White House Chronicle

News Analysis With a Sense of Humor

The Politicos Know for Sure Where the Oil Is

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Lemuel Gulliver is back! You remember him – he’s the hero of “Gulliver’s Travels,” a satire written by Jonathan Swift, first published in 1726.

Many adventures befall Gulliver, but the one most remembered is that he's captured and pinned down with innumerable strings by the tiny Lilliputians. By their standards, he was a giant, but they tied him down so well that he was helpless.

That, according to those seeking the Republican presidential  nomination, is the state of the U.S. energy industry – by energy, they mean oil and gas.

According to Newt Gingrich, who's echoed by frontrunner Mitt Romney and his two rivals, the oil and gas industries have been cruelly tied down by government, which imposes onerous environmental regulations and restricts drilling in the most hopeful parts of our ocean shelves and on federal lands.

If these lands and ocean sites were just opened to drilling, the Republican hopefuls argue, the United States would become the world’s greatest energy producer, as it was in the 1940s and 1950s. Drill, baby, drill and a gigantic cornucopia of energy awaits; energy for the United States and the world.

Jack Gerard, president and CEO of the American Petroleum Institute, the take-no-prisoners trade association that represents nearly 500 oil and gas companies, is a vocal advocate of more drilling in more places. He's a Gulliver theorist.

From Republicans and the oil industry, this is a new optimism born of an old idea. The old idea is that if you drill enough holes in enough places, oil will be abundant.

That optimism has existed more in the fringe world of wildcatting than it did in the big oil companies, which knew that there were limited reserves of recoverable oil and gas in the United States. They also knew that once a reserve is in production, you can calculate the point at which it will decline; as has happened with the North Slope of Alaska, where less than half the 2 million barrels a day produced at its peak is flowing today.

Then came the new technologies, largely developed by the despised government. Now in full deployment, these technologies have incontrovertibly changed expectations for natural gas but their impact on oil is debatable.

The first of these  is  3-D seismic mapping. Advanced physics enables the companies to determine very accurately how much hydrocarbon a particular formation underground might contain. Gone are the days when the hard-drinking wildcatter followed his gut and mysterious patterns in the tumbleweed.

Next, is the hole itself. At one time, a well was a well – drilled straight down, looking for a pool of oil, a cavern of gas or both. Fracturing – the process in which water, chemicals and other substances are injected down the hole to break up rock in proximity to the hole – has been used to release more of the good stuff. With time fracturing, also called “fracking,” has become more sophisticated.

What has made the euphoria of the politicians and oil lobbyists possible is the miracle of horizontal drilling, which allows as many as eight holes to be spread out for miles from a single shaft. This and better fracking has changed the prospects for gas out of all hope, and has somewhat improved oil expectations.

Much of the enthusiasm for new drilling has come from the success of the new technologies in North Dakota, which has overnight become the the fourth-largest oil-producing state in the Union. But beware. This isn’t Texas circa 1945.

Oil from North Dakota's Bakken Field isn’t cheap. Its “lifting cost” is among the most expensive there is: It costs about $50 a barrel to bring North Dakota oil to the surface, compared with about $15 in Russia and Saudi Arabia. Is it oil or incense?

API’s Gerard told reporters in a telephone conversation, designed to preempt President Obama’s “all of the above” energy recommendations, that technology in its inevitable advance would keep the oil flowing for many generations.

Only the government, in Gerard’s view, stands between the American people and abundant oil.

However, fields that have peaked – like the North Slope and much of Texas, Louisiana and the North Sea –  have seen declining production and no technology has been enough to revive them. All the oil has been removed. Gone, baby, gone.

More drilling has already improved domestic oil production. But will unfettered drilling really make a new Saudi Arabia of the. United States? Can the resource base stand the exploitation? Can Gulliver actually stand up?

The next generation of technology won’t put more oil in the ground. – For the Hearst-New York Times Syndicate

Big Challenges for Big Engineering

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There is a back story to the oil spill catastrophe in the Gulf of Mexico. It is the revelation of the extraordinary failure and triumph of engineering. In a world of computers, materials sciences and nanotechnology, big engineering remains awesome but often overlooked.

Everything to do with the Gulf disaster is part of the big engineering story. Hugely sophisticated drilling platforms, drills and drill bits make it possible to drill at a mile under the sea, and to go on another 3 miles into the earth beneath the ocean floor. That is awesome. The fact that at depth these drills can then drive horizontal is awesome-plus.

The blowout preventer–the fail-safe device–is amazing. It stands five stories high and is as sophisticated as a space rocket. It is a stunning piece of engineering design, which the world only knows about because it failed to operate on April 20 when the Deepwater Horizon drilling rig exploded.

