Solar Power in the US: Sunny today, cloudy tomorrow

This article was originally publicated by Energetica International in May 2014:

http://www.energetica21.com/revistas-digitales/mayo-2014-2014

Solar Power in the US: Sunny today, cloudy tomorrow

 

David Gomez Jimenez[1]

Trade Commission of Spain, Los Angeles, CA

April 2014

Solar power in the US continues breaking records every year. In 2013, 4,751MW of photovoltaic power (PV) were installed, the highest yearly figure so far and up 41% over 2012. Another 410MW of Concentration Solar Power has being added, so the US ended the year with more than 13GW of total operating solar capacity, being within the top 5 countries in the world. The trend is expected to persist in 2014, when analysts predict around 6GW of new installation, growing in all segments, but most rapidly in the residential market, according to SEIA[2].

Despite the good results, very few in the sector would say that the US is a sweet spot for doing business in solar energy. The complexity of the electrical market, the great competition between players pushing prices lower and regulatory drawbacks make solar industry professionals’ work very difficult. Additionally, putting the figures in perspective, solar power still represents less than 0.2% of the total electricity generation in the US[3].

Complexity is due to, among other things, the fact that energy policy in the US is more a state responsibility than a federal one, except for some cross-border issues. This is the heritage of an uncoordinated and scattered development of the power utilities which were born at the beginning of the last century as small and local ventures. They grew at slow pace, becoming monopolies in the areas where they serve due to the nature of electrical distribution. To oversee this market power and avoid abuses as electricity was becoming more indispensable; local or state agencies began to regulate their activities, usually being called Public Utility Commissions (PUCs). So after a century of state regulations, mergers and acquisitions, deregulation attempts and some outrageous blackouts, the market in the US has become a very heterogeneous and complex mix of models, with more than 3,200 utilities (public, private or even co-ops), three independent and asynchronous grids, 8 Independent System Operators and at least 52 legislation bodies to decide the future of the electrical markets.

Nevertheless, if there is something in this mess that they all agree on, it’s to maintain reliability at the lowest prices. This is the pledge that solar, and the rest of the renewable technologies, must make every day. Solar technologies have been well-known for several decades, and they have already demonstrated their capacity of producing electricity from the sun in utility-scale grade, especially thermo solar power that used to be considered experimental. However, as much capacity is installed, utilities and regulators in some places, such as California or Hawaii, are becoming worried that the outdated grid cannot support it, especially for variable PV, whose ramps can be sharp and no efficient storage has been already developed.

Moreover, the cost of energy for solar power is still higher than conventional technologies in most cases, if this comparison can be ever done in a fair manner. Once reliability is assured, and it is nowadays, price is the next barrier for solar. The cost of electricity is the key variable for regulators to grant approval for a utility’s project or raise tariffs for paying it back. The reason that makes PUCs allow more expensive technologies is because they have a superior mandate from state governments to achieve a goal of renewable generation: the so-called Renewable Portfolio Standards (RPS). These objectives of renewable consumption are set only by some states (29 to be exact); for example, 8% in 2025 in New York, 33% in 2020 in California or 40% in 2030 in Hawaii. For achieving a more balanced mix, some states also imposed a carve-out, obligating solar power to be a particular percentage of the RPS.

However, it is the responsibility of the utility and the regulators (PUC) to achieve them in the most cost-effective way. So utilities, pushed or backed by PUCs, launch competitive Request for Offers (RFO) to buy renewable generation from developers (Independent Power Producers, IPPs) or, in few cases, to build their own plants. The deal is closed in the PPA (Power Purchase Agreement), where the price paid by the utility for renewable kilowatts-hour in the next 25 years is defined. These processes are tremendously competitive, especially in the solar sector, so big vertically integrated companies are usually the winners; since they can offer lower prices thanks to scale economies. For instance, FirstSolar, manufacturer and developer, is by far, the number one solar contractor in the country, with more than 1,500MW installed, five times more than the next competitor[4].

RPS are continuously in debate within the States and even the Houses. Raising them seems very unlikely in the short and medium terms, since unconventional fossil fuels coming from shale exploitation have flooded the markets with cheap natural gas, ready for electricity generation. Moreover, these are domestic and also cleaner than the conventional alternative, coal, so the former renewable supporters based on these arguments are now challenged.

In addition to RPS, tax credits given by the federal and states governments act as catalysts in the definition of the PPA price, balancing renewable capacity installation in the short run. The reduced tax amount is translated into lower offers in the PPA price, so they are actually a subsidy to utility and consumers, who buy cheaper renewable electricity. The most important tax credit for solar power is the ITC (Investment Tax Credit), which is available for projects that will be online by 2016, giving 30% of investment costs back as an incentive. Due to the economic downturn and the difficulty of monetizing this credit, for projects that went online between 2009 and 2011, there was the option of receiving the incentive as an upfront grant, under the 1603 program, known as Cash Grant. This option was fantastic for solar projects, since developers did not need tax equity investors and they could reduce their financial needs. It is estimated that over 45,000 individual projects were supported by this program. However, the dream has turned into a nightmare for developers as the Sequestration is reducing the amount of cash grant received, challenging the legal certainty of a country that is supposed to be the hero of capitalism and have a responsible government, with a measure that is close to retroactivity. Since there has not been an agreement in Congress about raising the debt ceiling, the Budget Control Act of 2011 fired the automatic spending cuts in the Federal Budget, causing a reduction of 8.7% in 2013 and a 7.2% in 2014 of the Cash Grant, which will continue over the next years. That has squeezed the small margin of developers, compromising financial viability of projects that are already online, which included the grant in their project financing[5]. It is especially dramatic for the handful of thermo solar projects, due to the size and the huge amount of investment. Many foreign companies are affected, especially the Spanish ones. The situation is chipping away at the country’s credibility.

Nevertheless, despite these difficulties, the solar market continues growing, as mentioned before, driven by cost reductions, financial innovations and improved investor confidence in this long-term venture.

Solar PV in depth

As mentioned, 2013 was the record year on capacity additions, with 4,751MW of Solar PV installed. Annual weighted average PV system prices continued to descend in 2013, reaching a historic low of $2.89/W.

Solar Power in the US

More than a half of this new capacity (2,621MW) was installed in California, which continues being the champion in solar power in the US, followed by Arizona (421MW), North Carolina (335MW), Massachusetts (237MW) and New Jersey (236MW). In cumulative capacity, California is also the leader with more than 5GW running, followed by Arizona (circa 1.5GW) and New Jersey (over 1GW).

By segment, the utility scale broke records too with 2,847MW installed. However, the project pipeline (PPA-signed) in this segment fell from 12.6 GW to 11.7 GW, of which 3.3 GW is currently in construction with expected completion in the next two to three years. This is the first symptom that RPS-demand is starting to wane and the effect of tax credit cuts, since ITC is only available for less than three years (to 2016), for projects that usually need more than two years of development.

Commercial and residential segments, represented 1,112MW and 792MW respectively. The first one grows at a small rate, but the residential is distinguished by its remarkably consistent incremental growth. New financing options (lease, loan and PPAs) are more widely available for homeowners as well as new distribution channels closer to retail markets as partnerships with home improvement stores, electricity suppliers or other home service suppliers such as cable television. SolarCity, the company founded by the cousins of Elon Musk (Tesla), stands out as the leader of the contractor segment, ranking second, after FirstSolar.

