29 Mar 2012: Report

U.S. Fossil Fuel Boom
Dims Glow of Clean Energy

A surge in gas and oil drilling in the U.S. is helping drive the economic recovery and is enhancing energy security. But as the situation in Ohio shows, cheaper energy prices and the focus on fossil fuels has been bad news for the renewable energy industry.

by keith schneider

The story of American energy used to be that we consumed and imported too much, that fossil fuel reserves were finite, and that a technical breakthrough in clean alternatives would save us.

How 20th century. The new narrative of American energy is this: We’ve been using less. A national boom in oil and gas production — spreading across 12 states, from California to Pennsylvania and North Dakota to Texas — is showing we have much more than we thought. And the clean energy economy, tiny by comparison and roiled by uncertain markets, is still decades away.

No state embodies these trends more clearly than Ohio, which for years has been a modest oil and gas producer, and not long ago was widely viewed as a leader in passing legislation, promoting jobs, and installing manufacturing for a clean energy economy.

Over the last year, though, everything in Ohio’s energy sector, like the nation’s, has changed. A surge in tapping so-called unconventional gas and oil reserves locked in underground shale formations is helping drive a national economic recovery, elevating fossil fuel production to a top economic priority, and dimming the glow of clean energy in the U.S., especially in natural gas-rich states like Ohio.

At night, on both sides of the upper Ohio River valley south of Pittsburgh, floodlights illuminate the table-flat summits of steep Appalachian ridges that now serve as production pads for natural gas wells and processing plants. Drilling rigs 18 stories tall are starting to tap huge reserves beneath 17,000
Nearly $2 billion in new gas processing facilities have been announced for the Ohio River Valley.
square miles of eastern and central Ohio.

Early production results from Ohio’s Columbiana, Carroll, Harrison, and Belmont counties show the first completed wells are capable of producing millions of cubic feet of gas and more than 1,000 barrels of oil a day. Families are signing drilling leases that pay up to $5,800 an acre. Nearly $2 billion in new gas processing facilities have been announced for sites in the Ohio River Valley. The economy of the 145 miles of river from Pittsburgh to Marietta, for two generations a laboratory of industrial ruin, is perking up.

“It’s fantastic what this could do for this region,” said Sharon Davis, who owns a restaurant in Sardis, Ohio, and recently received up to $5,250 an acre for the 168 acres of minerals she and her family own in Monroe County.

Meanwhile, a plan to build an offshore wind farm in Lake Erie, near Cleveland, has faltered. Another proposal to build a big wind farm in western Ohio was fought to a standstill by local residents, who filed a lawsuit that went all the way to the state Supreme Court. In January, one of the state’s prominent solar manufacturing companies laid off half its workforce, and the chairman and founder of a second solar company resigned, leaving a skeletal staff and big debts. Cardinal Fastener, the Cleveland company that supplied bolts to wind turbine manufacturers, and which was visited by President-elect Obama in January 2009, declared bankruptcy last June, laid off most of the staff, and then was bought in November by a German manufacturer.

“The energy picture has changed dramatically,” said Eric Burkland, president of the Ohio Manufacturers’ Association. “The price of electrical power is low. The price of natural gas is low. It’s changed the thinking on all alternative technologies. It’s affecting solar. You could say it’s taking the
Not long ago clean energy production represented a cogent business plan for Ohio and other states.
wind out of wind.”

It wasn’t very long ago — 2008 in fact — that clean energy production, and the development of a manufacturing sector to support it, represented a cogent business plan for Ohio and other states interested in creating jobs and reducing pollution and greenhouse gas emissions. President Obama ran on a platform that responded to rising gasoline prices and industrial obsolescence with a clean energy, good jobs message.

Now, President Obama talks about an “all of the above” energy strategy, as he did in January in the State of the Union, when he hailed the fossil fuel sector for generating more natural gas than ever before and for relying “less on foreign oil than in any of the past 16 years.” Weeks later the president dispatched Interior Secretary Ken Salazar to Ohio to tour a manufacturing plant that is adding jobs to build the bulk tank trailers used to haul millions of gallons of water to drill sites to hydro-fracture, or “frack,” the nation’s hydrocarbon-rich shales.