No one knows for sure why the blowout preventer failed. Feeble human hands may have been a factor; the best engineering is no better than its operators.

When it came to the Deepwater Horizon, the makings of failure were in place; not on the sea bed, but on the deck of the drilling rig. Fatigue, greed, hubris and divided responsibility all drove toward disaster. As in aviation, great industrial disasters are usually not isolated phenomena but the result of a sequence of failures and misjudgments.

The Gulf tragedy will be compounded if we turn away from big projects and big engineering because we fear failure.

In the 19th century, big engineering thrived. The British built the Indian railways. Cecil John Rhodes dreamed of building a railway from Cape Town to Cairo. The idea of a tunnel under the English Channel was considered (an abortive start was made in 1911), while the Suez and Panama canals were being dug.

Like the Romans in their day, the British were committed to big engineering in their colonies and possessions. Big engineering carried the enterprise forward, opened markets and, in the case of canals and railroads, carried troops to the battle.

The American railroads united the country and laid the groundwork for the greatest commercial expansion the world had yet seen.

Electricity brought forth more engineering creativity with power plants, dams, transmission lines, and finally nuclear power plants.

But big engineering took a drubbing in the 1960s: It was suddenly the problem, not the solution. We continued to fly in Boeing 747s, but we did not celebrate their engineering. We used more electricity and held our noses as we did so.

The miracles of engineering-based comfort and prosperity were to be eschewed. We indulged but fretted, like a smoker who knows he should not do it.

No longer did politicians urge the young into the exciting world of big engineering, whether it was civil, electrical or mechanical. Instead, they talked blandly about “math” and “science,” as though these were disciplines that could operate without engineering support.

“Technology” was in and engineering–big engineering, which built big things like dams, nuclear power plants, oil refineries and ships–was out, relegated to the category of “last resort.”

Incredibly, the tunnel between England and France was opened and the French pioneered high-speed trains. But America’s engineering schools played with their curricula, adding socially relevant courses and hybrids that include, and sometimes emphasize, ideas that are far from the world of leverage, logarithm and tensile strength. Engineering management and social impacts of engineering are among the new courses that have tainted the brawny world of big engineering.

Political correctness met engineering, and it has not been a happy marriage.

One would hope that the events in the Gulf would excite a new generation of engineering students to the romance of engineering, the thrill of creation and the duty of problem-solving. For engineering romantics like myself, a giant crane is nearly as wondrous as a cathedral.

There is unbelievable horror in what we have wrought in the Gulf. But also is wonder that we can build machines so remarkable that they can lift the lid off the underworld.

 

Obama’s Energy Policy: A Labyrinth of Contradictions

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When it comes to energy, there is an incoherence to President Barack Obama’s policies.

This incoherence is embedded in his administration in the person of Carol Browner. She is largely regarded as the agent of a kind of reactionary environmentalism that once haunted the Democratic Party.

Browner, administrator of the Environmental Protection Agency under President Bill Clinton, is a special assistant to Obama for energy and environment. To a wide variety of industries, though, she is the agent of regressive, just-say-no environmentalism.

Browner’s background–from environmental jobs in Florida to working with Al Gore–dooms her to suspicion of zealotry, which is probably unjustified. Her defenders (just about all in the environmental movement), see her as a great public servant and standard-bearer.

But she is largely out of sight these days; her writ and her influence unknown.

To the energy industries, from the ever-embattled nuclear sector to the euphoric-for-now natural gas producers and the mostly happy wind farmers, Browner and her role remains a mystery. Why is she there? How much does she influence Obama? Or, for that matter, does he care more about the politics of energy and the environment than he does about the issues?

The answer, like so much that can be said of Obama, is some of this and some of that.

The administration is opening up the Atlantic coast and part of the Alaskan coast to oil drilling. But it is keeping the California shoreline free of new exploration. (There are a lot of environmental voters in California).

As for nuclear power, the actions of the administration are the most confusing. Obama looks like a host who having welcomed a guest to dine, snatches the guest’s chair away when the meal is brought in.

He has advocated nuclear power and has endorsed loan guarantees for new nuclear reactors. But in a piece of blatant political opportunism Obama has canceled all work, and even licensing, on the Yucca Mountain waste repository site in Nevada. Yet, Yucca Mountain was the cornerstone of the civilian nuclear revival.

To understand why Yucca Mountain has been abandoned, together with $10 billion of taxpayers money, look no further than the senior senator from Nevada, Harry Reid. And to understand Reid’s stubborn rejection of a national patriotic role for Nevada, look no further than the gaming tables and slot machines of Las Vegas. At least part of Obama’s energy policy is influenced by fruit machines.

Obama first declared against Yucca Mountain during the campaign. Many thought that his opposition would, in the way of campaign promises, melt in the sunshine of reality.

