Energy’s Future Increasingly Renewable…Even in Texas..

July 8, 2020

Houston Chronicle is a good keyhole to peer into the heart of America’s energy industry.

Houston Chronicle:

BIG SPRING, Texas — Driving through the Permian Basin while on vacation, I couldn’t help but notice an industrial landscape that presages the future of the oil and gas industry.

New drilling rigs were far and few between, while most of the pumpjacks were idle, their horsehead noses no longer dipping down to pull crude from the ground. Towering above them, stretching into the distance, wind turbines spun by the hundreds, generating electricity for Texas’ big cities.

Then I stopped in Lamesa, where Southern Power maintains 410,000 photovoltaic cells generating enough power for 26,000 homes. That’s when it struck me, Texas’s premier oilfield may have a lot of oil, but it has limitless wind and sunlight. Where would you place your bet?

Young people see the writing on the wall, choosing to turn their backs on oil and gas during the current oil and gas bust to find more stable careers, my colleague Sergio Chapa reports. Corporate executives are following suit.

British oil giant BP’s decision to sell its petrochemical units is perhaps the most revelatory. For years, BP and other oil and gas boosters have claimed the future of the industry rests in selling chemicals, coatings and plastic in a world that no longer wants to burn fossil fuels.

For just as many years, though, environmentalists have complained about pollution from chemicals and plastic. Consumers from America to Zimbabwe want more reusable and sustainable packaging. Plastics manufacturers promise to recycle more and consume less oil and natural gas.

If BP’s CEO Bernard Looney believed that selling petrochemicals would sustain his huge corporation’s profit margins, he would not have sold those businesses for $5 billion. Neither would his board of directors write off $17.5 billion in oil and gas assets due to temporarily low prices.

The most telling indication of BP’s loss of faith in oil and gas is found in the corporation’s annual Statistical Review of Energy. This year, the company’s analysts stopped measuring energy demand in millions of metric tons of “oil equivalent” and started using exajoules, a unit of measurement for energy of any kind.

Looney is keeping his promise that BP will supply the energy his customers need from sources they support. The current collapse in demand due to the coronavirus offers him a chance to move more quickly, said David Elmes, head of the Global Energy Research Network at Warwick Business School in the United Kingdom.

“The Covid-19 pandemic has accelerated how oil and gas companies see the future,” he said. “Some nationally-owned oil and gas companies have the money to change, like Norway’s Equinor. Other European firms like Shell, Total and Repsol have declared similar ambitions to BP, but low prices mean many are struggling.”

Private companies, he added, must keep investors on board with dividend payments and cannot afford to begin the transition to clean energy. Many don’t stand a chance.

Chesapeake Energy, a company credited with driving the American energy renaissance, finally filed for bankruptcy after years of failing to deliver on shale oil’s promises. Shale companies have taken billions of investors’ dollars, drilled millions of wells, and produced billions of barrels of oil.

The only problem is that rarely does oil generate enough profit to deliver a decent return.

With oil prices expected to hover around $40 a barrel for the rest of the year, shale oil companies that need $50 a barrel to break even are suffering. More than 100 oil companies could follow Chesapeake into bankruptcy if prices do not rise soon.

There is no reason for them to rise, though. Politicians ignored public health authorities, and COVID-19 cases and deaths continue to increase. Commuters are not returning to the office, vacationers are staying away from tourist attractions and demand is unlikely to return to normal before 2023.

Meanwhile, in North Carolina, where a major gas pipeline project has just been abandoned by developers, The Raleigh News and Observer editors weigh the options:

Raleigh News and Observer:

At the close of the Fourth of July weekend, Duke Energy and Dominion Energy may have unwittingly declared a new independence – a breakaway from the the tyranny of fossil fuels in generating electricity.

On Sunday, the two big utilities who had partnered in a plan to build the Atlantic Coast Pipeline announced they were giving up on the project. Richmond-based Dominion Energy and Charlotte-based Duke Energy had until recently expressed a strong commitment to the massive project that was becoming increasingly untenable.

The cost of the 600-mile pipeline from the fracking fields of West Virginia through Virginia and North Carolina had climbed from an estimated $5 billion in 2014 to $8 billion and rising. The utilities cited legal objections filed by environmental groups and landowners for the rising costs and the pipeline’s shrinking prospects for being a sensible investment.