In Ohio and the Midwest, the contrast between the sagging fortunes of clean energy manufacturing and the boom in the fossil fuel industry is striking. In 2008, Ohio approved a renewable energy law that required utilities to purchase 25 percent of their power by 2025 from renewable and advanced energy sources. In 2010, the Environmental Law and Policy Center of the Midwest (ELPC), a Chicago-based nonprofit, counted 106 Ohio companies involved in supplying components for the wind industry, 63 supplying materials to the solar industry, and 9,000 workers in the state’s clean energy sector.

Today, no one in state government or the private sector is sure how many clean energy companies and jobs are still around in Ohio. Almost everybody
Today, no one is sure how many clean energy companies and jobs are still around in Ohio.
agrees the sector is struggling. “There isn’t one big thing influencing the market here,” said Robert Kelter, a senior attorney in ELPC’s Columbus office. “There are a lot of factors. There’s been a change in administration in Ohio. The legislature wants to change the renewable energy law. There are other setbacks that lead to delay and layoffs. It’s hurting the industry.”

It’s not that Ohio has stopped generating power from new renewable energy installations. Iberdrola Renewables is getting ready to open a 304-megawatt wind farm in western Ohio, where another company opened a 100-megawatt wind farm last year. A 50-megawatt solar installation is planned for southern Ohio, along with a factory to build solar panels in Toledo. Nationwide, installed capacity for wind and solar power is small but growing briskly.

But solar energy manufacturers in Ohio and elsewhere are going out of business and wind energy suppliers are laying off workers, victims of competition from foreign manufacturers, low prices for natural gas, and uncertainty in renewing the federal production tax credit for wind power.

Iberdrola Renewables laid off 50 of its 900-member staff in January and the company’s executives say an amendment to Ohio’s renewable energy law would make it much harder to finance new wind farms in the state. The proposal, which Republican Governor John Kasich supports, would enable AK Steel, an Ohio steelmaker, to use state renewable energy credits to develop electricity from waste gases from its blast furnace. The co-generation project, notes Eric Thumma, Iberdrola’s director of policy and regulatory affairs, is itself fueled in part by non-renewable natural gas.

AK Steel’s co-generation technology, the company asserts, fits into clean and renewable energy development in Ohio. The U.S. Department of Energy has already approved a $30 million grant for the project. Gov. Kasich, who has introduced a new state energy plan that emphasizes fossil fuel production, has said repeatedly that using waste heat or gases from industrial processes to generate electricity should qualify for renewable energy credits.

But there is already more than enough wind energy in operation or planned to soak up the available credits, says Thumma. The AK Steel project would add 100 megawatts of new power to the already saturated market and essentially render the renewable credits worthless. “It will crash the market for wind as a renewable energy in Ohio,” says Thumma.

Contrast the unsettled economics of Ohio’s renewable energy industry with the massing industrialization by the state’s fossil fuel sector. Some $3 billion is being spent on drilling, leasing, pipeline construction, and supply chain manufacturing to serve the fossil fuel sector, according to the Ohio Department of Natural Resources. One new steel plant is opening in Youngstown and three others in Lorain and Canton are expanding to meet demand for drilling pipe and other equipment.

It takes a lot of steel to tap Ohio’s 4,000-foot-deep Marcellus shale, and 2,000 feet below it, the Utica shale. Geologists in state government say the Marcellus contains trillions of recoverable cubic feet of natural gas, a good
Contrast the unsettled economics of Ohio’s renewable energy industry with its fossil fuel sector.
deal of it so-called wet gas that produces ethane, propane, and other compounds that can be easily processed into valuable fuels and feed-stock chemicals for rubber and plastics. Royal Dutch Shell this month announced that an upper Ohio River site, just across the state border in Monaca, Pa., is its favored location to build a multi-billion dollar plant to convert natural gas to ethylene and other feed-stock chemicals. The Utica shale may be even more valuable, say state geologists, because it holds 15.7 trillion cubic feet of gas and 5.5 billion barrels of recoverable oil.