Net metering is the battlefield here. Since it is a direct threat to the utility business model, as they are paid by kWh served to customers, a strong debate is taking place in many states about how to manage it. It is not a simple question; as long as homeowners continue to need the grid as a backup and for balancing generation and consumption, while efficient and economic storage is developed. Utilities are lobbying the PUCs for charging high fees to customers arguing that distributed generation (DG) solar users take far more from the grid than they give. Solar supporters alleged that DG can actually be beneficial, since it is closer to consumption and it will avoid new transmission and distribution infrastructure to cope with demand increments. A strong battle will come in the following years.

CSP, stop and hope

Concentrated Solar Power is at the end of a cycle in the US. Between the end of 2013 and the first half of 2014, the largest capacity addition in the history of the country is going online. However, no new commercial project has started construction in the last two years, and the few that are in advanced grade of development, are trapped in permitting or financing phases. Now the Sequestration is adding a new hurdle in the road, as commented.

Around 1,300MW of CSP will be online soon, thanks to the key role of Spanish companies, which have been developers, engineers, contractors or suppliers. These projects are the result of extensive development during the last five years, and they are scattered throughout the southwest of the country[6]: Abengoa, with Solana, already successfully operating for the last six months, and Mojave, in commissioning (280MW each, parabolic trough), BrightSource, with Ivanpah in operation (392MW, tower), Solar Reserve – Cobra, with Crescent Dunes (110MW, tower) and Nextera – Sener, with Genesis (250MW, parabolic trough).

Solana by Abengoa
Solana by Abengoa

Projects in development are Rice (Solar Reserve – Cobra, 150MW, tower) with all permits and PPA but without financing, and Palen (BrightSource – Abengoa, 500MW, tower), that does not have all California Energy Commission permits yet. Both projects are currently on stand-by.

All these new online projects were possible somehow thanks to the Federal 1705 Loan Guarantee program, where the government securitized up to 80% of the investment, making financing possible at a reasonable price. This program ended in 2011, but now there is a glimmer of hope for new projects, as Ernest Moniz, Secretary of Energy, announced last February during Ivanpah opening. The previous 1703 loan guarantee program is about to open for new applications, allocating up to 4 billion dollars only for renewable energy where CSP funding could perfectly be granted.

Conclusions

Solar PV, especially distributed generation paired with smart grid, has the capability of altering the traditional power industry model that is more than one century old. Technology is becoming so reliable and inexpensive that it is beginning to cause concern among utilities regarding losing their core business: producing, transporting and distributing electricity to customers. The silent revolution has already started and it is more a matter of time when having solar panels on roofs will be as American as apple pie.

In the short or medium term, the market will depend on the cost of solar energy (which is expected to slightly increase as global excess capacity is removed2), availability of government incentives (Sequestration will force developers to revise some PPA prices), and new state and local policies support; with the cheap natural gas looming as an strong alternative for solving the energy puzzle, but with solar net metering being a very reasonable option.

Two challenging moments for solar power are ahead: first in 2016 when the ITC will end and second, in 2020 when RPS compliance dates arrive, especially in California, the first market for solar power by far. Political decisions made for later dates are crucial for the future of solar energy in the next decade.


[1] MSc Engineering (UPM), BA Business (UNED), CGS Sustainability (UCLA). Director of Energy Department.

[2] Solar Energy Industries Association (SEIA): Solar Market Insight Report 2013 Year in Review

[3] See www.eia.gov

[4] See Solar Power World: 2013 Top 250 Solar Contractors

[5] SEIA: Letter to OMB and Treasury on 1603 Sequestration Cuts

Situación de las Renovables en EEUU

Artículo originalmente publicado en la revista EnergéticaXXI.

David Gómez Jiménez[1]

Oficina Económica y Comercial de España en Los Ángeles

Enero 2014

Un comentario recurrente entre los analistas es que EEUU nunca ha tenido una política energética definida. Y es cierto que, viendo la historia del país en materia energética, los vaivenes han sido frecuentes, en muchos casos provocados por graves problemas (carestías, enormes apagones…). Sin embargo, observando la organización política del país y las altamente variables condiciones externas (política exterior, cambios tecnológicos, descubrimientos), se entiende la gran dificultad de la toma de decisiones a largo plazo en este sector.

La política energética en EEUU recae, en la mayor parte, en los Estados, no en el gobierno federal. Ello se debe al nacimiento y desarrollo disperso que han tenido las empresas de electricidad (utilities), que se crearon desde principio de siglo como pequeñas empresas locales. Con el tiempo fueron creciendo hasta ir ocupando mayores espacios y, por la naturaleza de la transmisión eléctrica, constituyendo monopolios, que eran regulados por los Estados (a través de las Public Utilities Commissions – PUC) o autoridades locales. Ello sigue hasta nuestros días, con más de 3.200 utilities en el país, incluyendo empresas privadas, públicas, municipales e incluso cooperativas.

Quizás la primera vez que se vio la necesidad de una autoridad superior para regular el sector energético fue a partir del apagón del año 65, que afectó a más de 30 millones de consumidores por 12 horas. La segunda ocasión, sólo unos años después, fue la crisis del petróleo del 73, que agitó enormemente la conciencia de un país con un inmenso consumo energético, y que, pese a ser un gran productor, es uno de los mayores dependientes del exterior. A partir de entonces, el papel federal fue tomando mayor relevancia, sobre todo por temas de seguridad de suministro; aunque últimamente, y en menor medida, también por la concienciación medioambiental del problema del cambio climático.

Por ello, y a pesar que desde fuera del país se ve de forma contraria, el papel del gobierno federal y del presidente, en este caso Obama, es muy limitado en las decisiones finales que afectan al desarrollo energético o renovable. No obstante, sí que tiene un papel muy relevante cómo “guía de opinión” y es conocida su fuerte apuesta por la reducción de las emisiones de CO2 y el impulso a las renovables. Ello, junto con el balance de poder en las Cámaras de Representantes, modela la cantidad de incentivos fiscales, mal entendidos como subvenciones directas, que se destinan al desarrollo renovable. Aparte de ello, sí que controla el presupuesto federal a la investigación en energías alternativas, que es, y ha sido, muy elevado, lo que ha hecho que EEUU sea un líder tecnológico de renovables, aunque no en su instalación, como se verá después. Además controla un gran consumidor de energía, las agencias federales, que incluyen al ejército a través del Department of Defense (DoD). En este sentido, recientemente ha ordenado aumentar la cuota de consumo renovable para ellas hasta el 20% en 2020[2], lo que supone una buena oportunidad, donde las empresas españolas están bien posicionadas (ACS, Acciona y T-Solar están precalificadas para realizar proyectos para el DoD, entre 22 listadas).

