THE NATURAL GAS SOLUTION

This week we’re going to refine the argument for natural gas as a comprehensive solution to high energy prices, energy pollution, and energy dependence upon foreign producers outlined last week in What Bush Can Do To Get Cheaper Gas.

To summarize:  the solution is for Bush to allow oil & gas companies to extract the vast amounts of NG we have within American boundaries, cut state residents in on the royalties, provide tax credits for folks to run NG in their cars, and before his presidency is over the equivalent cost of driving a car will be less than $1 a gallon.

Now for the refinement – of the argument, not NG, which unlike crude oil requires no refining.*

Seen those full page newspaper ads placed by Chevron trying to frighten you with the claim that the US only has three measly percent of the world’s natural gas supply?  Whatever the Chevron’s agenda is, it’s not about telling you the truth.

The SEC makes it a federal felony for an energy company to claim gas reserves as assets if they’re not determined by obsolete technology, i.e., you have to drill a hole.  Modern 3D seismic methods get a far better picture of an NG reservoir – but since you don’t have to drill a hole, whatever reserves are found by 3DS, the SEC won’t allow claiming it as an asset reserve.  This rule hasn’t changed since 1978.

The government screws things up more – much more – by not allowing gas exploration companies to survey the offshore continental shelf of over 90% of the US coastline excluding Alaska.  They can survey along the coasts of Texas and Louisiana – but not Washington, Oregon, California, Alabama, Mississippi, Florida, Georgia, the Carolinas, Virginia, Maryland, New Jersey, New York, and New England.

There may be as much gas off the mouth of the Columbia River as the Mississippi, possibly the same with Chesapeake Bay and the Hudson River.  The gas companies know there are fantastic amounts of gas off California, Florida, and much of the eastern seaboard – but the government won’t let them have it.

Gas exploration is not allowed on much of federal land – and one third of the US is owned by the Feds.  On what little land they can explore, with 3DS they are discovering huge amounts in "low-permeability reservoirs" – some 460 tcf (trillion cubic feet), tripling alone current US gas reserves.

Put this all together and you have US gas reserves ten to twenty times as greater as the 150 tcf or "3%" of world reserves.  This is enough to last the US for decades to come, even if we double or triple NG use (which we will with the Natural Gas Solution – the US currently uses some 22 tcf a year).

It’s also enough to provide a lot of mailbox money for residents of states producing NG on federal land or offshore.  A one-third cut of all federal royalties will overcome state residents’ NIMBY (not-in-my-backyard) objections (1/3 to Feds, 1/3 to states/ 1/3 to state residents).

As we discussed last week in What Bush Can Do To Get Cheaper Gas, what NG we produce, we consume.  Crude oil is different.  However much more we produce, it will bid for by the world market, such as China and India, because oil is cheaply shipped by ocean tanker.  (Japan buys a lot of our Alaska oil, for example). 

NG has to liquefied to be shipped over oceans, a costly and dangerous procedure.  The only cost-effective way to transport NG is by pipeline.  NG extracted offshore just needs a few miles of pipe laid on fairly level ocean floor to hook it up to the existing pipeline network in any US coastal state.  Neither the Chinese nor Indians nor other global folks will bid against it.  NG is the way to achieve American energy independence.

And do so as an environmentalist’s dream, for NG burns so cleanly, reducing both CO2 emissions and air pollution.  That’s because NG is 80% hydrogen.

There are 4 atoms of hydrogen for every one atom of carbon in NG.  There are only 2 atoms of hydrogen for every one atom of carbon in regular gas.  Thus NG emits much less carbon dioxide in the atmosphere.

There’s a lot of futuristic talk about the "hydrogen economy," hydrogen as an ultimate energy source.  Given the same size/weight of the pressure tank, NG delivers far more energy than hydrogen:  16 pounds of NG take up the same space as 2 pounds of hydrogen.  Your car’s trunk isn’t big enough to handle a hydrogen tank capable of driving a few hundred miles – but it can do so with an NG tank.