But the politics of the Senate triumphed. Obama’s need for Reid, the majority leader in the Senate, became utter dependence in the health-care debate. So the will of previous Congresses for a sophisticated and vital nuclear industry, was trumped by Reid. The Joker came out of the pack face up.

Good thing for energy policy that Nevada has no other big energy issues. Part of its previous attraction for nuclear was its small population and remote location. But the wheel of fortune spins in politics as well as roulette, and unpredictably Reid rose to be the most important Democrat in the Senate.

The offhand way the administration has junked Yucca Mountain should worry all in energy supply. White House press secretary Robert Gibbs dismissed the abandonment of Yucca Mountain as being done on “scientific grounds.” If you believe that, the tooth fairy is your sister.

So the administration has pushed nuclear in the full knowledge that California and other states by law cannot approve new plants without a viable repository for their spent fuel. In a stroke, the administration has converted certainty to limbo.

The squeezing of coal is similar. EPA is moving ahead with classifying carbon dioxide as a pollutant, presumably in order to pressure Congress to pass the highly criticized cap-and-trade legislation.

This giving and taking away should give pause to those who think oil and natural gas drilling will proceed apace in the Atlantic and off Alaska. Browner and the president himself must know that a slew of lawsuits will be filed and will tie up action for years, if not decades.

One foot forward, 12 inches backward. That is the Obama energy quick-step.  –For the Hearst-New York Times Syndicate

Bad Energy Vibes from Obama, Odd Ones from McCain

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Memo To Sen. Barack Obama: Beware of your friends and their opinions.

For example, Rep. Edward Markey was on a Sunday talk show allegedly defending your position on offshore drilling. But, in fact, the Massachusetts Democrat was defending his own long-held and irrelevant views. You just had an epiphany on campaign finance. Now, you need to have one on energy. At this point, the world needs oil and will need it for many decades. True, the United States will not get any new oil from the outer continental shelf for 10 years, and it will only account for about 4 percent of our needs as long as it lasts. But even that is essential.

Memo To The Friends Of Sen. John McCain: Just when you thought your candidate had settled down to be George W. Bush Lite, he up and proved that old mavericks cannot change their ways. McCain split the difference on oil by reversing himself on outer continental shelf drilling and remaining adamant on not drilling in the Arctic National Wildlife Refuge (ANWR). This put Tom Ridge, the former homeland security chief, on the spot on a Sunday talk show. Ridge simply could not explain the inconsistency of McCain, whose presidential bid he supports.

No matter what you believe should be done, the irrefutable fact is that the world is in a terrible energy bind–and all the indications are that the world energy situation may get worse.

Politicians of the left want to believe that there are technologies ready to come on line, and they are being squeezed out by old-line energy companies. They place their faith in what are referred loosely as “alternatives,” which include solar, wind and geothermal power. These they see as being the equivalent of low-impact aerobics. Painless and environmentally neutral. These politicians oppose the burning of coal and have no coherent policy on oil and gas. They choose to believe that the current high price of oil is a combination of oil company greed, Wall Street speculation, and the Bush administration’s appeasement of the Saudi royal family.

Conservative politicians have as much problem facing reality as their liberal colleagues. They have an inordinate faith that current off-limits drilling areas, both in the ocean and on land, will produce untold quantities of energy for the United States. They have considerable faith in new technologies that will clean up coal, find oil at ever-greater depths, and exploit gas hydrates on the ocean floor. They also believe that oil shale in the West, abandoned in the 1970s because of the environmental consequences of mining and the shortage of water, will replace Saudi Arabia.

One thing the left and the right do agree on is that plug-in hybrid vehicles are going to help a lot. The theory is that they will make a big dent in the 20 million barrels of oil that the United States gulps down every day; that is 10,000 gallons of gasoline every second, according to John Hofmeister, president of Shell Oil Company.

There is an energy establishment, and it is of one mind on energy challenges. This is the thrust of its thinking:

l Energy conservation is essential

l The outer continental shelf should be explored aggressively, along with federal lands

l ANWR should be drilled immediately, and a natural gas pipeline from Alaska should have priority

l Nuclear power is the best substitute for the coal now being burned and to replace geriatric plant

l Coal gasification is the best way to burn coal

l Wind power works and should be encouraged; in particular, storing wind energy as compressed air needs research

l Liquefied natural gas imports need to be boosted

l The search for new technologies needs to be relentless

l Energy producers, from oil companies to wind farms to electric utilities, need consistency in public policy

The unsaid addendum to the establishment thinking is that Obama needs to get some energy advisers who have a solid purchase on the Earth, and that McCain needs to listen to his advisers. In 1974, governments fell like ninepins as the global economy was battered by high energy prices. The battering next time may be much worse.