Lo que realmente marca el desarrollo renovable a medio y largo plazo en el país son los denominados Renewable Portfolio Standards (RPS), que son objetivos de consumo renovable que algunos Estados se imponen (29 de los 52), y que van, por ejemplo, desde el 8% en 2025 en New York al 33% en 2020 de California o el 40% en 2030 en Hawaii. A partir de ahí, las propias utilities obligadas, supervisadas por los reguladores correspondientes, intentan que la adquisición de la nueva capacidad renovable sea lo más barata posible para el consumidor. Por ello, los proyectos se cierran a través de PPAs (Power Purchase Agreements) individuales con precios muy competitivos. Por ello, se estima que más del 80% de los RPS se han alcanzado gracias a la eólica, que es, en general, la tecnología renovable más barata actualmente[3].

Los incentivos fiscales actúan como catalizador en la consecución del PPA y de la financiación posterior del proyecto, y modulan la evolución de la instalación renovable en el corto plazo. La reducción de la carga impositiva al generador renovable, se traduce en ofertar un menor precio del PPA, por lo que, en realidad, los incentivos son una subvención a la utility y finalmente, al consumidor, que compra la energía renovable más barata. Aunque existen multitud de incentivos, los más importantes son los federales, Investment Tax Credit (ITC) y Production Tax Credit (PTC), junto con otras medidas como el cash grant y el loan guarantee, que ya no están disponibles. Los incentivos están continuamente en debate, dentro de una cuestión más general que es la política fiscal, que incluye otras muchas medidas e incentivos, y que ha sido famosa por las peculiares situaciones a las que ha llevado al país en 2013, bautizadas como Fiscal Cliff y Sequestration. Como resultado, en los últimos dos años, muchos de estos incentivos se han eliminado o reducido.

No obstante, aunque se realizaran completamente los RPS, que tienen un horizonte a partir del 2020, ello sólo supondría alrededor de un 10% renovable (sin incluir la gran hidráulica) en el mix de generación. Actualmente, las renovables suponen alrededor del 5,2% del total (más un 6,7% adicional de la gran hidráulica). De esa cifra, el 3,3% es eólico, el 1,4% biomasa, el 0,3% geotérmica y solar apenas llega al 0,2% del total[4].

Los RPS también están continuamente en debate dentro de cada Estado, y su aumento o disminución dependerá en gran medida de la evolución de los hidrocarburos no convencionales (Shale gas / Tight gas), que representan una revolución en el país y han abaratado los precios del gas natural para generación. Además reducen la dependencia energética externa y las emisiones de CO2 (si se utiliza para sustituir carbón, lo cual no está claro que vaya a ocurrir), siendo, en este sentido, el gran competidor de las renovables.

A continuación se va a repasar el estado de cada sector por tecnología.

Eólica

Como se ha comentado, es la tecnología preferida por sus bajos costes, siempre que exista recurso y no haya problemas ambientales relevantes como migración de aves. Actualmente existen algo más de 60GW instalados, siendo Texas el primer Estado, seguido de California y Iowa, según la asociación del sector, American Wind Energy Association (AWEA[5]).

La evolución de la potencia instalada ha dependido históricamente de la disponibilidad del incentivo PTC, que ha sufrido diversas cancelaciones y posteriores extensiones. Ello ha ocurrido también en los últimos años. Disponible inicialmente hasta 2012, la ausencia de acuerdo en su extensión provocó que ese año fuera record en instalación, con más de 13.000MW instalados, provocando la histeria por acabar los proyectos en curso para aprovechar la subvención. Finalmente, se acordó in-extremis, el último día del año, su extensión hasta el 2013, pero permitiendo que los proyectos terminen su construcción en los años siguientes. Con el fin del 2013, el incentivo ha expirado y no se ha conseguido su renovación, aunque la industria sigue presionando por ello.

Esta incertidumbre regulatoria ha provocado que, paradójicamente, siendo el 2012 un año histórico, en el 2013 se hayan instalado sólo 1.084MW en todo el país, 12 veces menos que el año anterior. Sin embargo, por la misma razón de aprovechar el PTC, ha sido el año record de proyectos que empiezan la construcción, con más de 12.000MW, que se terminarán en los próximos años. Como se ve, la política del incentivo PTC es lo que marca la evolución del sector.

En cuanto a eólica offshore, en 2013 se logró el hito de iniciar la construcción del que será el primer parque eólico offshore del país, el proyecto de Cape Wind[6], en la bahía de Nantucket, Cape Cod (MA), tras más de 12 años de permisos y litigios.

Solar Fotovoltaica

A diferencia de la eólica, la energía fotovoltaica no para de crecer en EEUU. En el tercer trimestre del 2013 alcanzó la marca de los 10GW instalados, y se estima, a falta de los datos finales, que en el total del año se hayan instalado alrededor de 4.200MW, según la asociación SEIA[7]. California es el Estado con mayor capacidad instalada, seguido de lejos por Arizona y New Jersey, este último gracias a una agresiva política de penalización por incumplimiento de los objetivos RPS.

El descenso de precios globales y la certidumbre regulatoria del país, ha propiciado que cada año se haya ido superado las cifras de instalación anteriores. En este caso, el incentivo preferido es el ITC, que tiene prevista su expiración en 2016, lo que concede un horizonte estable en el medio plazo. Después de ese año existe una total incertidumbre, por lo que se prevé un aumento continuo en la instalación antes de que llegue esa fecha para aprovechar el incentivo.

Por potencia instalada, el segmento de utility-scale (>1MW) es líder en capacidad y sigue creciendo. Sin embargo, el tamaño comercial (entre 10kW y 1MW) permanece prácticamente constante y está siendo rápidamente alcanzado por el segmento residencial (<10kW), que está experimentando un importante auge gracias al third-party ownership. Está modalidad consiste en que la empresa financia totalmente la instalación al dueño, que la paga mensualmente gracias a los ahorros, siendo rentable sólo si la utility local permite cierto autoconsumo o net-metering, al que, en general, suelen oponerse. La empresa pionera y líder en este campo es SolarCity, creada por los primos de Elon Musk (Tesla), y que cotiza en el NASDAQ desde finales del 2012.

La fuerte competencia entre los promotores de fotovoltaica, resulta en unos precios muy competitivos y fuerza a una importante concentración vertical, donde los propios fabricantes se ocupan de la promoción. Es claro el ejemplo de First Solar, que además de ser uno de los mayores fabricantes a nivel mundial es, de lejos, el mayor instalador del país. Esto deja poco espacio a promotores pequeños o extranjeros para acceder al mercado

La solar térmica de baja temperatura es casi inexistente, salvo en tejados de algunas regiones con mucha irradiación, como Arizona, o precios energéticos muy elevados, como Hawaii.

Termosolar

La solar térmica de concentración vive actualmente un momento agridulce. Por un lado, entre finales del 2013 y principios del 2014 se están poniendo en marcha proyectos que suponen la mayor adición de capacidad termosolar de la historia en EEUU. Sin embargo, ningún proyecto nuevo ha empezado la construcción en los últimos dos años, y los pocos que se encuentran en desarrollo, están atrapados en las fases de permisos o financiación.

En total, más de 1.300MW termosolares adicionales estarán online próximamente, donde las empresas españolas han tenido un papel protagonista, siendo promotores, ingenieros, constructores, tecnólogos o suministradores. Los proyectos, que son la culminación de un desarrollo de más de cinco años, se reparten en la zona suroeste del país[8]: Abengoa, con Mojave y Solana (280MW cada uno, cilindroparabólico), BrightSource, con Ivanpah (392MW, torre), Solar Reserve – Cobra, con Crescent Dunes (110MW, torre) y Nextera – Sener, con Genesis (250MW, cilindroparabólico).

