you step back from the feel-good rhetoric and look more closely at these underlying—and under-reported—realities it’s clear that the rush to approve LNG export terminals is a fool’s errand. And by that I mean an errand on the part of some elected officials to fool us so that the oil & gas industry can ensure its profits.
View the slideshow of images to see the energy reality of natural gas exports.
Watch photographer J. Henry Fair’s TEDx talk “Schwarze Energie: Changing The Momentum”
Take action and tell Congress to vote no on a natural gas export boom.