Gas and oil issues [The Price of Power studio session]

Transcript: Gas and Oil

As Senator McClure says, "[W]e have a tremendous demand for natural gas because it [is] relatively low priced, relatively abundant, and relatively friendly to the environment . . ." But much of the remaining gas reserves are in lands westerners (and non-westerners) care deeply about.

These are selections from the whole transcript. Some comments will also occur on other themed pages because they cover more than one topic.

Jim McClure: Well, right now we have a tremendous demand for natural gas because it was relatively low priced, relatively abundant and relatively friendly to the environment and so the, the demand for natural gas went up very rapidly and now we're bumping against the ceiling of availability at prices we're willing to pay at the current market price.
View the clip

Mark Maher: And it was easy to site gas plants went in at the intersection of gas pipelines and high voltage transmission so we saw proliferation of gas.
View the clip

Jude Noland: And we also saw a tremendous leaps in efficiency in terms of gas turbine technology where they were must more efficient and they were also developed in to be much less polluting and so it was a to a large extent a win/win situation. The problem is that with everybody putting their eggs in that basket we had price, pressure on the price of natural gas and it starts to become expensive.
View the clip

Jim McClure: Well, there's another reason they went to natural gas, it was a relatively short period of time in which to site and best build and get online.
View the clip

Jim McClure: Of a natural gas fired power plant other technologies take more cash, more capital up front and longer time.
View the clip

Michael Grainey: Well, I, I'd like to address that because in Oregon we've seen a lot of public acceptance and a lot of individual decisions by individual businesses, consumers, homeowners, individual schools, . . . conservation and renewable resources. They've had over 5,000 business invest over $100 million dollars in each of the last two years on energy efficiency measures. That helped them weather the enormous price fights [hikes] we had in the power market and stay in business and keep people employed, keep their jobs. We've had over 100,000 energy efficient appliances replaced in Oregon through our State Tax Credit program. We did upgrade our building code, but in both residential and the commercial code with the upgrades we've made over the last 20 years series of time the residential code is helping consumers save $100 million dollars a year in energy costs and our businesses through the commercial codes $75 million a year. And in total Oregon consumers are saving over $400 million dollars in energy bills. Energy bills that otherwise go out of the state and in some cases go out of the country. We have no coal in Oregon, we have no petroleum, we have a little bit of natural gas, we have no uranium, well we do have a little bit of uranium and we're still cleaning it up from the mining experience 50 years ago. So all of these sources of energy that play a role will continue to play a role, we think it's very important in Oregon that they be used wisely and efficiently and it doesn't mean doing without, but it means doing better with what we have. Even with the new energy code that we built we have new schools being built now with the design being built in right to new sustainability standards they use less than half the energy that buildings built to the new energy code can do, there's an awful lot that can be done through energy conservation, energy efficiency.
View the clip

Joan Cartan-Hansen: I think even if we do make a massive effort toward conservation we still need to look to the future toward building that base supply, and right now coal and all the fossil fuels are still going to have to play a major part in that. But it also has some real environmental tradeoffs.
View the clip

Michael Grainey: I guess I have to note a voice of skepticism. I worked for the Nuclear Regulatory Commission for 7 years, so I'm certainly not a rabid anti-nuclear person. But I've been hearing talk for 25 years about a new generation of nuclear reactors -- new, safer, less expensive, more efficient generation -- and we haven't seen any. We haven't seen one new nuclear power plant since Three Mile Island, and I'd be very surprised if we see a new generation anytime soon. I think we really need to focus instead on renewable energy resources like wind, solar, geothermal biomass. We have limited federal budgets, in the history of energy in this country has been it does need federal support it needs federal support for exploration in the case of fossil fuels for development, for technology, and I see the, the energy bill pending before Congress as not providing enough of the support that it needs for renewable resources to make them more competitive. Wind is essentially competitive now in many circumstances with natural gas and other fuels, but we need continued federal support there. Given the fact we have limited federal funds I think putting much money into new nuclear research at the expense of those renewable energy resources is a mistake.
View the clip

Corbin McNeill: The American public doesn't have to be there, alright? The policy decision makers have to be there, this is an issue in which as many other issues whether its conservation or, or other things not all the American public is, is in with conservation, but the reality is, is that we have people that claim that coal fired generation is killing people because of asthma, that natural gas has explosive characteristics to it that blows up apartment houses in New Jersey the reality is that nuclear energy has in fact killed no person in the United States, the, the Three Mile Island accident a person that had the most exposure in the civilian populous had the same exposure that they would've gotten if they moved from Pennsylvania to Denver, Colorado, that's the reality of the situation and we have to make sure that people are informed, but in fact we don't build things are reject things because of some specific individual being ill-informed about things and that's why you have a regulatory process.
View the clip