What really nixes hydrogen is a feature called "embrittlement."  Hydrogen atoms ooze their way between grains of steel and make it as brittle as glass.  So you need special high-nickel steel pressure tanks and pipelines.  You can’t transport hydrogen in existing NG pipelines – you’d have to build an impossibly costly additional pipeline system, or lug it in special trucks and railroad tank cars like ethanol.

Which brings me to the ludicrous rip-off of ethanol.  Ethanol combustion is carcinogenic (cancer-producing).  It releases known carcinogens into the atmosphere:  acetaldehyde, and peroxy-acetyl-nitrate/nitrite/nitrile, three powerful eye and lung irritants.

Ethanol has only 2/3 the energy of regular gas, so you get 1/3 less energy per gallon, which means it adds 33% to the gas-per-mile cost of driving.  But there’s also the cost of ethanol transport, which is by truckload or railroad, much higher than by oil pipeline (which ethanol can’t use because it can’t handle any water contamination like oil can).

The argument that ethanol reduces emissions is a fraud.  With a modern car engine’s oxygen sensors and computer-controlled fuel injection, there’s no difference in CO (carbon monoxide) coming out your tailpipe with regular gas or ethanol.

(Ever see the 1960s anti-war movie On The Beach?  Remember when Fred Astaire kills himself by breathing the fumes of his prized sports car in his closed garage?  A modern car doesn’t emit enough CO for this to work anymore.)

The reason I’m discussing the ethanol fraud is that Archer-Daniels-Midland and the corn farmer lobby will go nuts in objecting to the Natural Gas Solution.  Hell hath no fury than folks threatened with the elimination of their government subsidy.  The question to ask the corn farmers is:  if ethanol is so great, how come you don’t run your tractors with it and use (far more economical) diesel instead?

If most driving in urban areas is with NG as per the Natural Gas Solution, ethanol use would be drastically reduced – as would our dependence on foreign oil.  But the corn farmers care far more about their taking a huge hit.  Not only would they be selling a lot less corn for ethanol, their land prices would deflate.

The LNG (liquefied natural gas) industry would also squawk, as it would be obsoleted.  The power industry will love it though – not because of NG-powered cars, but vastly increasing production of NG by allowing offshore exploitation would mean much cheaper NG.

And that would spur the construction of "combined cycle" power plants.  Right now, most NG power plants have the same 30-35% energy efficiency as coal.  A combined cycle plant (which has to be built from scratch, not converted from coal as most NG plants are now) can double that to 60%.  (The NG powers a gas turbine producing electricity plus a lot of gas turbine exhaust heat which heats a boiler powering a steam turbine, which produces still more electricity.  The engineers call it "thermodynamically elegant.")

Another group to vociferously object will be Washington politicians who can’t or won’t understand dynamic cost-scoring.  The tax credits required for the Natural Gas Solution would be around $200 billion  — far less than the recently-passed (and scandalously pork-laden) $240 billion Transportation Bill.

If 100 million cars have NG conversion kits installed at $1000 each, that’s 100 billion the IRS doesn’t get.  The same with 50 million residences to install a compressor hooked up to the home’s existing NG line. That’s another $50 billion not for the IRS.  The last $50 billion would be in credits for service stations to install commercial compressors so apartment dwellers, street parkers, and anyone else can fill up their CNG tank in 60 seconds.

This conversion tax-credit cost will be spread over a few years, not in one hit.  Once the conversions are done, that’s the end of the cost – but not the end of the offshore NG royalties, which will be in the multi-billions for decades. So the cost is easily paid for.

Further, just think of how much the US economy will benefit by $1 a gallon cost-equivalent, and both the trade deficit and dependence on foreign oil drastically reduced.  Our GDP would rocket – and with it federal revenues.  (Not that the federales should get more money – better to use the economic benefit to reduce taxes.)

