Energy Without Emirs
Hefner, Robert III
ENERGY WITHOUT EMIRS Here are the reasons the government hasn’t encouraged the development of America’s natural gas: It’s cleaner and cheaper than oil and we have a huge amount of it. by...
...Despite evidence from people like me that vast resources remained, natural gas was forced to fit this pessimistic vision...
...But price controls administered by what later became the Federal Energy Regulatory Commission dictated that we sell our gas for the equivalent of 60 run over 50 school buses on natural gas...
...Can there be any wonder that natural gas producers simply stopped drilling...
...And so on...
...This combination of events-the stifling of exploration and the decline of gas associated with oil suspicion of natural gas supplies left over from the “energy crisis” of the late seventies, failure to recognize the true costs of oil, and the natural gas industry fields-occurred at exactly the wrong time: during the crisis atmosphere induced by the OPEC shocks of the seventies...
...But there may be a way around this problem...
...simply returned to its natural gas consumption levels of the 1970s (before the federal government discouraged and even outlawed using the fuel) we would replace 2.5 million barrels of oil each day-about 25 percent of the oil we import...
...Right now, almost anyone (usually competing fuel distributors with good lawyers) can delay building new pipelines by five years or more...
...Congress needs to clear away the misguided regulations holding up pipeline construction, recognizing that the economic and environmental benefits of building a pipeline dramatically outweigh the costs...
...because it’s a gas, not a liquid, it contains no particulates, which means it extends engine life by about three times the current average...
...Because my business for the past 30 years has been the exploration and production of natural gas-and because you’re an American raised on the notion that energy has to be nasty, crudish, and in short supply-you’re probably a little suspicious...
...by Robert Hefner III For the third time, we’ve lost control of our economic destiny to a Middle East oil producer, and now we’re risking American lives...
...energy needs...
...At the same time, we’d be cleaning up the atmosphere, since natural gas produces only two-thirds the carbon dioxide of gasoline and contains 1 percent the sulfur oxide and 10 percent the carbon monoxide of oil...
...Commuters, by using a small compressor, can tap into those lines at home and fill their tanks overnight...
...As usual, it took Uncle Sam a few years to realize he’d arrested the wrong guy...
...may cover upfront...
...Conversion is right on the verge of making economic sense...
...If that fails, they can call for a re-hepring...
...Even before the current crisis, United Parcel Service announced it would convert its 2,000 fleet trucks in Los Angeles to compressed natural gas...
...Americans have always distrusted natural gas, anyway: If I can’t see it, smell it, or stain my clothes with it, how can I possibly run my car or my business on it...
...In other words, just when high oil prices, public awareness of the dangers of imported oil, and the discovery of new gas reserves most favored conversion to natural gas, Uncle Sam stepped in to make conversion a crime...
...Even after most of the federal bans were repealed in 1987, the perception of natural gas shortages lingers...
...If natural gas is so great,” you might be thinking, “why am 1 still driving a gasoline-burning car...
...Why isn’t natural gas America’s chief energy source...
...States, cities, and towns followed the federal lead, and soon natural gas was banned even from barbecues, outdoor lanterns, and fireplaces...
...The good was that it began to decontrol natural gas prices, which led to increased exploration, which in turn led to discoveries of vast reserves of natural gas-including 300 “super wells,” like ours in Oklahoma, which could generate as much power as the entire nuclear industry did in 1988...
...Economic models forecasting the demise of the industry proliferated...
...In fact, it’s poised to enter a new market: transportation...
...Demand for natural gas dropped from a record of 22.7 trillion cubic feet in 1972 to a low of 16.7 trillion cubic feet in 1986...
...The well’s production of over 19 million cubic feet of natural gas per day meant it could match one-third the energy output of a nuclear plant, meeting all the natural gas needs, including industrial ones, of a town of 80,000...
...The technology for converting cars, trucks, and buses from gasoline to natural gas has been around for at least 50 years, as shown by the three-quarters of a million natural gas powered vehicles already on the world’s roads...
...The lack of national leadership in natural gas has held the industry back (although, for decades, it has met more than 20 percent of U.S...
...If the U.S...
...such red tape is now preventing natural gas from displacing another one million barrels of oil per day...
...At the same time, the American oil fields were beginning to dry up after more than half a century of production...
...First, they get a hearing to block construction...
...Let me give you a real-life example of the damage done by those controls...
...The compressor is an additional $2,500, which your utility Robert Hefner III is chairman of the GHK Company, an Oklahoma City-based natural gas exploration and production company...
...In contrast, the oil industry is vertically integrated, with single companies controlling the entire process from production through marketing, and hence has a powerful political and economic voice...