Entre los que están en desarrollo, los más avanzados son los de Rice (Solar Reserve – Cobra, 150MW, torre), que tiene todos los permisos y PPA, pero no financiación, y Palen (BrightSource – Abengoa, 500MW, torre) que todavía no tiene todos los permisos.

El fin del apoyo federal como avalista, (gracias al loan guarantee, clave para el desarrollo de los proyectos actuales), los importantes requisitos de la tecnología y el auge del gas natural, dibujan un futuro muy incierto para la termosolar en el país.

Conclusiones

Aparte de las tecnologías comentadas, está la biomasa, que ha ido perdiendo cuota por su crecimiento lento y difícil, al igual que en el resto del mundo. Sin embargo, destacan algunos proyectos de biocombustibles, como el de Abengoa en Hugoton, Kansas. Y otras tecnologías, como la geotermia o la marina, se reducen a lugares y proyectos muy concretos. La cogeneración es posible que aumente su cuota por la mayor disponibilidad de gas natural.

En resumen, el desarrollo renovable en el país se encuentra en un punto de inflexión. Es probable que continúe su avance, pero a menor nivel que en los años precedentes, dado que se están alcanzando los objetivos marcados y que es improbable que estos aumenten a corto o medio plazo. La gran expectación que hay en los combustibles fósiles extraídos con técnicas no convencionales supone una fuerte competencia en las decisiones de los responsables de planear el futuro energético del país.


[1] Ingeniero Industrial (UPM), Diplomado en Empresariales (UNED). Director Departamento de Energía.

[3] AWEA State RPS Market Assessment 2013, John Hensley, 2013

[4] Ver www.eia.gov

[5] Ver www.awea.org

[6] Ver www.capewind.org

[7] Ver www.seia.org

Hidrocarburos no convencionales en EEUU y sus implicaciones

Artículo publicado en Energética XXI, en diciembre 2013:

http://www.energetica21.com/revistas-digitales/diciembre-2013

Escrito por:

Jorge Sanz Oliva [1]

David Gómez Jiménez [2]

Jaime Portero Larragueta [3]

El auge de los combustibles fósiles no convencionales está cambiando el panorama energético mundial y es un foco de atención para inversores, reguladores, empresas y ciudadanos. Sin embargo, su explotación no es sencilla y tiene importantes impactos ambientales, sociales y económicos. En este artículo se explica dónde, cómo y por qué ahora se están explotando y las implicaciones que tienen en el país que lo ha visto nacer: Estados Unidos.

*Esta parte impresa es el resumen de un artículo más largo que se puede consultar en:

Hidrocarburos no convencionales en EEUU y sus implicaciones

Origen

La primera consideración es que estos hidrocarburos no son distintos en absoluto a los convencionales; su génesis es la misma aunque su geología no lo sea. Como es sabido, los hidrocarburos se han creado a lo largo de cientos de miles años, a partir de materia orgánica primitiva y otros sedimentos que se compactaban y petrificaban dejando intersticios donde se quedaban contenidos los hidrocarburos. Este tipo de rocas se denominan en la jerga del petróleo generadoras o madres. Desde ellas, los hidrocarburos migraban hacía las bolsas convencionales que se explotan desde principios del siglo XIX. Sin embargo, muchos de los hidrocarburos formados siguen todavía retenidos en las rocas generadoras, de donde no han podido migrar, y adquieren su nombre porque se explotan con técnicas ‘no convencionales’[4].Explotacion de Shale Gas usando fracking.

La característica más importante de estos estratos es su baja permeabilidad, es decir, su poca capacidad para permitir el paso del petróleo o gas, siendo cientos de veces menor que las rocas tradicionales. Existen tres tipos de formaciones donde se pueden encontrar hidrocarburos retenidos: Coal Bed Methane (CBM), Tigh Gas/Oil y Shale Gas/Oil. Estos dos últimos se encuentran, en general, en formaciones a grandes profundidades, mientras que el CBM puede darse en estratos superficiales. En cualquier caso, los tres se explotan con las técnicas de fracking. El CBM y las Tigh Sands se llevan explotando desde los 80, mientras que el Shale Gas/Oil ha despegado, de forma exponencial, a partir del 2005[5], ya que su explotación es más compleja por ser el tipo de roca menos permeable de los tres.

Explotación

La razón por la que se han desarrollado ahora estos hidrocarburos y no antes, se debe a una combinación de factores: apoyos públicos a la investigación, mejoras en las técnicas de perforación y estimulación de los pozos (fracking), y ventajas regulatorias que han facilitado su desarrollo.

Para poder extraer los combustibles de estas rocas tan poco porosas, es necesario abrir las fracturas existentes y crear muchas más nuevas, permitiendo unir las micro-cavidades donde se encuentran alojados los hidrocarburos. Ese es el objetivo de la estimulación de pozos, que es una técnica que se viene empleando con distintos fluidos (y explosivos) en la industria del petróleo desde finales del siglo XIX, en pozos convencionales para mejorar su rendimiento (actualmente se aplica en más del 60% de los pozos). Para rocas poco permeables, se ha estado investigando en EEUU desde los años 50, a iniciativa pública y privada. Sin embargo, no fue hasta el año 1997, cuando la compañía Mitchell Energy, tras años de pruebas en la cuenca de Barnett (Texas), consiguió dar con la mezcla de fluidos de fracturación adecuada (agua, arena o proppants y diversos químicos) para hacer rentable su explotación. El método se denominó slick-water fracturing (literalmente, fractura con agua ‘escurridiza’)[6].

Además de ello, la explotación de estos hidrocarburos no hubiera sido tampoco lucrativa si no se hubiera avanzado en las técnicas de perforación. La tecnología actual permite perforar pozos verticales que en cierto punto (kick-off point) son capaces de girar y orientarse siguiendo el estrato, de forma horizontal o en direcciones más complejas, y permite avanzar varios kilómetros en estos ‘laterales’.

El aprovechamiento actual del Shale y las Tight Sands supone un fuerte desarrollo industrial y un importante impacto en el terreno. Cuando se ve una foto aérea de estas explotaciones, se aprecian un gran número de plataformas esparcidas en el terreno (entre 400 y 1000m)[7]. Además, de acuerdo con la industria[8] y la Environmental Protection Agency (EPA)[9], por cada pozo que se perfora, es necesario entre 4 y 30 millones de litros de fluido para estimularlo, lo que supone una cantidad enorme de agua y residuos a gestionar en el conjunto regional.Explotacion de Shale Gas usando fracking.

La física que subyace en la estimulación y rotura de la roca es tremendamente complicada. A pesar de que se lleva investigando en este campo varias décadas, todavía no se comprende cómo se produce la extracción de los hidrocarburos[10]. Lo que sí se conoce, y ha causado cierta sorpresa, es el bajo rendimiento de extracción con el tiempo[11]. Con datos de los pozos que se llevan explotando, se ha visto que la producción disminuye de forma exponencial tras la estimulación hidráulica. Por ello, algunos consultores como Arthur Berman[12] o el Post Carbon Institute[13] han disparado las alarmas sobre una posible burbuja en el sector, ya que la financiación necesaria se puede estar consiguiendo con unas expectativas de retorno infladas18.

