The Coming Gas Shake-Up

LONDON — From the rise of renewable power to the transformation of the United States into a heavyweight producer of oil and gas, the global energy market, normally slow to evolve, is going through major upheaval.

That is the assessment of Fatih Birol, the executive director of the International Energy Agency, the organization based in Paris that is publishing its annual World Energy Outlook on Tuesday.

The report does not make for easy bedtime reading: It is 763 pages long and stuffed with data-laden charts and tables.

Still, the document tries to project current trends as far out as 2040, and sees an industry at the nexus of various powerful trends.

The United States, for instance, has shifted from being an energy-dependent importer to a new role as one of the world’s biggest producers of oil and gas, the report says. But concerns about greenhouse-gas emissions have clouded the future of fossil fuels. That has encouraged the development of alternatives like solar and wind power, which increasingly compete with traditional energy sources.

By the 2030s, largely because of production from shale-rock formations, the United States is expected to produce more than 30 million barrels of oil and gas a day, the report says. That is 50 percent more than any other country has ever produced in a single year.

That is a sharp shift from the country’s position just a decade ago, when it was a major importer of oil.

The shale industry has gone through a “trial by fire” in recent years, the report says, referring to a sharp falloff in the price of oil from more than $100 a barrel to as low as around $30 a barrel. It is now above $60 a barrel.

That has transformed the shale sector, and it is “leaner and hungrier” than it was before the price crash, the report says. As a result, it is better able to quickly react to any sign of higher prices. That is crucial, as the OPEC oil cartel tries to manage its production levels to bolster prices.

The Coming Gas Shake-Up

Changes in how gas is transported and traded are having a major effect, on the energy industry and the environment.

As the United States increases its gas production — it is now on track to surpass traditional giants like Qatar and Russia and become the world’s largest exporter of liquefied natural gas, or L.N.G. — it is also exporting what the report calls a disruptive “mind-set about how gas markets should operate.”

Renewable Energy Is Surging

WASHINGTON — The Republican tax bills moving through Congress could significantly hobble the United States’ renewable energy industry because of a series of provisions that scale back incentives for wind and solar power while bolstering older energy sources like oil and gas production.

The possibility highlights the degree to which the nation’s recent surge in renewable electricity generation is still sustained by favorable tax treatment, which has lowered the cost of solar and wind production while provoking the ire of fossil-fuel competitors seeking to weaken those tax preferences.

Whether lawmakers choose to protect or jettison various renewable tax breaks in the final bill being negotiated on Capitol Hill could have major ramifications for the United States energy landscape, including the prices consumers pay for electricity.

Wind and solar are two of the fastest-growing sources of power in the country, providing 7 percent of electricity last year. Sharp declines in the cost of wind turbines and photovoltaic panels, coupled with generous tax credits that can offset at least 30 percent of project costs, have made new wind and solar even cheaper than running existing fossil-fuel plants in parts of the country.

In different ways, direct and indirect, the House and Senate bills each imperil elements of that ascension. A Senate bill provision intended to stop multinational companies from shifting profits overseas could unexpectedly cripple a key financing tool used by the renewable energy industry, particularly solar, by eroding the value of tax credits that banks and other financial institutions buy from energy companies.

The House bill’s effects would be more direct, rolling back tax credits for wind farms and electric vehicles, while increasing federal support for two nuclear reactors under construction in Georgia. 

Fossil fuel producers are under little pressure in either bill and some would stand to benefit: The Senate legislation would open the Arctic National Wildlife Refuge in Alaska to oil drilling, while a last-minute amendment added by Senator John Cornyn, Republican of Texas, would allow oil and gas companies to receive lower tax rates on their profits.

The solar panel industry could be Mr. Trump

              SAN FRANCISCO — With President Trump vowing to            get tougher on trade, troubled American makers of                   everything from steel tubing and aluminum foil to                     washing machines  have lined up to ask Washington               for protection from foreign rivals.

But Mr. Trump’s first big international trade fight could be over solar panels.

Major manufacturers in the United States and China, as well as numerous other businesses that buy and use solar panels, are readying for a clash that could begin as soon as January. The solar panel dispute comes at a time when senior administration officials have been signaling their intention to take a much tougher trade stance toward China, where most solar panels are made.

The solar panel industry could be Mr. Trump’s first test of whether his harsh language toward China will result in significant trade measures — and whether those moves would help restore American businesses. Factories in China now account for more than two-thirds of the world’s production, up from a negligible share a decade ago. Faced with intense competition, more than a dozen solar companies in the United States have closed factories over the past six years.

China’s push to become a major maker of solar panels has driven down global prices by close to 90 percent over the past decade, helping international efforts to curb emissions of planet-warming greenhouse gases. That has blurred the lines over the pending solar trade fight even within the United States, where American manufacturers are squaring off against American installers and users of the panels.

Chinese officials contend they are helping the world move toward cleaner energy. “Everybody needs the kinds of cheaper panels, not only in China, but also the world,” said Li Junfeng, a senior Chinese economic adviser and the architect of many of China’s renewable energy policies, at The New York Times’s Climate Tech conference on Thursday in San Francisco.

But American manufacturers say the cheap panels have been unfairly financed by the Chinese government. Chinese manufacturers have benefited from cheap loans from government-run banks. Even some Chinese companies that have struggled with losses and had trouble making loan payments have been able to stay afloat.

Such manufacturers in China “are technically insolvent, but they still get capital,” said Mark Widmar, the chief executive of First Solar, a large manufacturer based in Phoenix.

