Natural Gas: A Fool’s Gold Rush?

riverside panning gold rush

As the availability of natural gas becomes more widespread, a Fool’s Gold rush has been created.  Thayer Corporation has been and will remain fuel, technology and brand neutral as we offer some considerations when determining if switching to natural gas is in your best interest.

The supply of natural gas in the United States has increased dramatically over the last decade, largely due to the use of fracking technology to improve yields from gas deposits embedded in shale rock formations.  Many politicians hail cheap and plentiful energy supplies as the key to a healthy economy.  Our political stability is strengthened by relying less upon imported oil.  The environmental impact of fracking, however, remains the topic of heated political debate.  Millions of gallons of clean ground water are used to fracture (frack) the shale to harvest gas.  The water becomes severely contaminated and must be carefully sequestered below ground to prevent health and safety risks, including respiratory illnesses.  It’s impossible to prevent some of the contaminated water from seeping into clean ground water supplies and volatizing into the air above ground.

Last week, the largest independent study to investigate the health impact of fracking was released by Environmental Health Perspectives, which does not establish definite causation between health problems and fracking, but does report that the effects suffered by residents in 1 kilometer proximity of fracking sites: hair loss, persistent rashes, sore throats, respiratory illnesses and nose bleeds, among other ailments, is more prevalent than in households further than 2 kilometers from natural gas wells. Several multimillion dollar lawsuits have been settled, and surely more will follow.  Chemical manufacturers are pushing for major legislative reform to reduce State by State rules for the use of their products. Opponents argue the proposal undermines states’ rights and weaken regulations.  The environmental impacts associated with the use of fracking to harvest natural gas will likely escalate gas costs in the future.

There are more powerful forces likely to cause the price of natural gas to spike.  As Russia bullies their European neighbors, the EU desperately wants to import natural gas from the US in the form of liquefied gas.  Even with the costs of liquidation and shipping, estimates are that American gas can be sold in Europe for roughly half the cost of Russian gas (read more here).  The export market for gas would explode if the house approved permits for coastal export loading sites.  Opposition cuts across party lines as those opposed try to artificially keep domestic prices low.  If widespread export is permitted the domestic price of gas will escalate.

Regionally, the price of gas has risen sharply as demand has exceeded supply. New gas pipeline mains and branches are being built at a breakneck pace.  Gas suppliers are competing for new connections in order to grab market share.  Once they connect a new customer, they almost always have the customer locked in regardless of gas prices. Ironically, major pipelines coming from south are severely undersized for present and future needs of New England.  According to Maine Natural Gas, new requests for service from existing main lines will not be installed until 2015.  Governors from several northeastern states are collaborating on the long term solution to install larger pipelines.  Success will require political unity and lots of negotiation with thousands of individual landowners to create a corridor through heavily populated areas.  The cost of land easements and the pipeline itself will have to be borne by gas users in the northeast.

The cost of heating with any fuel is the price of the fuel multiplied by the efficiency of its use.  In the case of gas boilers and heaters, efficiency is a combination of combustion, thermodynamic and operational efficiency.  Advertised efficiencies of 80-98 percent almost always refer to combustion alone.  How efficiently the boiler captures the heat from combustion and transfers it to air or water is the thermodynamic efficiency.  Boiler inefficiencies translate to heat being wasted through the chimney or vent.  The configuration and effectiveness of the controls result in the operational efficiency.  Smart thermostats, reset controllers and zone controllers are some enhancements that improve operational efficiency.  A wide variety of factors play a part in determining overall system efficiency.

Lately, in the rush to fill seats on the natural gas bandwagon, there have been many conversion burners sold and installed. Gas companies often tout this approach since this method provides the smallest upfront cost.  Although conversion burners can work effectively, they rarely operate optimally when the three types of efficiency factors are considered.  The burners are not matched precisely to the boiler, creating challenges in operation and long term reliability.  Thayer and other service providers are seeing many very poor installations, upset customers and premature failure of boilers and furnaces.  Compare this to a total system replacement with all components being designed, tested, certified and optimized and the difference in cost of operation and ownership can be (and typically are) dramatic.  The lower cost conversion burner on an existing boiler might have an overall efficiency of approximately 50% compared to a new efficient and optimized boiler at 90%. The magnitude of the differences is typical. The higher installed cost of boiler replacements, however, is a barrier for many.  The higher installed cost, however, is a barrier for many.

Considering all of the factors of fuel choice, along with the decision whether to convert or replace equipment, professional design and installation provides more than a “one size fits all” approach.  Unfortunately, most information being pushed to consumers is by the gas companies and manufacturers who have vested interest in objectivity.

Don’t settle for Fool’s Gold.  Hire a professional that has the experience to guide you through the maze of choices and considerations for gas, oil, heat pumps, wood pellets, chips, etc.  Call one of our engineers to see if your project is suitable.