Recovering natural gas and oil from deep shale formations, which uses millions of gallons of water shot down long wells at super high pressure, has stirred safety, health, and environmental concerns in Ohio and other energy-producing states. But Kasich insists that Ohio is prepared for the onslaught and ready to limit the risks. “You cannot degrade the environment at the same time you’re producing this industry,” Kasich said in January. “It’s not acceptable. The biggest companies know that you need tough environmental rules.”

Ohio requires fracking wastewater to be recycled or disposed in deep injection wells. This month, the Ohio Department of Natural Resources imposed tough new regulations on the operators of the state’s 177 deep injection wastewater disposal wells.

“We have the opportunity to get in front of the development with stricter rules [and] oversee the industry better than other states have,” said Trent Dougherty, staff attorney and director of legal affairs at the Ohio Environmental Council.

Similar shale formations lie beneath much of the rest of the country and are being tapped at a furious pace. Last year, according to the Department of Energy’s Energy Information Administration, the number of oil and gas drilling rigs in operation across the U.S. reached an average of 1,876 a month, the highest rig count since 2008.

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A High-Risk Energy Boom Sweeps Across North America
Energy companies are rushing to develop unconventional sources of oil and gas trapped in carbon-rich shales and sands throughout the western United States and Canada. So far, Keith Schneider writes, government officials have shown little concern for the environmental consequences of this new fossil-fuel development boom.
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From the ridge summits high above the upper Ohio, on an unseasonably warm day late in a winter that wasn’t, some of the risks of perpetuating America’s fossil fuel economy are visible. The growl of bulldozers clearing trees for new roads and drill pads can be heard across a landscape that consists of miles of unbroken forest that is now being fragmented. Wide, muddy corridors have been cut up and down steep hillsides for pipelines that gather natural gas for transport to processing stations. Erosion is increasing and pouring mud into the region’s streams. Big trucks, spewing diesel exhaust, strain in low gear to haul equipment and water up narrow roads.

Certainly this fossil fuel boom comes with local economic benefits. Motels and campgrounds are full with skilled oilfield workers from Ohio and other states. Restaurants are busy. But many people, even those who’ve gained new jobs in the industry or reaped windfalls from mineral rights, are nervous. “Things will change now,” said Sharon Davis, the restaurant owner in Sardis. “We know that.”

POSTED ON 29 Mar 2012 IN Business & Innovation Business & Innovation Climate Energy Energy Policy & Politics Asia North America North America 

COMMENTS


Was there even one mention of climate change in this article? If so, it was so buried that I didn't notice it.

Once upon a time, we used fossil fuels with abandon, not realizing that they were dramatically changing the world's atmosphere. These days, we have no excuses whatsoever. Such excessive and indulgent use of fossil fuels is wanton greed and it will create untold tragedies through the destructiveness of a climate that is being more and more out of balance.

Let us bow our heads and pray that we, as a race, may come to our senses and immediately work to reduce, not expand, the wanton use of fossil fuels that is detailed in this article.
As time is of the essence, as a country, the U.S. Congress would be well advised to act now to put a price on carbon, in the form of a carbon fee, with the amount collected then divided among all U.S. citizens.

This "carbon fee and dividend" will be an equitable and efficient way to reduce our fossil fuel emissions and to compensate ourselves for any subsequent increase in the price of energy. It, too, will provide effective incentive for the development of our renewable energy industry that has great, but as yet untapped, potential.

For the sake of our consciences, as well as for the sake of generations to come, we must rise to this challenge.

Posted by Abhaya Thiele on 30 Mar 2012


Regarding job-creation, it will never come from government programs and it never has. The whole world has become very incremental about everything, including innovation. Small steps are all we’re willing to even consider.

I’m following a guy in Austin, TX – Andrew West. He has the right idea: SOLVE problems with economically-viable solutions and the resulting demand will create jobs. He has tackled the construction industry by enabling high-rise apts/condos for 50\% less and in half the time. That’s going to be disruptive. Plus, clean energy, education and agriculture.

