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By John Karoly
Chicago, IL, USA

John Karoly
John Karoly

Two years ago we reported in this column on the first Vail Global Energy Forum organized by the Precourt Institute for Energy of Stanford University. This year we attended the third Forum.

This Forum was very different from two years ago. The Forum in 2012 was designed to address many if not most renewable technologies although it went deeply into shale gas recovery by hydraulic fracture, commonly known as "fracking." This year's Forum examined the ramifications, consequences, politics of the shale gas industry and uses of natural gas in industry and transportation. Renewable energy was not a significant part of this conference.

The conference started with a presentation by Alan Murray, President of the Pew Research Group, titled "Public Attitude about Energy and Environmental Issues." In his opening remarks he said that he participates in a lot of venues on many issues and he listens to talk shows on various cable channels. His firm conducts opinion surveys domestically and internationally. He tells the participants that they are entitled to their own opinions but not to their own facts!

He observed that there is a very significant polarization between Democrats and Republicans but also among Independents. There is a polarization on environmental issues and global warming among others. Global warming is a major concern to the least polluting nations and less concern to the two biggest polluters: US and China.

There is a general ignorance among the public about energy issues: only one out of three people know and realize that the US energy situation changed dramatically with the development of shale gas and crude oil resources. At the same time, opposition to fracking increased a lot in the last six months. Generally women oppose fracking while men are in favor of it.

A panel discussion was held with Colorado Governor John Hickenlooper, Charles Davidson, Chairman of Noble Energy, officers from Anadarko Petroleum, Encana and Fred Krupp, President of the Environmental Defense Fund. The discussion centered around the agreement on Air Emission Rules reached just exactly one week before this Forum with industry, government and environmental groups for treating and dealing with pollution problems of the shale gas industry in Colorado. It is the framework under which the energy industry operates in Colorado. The feeling of the Governor was that this agreement could be the blueprint of future agreements reached by other States.

Tom Petrie, a consultant to the energy industry, talked about the benefits of horizontal drilling which eliminated the old, haphazard and expensive practice of "wildcatting" thus making oil exploration much more cost effective. New domestic oil reduced the country's current account deficit. Yet opposition to fracking is substantial and well organized. Furthermore, OPEC could orchestrate a large decline in oil prices in order to render fracking uneconomical. Jim Brown, an official of Halliburton, stated that next year the US will be the largest oil producer, surpassing Russia and Saudi Arabia. We went from declining reserves to excess reserves. He said that hydraulic fracturing is done through a hole only one-eighth of an inch in diameter, it does not pollute and does not use a lot of water.

Another objection to fracking is earthquakes which are caused by this operation. Mark Zoback, Stanford Seismic Expert on hydraulic fracturing spoke to this subject. 150,000 injection wells operate today. The rate of earthquake occurrence has indeed increased because some of these wells operate in active earthquake zones and the well activity advances the process which creates earthquakes ahead of their natural timing. He suggested seismic testing prior to drilling the well and a moratorium on injection into seismically active areas. Water recycling will also help to eliminate seismic activity.

Rob Gardner, Manager of Economic and Energy Division of Exxon Mobil talked about that company's outlook for energy with a view to 2040. They forecast that the role of coal in energy generation, over 50% today, will drop to 20% by 2040. It is and will be overtaken by natural gas. The large supply of natural gas has allowed for the return of the petrochemical industry into this country. Fertilizer plants are also returning; natural gas is providing a solid basis and rejuvenation of the domestic industry.

There was a lot of conversation and discussion around the use of natural gas as a transportation fuel. A Vice President of FedEx Express talked about that company's current activities with natural gas vehicles. They use them for local transportation where the route of the vehicle is well defined and fueling with natural gas is not a problem. But a natural gas filling station costs a million dollars which makes it very expensive to have a lot of them around the country. Furthermore the precautions which have to be taken to execute a refill (masks, etc.) would not lend itself to ready public use. It sounds too expensive and complicated and it is not likely that transportation will go beyond the use of city buses and some local truck traffic.