Corbin McNeill: If you put all of your eggs in one basket, whether it's natural gas, coal, nuclear, wind. I'll give a nice example here. Part of the California energy crisis was in fact a failure of renewables -- the lack of rainfall and snowfall in the Northwest created a shortage of available hydropower. The city of Fairbanks, Alaska, has a very unreliable power supply today, and if you want to build a big system of renewables you've got to have an energy storage mechanism. Well, the city of Fairbanks, Alaska just put in a large battery. It takes up a whole building; it lasts for seven minutes.
View the clip

Corbin McNeill: Gas turbines wouldn't be where they are today if we hadn't put money into gas turbines.
View the clip

Ralph Cavanagh: I agree with that. And for research and development you should look wide and you should take risks. But then at some point when you're in a deployment and commercialization. I don't support, Oregon's biggest investment I think has not been through the tax system it's been through the utility bill and the fundamental point there is I think the Oregon judgment and I agree with it is you want for the very diversification reasons we've been describing you'd like to have part of your portfolio out of fossil fuels and that's a judgment that a number of other states are in the process of making too.
View the clip

Ralph Cavanagh: Well, see I think this is, this is precisely the wrong way to look at it because then you have quotas for everybody, like in the relative level of enthusiasm and political clout and I still think we are best off if we have an honest process that has all of us theologians in there. I'm going to push for all efficiency and Corbin is going to be in there with every nuclear plant he can muster. But Peter is right there isn't, the fundamental problem is one of economic scarcity, and my biggest concern right now is the, the institutions that are most important in making these decision are our utilities. We haven't talked enough about them. Because they have one fundamental problem if you want to take Peter's advice that efficiency and demand side solutions are the best it is a problem as Corbin mentioned that most utilities profits are tied to increasing sales. The good news is we know how to fix that. Like you know Oregon pioneered rate reforms that break the link between utilities profits and the amount of electricity and natural gas they sell. The problem is those reforms have not been executed across the west and in fact virtually every utility in the west now has its profits tied directly to increases in the use of gas and electricity and that throttles investment inefficiency in demand side. The most important message for me to leave with folks is we know how to fix that problem, it is not inherent in the utility business. There are utilities that have solved that problem and become international leaders in energy efficiency and an overriding priority for the west right now ought to be solving that problem so the financial interests of the utility system are aligned with the interests of their customers in greater efficiency.
View the clip

Jim McClure: Here I am sitting on Peter's right, but I'm going to disagree with him a little bit on what we can afford to do. And I'll put it a little bit on the other side of things. What, how can we afford not to meet this challenge? I participated several years ago in an energy forum in Atlanta sponsored by former President Carter. And we it was after the Kuwait, Desert Storm original battle in Kuwait when we threw Sadam out of Kuwait. And we went around the room at the end of that discussion and then the when Jimmy Carter said now how many people in this room believe that the war was all about oil and everybody in the room except myself said yes it was all about oil. Well without quarreling with that for a moment how much did we spend if indeed that was all about oil. How much did we spend on the military adventure, how much do we spend on a military posture, how much do we spend on the indirect costs to our economy because we didn't have an energy policy that avoided that impact from that section of the world. So I don't think we can afford to look at, at it from the standpoint of just it costs X number of dollars and we're operating in the red today because we're operating in the red today for two reasons. One is economic downturn and the others military expenditures. Both of which are driven by energy policy.
View the clip

Corbin McNeill: And if you looked at one of the results of natural gas expansion there are 13 liquid natural gas facilities under plans for licensing in North America today. They each of those implies, importing more natural gas to this country and making us, and displacing our current dependence on oil with dependence on natural gas and part of that is because we don't have the, we have opposition toward utilizing existing resources in the country valid or invalid, but just saying we have debates on that issue in the United States. There's a book coming out later this year that really looks a paradoxes that we deal with as a nation. You know with the fact that we want cleaner and cleaner water and cleaner and cleaner air, but at the same time we have tremendous increases in life span. The fact that we had objection to building the pipeline in Alaska because we were going to decimate the caribou herds, and the caribou herds have grown by something like 200% in the time that, that's been there. This issue of what happens when you have a nuclear accident is another one that has you know a great deal. And we really struggle as a nation to some extent with these things, it's not unnatural, but in fact its probably good for us to debate those kinds of issues as we go forward, but there is a lot of paradoxical outcomes that come from, from these debates.
View the clip

