[DEBATE] : (Fwd) Sasol celebrated by loony, anti-eco right

[Patrick Bond]

(Tragically, Sasol is lined up to be SA's #1 Clean Development Mechanism 
beneficiary, so it can accumulate more profits, and hence innovate more 
coal/gas-oil, and hence fry us all quicker.)

The Coming Energy Abundance
How new technology can lower prices and reshape the global economy

Jon Basil Utley | September 22, 2008

As politicians, consumers, and manufacturers fret over the price of oil, 
there's good news on the energy front: Natural gas production is booming 
from "huge shale beds found throughout North America," reports The New 
York Times. The improving technology of underground horizontal drilling 
and fracturing has opened up trillions of cubic feet of gas that had 
formerly been thought unobtainable. And natural gas can also be used to 
run automobiles (after about $2,000 in conversion costs). These and 
other alternative methods of lowering fuel prices could dramatically 
reshape not only energy policy but the global economy.

The same report quotes an industry study estimating 842 trillion cubic 
feet (40 years supply) as now accessible. Drillable quantities exist in 
23 states, much of it relatively close to existing pipelines. The Times 
describes one field in Texas, the Barnett, where shale technology was 
first developed. Production has gone up tenfold since 2001 and it alone 
now produces 7 percent of the nation's gas supplies. A giant new field 
has been found in Pennsylvania in the energy-hungry Northeast. New York 
and Michigan also have large reserves. This year, a 9 percent increase 
in U.S. production has already brought about a 40 percent decline in the 
price since July.

Drilling into coal beds provides another very promising source of gas. 
Forbes recently described how this technology already accounts for 
nearly 10 percent of all U.S. gas production. It also reported on 
research into the use of methane hydrates, yet another potentially 
fabulous new source of gas in shallow, colder coastal waters. Natural 
gas is the fastest, cleanest and lowest capital cost way to generate 
electricity, compared to coal or nuclear. It would make competition in 
electricity production more viable and hence bring down prices.

Gas-to-electricity is not the only promising conversion. The Germans 
fought World War II mainly with oil produced from coal. South Africa, 
when under trade sanctions, produced 70 percent of its liquid fuel needs 
from coal. Billions of tons of coal are easily accessible in the United 
States. This is an area where Washington might spend sensible money 
instead of subsidizing will-o'-the-wisp wind power, or, worse, using 
heavily subsidized corn-based ethanol, which raises food prices and 
costs more in energy and subsidies to convert to gasoline than it produces.

The Washington Times recently described how coal conversion works, 
estimating the cost equivalent at $1.85 per gallon using coal priced at 
$30 per ton. The conversion rate is 1.25 barrels of oil per ton of coal. 
"Coal can produce gasoline, diesel and kerosene directly and its use in 
motor vehicles does not require addition of costly technologies of 
reforming or cracking," reports the article. The conversion process is 
cleaner than burning coal. Also it uses low grade, cheap coal and 
produces electricity as a byproduct. Other industry estimates place the 
cost of conversion as equal to $30-40 per barrel oil. See The Energy 
Blog for what is now generally known about the technology and costs.

An interesting facet of the 40 percent decline in natural gas prices is 
how the major media still parrots the extreme environmentalists' line 
that offshore drilling won't bring major drops in oil prices. A recent 
and representative U.S. News article quotes a Department of Energy 
report that "the impact [of offshore drilling] on global oil prices 
would be insignificant." That view, constantly repeated by anti-drilling 
interests, is actually from 2007 when oil prices were around $70 per 
barrel. Mainly, however, it is based upon the current time frame of 
snail-pace leasing and unending lawsuits (without mentioning them as a 
cause of delay). The fact is that ending the prohibition on offshore 
drilling, along with new laws to allow faster permitting and special 
courts to speed up hearing environmental suits, would have an immediate 
impact upon oil prices. That's because current prices are based on 
future anticipation. The same goes for ANWR in Alaska. The world oil 
shortage was caused by political reasons, not geological ones.

Extreme environmentalists will not be happy with the news about shale. 
They will try to block production just as they do with offshore oil 
drilling and nuclear electric power. Their mindset is that all new 
energy use contributes to global warming, so they don't want production 
of cheap energy. Many commercial interests support them. For example, 
farmers producing high cost ethanol don't want to see gasoline costs 
coming down. Beach front owners don't want to see oil platforms 
"polluting" their ocean views. Foreign oil producers want to see prices 
stay high. The shale fracturing does use much water and, already, there 
are questions about aquifers and lawsuits against drillers trying to 
control their access to water. Perhaps, in populated areas, new 
standards will be needed for "frac water" used in drilling.

Shale gas and coal deposits similar to those in the U.S. exist all over 
the world. Europeans are now searching for them to ease their dependence 
upon Russian gas. China is building the largest coal-liquefaction plant 
in the world. Nations with the ability to harvest these resources could 
become free of their dependence upon a few world oil exporters. Low 
energy costs could propel the world's economy back to faster growth and 
prosperity.

Jon Basil Utley is associate publisher of The American Conservative. He 
was a foreign correspondent for Knight Ridder newspapers and former 
associate editor of The Times of the Americas. For 17 years, he was a 
commentator for the Voice of America. In the 1980s, he owned and 
operated a small oil drilling partnership in Pennsylvania.