Cavalcade of Ambiguity

Carrizozo Gas Company, Carrizozo, New Mexico

Today is apparently something called Blog Action Day, which this year is focused on climate change.  I’m not sure exactly how blogging about climate change is supposed to affect anything, but I’m willing to do my part.

Merrion Oil & Gas, Farmington, New Mexico

I’ve noticed a number of articles in the mainstream press about the natural gas industry in the past few days.  While none of these is directly relevant to my particular focus on coalbed methane, most of them address what I find the most interesting aspect of gas as a fossil fuel: its ambiguous nature as both a source of greenhouse gas emissions and an alternative to other fossil fuels that produce more emissions.  This makes understanding the ultimate effects, both economic and environmental, of changes in price and quantity of natural gas very complicated.  That’s what I’m going to be exploring in my paper.

Oil Tanks, Artesia, New Mexico

There are a lot of factors involved here.  One, pointed out by a recent New York Times article and a blog post by one of the article’s authors, is that natural gas itself is composed mainly (80% to 99%) of methane, which is a potent greenhouse gas with a considerably higher Global Warming Potential than carbon dioxide (25 times as high over 100 years).  In addition, it is present in the atmosphere for a much shorter time than carbon dioxide.  This means that patching up leaks in the natural gas production and distribution system is a cheap and easy way to cut back quickly on emissions and the potential for severe impacts from warming.  (The optimal amount and timing of the cutbacks, however, depends on the overall reduction strategy being used.)  Since gas is a fuel with substantial market value, moreover, patching leaks makes economic sense as well, and can easily pay for itself.  The history of coalbed methane development, with its origins in concerns about the safety of coal miners and ideas about what to do with the gas released by coal mining, shows this as well: during the energy crisis of the 1970s, people began to realize that the gas being vented from mines as a safety hazard could be captured and sold as a profitable sideline to coal mining, which eventually led oil and gas companies to begin drilling directly for it in coal seams with low potential for mining.

Drake Well Service, Farmington, New Mexico

One of the major challenges in combating climate change is shifting away from reliance on coal for generating electricity.  The US currently gets a little less than half of its electricity from coal-fired power plants.  The main reason for this is that coal is really cheap.  Unfortunately, it’s also really dirty; burning coal releases both huge amounts of carbon dioxide and smaller but still dangerous amounts of an astonishing range of pollutants with more direct and deleterious effects on human health.  Perhaps the most serious of these is sulfur dioxide, one of the main sources of acid rain (remember acid rain?).  In one of the major success stories of American environmental protection, sulfur dioxide levels have been drastically reduced by an innovative and very effective cap-and-trade system begun in 1995.  (It’s a little surprising that this system doesn’t get mentioned more in the context of efforts to establish a cap-and-trade system for carbon dioxide emissions in the US, since it’s basically the exact same policy and it’s worked really well.)  There’s lots of other nasty stuff in coal, though, and efforts to control it have been much less effective.  Another New York Times story points to one problem, which is that aggressive attempts to control air pollution from smokestacks by installing scrubbers to trap pollutants have had the unanticipated side effect of the plants dumping the waste from the scrubbers into local waterways, taking advantage of much laxer regulations on water pollution.  Because of issues like this, and the looming threat of carbon pricing making coal potentially much more expensive, there has been a trend toward gas-fired power plants and a move away from coal.  In some cases this is a matter of designing new plants to run on either fuel, while in others it has been a total switch to gas.  The price of gas has been relatively low lately, which has been a factor in this decision-making process, although the effect of an increase in demand for gas on the price is another thing to consider.

Farmington Daily Times Office, Farmington, New Mexico

The current low prices for gas are an immediate concern for gas producers, however, and a recent story in the Farmington Daily Times points out that a lot of wells in the San Juan Basin have been taken out of production.  Seasonal restrictions on gas production on federal lands during the winter to protect deer and elk play a role, but the general economic slowdown and resulting low gas prices are important as well.  Note the wide variety of opinions voiced on what will happen to prices in the spring; this points to the considerable amount of uncertainty in these matters even before adding things like climate change legislation into the equation.  A switch from coal to gas on a large scale would certainly increase gas prices, but how much?  And how would the increase in prices feed back into decisions by power plants on what fuel to burn?  These are complicated issues, and I hope this collection of (admittedly rather random) links has illustrated that.

Oilfield Signs, Mentone, Texas

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The Ambiguous Fuel: Paper Proposal

Natural Gas Pipeline, Farmington, New Mexico

This is a slightly edited version of the proposal I wrote up for the term paper I am writing for my environmental economics class this semester.  While this may seem rather disconnected from archaeology, I think it’s important to note that Chaco Canyon is located right in the middle of the San Juan Basin, which as noted below is the main area of coalbed methane production in the US.  While most of the attention Chaco gets has to do with its past, I think the present is important too.  Oil and gas production has been the mainstay of the economy of northwestern New Mexico for decades, and coal and uranium mining have also played key roles.  This has shaped the area in a variety of ways relevant to its substantial archaeological resources, perhaps most obviously in spurring numerous salvage projects in advance of energy development.  The artifacts and data recovered by these projects have made the San Juan Basin one of the best-documented archaeological regions in the country, which has set the ongoing arguments over its prehistory on a much firmer empirical base than is often the case.  In addition, of course, energy development is directly and obviously relevant to climate change and other environmental issues which are both of grave importance for current policymaking and of increasing interest to me personally, as shown by the trend in that direction evident in my recent posts.