Michael Grainey: No, I agree with that. I think two things are a mistake. One is wasting energy, because then that puts pressure on making bad energy choices and secondly the replacing one form of imported dependence for another makes no sense either and I know the chairman of the Federal Reserve has called just for that and I think he, he's dead wrong on that. And we have had a history of federal support and subsidies of energy fossil fuels have received 100 years of federal support, nuclear 50 years. I think we need to make the choices for transition to cleaner resources that don't have as much environmental impacts or as much risk. And as part of that though during that transition I think energy efficiency is a fundamental element of a sound energy policy.
View the clip

Corbin McNeill: And the more you move toward at least natural gas and/or potentially hydrogen generation sources you're going to have to build pipelines and pipelines don't have quite as much impact, but I don't know of any pipeline in the country that's been built without some degree of resistance to it at some point in time.
View the clip

Mark Maher: Well, and what we're saying is there's a real lag with transmission because we're not building ahead of need. When those generators do want to come on, when that demand is there and, and gas fired generation can be built in a couple years we can't build a transmission.
View the clip

Ralph Cavanagh: Or dependent on utility contracts to do anything and so I think as, as the public tries to sort out how is this going to play out, what's going to happen the big utilities of the west -- the Idaho Powers, the PacificCorps', Pacific Gas and Electric when it emerges from bankruptcy in the wreckage of the California restructuring -- what decisions they make, what incentives they face and how they figure out to bring their customers into some of this, that's why this is really going to play out and happily everybody has a hometown utility and sometimes the hometown utility's policies are a whole lot easier to influence as you know Senator then a distant capitals on the east coast. And I think all of us would encourage folks who care about these issues to learn more about what the local utility's doing, what is it investing in energy efficiency, what efforts is it making to tap into those opportunities that Peter Johnson identified. What renewable energy options is it seeking. What's its long-term perspective on nuclear and fossil? These issues are being played out in every hometown utility in the west and that's where the real action will be for the foreseeable future on all of this.
View the clip

Peter Johnson: Joan, let me suggest let's go back to one of the things we saw in the beginning and that is the methane natural gas source here in the western you know in Wyoming starting there, but its suggested it's going to go all over the country potentially. I for one and I'd be interested in how others feel about that, I think that has merit because natural gas and the combined cycle gas turbines are right at the leading edge of what I consider to be right now the best base resources that we can build. So and, and as somebody mentioned earlier maybe Corbin that yeah we're not natural with natural gas we're particularly liquefied natural gas we're brining it in from all over the world so we're just as vulnerable as we are with oil. But I think that obviously there's going to be an EIS, an Environmental Impact Statement, that should be you know prepared for that entire you know idea of technology that we'll end up you know with recommendations to mitigate impacts on wildlife and habitat. Now whether it survives that test that's something again that I compliment Senator McClure. Thank goodness we have a National Environmental Policy Act so that we can critically look at all of the alternatives, but that one seems to have merit in the back of my mind particularly to supply they say in what 10 years of supply of natural gas for this country to serve the needs because right now I think the fastest growing base technology that's being invested in is gas.
View the clip

Corbin McNeill: Peter, I live in Wyoming and while I'm not involved in the politics of Wyoming I can tell you this is probably the most contentious issue in the state today. And right in the area, the Green River Basin that was highlighted in that article and it, you know if you over fly that area you have some sympathy for the people that say because you see the roads and the bare-scaped lands and everything else.
View the clip

Ralph Cavanagh: And the waterways.
View the clip

Corbin McNeill: Yeah my view is that each of these and this would be supportive of, of Ralph and that each of these issues needs to be addressed under the circumstances of you've got to restore the place to its natural habitat. That then incurs a cost that begins to find the right economic source. I, my view is that what many people call externalities right whether it's CO2 emission into the air we don't have ways to value those to charge the cost to the person that utilizes them and it is the inability to do that in my opinion and, and to have a definition that, that goes out 30 or 40 years in time that really causes us to have these just arguments about cost versus environmental impact and things of that nature. For instance if you were to say, All right, all those places have to be restored like you know in I think coal mining regions in the midwest when they have a pit mine they've got to restore it back to something similar to what it was.
View the clip

Ralph Cavanagh: But the . . . there are special places where we shouldn't drill.
View the clip

Corbin McNeill: I, I'm not going to argue about you know I don't want anybody drilling in the Grand Teton National Park and a fine wilderness area or things of that nature. I'm not, these are open public lands, Bureau of Land Management lands, I mean they're, they're not highly valued for by most people for other purposes.
View the clip