A panel discussion attended by Jiang Lin, Chairman China Sustainable Energy Program, Jeffrey Ball, Stanford, Cynthia Wang, China International Capital Corp, Mark Zoback, Stanford titled "China Energy Impact on the World" was the opening program of the second day. Prior to starting the actual topical discussions, the panel reviewed the air pollution situation in Beijing. The desirable solution to people who can afford it is to get out of the city. People wear face masks at all times, use air purifiers in their homes, restrict out-door activities and cover fields with huge bubbles with the air purified underneath for sports.

China has a great potential to develop shale gas resources, however, it is in the very first stage of the development. In 2014 China will drill its first 100 wells whereas in the same year the US will drill 20,000 wells. The more we drill the more shale gas opportunities are opening up here in the US. It will take ten years for China to catch up. In addition, China's industry is fighting its government. Shale gas developments will start in earnest in 2020.

On another topic, there have been considerable discussions on electricity storage, a key requirement to make renewable energy a true reality. New battery technology research is on the way; it is required to realize effective energy storage both on and off the grid. Other storage technologies are also available, of course, but as far as we can tell, battery storage may be the most competitive. On an overall basis, $38 trillion of investment is needed between now and 2035 to meet the energy needs of the country.

Electric cars seem to be strongly favored for the future. Cars will have instrumentation to communicate with each other allowing for improved, high density and faster traffic with fewer, if any accidents.

Tesla brought one of its cars with a technician to the conference. It was for a test drive but, unfortunately, I did not fit into the car. It is made for shorter ballet dancers. Nevertheless I was impressed by the car's simplicity of design. All space is taken up by passengers and their luggage in a nicely appointed space for both. The front is a trunk, the back is a trunk and in between is the passenger compartment with a computer in the console. There is no engine and other mechanical/electrical components are not visible. It is an elegant design – it is the iPhone of the automobile. And you don't have to take it to a dealer for service; just call Tesla and they can instruct you how to solve the problem over the phone. Of course the "charge anxiety" will be with you if you take the car on a long ride. This car shows the way to the future of electric automobiles.

The conference concluded with the closing remarks of George Schultz, former Secretary of State. He observed that North America, including Canada and Mexico, are in a "fantastic shape" for the future in global terms. We have all the energy required even looking into the distant future. North America has stable and well functioning governments, including Mexico where opportunities under the current administration have been rising. Mexican immigration to the US in 2013 was zero. More people/families went from the US to Mexico than vice versa. He suggested that if we want to protect our Southern borders from illegal emigration, we better move the forces to the southern border of Mexico.

Schultz expressed his displeasure over silly and pointless arguments whether the Arctic Vortex or Hurricane Katrina and the like are or are not signs of global warming. He pointed at the long term melting of the Antarctic, the North Pole which is now navigable in summer and the melting of the glaciers as irrefutable proofs of global warming. He echoed the key elements of the conference: use of natural gas and crude oil from tight formations recovered under controlled environmental rules.

My take-away from the conference is as follows:

The discovery and development of our natural gas and crude oil reserves is a watershed for the country. With proper methods and environmental safeguards, the technology is and will flourish in spite of opposition. Use of natural gas is a gain to the environment over use of the dirtiest fuel: coal. It also generates less CO2.

Natural gas is not a likely vehicle fuel with all its drawbacks. With battery research on the way, a less hazardous chemistry than lithium's, such as calcium or aluminum, will also be able to carry many times the charge of a lithium ion battery. It is easy to see vehicles powered by these batteries capable of long distance travel on a single charge. When this development is ready, internal combustion engines may be a thing of the past.



Vail Global Energy Forum

All opinions expressed by John Karoly are solely his own and do not reflect the opinions of Stay Thirsty Media, Inc.

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