Regulación

El otro factor clave para su desarrollo ha sido disfrutar de un marco regulatorio muy favorable. En EEUU, los derechos mineros son privados, y reciben considerables ingresos de su explotación[19]. Por ello, la actividad energética se ha convertido en un negocio paralelo en muchas zonas rurales.

En cuanto a la regulación medioambiental, en EEUU existe un modelo llamado corporativismo federal, por el cual los Estados tienen casi todas las competencias. El gobierno federal dicta unas normas que suponen un mínimo que todo el país tiene que cumplir, pero que los Estados pueden hacer más estrictas. La normativa federal se vio especialmente modificada en 2005, en la Energy Policy Act, hecho que se conoce como el Halliburton Loophole (laguna jurídica). Dicha ley de 2005 fue promovida por el entonces vicepresidente, Dick Cheney (Republicano), que accedió al poder tras ser el presidente de la empresa Halliburton, una de las mayores compañías en el suministro de equipos y fluidos para la perforación. En dicha ley, se concedieron importantes exenciones a la industria del petróleo y del gas, allanando el camino para la técnica de fracking, sobre todo en la gestión de aguas y vertidos.

Por tanto, el grueso de la regulación recae en los Estados, que están legislando de forma desigual. Por ejemplo, Nueva York ha establecido una moratoria al fracking o Arkansas a la inyección de vertidos en depósitos profundos hasta estudiar su sismicidad.

Por otro lado, a nivel federal, tiene un papel de referencia y siempre controvertido la EPA, que lleva estudiando los impactos del fracking desde hace décadas[14]. Recientemente, destacan sus investigaciones en Pavillion (Wyoming)[15] y Dimock (Pennsylvania)[16], donde ha encontrado productos químicos en el agua de consumo que se emplean en la estimulación hidráulica de pozos cercanos y en valores superiores a los normales. No obstante, en Dimock, declaró que el agua era ‘segura para su consumo’ porque no superaban los estándares federales; y en Pavillion, ha abandonado la investigación en junio de este año.

Aunque la composición de los fluidos de fracturación ha sido clave para el desarrollo de la técnica, esta es desconocida por la opinión pública, ya que no es obligatorio revelarla tras el Halliburton Loophole. No obstante, la industria ha elaborado la iniciativa Fracfocus11, donde se publican voluntariamente ciertos datos de los productos que se inyectan. Generalmente, el fluido está compuesto por un 90% de agua; 9% proppants y alrededor de un 1% aditivos químicos. Estos últimos, son responsables de la efectividad última de la mezcla y de la posible peligrosidad del slickwater para el medio ambiente. La gran cantidad de residuo que retorna de los pozos una vez estimulados (flowback), tiene dos destinos habituales: el vertido profundo en cavidades que eran antiguas explotaciones de hidrocarburos, y la reutilización en estimulación de otros pozos.

Implicaciones

Aunque según la industria hay varios miles de pozos estimulados de forma segura con esta técnica, se han denunciado algunos casos de contaminación de acuíferos por los fluidos y también por metano, que puede aparecer en grifos domésticos e incluso inflamarse[17]. Las complicaciones pueden surgir por la deficiente cementación de los pozos, que es un problema conocido hace décadas como gas migration control, y que también ocurre en la perforación convencional[18]. Sin embargo, se ve magnificado por la gran cantidad de perforación que exigen los hidrocarburos no convencionales, las grandes presiones y el desarrollo explosivo y rápido que se está realizando, donde quizás no se están empleando las mejores prácticas disponibles[19]. Otra potencial vía de contaminación en aguas superficiales, es por las escorrentías de pluviales o derrames, ya que las balsas de flowback, se disponen a cielo abierto[20].Marcellus Shale Wastewater Sludge Ponds

Un impacto muy debatido, es el de la sismicidad inducida por el vertido en depósitos profundos. En ciertas zonas donde se está realizando fracking, se ha percibido un aumento significativo del número de terremotos, de baja y media intensidad. Esta sismicidad tampoco es nueva y se conoce como ‘activación de falla’. La introducción de fluidos a presión puede hacer que las fallas se desplacen tras repartir las tensiones creadas en el terreno. Esto origina pequeños seísmos que pueden tener especial relevancia en zonas urbanas.

A pesar de ello, el interés de los diferentes gobiernos por estos combustibles es evidente, ya que puede reducir su dependencia energética[21]. Por ello hay un cierto debate sobre permitir las exportaciones de gas en grandes cantidades desde EEUU. En el entorno regional, también está teniendo una creciente importancia. Destaca el caso de North Dakota, que se ha convertido en el segundo productor de petróleo por la explotación de Shale Oil en la cuenca de Bakken. Gracias a ello, el Estado tiene una tasa de desempleo del 3%, aunque su población no llega ni al millón de habitantes.

Por otro lado, la situación en Europa es muy distinta. Aunque es objeto de estudio por la Comisión Europea, todavía no hay legislación común. Por ello, algunos Estados y regiones han tomado la iniciativa: Francia, Luxemburgo, Holanda, Republica Checa, Bulgaria, Westfalia o Cantabria en España, han establecido moratorias hasta que se evalúe el impacto de las explotaciones.

En cualquier caso, hay que tener cierta cautela con las cifras de los recursos existentes, ya que, por ejemplo, un reciente informe de la US Energy Information Administration ha rebajado las reservas técnicamente recuperables en España a 226bcm21, mientras que la industria española afirmaba, meses antes, valores alrededor de los 2.000bcm[22].

Conclusiones

En resumen, los hidrocarburos no convencionales no son algo distinto a los tradicionales, y su explotación se ha hecho posible gracias a una combinación de factores que se han dado en Estados Unidos, entre los que destaca la investigación y un entorno regulatorio favorable. El potencial como fuente energética parece muy elevado aunque existe gran incertidumbre en su cuantificación por la complejidad de la fracturación en la roca. Los riesgos ambientales existen, pero pueden ser mitigados o reducidos con la regulación adecuada, que todavía no parece haberse definido.

La sociedad se encuentra de nuevo ante una encrucijada entre el desarrollo económico a corto plazo y unos efectos y costes que se observarán a largo plazo. Para tomar la decisión, es necesario disponer de información completa y verídica que permita cuantificar las externalidades. Estos hidrocarburos llevan miles de años en el subsuelo, y su explotación no es una oportunidad que pueda desaparecer, sino todo lo contrario, el paso del tiempo sólo puede mejorar la técnica, abaratar costes y cuantificar los riesgos, en base a una mayor experiencia internacional. Por tanto, se aconseja ser prudente, ya que este tipo de decisiones tienen amplias repercusiones en la sociedad y generaciones futuras. Con la correcta asignación de costes, será el propio mercado el que decida cuándo es óptima su explotación.



[1] M.Sc. London School of Economics. Consejero Económico y Comercial.

[2] Ingeniero Industrial (UPM), Diplomado en Empresariales (UNED). Director Departamento de Energía.

[3] Ingeniero de Caminos, Canales y Puertos (UPM). Técnico en Comercio Exterior.