There is an Intro here:
http://www.Solutioneur.com

Posted by Alex White on 30 Mar 2012


Abhaya is right, and I just searched Schneider's article and "climate" did not appear. "Greenhouse gas emissions" did as he mentioned the now-waning push for "clean energy."

Where I differ with Abhaya and probably some others is in the overly simple distinction between so-called clean energy and fossil fuels. Reducing what needs to be done to slogans such as "clean energy" or "renewables" has done a lot of harm to the urgent cause of limiting carbon emissions because it confuses ends with means. Take the challenging issues of oil, on which we now depend as a source for the liquid fuels for cars, trucks and jets. Unconventional oil is a big part of the fossil boom that Schneider documents as high prices have made new U.S. resources profitable to extract. Unmitigated exploitation of fossil fuels is an environmental disaster, but so is the growing use of real (as opposed to imaginary) biofuels, which at commercial scale are an environmental disaster probably more damaging overall than continued oil use. They're a case of what can go badly wrong when slogans such as "renewable" substitute for sound environmental management.

Offsetting the CO2 emissions from fossil fuels -- through reforestation, through CO2 enhanced oil
recovery -- can begin significantly mitigating emissions in the near term and at lower cost than many non-economic clean energy fantasies. The most urgent need is to start making
measurable reductions in net CO2 emissions right now. That means using fossil fuels more carefully, rather than blindly racing to get off of them. The ultimate energy future is unknown and may well be post-fossil. However, the fossil resource base is too vast and too economically tenacious to dismiss rather than clean up, a process from which the often ill-grounded and premature quest for clean energy "the brand" has been a dangerous distraction.

Posted by John M. DeCicco on 01 Apr 2012


Much of this article is communicated in the language of commerce (oil is easily refined, cubic feet of gas, barrels of oil, etc), which, I think, distracts people from the very real dangers of fossil fuel. What we pump into our cars has been so removed from what is pumped out of the ground and refined. Similar to agribusiness, we've lost any sense of context for what we consume.

Industry has framed renewables as expensive, while obfuscating or denying the health and environmental costs of their products, thus the public is given only half the picture.

“It’s not acceptable. The biggest companies know that you need tough environmental rules.”

Really? Maybe I'm cynical, but the idea that the dirtiest industries in the country understand the need for tough regulations strains credulity.

And since when did infusing millions of gallons of fresh water with carcinogens and pumping it into the ground pass for tough environmental rules?

I'm not advocating for scare tactics, and frankly, I get frustrated when environmentalist only focus on CO2, but it seems we're reluctant to adopt clean energy, yet over-eager to consume more dirty fuel.

Posted by KM on 03 Apr 2012


Thanks for this article.

Posted by Diablo 3 on 04 Apr 2012


What is it with these fossil-fuel people? They're scientists so surely they know what they're doing to the atmosphere and thus to the climate. They have to be consciously culpable.

Are they also just too idle to move beyond coal, oil and gas? Is it the big money?

Or could it be worse? Sometimes one feels that there's a kind of 'get used to it' or 'in your face' attitude, a malicious glee in trouncing alternative energy systems. Nasty, mocking.

History will judge them very harshly, if there's anyone around to write it.

Posted by Chris Chatteris on 09 Apr 2012


When considering as far as 2050, humankind will not be able to meet all their energy demands from renewable energy sources alone, unfortunatelly!

It is therefore, still, necessary to continue power generation using fossil fuels and nuclear power, but not any more with "subsiding" it.

What is important is to foster comprehensive research and the development of human resources for the safe and peaceful use of nuclear power (after Fukushima). RD&I of the new and/or emerging sciences and technologies (Bio-Cogitive-Geo-engineering-Informative-Nano) should help us a lot.

Posted by KEMO on 16 Apr 2012


Comments have been closed on this feature.
keith schneiderABOUT THE AUTHOR
Keith Schneider is senior editor of Circle of Blue. He is a former national correspondent and regular contributor to the New York Times. In previous articles for Yale Environment 360, he has written about the renewable energy industry in the U.S. Midwest and an increase in the development of unconventional sources of oil across the western U.S. and Canada.
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