The United States has already imposed tariffs on solar panels from China over the past five years, prompting Chinese manufacturers to build vast factories in Southeast Asia. Now, the Trump administration has indicated it may raise the stakes by authorizing tariffs on all solar panel imports, including those from Southeast Asia.

Administration officials have so far allowed two solar panel companies with factories in the United States to ask Washington for tariffs on all solar panel imports.

Where does power come from

oLike most business activities, the process of generating electricity and delivering it to your home and business requires numerous steps.  In the past, one company handled all aspects of electricity service, including generating the power,  transmitting the power to your home and billing you for the power you use. Tday, much of Texas is in the deregulated electricity market where separate entities control each step of the process. Power generation companies, Retail Electric Providers, and Transmission and Distribution Utility companies each manage a different step in the process and rely on each other to provide power to the people of Texas.

Power Generation Companies

Power generation companies, such as Luminant, own and operate power plants that generate electricity. These plants can be fueled by coal, nuclear power, natural gas, wind, water, solar and other renewable energy sources. These companies sell wholesale power to the Retail Electric Providers.

Retail Electric Providers

Retail Electric Providers, like TXU Energy, package the power into electricity service plans for sale to consumers. These providers handle customer accounts, including billing for Energy Charges used by the consumer as well as infrastructure maintenance charges from the Transmission and Distribution Utility.  Because the Texas electricity market is extremely competitive (in areas of electricity deregulation), there are many providers and offers to choose from. Learn about how to choose an electricity provider.

Transmission and Distribution Utilities 

Transmission and Distribution Utilities (TDU) are responsible for the infrastructure used to deliver electricity to the consumer. This infrastructure includes the installation and maintenance of transmitters, power lines, poles and electric meters, including smart meters. When you have a power outage, it’s the TDU in your area that comes out to repair your service. There are five Transmission and Distribution Utilities in Texas.

If you live in Texas, check to see if your area is deregulated and whether you have the power to choose who supplies your electricity. Make sure to research beyond the basic kWh electricity rate when choosing an electricity plan.

How Natural Gas Is Formed

Like oil, natural gas is a product of decomposed organic matter, typically from ancient marine microorganisms, deposited over the past 550 million years.

This organic material mixed with mud, silt, and sand on the sea floor, gradually becoming buried over time. Sealed off in an oxygen-free environment and exposed to increasing amounts of heat and pressure, the organic matter underwent a thermal breakdown process that converted it into hydrocarbons.

The lightest of these hydrocarbons exist in the gaseous state under normal conditions and are known collectively as natural gas. In its pure form, natural gas is a colorless, odorless gas composed primarily of methane. Methane, the simplest and lightest hydrocarbon, is a highly flammable compound consisting of one carbon atom surrounded by four hydrogen atoms (chemical formula: CH4).

Once natural gas forms, its fate depends on two critical characteristics of the surrounding rock: porosity and permeability. Porosity refers to the amount of empty space contained within the grains of a rock. Highly porous rocks, such as sandstones, typically have porosities of 5 percent to 25 percent, giving them large amounts of space to store fluids such as oil, water, and gas. Permeability is a measure of the degree to which the pore spaces in a rock are interconnected. A highly permeable rock will permit gas and liquids to flow easily through the rock, while a low-permeability rock will not allow fluids to pass through.

After natural gas forms, it will tend to rise towards the surface through pore spaces in the rock because of its low density compared to the surrounding rock. Most of the natural gas deposits we find today occur where the gas happened to migrate into a highly porous and permeable rock underneath an impervious cap rock layer, thus becoming trapped before it could reach the surface and escape into the atmosphere.

There are two general categories of natural gas deposits: conventional and unconventional. Conventional natural gas deposits are commonly found in association with oil reservoirs, with the gas either mixed with the oil or buoyantly floating on top, while unconventional deposits include sources like shale gas, tight gas sandstone, and coalbed methane.

US natural gas resources and reserves

The United States is endowed with substantial natural gas resources, and new discoveries and advances in drilling techniques have revised estimates of their size sharply upward in the past few years. In 2009, the U.S. Energy Information Administration (EIA) estimated that the U.S. possesses 2,203 trillion cubic feet of natural gas that could be recovered using current technology.

Conventional resources represent 46 percent (1,009 trillion cubic feet) of the total resource base, while the rest includes unconventional natural gas resources, such as tight gas, shale gas, and coalbed methane. Of the total U.S. gas resource, 273 trillion cubic feet of gas are classified as “reserves,” which can be extracted under current economic and operational conditions [1]. 

As of 2012, the largest known gas reserves in the world are found in Russia, which has five times the reserves of the United States [2]. Iran and Qatar have four and three times as much gas as the U.S., respectively, and significant reserves are also present in Saudi Arabia, Turkmenistan, United Arab Emirates, Nigeria, and Venezuela. Total world reserves of natural gas are estimated at 6,707 trillion cubic feet [3].

Exploration and production of conventional natural gas resources

Potential natural gas deposits can be located with seismic testing methods similar to those used for petroleum exploration. In such tests, gas prospectors use seismic trucks or more advanced three-dimensional tools that involve setting off a series of small charges near the Earth’s surface to generate seismic waves thousands of feet below ground in underlying rock formations.

By measuring the travel times of these waves through the Earth at acoustic receivers known as "geophones," geophysicists can construct a picture of the subsurface structure and identify potential gas deposits. However, to verify whether the rock formation actually contains economically recoverable quantities of natural gas or other hydrocarbons, an exploratory well must be drilled.

Once the viability of a site is determined, vertical wells are drilled to penetrate the overlying impermeable cap rock and reach the reservoir. Natural buoyancy then brings the gas to the surface, where it can be processed and sent to homes.