[4] Gas No Convencional en España, una oportunidad de futuro. Consejo Superior de Colegios de Ingenieros de Minas, 2013

[5] www.eia.gov

[6] US Government Role in Shale Gas Fracking History: An Overview and Response to Our Critics, Trembath, 2012

[7] blog.skytruth.org

[8] www.fracfocus.org

[9] Draft Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources, EPA, 2011

[10] Multidomain Data and Modeling Unlock Unconventional Reservoir Challenges, Ganguly and Cipolla, Society of Petroleum Engineers, 2012

[11] Evolution of the Barnett Shale: Inception to Date, Horizontal Well Completions in North American Shale Plays, Nick Steinsberger, 2012

[12] petroleumtruthreport.blogspot.com

[13] shalebubble.org

[14] www2.epa.gov/hfstudy

[15] www2.epa.gov/region8/pavillion

[16] www.epa.gov/reg3hwmd/npl/PAN000306785.htm

[17] gaslandthemovie.com

[18] Getting to the root of Gas Migration, Bonett and Pafitis, Oilfield Review, 1996

Predicting potential gas-flow rates to help determine the best cementing practices, Crook and Heathman, Halliburton Energy Services, 1998

[19] Fluid Migration Mechanisms Due To Faulty Well Design And/Or Construction: An Overview And Recent Experiences In The Pennsylvania Marcellus Play, Anthony R. Ingraffea, 2012

[20] Could Shale Gas Power the World?, Bryan Walsh, Time, 2011

[21] Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States, EIA, junio 2013

[22] Evaluación Preliminar de los Recursos Prospectivos de Hidrocarburos Convencionales y no Convencionales en España, ACIEP, marzo 2013

Oportunidades para los ingenieros industriales en proyectos energéticos internacionales. Induforum 2013.

Induforum 2013 es la Feria de Empleo de la Escuela Técnica Superior de Ingenieros Industriales de la Universidad Politécnica de Madrid y ha tenido  lugar los días 3 y 4 de abril de 2013.

descargaHace ya seis años desde que, como alumno de último curso, tuve el placer de formar parte del grupo de organizadores de la feria de empleo Induforum 2007. Gracias a ello, conseguí mi primer empleo como ingeniero de proyectos renovables, antes de acabar siquiera la carrera, en una de las empresas participantes. Era el momento del despegue de las energías renovables, gracias a las generosas tarifas reguladas (o feed-in tariffs) que proporcionó el RD661, del mismo año. Fueron unos años de gran actividad e inversión en el sector energético, pero, como se ha comprobado después, resultaron en un crecimiento insostenible.

Ahora he tenido el gran honor de escribir un artículo para su revista. Se titula Oportunidades para los ingenieros industriales en proyectos energéticos internacionales, y hago un repaso de la situación de las energías renovables en EEUU y las oportunidades para los jóvenes licenciados. La revista completa de Induforum 2013 se puede descargar aquí.

Enhorabuena al comité organizador de la feria y mucha suerte para los recién licenciados, tenéis por delante un reto importante pero, sin duda, vais a encontrar vuestro sitio.

Artículo publicado sobre certificación sostenible LEED

Las edificaciones juegan un papel prioritario en la sostenibilidad de las sociedades, puesto que representan, en los países desarrollados, el primer foco de emisiones de CO2, seguidas del sector transporte y de la industria. Además, según la U.S. Energy Information Administration (EIA), las edificaciones son responsables del 40% del
consumo de energía primaria, el 72% del consumo de energía  eléctrica y el 13% del consumo de agua potable. Por lo tanto, un diseño y operación adecuados de ellas, pueden suponer grandes mejoras en el objetivo de crear una sociedad sostenible.

Con este fin se creó en Estados Unidos en el año 1993, el U.S. Green Building Council (USGBC), que tiene la misión de “transformar la manera en que los edificios y las comunidades se diseñan, se construyen y se operan; permitiendo un entorno próspero, sano y medioambiental y socialmente responsable que mejore la calidad de vida”.

En el siguiente artículo se explican y comentan las principales características de esta certificación energética de edificios, publicado en este documento elaborado por el grupo de trabajo coordinado por el COIIM en Conama 2012, celebrado en Madrid del 26 al 30 de noviembre de 2012, donde ha sido presentado y debatido con los asistentes a la sesión.

Conama2012 Eficiencia energética en edificios. Implicaciones de la nueva Directiva Europea

AB32: the weapon against climate change

In 2005, California Governor Arnold Schwarzenegger signed Executive Order S-3-051 setting long-term greenhouse gas (GHG) reduction targets, with a final target of 80% below 1990 levels by 2050. Nevertheless, the Executive Order did not say how to achieve these reductions. They were establish in 2006 trough California Assembly Bill 32, also called the Global Warming Solutions Act or simply AB32. It set a target of reducing GHG emissions in the State to 1990 levels by 2020. The AB32 bill provided for the State the organization to implement these reductions, including the option of market-based compliance mechanisms such as a cap-and-trade program. AB32 designated the California Air Resources Board (ARB), which depends on the California Environmental Protection Agency, to implement the legislation. The program that has resulted includes both a cap-and-trade component as well as a variety of complementary and direct regulatory measures. Another remarkable achievement of the bill is to set the Renewable Portfolio Standard to 33% by 2020, which means that the 33% of electricity consumption has to be generated from renewable sources by this time. That applies to the big utilities of the State and has converted California to leader of renewable generation in the country.

At the end of 2010 ARB adopted a cap-and-trade program to place an upper limit on statewide greenhouse gas emissions. This is the first program of its kind on this scale in the United States. The program had a soft start in 2012, with the first required compliance period to start 2013. Emissions are to be reduced by two percent each year through 2015 and three percent each year from 2015 to 2020. The rules apply first to utilities and large industrial plants, and in 2015 will begin to be applied to fuel distributors as well, eventually totaling 360 businesses at 600 locations throughout the State of California. Free credits will be distributed to businesses to account for about 90 percent of overall emissions in their sector, but they must buy allowances (credits) at auction, to account for additional emissions. The auction format used will be single round, sealed bid auction. A preliminary auction was held August 30, 2012, and the first actual quarterly auction took place on November 14, 2012.

In this Presentation, more details are provided about this leader bill to fight against climate change in the US:

Artículo en la revista del COIIM: Situación de la energía eólica en Estados Unidos

He vuelto a conseguir publicar otro artículo en la revista de Colegio de Ingenieros de Madrid Nº57, esta vez sobre la situación del mercado eólico en Estados Unidos. Se repasa el estado del mercado y se comentan los retos a los que se enfrenta, a corto plazo la renovación del PTC y a largo plazo, la falta de capacidad de transporte eléctrico y la competencia del shale gas:

Articulo Situacion eolica Estados Unidos

Ver en pdf

I have published an article in 'Energias Renovables'

I am very glad to announce that an article by my workmate Victor Iglesias and me, have been published in the very famous Spanish magazine Energías Renovables.