Natural gas occupies an odd and ambiguous place in the public discussion of anthropogenic climate change and the evaluation of policy options for addressing it. On the one hand, natural gas, which is composed primarily of methane combined with small amounts of other hydrocarbons and varying amounts of carbon dioxide, is unquestionably a fossil fuel with many similarities to petroleum and coal. The supply of natural gas is finite, although the exact amount of reserves is not known, which makes it a nonrenewable source of energy, in contrast to renewable sources such as wind and solar. Burning natural gas releases carbon dioxide, the greenhouse gas and main contributor to global warming that has been the focus of most policies intended to combat climate change.

On the other hand, however, the amount of carbon dioxide released by burning natural gas is vastly smaller than the amount released by coal and oil, which makes gas a much cleaner fuel than either. Since it is still a hydrocarbon, natural gas nonetheless stores a large amount of energy, which makes it much more cost-effective than solar or wind power, both of which require enormous amounts of land to produce significant amounts of energy. A gas-burning power plant, on the other hand, takes up no more land than a coal plant, and many recently constructed coal plants are in fact designed to also be able to burn gas if necessary. Many environmental advocates and policymakers have therefore applauded the increased use of gas as a crucial step in reducing (though not eliminating) carbon emissions.

At the same time that gas has gained this popularity, however, known reserves of conventional gas have been declining in productivity, and discoveries of new reserves have not kept pace with increasing demand. This has stirred interest in so-called “unconventional” gas sources the extraction of which involves technological challenges beyond those posed by conventional gas, which is usually trapped in easily accessible underground rock reservoirs often associated with petroleum deposits. There are various types of unconventional natural gas sources, but one of the most promising is known as coalbed methane.

As its name implies, coalbed methane is associated with coal rather than oil deposits. There are two main ways coalbed methane is produced.  Certain bacteria that feed on coal produce methane, which adheres to the surface of coal molecules and is held in place by pressure from water percolating through fractures in coalbeds.  This is known as “biogenic” methane.  Methane can also be produced by high temperatures in coalbeds, generally caused by intrusions of igneous rock, stimulating similar reactions in the coal.  This is known as “thermogenic” methane, and it is held in place by the same water pressure.  In either case, coal mining disturbs this delicate balance and releases the gas, which historically has been viewed primarily as a safety risk to coal miners due to its combustibility. For a long time the gas was simply vented from the mines and left to dissipate in the atmosphere, which is not only economically wasteful but environmentally disastrous, since methane is a much more potent greenhouse gas than carbon dioxide. In recent decades, however, coal companies have begun to capture the gas from their mines and feed it into the conventional natural gas distribution system, turning a safety crisis into an economic opportunity.

Along the same lines, the natural gas industry has itself begun to notice the potential for directly mining the coalbed methane deposits in coalbeds not being mined for coal. This helps to supplement declining supplies of conventional gas, and unlike extracting many other alternative sources is also easy to do. Coalbed methane deposits tend to be much closer to the surface than conventional natural gas reservoirs, so the wells required to reach them are shallower and can be drilled more easily and rapidly. Coalbed methane deposits are present in coal-bearing sedimentary basins all around the world; most US deposits are in the western states. As of 2002, coalbed methane accounted for 7% of US gas production, and 80% of the coalbed methane produced in the US came from the San Juan Basin of northwestern New Mexico and southwestern Colorado, although there has recently been more development further north, in the Powder River Basin in Wyoming and Montana.

The effects of increased production and use of natural gas on greenhouse gas emissions are complicated and not predictable by theory alone. Bills under discussion in the US Congress to establish a cap-and-trade system for the abatement of greenhouse gas emissions in the US add another complication both economically and environmentally. I propose an analysis of the probable effects of these attempts to put a market price on carbon dioxide and other gases (including methane) on the production of coalbed methane, focusing on the San Juan Basin. Areas of policy concern include the economic effects of pricing carbon on the supply of and demand for both gas and other fuels for which it is a substitute (especially coal), the effect on total emissions of the substitution of gas for other fuels, the effect on emissions of methane leaks in the gas production and distribution system, and the possible use of coalbed methane extraction as a method of carbon sequestration through the injection of carbon dioxide into deposits to ease the release of methane. Other environmental concerns include local air quality concerns from the drilling process and the effect on water quality and quantity. Coalbed methane production generally involves the extraction of large amounts of the water that holds the methane in the coal aquifer. This water is of varying quality, and while in some areas it can be used for watering livestock or other productive uses, in the San Juan Basin it is usually injected back underground.

Methodology will be along the lines of a literature review, evaluating recent studies of the effects of cap-and-trade systems such as the European ETS on the production and prices of fossil fuels along with studies of issues more directly relevant to gas production and distribution to determine what, if any, conclusions can be drawn about the likely effects of a cap-and-trade system on coalbed methane production. When appropriate and feasible I will attempt to evaluate the applicability of previous studies through comparison of the data used in those studies with EPA emissions data and EIA data on US fossil fuel production and pricing, with a focus where possible on data specific to San Juan Basin coalbed methane production.

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