Predictably, the Trump administration’s anti-regulatory zealots condemned the pipeline’s opponents for blocking the project by using the law and rules against environmental damage.

U.S. Energy Secretary Dan Brouillette said, “The well-funded, obstructionist environmental lobby has successfully killed the Atlantic Coast Pipeline, which would have lowered energy costs for consumers in North Carolina and Virginia by providing them with an affordable, abundant and reliable natural gas supply from the Appalachian region.”

What the “obstructionist environmental lobby” actually did was hold off the pipeline long enough that Dominion and Duke could see it was becoming a boondoggle that would have cost them and their ratepayers dearly. The worldwide economic slowdown caused by the pandemic has created a fossil fuel glut that has rolled back the fracking industry. There is increasing evidence that there would not be enough energy demand or natural gas price stability to justify the volume or the cost of the pipeline.

Those who fought hard against the project deserve the thanks of ratepayers and the utilities. They saved Dominion and Duke from a doomed investment in energy’s past rather than its future.

Sierra Club Executive Director Michael Brune stressed that point in a statement Sunday: “Duke and Dominion did not decide to cancel the Atlantic Coast Pipeline – the people and frontline organizations that led this fight for years forced them into walking away.”

The project’s real obstacle – and the real beneficiary of its collapse – is Mother Nature. On an immediate level, the project threatened to damage pristine forests and waterways and disturb habitats. In the longer term, it would commit utilities to supporting fracking and burning natural gas for decades, even as climate change is accelerating. 

Natural gas does burn cleaner than coal – as the utilities emphasize – but leaks during the extracting, storing and transporting of natural gas release large amounts of methane, a greenhouse gas that is a major contributor to global warming.

Despite their gauzy ads about clean natural gas and their commitment to renewable energy, the utilities’ plan for the pipeline was a plan for a fossil fuels future. It’s urgent that they now pivot toward investment in renewable energy.

Generating electricity from wind, solar and other renewable sources is not only good for the planet, it’s good for ratepayers and utilities. Renewable energy is on a path to be cheaper than energy from fossil fuels and it offers a stronger foundation for utilities’ business model in the 21st century.


8 Responses to “Energy’s Future Increasingly Renewable…Even in Texas..”

  1. Sir Charles Says:

    Well. Renewable energy is green. And the only thing what’s green in Texas is the dollar.


    • dumboldguy Says:

      DUH! yet again

      “QED means you’ve proven something. It’s pretentious to use it when you’re not discussing a mathematical proof, and embarrassing to use it you’re just ranting and not even remotely proving anything”.

      But since Chucky’s comment is pretty much a non sequitur, and not provable, and just another “look at me”, does qed have ANY relevance at all here?

  2. […] Energy’s Future Increasingly Renewable…Even in Texas.. | Climate Denial Crock of the Week […]

  3. dumboldguy Says:

    To me, the biggest news in this excellent piece is BP selling off the assets it planned to get rich off—–the oil and gas reserves that it was going to use in its petrochemical business—-remember?—-they were going to make big bucks from all those plastics they were going to make instead of burning the stuff?

    PS I will take some small personal credit for the demise of the Atlantic Coast Pipeline—-spent quite a few hours at protest meetings and writing public comments to VA agencies and politicians. Think I’ll wait a while before removing the VA Sierra Club NO PIPELINES sticker from the van—-it’s big and colorful

  4. Reblogged this on The Most Revolutionary Act and commented:
    “Young people see the writing on the wall, choosing to turn their backs on oil and gas during the current oil and gas bust to find more stable careers.”

  5. rhymeswithgoalie Says:

    Natural gas does burn cleaner than coal – as the utilities emphasize – but leaks during the extracting, storing and transporting of natural gas release large amounts of methane, a greenhouse gas that is a major contributor to global warming.

    Containment and transport for natural gas (or LNG) is a heck of lot more expensive than rusty old low-tech open containers of coal, and a lot more explosive (um, except for enclosed places full of coal dust).

    • Brent Jensen-Schmidt Says:

      And there is my usual drum. Raw gas contains many impurities to be stripped out before sale. A spreadsheet of 800 gas fields in SA gave an un-normalized average of 20% CO2 by volume. So for every 4 volumes of gas, there is one volume of CO2 released before it is transported or burnt. In short, gas can actually be worse than coal. ??

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