...The answer lies in the nation’s hodgepodge of energy laws, cents per barrel of oil, rendering the well hopelessly uneconomic...
...ENERGY WITHOUT EMIRS Here are the reasons the government hasn’t encouraged the development of America’s natural gas: It’s cleaner and cheaper than oil and we have a huge amount of it...
...In the late eighties, oil prices stayed low enough that converting to natural gas, which requires a lot of capital upfront, didn’t make economic sense for utilities and industrial plants that weren’t already “dualfueled” (that is, able to switch back and forth from oil to natural gas...
...Conversion should pay for itself within five to eight years...
...A final weakness of the industry has been its distribution network...
...Oil has become too large an economic burden, too large a strategic risk, and too large an environmental hazard...
...Twenty years ago in Oklahoma, my company completed the then highest pressured natural gas well in the world, which was (not uncoincidentally) the second-deepest well ever drilled...
...But while drillers made strike after strike in the early eighties, the market for natural gas shriveled, thanks to the bad side of the Carter legislation, which discouraged the use of natural gas in existing plants and expressly outlawed it in new industrial and power plants...
...Since natural gas is delivered through pipes, local distribution companies, like electric companies, came to be regulated by the states...
...Here in Oklahoma, we ciated with oil...
...The stumbling block for conversion today is more convenience than cost: The natural gas industry offers few filling stations to compete with the ubiquitous gasoline ones...
...With an economically rational energy policy, we could take control of our economic future by making natural gas our principal energy source...
...In 1977, James Schlesinger, then secretary of energy, responded to the notion that deregulation would leave America awash in natural gas with this nationwide...
...So, it’s time to get serious about America’s best energy source: natural gas...
...As a recomment: “I believe that’s based on smoking pot...
...After all, half of American homes are already connected to natural gas pipelines...
...One million miles of pipeline crisscross the United States, but some regions of the country-in particular the Northeast and the West Coast-still can’t get all the natural gas they need...
...Natural gas isn’t just for cooking anymore...
...For instance, the interstate pipelines and distribution companies for years battled the producers to prevent the removal of natural gas price controls that made it unprofitable to produce natural gas that was not asso, cal Survey who dared to be optimistic...
...As the oil industry began to focus on foreign lands, the supply of natural gas associated with oil turned into a trickle...
...What are the benefits...
...Also, companies had witnessed how the federal government simply turned off the natural gas spigot only a few years before, which made them reluctant to commit to the fuel...
...Today, it costs between $1,500 and $2,500 to turn a gasoline-burning car into a dual-fueled one...
...The Carter administration strove to keep despair alive by canning those at DOE and the U.S...
...While domestic oil exploration was vigorous, the supply of natural gas was abundant, and an interstate pipeline industry developed to carry gas from the southwest to consumers years led Americans to believe that energy inevitably had to be scarce and pricey...
...Geologisuit, the natural gas industry fractured into three sectors: Natural gas was produced mainly by oil companies, transported by interstate pipelines, and sold by local distribution companies...
...Utilities and city governments around the country-in places as diverse as Brooklyn, New York and Cannon Beach, Oregon-have already converted fleet trucks and cars...
...Natural gas is even in oversupply today-as evidenced by the fact that it sells for less than the equivalent of ten dollars a barrel at the wellhead...
...Bad gas attitude For decades, natural gas production was largely a byproduct of the oil industry, since natural gas reserves are found with oil...
...The economic interests of the three sectors often clashed...
...Well, compressed natural gas is a high-powered fuel, the equivalent of about 130 octane...
...Our domestic natural gas resources are vast...
...While you can slop oil into a truck or boat and deliver it anywhere, you can efficiently transport natural gas only through a pipeline...
...The doom and gloom of the Carter itself...
...Failing again, they can take the case to court, beginning at the lowest level...
...A flick of the switch on the open road, far from any natural gas pumps,,and the car goes back to plain old gasoline...
...Moreover, buying additional natural gas from the enormous Mexican and Canadian reserves would allow us to secure ample energy supplies well into the next century...
...It contained a little good and a lot of bad...
...Or just for heating or making electricity...
...If we were to double our current consumption-using natural gas to meet 50 percent of American energy needs and thereby supplanting oil as our number-one fuel-American supplies alone would last at least 20 years...
...and it costs only about 70 cents per gallon...
...In short, natural gas is better for national security, better for the environment, and cheaper for the consumer: all in all, not a bad deal for the country...
...Not leaving wells enough alone In 1978, Carter signed into law the most comprehensive energy legislation ever...
...The Department of Energy declared it “probable that reserves will be exhausted by the late 1980s...
...Throughout the 1980s, the Carter legislation worked diligently to increase American pollution and reliance on OPEC...
Vol. 22 • October 1990 • No. 9