Termosolar en estados unidos

The title is ‘¿Cómo está la termosolar en los Estados Unidos?’ (How is the thermo-solar market in the US?) and in a few pages we explain to our Spanish compatriots what is going on in the American market:

http://www.energias-renovables.com/articulo/como-esta-la-termosolar-en-los

Moreover, we have been cited in the paper version, on page 59

http://www.energias-renovables.com/publico/revista_digital.php?nrevista=582&title=Especial%20Termosolar/

 

Shale Gas: The Black Revolution

Introduction

In the last 40 years, important changes were occurred in the traditional scenario of the energy sources. First, the crisis of petroleum in 1973 was the first warning about the problems of fossil fuels. More closely, the important economic development prior to 2008 pushed the markets of energy resources due to the growing demand. With traditional sources of energy as oil, gas and coal raising prices, alternatives sources which were unprofitable before, started to seem more attractive. Also, the dependency of the developed countries on the resources of foreign countries, many of them not very trustable, converted the issue in terms of national security.

Among these alternative sources, renewables, especially wind and solar, have been the main character of the play. Not absolutely new, since they had a little bright in the 80’s, now they have experienced a very strong development worldwide. A new industry has been created only five years ago. The benefits of the renewables are tremendously obvious. They do not consume fuels susceptible to expire to get energy from nature, and they almost do not affect the environment, do not pumping CO2 or other gases into the atmosphere or compromise any region with nuclear risks. On the other hand, these technologies are still not cheap enough to compete with the conventional sources. The price of energy is a key variable in the economic growth and any country try to keep it low for achieving more competitiveness and more economic expansion.

But these efforts in finding alternatives to traditional sources, also has applied to investigation in fossil fuels. Since the end of the 19th century, it is known that there are fuels buried into the ground which are not in the conventional geologic formations. These fuels are in structures which permeability is very poor to make the normal drilling process profitable. They are called non-conventional fossil fuels. Many research resources have been expended in investigating new techniques or technologies to get these fuels from earth in a profitable way. Now, it seems that it has been achieved.

These difficult geologic formations, which until very recent years were unprofitable, have different names as shales, tights or sands. From them, currently gas natural and oil are being obtained, and because of its origin, they receive the nickname of shale gas, tight gas or shale oil. At present, the most important one is the Shale Gas, because there are huge reserves of natural gas in shales and because this last 5 years the production of Shale Gas has shooted up. The raise of these new sources of fossil fuels is being named for some people as, ‘The Black Revolution’.

In this paper, it is going to analyze why the Shale Gas is so important in the new era of energy, what are the important environmental and social issues of its production and what can we expect in the evolution of the energy mix in the US and worldwide.

What is the Shale Gas?

As it has been introduced, Shale Gas refers to natural gas that is trapped within shale formations. Shales are fine-grained sedimentary rocks that can be rich sources of petroleum and natural gas and whose porosity and structure does not permit to get the fuels with the traditional ways.

The advent of large-scale Shale Gas production did not occur until Mitchell Energy and Development Corporation experimented during the 1980s and 1990s to make deep Shale Gas production a commercial reality in the Barnett Shale in North-Central Texas. They used a combination of techniques invented for other purposes, the horizontal drilling in conjunction with hydraulic fracturing.

 Extraccion del Shale Gas

As it can be viewed in the figure, natural gas is incorporated into the Shale Gas formation, not is in a bag as conventional gas. Moreover, shales are ordered in horizontal layers. Conventional drilling is totally useless in these formations. The new drilling technique consists of:

  1. A vertical well is drilled
  2. The drill turns to continue horizontally. In this manner, the horizontal drilling permits to make a hole along the shale
  3. Water, lots of chemicals and sand are pumped into the well to unlock the hydrocarbons trapped in shale formations by opening cracks (fractures) in the rock and allowing natural gas to flow from the shale into the well.

As the success of Mitchell Energy and Development became apparent, other companies aggressively entered the play, so that by 2005, the Barnett Shale alone was producing nearly 0.5 trillion cubic feet of natural gas per year. As producers gained confidence in the ability to produce natural gas profitably in the Barnett Shale, with confirmation provided by results from the Fayetteville Shale in Arkansas, they began pursuing other shale plays, including Haynesville, Marcellus, Woodford, Eagle Ford, and others.

Economic vitality

Although Shale Gas production started ten years ago, only in the past 5 years has been recognized as a “game changer” for the U.S. natural gas market. The proliferation of activity into new shale plays has increased dry shale gas production in the United States from 1.0 trillion cubic feet in 2006 to 4.8 trillion cubic feet, or 23 percent of total U.S. dry natural gas production, in 2010. Wet shale gas reserves increased to about 60.64 trillion cubic feet by year-end 2009, when they comprised about 21 percent of overall U.S. natural gas reserves, now at the highest level since 1971. Oil production from shale plays, notably the Bakken Shale in North Dakota and Montana, has also grown rapidly in recent years.

Something is considered as a ‘game changer’ if it has the ability to change the price of good. That has happened in the case of the Shale Gas.

As you can see in the figure on the left, due to the more offer of gas natural in the market, and also the contraction of the demand, the price of natural gas has dramatically fallen down between 2005 and 2010. Moreover, the projection shows that thanks to the influence of the Shale Gas, the evolution of the prices (blue line) will be below the prior projections which did not considered the new gas. That has huge implications in energy markets. For example, less natural gas prices imply less electricity prices and more difficulties to renewables to achieve grid parity.

To better understand the importance of this new source of gas, let compare it with the actual figures of the natural gas market in the US. Of the total natural gas consumed in the United States in 2009, 87% was produced domestically; thus, the supply of natural gas is not as dependent on foreign producers as is the supply of crude oil (only 51% domestic), and the delivery system is less subject to interruption. The availability of large quantities of Shale Gas will further allow the United States to consume a predominantly domestic supply of gas.

According to the EIA Annual Energy Outlook 2011, the United States possesses 2,543 trillion cubic feet (Tcf) of potential natural gas resources. Natural gas from shale resources, considered uneconomical just a few years ago, accounts for 862 Tcf of this resource estimate, more than double the estimate published last year. At the 2010 rate of U.S. consumption (about 24.1 Tcf per year), 2,543 Tcf of natural gas is enough to supply over 100 years of use. Shale Gas resource and production estimates increased significantly between the 2010 and 2011 Outlook reports and are likely to increase further in the future. The Shale Gas represents about 37 years of supply considering the US consumption of 2009.

Reservas de Shale Gas de EEUU

The US plays of Shale Gas are spread around the country but there are some formation especially important located in Barnett shale (Texas), Bakken Shale (North Dakota and Montana), and the most important is Marcellus Shale (Pensilvania, New York and others).

The Shale Gas is being extracted in rural zones, and that is causing important changes in these villages. There are some important environmental implications, due to the extraction of Shale Gas is not perfect and can affect aquifers. Moreover, the social equity in the villages is changing since the owners of the lands where the gas is extracted are earning much money for royalties they had imagined feeding cows and growing plants.

Ecological Health

Local effects

The extraction of Shale Gas is not as simple as it was presented above. As many industrial activities, important bad externalities are generated. The amounts of water and chemicals pumped for the hydraulic fracturing are huge. Drilling a typical deep shale natural gas and oil well requires between 65,000 and 600,000 gallons of water. Not only the consumption of tons of water is something to be considered from an environmental position, also the composition of the chemicals is important. The problem is that the actual composition has not been revealed because is considered an industrial secret. About a 2% of the mixture is chemicals. They are crucial for the Shale Gas extraction and include acids, anti-bacterial agents, breakers, clay stabilizers, corrosion inhibitor, crosslinker, friction reducers, gelling agents, iron controls, pH adjusting agents, and scale inhibitors, between others.

