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Coal Loses to Natural Gas

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@VolkerP: I agree that the "gas revolution" isn't going to happen in Europe or Japan any time soon. Japan relies on imported LNG, which will always carry a premium to wellhead gas costs. Europe could realize the lower costs of shale gas, as there are tremendous reserves in Poland, but access to, and pricing of, the pipeline system is so restrictive that it is unlikely that Europe will have the same boom in production that we've had in the US.
 
We don't have the year-end data in yet, but here are some data for January - November 2012, US Generation by fuel source:
Fuel Source20112012
Coal42%37%
Natural Gas25%31%
Nuclear19%19%
Hydro (conventional)8%7%
Other Renewables5%5%
> Wind
3%
> Biomass
1%
Source: EIA 2011, 2012

This is the first time in U.S. history that coal produced less than 40% of our electricity. To a good approximation, coal lost 5 percentage point of market share to gas. Renewables (other than hydro) made a slow gain, from 4.7% to 5.3% of the supply.
 
This is the first time in U.S. history that coal produced less than 40% of our electricity. To a good approximation, coal lost 5 percentage point of market share to gas. Renewables (other than hydro) made a slow gain, from 4.7% to 5.3% of the supply.

Too bad what they are losing to is natural gas. Headache to upset stomach.
 
Nature: A reality check on the shale revolution

The study is behind a pay wall. Some points got discussed in Telepolis, I translate a few tidbits:
The Author of the study, J. David Hughes, judges it as "unwise" to claim energy independency for the U.S. and forge plans on exporting the technology. He endorses the need for a more realistic debate. He looked into 30 shale gas and 21 tight oil exploration locations in the U.S.

In the examined explorations of the most important shale gas regions, the yield of 3 year old drill holes has declined by 80% to 95% of the initial value. The decline rates are extreme and cannot me compared with these from conventional exploration methods. A life time of 40 years, suggests Hughes, is way too optimistic.

In the Haynesville exploration region, 800 holes must be drilled per year, just to keep the yields at 2012 value. That is a third of all drill holes that were active in 2012.

The author concludes that shale gas is not economically sustainable for much longer, and that natural gas prices will have to rise again.
 
While in the WSJ this morning, there's an article about a report done by researchers at the University of Texas, funded by the Alfred P. Sloan Foundation, that claims:
The most exhaustive study to date of [Barnett,] a key natural-gas field in Texas, combined with related research under way elsewhere, shows that U.S. shale-rock formations will provide a growing source of moderately priced natural gas through 2040, and decline only slowly after that.

The research provides substantial evidence that there are large quantities of gas available that can be drilled profitably at a market price of $4 per MMBtu, a relatively small increase from the current price of about $3.43.

Looking at data from actual wells rather than relying on estimates and extrapolations, the study broadlyconfirms conclusions by the energy industry and the U.S. government, which in December forecast rising gas production.
So we have someone (quoted by @VolkerP) from the "Post Carbon Institute" saying gas is running out, and a team from the top research university in the leading shale-gas producing state reaching the opposite conclusion. Why am I not surprised?
 
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Three more coal units take a bullet:
American Electric Power Co. Inc. has reached a settlement agreement with the U.S. EPA and several states and environmental groups that will require the company to retire units at coal-fired power plants in Indiana, Ohio and Kentucky by 2015, the Sierra Club, one of the parties to the agreement, announced Feb. 25.
The units are Tanners Creek 4 in Dearborn County, Ind., with a nameplate capacity of 579.7 MW; Muskingum River 5 in Morgan County, Ohio, at 615.2 MW; and Big Sandy 2 in Lawrence County, Ky., at 816.3 MW. All capacities are according to SNL's database.
The utility, through its Kentucky Power Co. subsidiary, had already announced the possibility of closing the Big Sandy plant, which also includes a 280.5-MW unit. In addition, AEP has said it will retire the other three units at Tanners Creek and the other four at Muskingum River. Those plants are operated by subsidiaries Indiana Michigan Power Co. and Ohio Power Co., respectively.
The settlement represents a "major victory," the Sierra Club said. "This agreement is only the latest sign of progress as our country continues to transition away from dirty, dangerous and expensive coal-fired power plants," Jodi Perras, Indiana campaign representative for the Sierra Club's Beyond Coal campaign, said in a statement.
 
At least it is until all the water is made undrinkable and the water table is lowered :)

I am not thrilled with the Natural Gas boom either. I'm not convinced that the chemicals used in relatively new fracking technologies are safe in the long term, and I'm also concerned about methane leaks from wells. Methane is a much more potent greenhouse gas than Carbon Dioxide. That may negate its advantages over coal where it comes to greenhouse gasses.
 
So we have someone (quoted by @VolkerP) from the "Post Carbon Institute" saying gas is running out, and a team from the top research university in the leading shale-gas producing state [Sloan Foundation-funded study] reaching the opposite conclusion. Why am I not surprised?

Yeah, the Sloan Foundation-funded study is not particularly credible. Extrapolating from the Barnett is extremely questionable; most fields are far less rich. This is an example of a cherry-picking fallacy.

The US Geological Survey believes that shale gas (fracking) wells tend to decline sharply, down to low "stripper" levels, in less than 5 years.

The fracking companies are basically running a land flipping scheme. Because the decline rate on fracked shale gas wells is much worse than that on conventional gas, the scheme is to drill a well, frack it, announce a high early production rate, and then *sell it to the suckers* at the large integrated oil companies, for a price which would be appropriate if it had a decline rate similar to convientional gas wells. As soon as the large companies catch on, fracking for shale gas is dead, because it's basically impossible to recover the drilling and fracking costs in 5 years. Ignoring environmental regulations and otherwise cutting corners also helps make the fracking appear "profitable" while the companies try to find a sucker to sell it to.

Now, some of the shale fields have high liquids -- oil -- content, and those can actually make the fields profitable. This has caused a serious shift in the focus of the integrated oil companies, though not of the land-flipping companies like Chesapeake.

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Usually there is some form of a royalty payment to the government or a landowner. For example, off-shore oil drillers must lease parcels of land to obtain the right to explore and produce oil & gas. These lease payments, however, are set to maximize short-term revenue, and don't necessarily capture the long-term value of the product.

Just thought I'd tell you in case you didn't know -- in the case of onshore oil royalties on land with mineral rights held by the BLM, the lease payments were set to maximize short-term revenue in the *1920s*, and are far far below the market rate now. I have personal experience benefitting from this.