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The Fuel Revolution that Is Changing the World — And Us

July 24, 2012 by White House Chronicle Leave a Comment

 

Colorless, odorless natural gas is changing the world geopolitically and economically in ways undreamed of even five years ago.

It is a giant upheaval of which President Obama is both the beneficiary and the victim. He benefits because low natural gas prices are helping consumers and industry. And he is undermined by them because the cheap gas is savaging his dreams of “green” energy alternatives with scads of jobs attached.

The technologies which have brought on the gas boom also are contributing to enhanced oil production in the United States. Who would have believed that North Dakota would become the third-largest oil-producing state?

But the price of gas, now at historical lows, is also a political difficulty for Obama. His energy policy has been based on the old reality of shortage and a need for “alternatives.”  In the administration’s scheme of things, the slack was to be taken up by the renewable sources ofenergy, wind, solar and wave power. With natural gas in plentiful supply and pushing out coal and new nuclear, the president is saddled with his failed attempts to push alternatives and to create a plethora of “green” jobs.

Yet without the boost that oil and natural gas are giving to the economy, it would be in worse shape than it already is.

A similar natural resources boom in the North Sea greatly aided Margaret Thatcher’s government and has underwritten Britain’s economy to this day, when production and British prosperity are both in decline.

New technology has brought the gas boom to the world and with it a change in geopolitics, soothing some tensions and exacerbating others.

The biggest excitement is in the Eastern Mediterranean, where there have been huge discoveries of gas — and sometimes oil and gas — off the coasts of Egypt, Israel, Lebanon, and around the Island of Cyprus.

The problems reflect the old tensions of the regions and some new ones, such as the growing estrangement between Israel and Turkey and the projection of Russian interests in the region.

Cyprus, itself a divided island since the Turkish invasion of 1974, is the closest member of the European Union to chaotic Syria and is being courted on several fronts by Russia.

Russia is worried about new gas supplies affecting its monopoly in gas supply in Europe, as well as the future of its naval base in Syria. As a result, Russia is pouring money and people (150,000) into Cyprus to keep its options in the Mediterranean open.

Cyprus would like to become a transshipment point for Israeli gas (when a gas liquefaction plant is built). But claim to reserves in its own territorial waters are being contested by Turkey and the Turkish Cypriots. About 63 percent of the island is controlled by 900,000 Greek Cypriots who claim to speak for the whole island.

With new gas everywhere, there will be a rush to find markets. Europe, for example, is hoping to ease its Russian gas dependence by building pipelines that will bring gas from Central Asia through Turkey  avoiding Russia. Others, like Qatar, are looking away from Europe and to Asia for new customers.

The appeal of gas to electric utilities everywhere is undeniable. It burns with about half the greenhouse effluent than oil and coal. The power plants are easily sited, do not need huge cooling structures and the capital cost is low.

However, methane, which makes up 75 percent of natural gas, is a serious greenhouse contributor and needs to be kept out of the environment. The other components of natural gas are ethane, 15 percent, and butane and propane come in at about 5 percent each. Natural gas is the world’s most abundant compound.

While the case against the swing to gas is primarily environmental, there is an economic concern about costs in the decades to come. The environmental case is twofold:

• One, that although it produces less CO2, a principal greenhouse gas, than coal or oil, it still produces half as much as they do.

• Two, that hydraulic fracturing, known as “fracking” affects groundwater, uses too much water itself in the process and may stimulate earthquakes.

Yet the chances of the world or the United States turning away from this new bounty are nil.

If the 19th century belonged to coal and the 20the century to oil, it looks as though the 21st will be the natural gas century. Reports of the death of fossil fuels are wildly exaggerated. — For the Hearst-New York Times Syndicate

Filed Under: King's Commentaries Tagged With: Cypru, Europe, fracking, green energy, natural gas, President Obama, Russia, selectric utilities, Turkey

Israel Set To Join the Rich Countries’ Club

January 31, 2011 by White House Chronicle 2 Comments

From Israel, there is good news and bad news.

The good news – and it is huge – is that Israel will soon be awash in natural gas. Gas discovered on the country’s outer continental shelf will turn the country from being hydrocarbon-deprived to being a net exporter.

Indeed, Israel is set to become so rich that it is laying the groundwork for creating a sovereign wealth fund for overseas investments in order to protect the country from inflation and the shekel from getting too strong.

The bad news is that with Hezbollah poised to control Lebanon’s government, Iran has de facto arrived on Israel’s northern border. Even without an Iranian nuclear weapon, this is a grave deterioration in Israel’s security.

Already Lebanon has asked the United Nations to guarantee that Israel does not violate the integrity of Lebanon’s outer continental shelf, where Iran plans to help Lebanon drill for gas.

Geology is about to change the political geography of the world’s most combustible neighborhood.

The two huge gas discoveries are in the Tamar and Leviathan fields. Taken together, the gas reserves are estimated at 26 trillion cubic feet or 10 times larger than Britain’s North Sea discoveries.

Since its creation in 1948, Israel has drilled on land for oil and gas with very little success. While the Arab Gulf countries have found and produced massive quantities of oil and gas, Israel has scrounged in the international markets for its hydrocarbons, including coal. But its isolation has made this difficult and expensive.

In recent years, Israel has bought gas from Egypt. Now Egypt will lose its good customer.

Turkey, Israel’s only Moslem friend until the botched seizure of a humanitarian ship bound for blockaded Gaza, will be affected too. There were plans for a pipeline that would carry gas from Azerbaijan across Turkey and undersea to Israel. That economic boost will not go to Turkey, but instead will probably go to Greece and Greek Cyprus. There have been preliminary discussions between Israel and Greece about shipping gas through Greece–by an undersea pipeline or a liquefied natural gas train–as an entry point into Europe.

Cyprus is a possible export-staging destination, as the Leviathan field, 86 miles off the Israeli coast, is nearby. But Turkish Cyprus, on the north side of the island, is not onboard.

The Tamar field is 50 miles off the Israeli coast and there are two smaller fields, potentially subject to claim by a free Gaza or a Palestinian state.

The gas will change Israel itself. Its defense force will have to defend the gas installations and the miles of pipes, pumps and other infrastructure. Israel has no domestic heating market, so all the new gas bounty will go to electric generation. The government hopes to make Israel the first 100-percent electric car country and the new gas will speed that transformation.

Credit for the Eastern Mediterranean gas discoveries goes to Houston-based Noble Energy. It is the technical leader in a consortium of Israeli companies. Now the world wants in before a whiff of the new gas has come onshore. Gazprom, Russia’s gas behemoth is keen to have a piece as an investment and to protect its European markets.

The Israeli government expects an influx of U.S. and European companies to supply piping, pumps, controllers and construction equipment and materials. It is not just private companies that are salivating: The Jerusalem government has just passed a law to tax gas profits at 62 percent.

Israel’s hostile neighbors want in too. The Eastern Mediterranean is in play in an area where play is rough.

 

 

 

Filed Under: King's Commentaries Tagged With: Eastern Mediterranean, Gazprom, Greece, Greek Cyprus, Israel, Lebanon, Leviathan field, natural gas, oil, Tamar field, Turkey

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