The huge amount waste water of the process, full of chemicals, sand and muddy has to be treated. Analysis performed to this waste water shows that it contains some components that are carcinogenic and even nuclear radioactive. The treatment of this water is done in the States with the more lax regulation. Many of them do not have equipment to remove these chemicals out of the water, which is pumped in rivers. Nobody knows what will be the effects of these chemicals in the environment in a long term, because this new type of extraction is almost new.

But maybe, this is not the worst problem. When the drill punches the land, in many cases, some of the layers crossed are aquifers. In some places of Pennsylvania and other States, the tap water has been contaminated by the waste water and even by the gas. The problem was shown in the documentary ‘Gasland’ by Josh Fox, where it is possible to see incredible images of taps running with flammable water. Also, it presents some cases of people living near the drills with terrible and strange diseases, animals dead, bad water contamination and other health issues. A ‘silent law’ seems to be happening because many people of these farms are earning lots of money with the royalties of the gas and also they have disclosure contracts with the drilling companies.

As named above, the Shale Gas production started in Texas ten years ago. I had the opportunity to speak in October 2010 with Keith Sheedy, Chief Engineer’s Office from the Texas Commission on Environmental Quality. He basically explained that in Texas, no water contamination have occurred in this ten years of commercial exploitation. The cases of Pennsylvania are due to bad practises in the drilling process. When the hole is not properly cemented, then some of the gas running through the hole can pass to aquifers and contaminate the tap water.

Anyway, drilling has been doing for decades in similar industries, so regulations should have existed about water uses and disposal, but why is not the Shale Gas drilling regulated by environmental rules as the rest of industrial activity? Because, The Congress, pushed by Vice President Dick Cheney, exempted gas drilling from EPA Clean Water Act regulations in 2005. It is something curious that Cheney was former CEO of the Halliburton Company, one of the biggest driller and Shale Gas extractor in the US. After 2005, Shale Gas drilling boomed.

There are other collateral effects in Shale Gas extraction. Fracturing is changing the structure of the geologic formations. In the drilling zones some earthquakes has been occurred in recent years, and the seismic activity is above the average. In addition, the great amount of water used, generates large truck traffic to this normally quiet populations.

Global effects

The global effects of the boom of Shale Gas are similar to the rest of fossil fuels usage. As fossil fuel, CO2 are generated in its combustion. The CO2 is a greenhouse gas that contributes to the global warming, which diverse effects in the environment. Even, during the Shale Gas extraction, many other greenhouse gases, more powerful, as CH4, are liberated due to bad practises in the drills and the lack of regulation.

Moreover, it is an exhaustible fuel. That means that there will be a day when there will not be more.

The usage of fossil fuels generates strong externalities for the rest of the world, and they are not incorporated in the cost of its use. As indirect effect, the boom of the natural gas or the reduction of its price is bad for renewable energy because is a substitutive product. As lower is the price of fossil fuel generation, more difficult is for renewables to achieve grid parity and be competitive by their own.

At the end, the more usage of natural gas, despite is greener as other fossil fuels as coal or oil, address our world to a very tough scenario, with a society dependant of scarce fuels and an earth that had suffered non-return changes in its ecosystem.

Social Equity

In the past five years, many drills have been done. In the next figure it is possible to see the evolution of the Shale Gas drills (red spots) in the Barnett shale during the last decade.

 

The economic benefits for the owners of the land have been important. Signing its gas lease about $1,000 per acre and a royalties of 12.5% for the gas produced, can make them to earn between $1,500 and more than $500,000 per year during the term of the extraction, which can last some years. This is much money for people used to feeding cows and growing plants for fringe benefits.

This disparity of earnings is generating some social equity problems within farmers but more between ‘county folk and city people’. The city people are not earning anything with the drilling but they suffer the problems of water contamination, truck traffic and risks from the unknown effects of the activity. They are against drilling but farmers, in general, are in favor of it. Disputes are increasing in these, up to now, calm and little populations.

A good impact of the drilling activity is the job creation. According to a recent study by Pennsylvania State University, the industry has created 23,000 jobs, including employment for roustabouts, construction workers, helicopter pilots, sign makers, Laundromat workers, electricians, caterers, chambermaids, office workers, water haulers and land surveyors.

Another controversial topic is the unequal tax policies to the drilling activity. Currently, companies operating in Pennsylvania pay no tax to extract gas. (Governor Tom Corbett reportedly received at least $1 million in campaign donations from gas interests). Corbett recently introduced legislation that would levy fees that critics say would amount to a tax of 1% per well on gas extraction, significantly lower than Arkansas (3.45%) and Texas (5.4%). It is not very fair to tax differently the activity between States, since the basins extends along vast territories of different States and the problems of the activity are affecting people in the same way.

Conclusions: my personal vision

An important change in the energy world is happening. The important economic implications of the availability of domestic natural gas are something to be considered for any country. The US has been the first country to exploit the benefits of the Shale Gas, but it is expanding through the world. You can see in the next figure the worldwide reserves.

 

The new distribution of the sources of energy changes the game of power. No dependency from Middle East could be a fact that changes the course of international policy.

Apart of the good benefits from the economic point of view, there are other aspects in the sustainability analysis that have to be considered. The local effects on the environment are not trivial. Public health and environment ecosystem is endangered. Nobody knows what will be the effects of the chemicals used for extraction in the long term but, my impression is that many companies are working as fast as they can to get the maximum amount of gas before the effects will be public. Responsibility from the Government must be priority to avoid this, but as another market failure, the current democracy system permits the regulator be supported by the companies which he has to regulate.

At a local scale, the social problems of inequity will convert stronger in future years. Ronald Coase, a famous economist, states that if trade in an externality is possible and there are no transactions costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. In this case, this bargaining is not happening and that will push unfortunate people to fight for its rights.

From a global sustainability point of view, the raise of the fossil fuels has huge impact on the world. If the fossil fuels come to be cheap again, the efforts in renewables will stop and we will experience something similar to the 80’s, when the first renewable plants were built and no more were set up until 20 years later. At the end, it is to delay the inevitable, but in a worse scenario. We will have a warmer earth, more population and more bubble, because we have been growing with more energy than we can produce in our present time.

In a more practical way, the implications for the US energy mix or the electricity energy mix are obvious. The current 45% of coal will be substitute by gas, cleaner and not much more expensive now. If you see the predictions of new electrical capacity added from EIA, you can figure out:

 

 After knowing more about the Shale Gas, I understand better the words by President Obama during the State of the Union discuss in 2011, when he claims for a new goal for America’s energy future, saying 80 percent of electricity should come from clean energy sources by 2035. He considers clean, among others, wind, solar, nuclear and natural gas. 

References

 

Energy Information Administration (EIA): www.eia.gov

Josh Fox, Gasland, the movie: www.gaslandthemovie.com

The Economist, ‘We will frack you’ November 22, 2011: www.economist.com

Chesapeake, Hydraulic Fracturing Facts: www.hydraulicfracturing.com

New York Times, ‘The Fracturing of Pennsylvania’ November 17, 2011: www.nytimes.com