In his January 9 Guest Shot column, Hugh Owens disparages the use of natural gas as a transportation fuel, mainly on the basis of what he claims are inflated estimates of reserves and potential cost-savings to the individual consumer. Both claims seem to me to overlook important realities. A nation wide conversion from diesel-fueled haulers to Liquefied Natural Gas (LNG), and petroleum passenger vehicles to Compressed Natural Gas (CNG), offers holistic opportunities for economic growth across all sectors of the country. Most importantly, natural gas is a significantly cleaner burning alternative to traditional petrol products, particularly as the industry responds to growing awareness of the need for responsible drilling practices.
We see the results of high carbon dioxide levels in our atmosphere through filthy air in China, melting polar caps, increased severity of natural disasters, rising temperatures, and habitat loss leading to species extinction (e.g., Pine Bark Beetle epidemic), among others. In fact, according to the National Oceanic and Atmospheric Administration, this past decade (2000-2010) was the warmest on record. The transportation sector contributes significantly to these high levels of carbon dioxide.
Switching to CNG and LNG as a transportation fuel offers a cost-effective means to reduce CO2 by 20-30 % in comparison with gasoline and diesel. Conversion of diesel haulers to LNG offers the additional advantage of reducing black carbon particulate emissions, another contributor to global climate change. Finally, with fueling stations that can also dispense Hydrogen, a CNG/LNG fueling infrastructure offers a bridge to a transportation system based on Hydrogen fuel cells, an emissions-free fuel source of the future.
According to recent studies by the US Energy Information Agency (EIA), the United States could reach energy independence by 2020 to 2025, if current development trends continue. Mr. Owens offers a static snapshot of current reserves (“11-23 years”), based presumably on current estimates of 300 trillion cubic feet (tcf). However, these estimates do not take into account ongoing additions to capacity resulting from new sources discovered each year. For example, the Marcellus Shale region is hardly insignificant, given its reserves of over 13.2 tcf, according to a 2010 EIA estimate. This is just one example of increasingly discovered reserves, not resources, contributing to the nation’s supply.
Current projections point toward total domestic conventional and unconventional natural gas production by 2040 of 35 tcf per year, including shale gas, coalbed methane, tight gas, onshore & offshore drilling, and Alaskan reserves. Imports are declining as drillers discover more reserves. This level of domestic production could easily accommodate at least a three-or-four fold increase in fuel use for an enlarged natural gas vehicle (NGV) fleet, which would put the U.S. well on the road to reliance on domestic oil production for our remaining oil needs.
As demand for natural gas grows, three key factors are pertinent. First, natural gas prices will not remain at their current historically low prices, and commercially exploitable reserves will continue to increase. Although prices are now artificially depressed owing to excess supplies, as demand increases, prices will gradually rise. Higher prices will in turn encourage increased production. Thus, prices per gallon equivalent of natural gas will level out to a more appropriate, but still relatively low level when compared with gasoline or diesel, whose prices are set by the global market. Given these realities, it seems highly unlikely that a prediction of growing “parity” with oil prices will materialize any time in the foreseeable future.
Second, the current expansion of the natural gas transportation network is largely market-driven, not taxpayer-supported. Although Mr. Owens criticizes the industry for its supposed dependence on taxpayer-financed subsidies, the only subsidies in fact being offered are low-interest loans to encourage private sector investment. This seems a small price to pay in encouraging the private sector to tackle a challenge clearly of national interest.
In fact, according to Exxon Mobil, a recent economic impact study found that the natural gas industry contributed more than $380 billion to the U.S. economy in a single year, while creating 2.8 million American jobs. Marcellus Shale in particular added 44,000 jobs for Pennsylvania in 2009 alone, $389 million in state and local tax revenue, $1 billion in federal tax revenue, and nearly $4 billion in value-added to the state’s economy. This could very well be a reality for Wyoming as well, given the state adopts natural gas as fuel alternatives.
Third, and perhaps most importantly, as the industry advances with improving technologies, it is imperative for natural gas suppliers to extract reserves in a responsible manner. This includes, but is not limited to, safe fracking techniques and appropriate reimbursement for wear and tear on taxpayer supported infrastructure. In Pennsylvania, this phenomenon is known as an “Impact Fee,” where in 2012 drillers paid $50,000 per well, with 60% going to local counties and municipalities, and the rest supporting various state level agencies, according to National Public Radio. Additionally, extraction companies can mitigate the potential hazards of fracking for natural gas by complying with the International Energy Agency’s “Golden Rules,” which adds a marginal 7% to the overall cost of drilling and completion.
Collectively, NGVs will create healthier environments, potential energy security, and economic success. For these reasons, it is in Wyoming’s best interests to take a proactive, preemptive, leadership role in building CNG and LNG stations. This is the long-term solution to impending petrol shortages across the globe. Responsible firms and states across the nation, like UPS, Utah, Washington, and others, are already converting to natural gas for fueling their trucks, taxis, refuse haulers, school buses, and passenger vehicles. Wyoming has the potential to be another leader in this field. Converting to natural gas is not a mistake. Rather, it is a solution, one of many my generation must solve, that in this case will help both the economy and the environment.
Bayleigh McMenamin is a third-year student from Washington & Jefferson College in Washington, PA, at the heart of the Marcellus Shale Region. She is a double major in Environmental Studies & Economics, and currently interns with the Jackson Hole Center for Global Affairs.