See how comprehensive this is getting to be?  Here’s another benefit.  All city buses barfing cardiovascular disease-causing carbon particulates with their diesel exhaust can easily be converted to NG, as can city delivery trucks.  Long-distance trucks will still need diesel on highways where there are no gas stations hooked up to an NG pipeline, but they can be converted to dual-use NG for driving in cities.

Both will very substantially reduce what smog there is left in cities with most cars running NG.  (There will always be some smog produced by very photochemically-reactive terpenoids emitted by grasses, bushes, and trees, especially pine trees.)

So, let’s review the Natural Gas Solution.

1.  The US has massive reserves of natural gas easily and safely accessible on our offshore continental shelf and federal lands – enough for centuries.  Energy companies must be allowed to extract it.

2.  Directly paying residents of NG-producing states one-third of federal royalties will render those residents enthusiastic proponents of NG extraction.  The check they will get in the mail, which will be hundreds if not thousands of dollars per year per resident, is passive income and not subject to Social Security/FICA taxes.

3.  NG can only be economically transported by pipeline, not ocean tanker.  US-produced NG will be consumed domestically, not bid against like crude oil by China and others.  The more NG the US produces, the less dependent the US is on foreign oil.

4.  Any modern car’s or truck’s internal combustion engine using either gasoline or diesel can easily be converted to additionally using NG.  Such conversion to dual-fuel use requires no engine modification.  The conversion is a plug-in:  an injector and control valve is attached to the intake manifold.  Not even a wire is cut.  The NG system plugs into the same throttle and oxygen sensors regulated by the car’s computer.

The NG-powered engine is a mature proven technology in use for a half-century.  Nothing has to be invented.  Unlike hydrogen or fuel-cell futurism, this is here and now, ready to go.  It is proven safe.  No automotive CNG has ever exploded in a traffic accident.

5.  A CNG conversion kit now costs around $2,000 to install as there is little demand.  The main cost is the tank to hold the CNG (compressed natural gas).  Demand will bring this cost to less than $1,000, for which there should be a substantial tax credit.  Demand will also spur car manufacturers to produce dual-fuel vehicles.

6.  The key to the Natural Gas Solution is a compressor installed in your home’s garage connected to the natural gas line.  The same gas that heats your home and cooks your food now fills up your CNG tank.  One such home compressor is called Phill made by FuelMaker Corp.  One CNG tankfull gives your car a range of 150-300 miles.

7.  A typical automobile engine running on NG will last 250-500,000 miles as there is so little wear and tear on the engine.  NG is as friendly to the environment as it is on engines, greatly reducing both CO2 and photochemical smog emissions.

8.  Greatly increasing NG production will soon drop the price to at least mid-90s levels of $2-3 per tcf.  It’s now (5/5/06) $6.70.  Even at this price, drivers of the all-NG Honda Civic GX report they get 200 miles with $10 of NG.  That’s 5 cents a mile.  With the Natural Gas Solution in place, driving your car could cost a penny a mile.  (Ok, maybe 3 cents a mile with a big SUV or Hummer H2.)

9.  Dual-fuel cars running both NG and gasoline/diesel, using the latter only for long out-of-city drives, filling up their CNG tank overnight at home, will achieve energy independence for the US and eliminate our dependence on foreign oil.

10.  The obstacle to the Natural Gas Solution is neither technical nor practical.  It is political.  The government prevents NG extraction from 90% of our coastline and hundreds of millions of acres of federal land.  Remove these restrictions, and implement tax credits for NG dual-fuel technology, and say hello to cheap gas and energy independence.

The problem, as so many problems are, is with the politicians.  They are in the way, as they so very often are.  I suppose that’s their job, not to solve problems but to create problems, to get in the way, so we have to plead and beg them to get out of the way.

If they will just get out of the way, the Natural Gas Solution can solve our energy problems.

*Note:  NG is processed, not refined, to remove hydrogen sulfide and remove other light hjydrocarbons such as propane, ethane, and butane, leaving mostly methane.