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.

EPA Carbon Rules Create Firestorm

Coal Fired Power Plant

Whether you believe the EPA’s carbon standards will have a positive impact on this country’s economy or a negative one, it’s hard to deny the environmental benefits they will cause.  The EPA announced earlier this month they were investing effort into reducing pollution from coal-fired power plants.  These rules are new, but the laws are not—due to political pressure, the Obama administration has chosen to create the rules and enforce the law.

The new carbon rules, which the EPA unveiled on Monday, June 2nd, are directly modeled after the success of the Regional Greenhouse Gas Initiative (RGGI), which is a market-based regulatory program in the North East to reduce greenhouse gas emissions from the power sector.  All New England states participate, along with New York, Delaware and Maryland.  RGGI, the first program of its kind in the United States, auctions carbon dioxide (CO2) allowances, also known as carbon credits.  A carbon credit is a term for a tradable certificate or permit representing the right to emit one ton of CO2 or other greenhouse gas equivalent to one ton of CO2Proceeds from auctions benefit energy efficiency programs in the region, for example, a great partner of ours, Efficiency Maine.

Last Friday, June 6th, was an important day for Maine’s growing green economy.  Over 200 people gathered with Senator Angus King to celebrate Maine’s Climate progress and the new EPA carbon standards.  Joining Senator King were Maine business and community leaders, the Deputy Administrator of the U.S. Environmental Protection Agency (EPA) Bob Perciasepe, Economist Charlie Colgan and others.

Senator King impressed upon attendees that, “Countless scientific reports have sounded the alarm on global warming, and right here in Maine we continue to see the impacts every day.  The facts are simply undeniable: climate change is real, it’s caused by humans, and it poses a significant threat to public health and to our state’s and the nation’s economic livelihood.”

Climate change is a severe threat to Maine’s economy, and as Charlie Colgan explained, the EPA regulations are important to Maine for myriad reasons; Colgan states, “[The proposed EPA regulations] would reduce Maine’s electricity price disadvantage compared with other parts of the U.S., enhancing our economy’s competitiveness […] Maine and New England are very well prepared to meet the new regulations quickly and efficiently because we helped design the model for the national policy […] climate change is a clear and present danger for Maine that needs to be addressed as quickly as possible.”  As the easternmost state, we’re particularly vulnerable to carbon pollution.  Bar Harbor, for example, has some of the highest recorded concentrations of ozone, due to pollution piggybacking on the jet stream.

It’s been a long time coming, but finally, climate change has been acknowledged by all political parties.  Even the Pentagon recognizes climate change as a national security threat, along with many businesses including General Electric, Wal-Mart, and Nike.  Ben and Jerry’s Ice cream are supporters of reducing greenhouse gases, as they, “know how messy things get when they melt.”  Gina McCarthy, Administrator of the EPA, says of the new standards, “This is not about disappearing polar bears or melting ice caps.  It’s about protecting our health and our homes.  This is about protecting local economies and jobs.”

An additional 565 gigatons of CO2 is an approximate 20% increase of current levels, which will result in a 2°C (3.6°F) rise in the average global temperature.  At that point, we’ll have significant and irreversible planetary damage.  Both ice caps will have melted, elevating the sea level and widespread drought will lead to famine, animal extinction and widespread human despair.  Alarmingly, publicly traded global energy companies currently report 2,795 gigatons of CO2 in their balance sheets—five times more than the disaster limit.Fossil Fuels Disaster Limin

Implementation of a national carbon credit system would effectively determine who wants to pay to pollute.  For example, General Motors has recently purchased $500,000.00 worth of carbon credits from the University of Illinois, and since 2010, they have reduced 7.7 million tons of carbon from entering the atmosphere.  They purchase the credits so they are no longer on the market and to minimize their carbon footprint as well.

In an effort to burn cleaner fuel and save money, we’ve seen a rush to convert to natural gas over the last year.  Due to limited pipeline availability and demand from Europe, prices and shortages are on the rise.  Though the U. S. does not currently export natural gas, the US Energy Department has begun issuing permits to American companies to export, starting in 2015.  Six out of twenty one applications to build port facilities in the US to export liquefied natural gas (LNG) have been approved.  Currently US natural gas prices are one-third the cost what they are in Europe.  The “landed” price for LNG in Europe will still be roughly 50% cheaper than Russian gas, improving their economic and political security.

There are a multitude of steps that can be taken to shrink your carbon footprint that won’t significantly impact your daily life, and a lot of them start with your HVAC system.  If you’re unable to completely replace your equipment, make sure the system you currently have in place is maintained by a professional.  In Energy Star’s guide to energy efficient heating and cooling, they express the importance of system maintenance.  They go on to say that the average household spends more than $2,200 annually on energy bills, and the typical commercial building spends 40% of its energy on HVAC, and the other 20% on lighting.

Sadly, we find that less than 1 out of 20 buildings maintain their systems to the minimum industry consensus standards.  Worse is that those non-compliant buildings usually perform less than 25% of the minimum preventive maintenance tasks, and resort to “belts and filters” approach.

Give the Experts a call at 1 (800) 649-4197.  We’ll keep your system running at industry standards, and help reduce your greenhouse emissions.

 

Dan

 

Dan Thayer, P. E.

President, Thayer Corporation