July 20, 2010
Ms. Toni Reale
Coastal Program Coordinator
Southern Alliance for Clean Energy
Charleston, SC 29412
Dear Ms. Reale,
I would like to thank you again for the opportunity to speak at the 26 June action event for “Hands Across the Sand” as well as follow-up on some of the points that I made during my speech, notably related to alternative solutions to offshore drilling. The information provided in this letter supersedes my comments about drilling alternatives on 26 June.
In order to have an intelligent discussion on alternative solutions to offshore drilling we must appreciate how much energy offshore drilling would provide, how long it would last with our current consumption patterns and how much it would cost to acquire that energy. For the purpose of this letter I will only address the supply of natural gas and petroleum on the Atlantic Outer Continental Shelf (AOCS) that stretches from central Florida to Maine.
As indicated in Table 1(a) of the 2005 Comprehensive Report to Congress, the Minerals Management Service estimates a technically recoverable endowment of 36.99 trillion cubic feet and 3.82 billion barrels of petroleum on the AOCS1. As such, the AOCS may contain 9% (natural gas) and 4% (petroleum) of unrealized fossil fuel assets on all US outer continental shelves. However, because 23.12 trillion cubic feet2 of natural gas and 7.1 billion barrels of petroleum3 were consumed in 2008, the estimates of unrealized assets for these fuels on the AOCS represent only a 19 month (natural gas) and <7 month (petroleum) supply of energy.
Despite the minor contribution that AOCS fuels would make to long-term US energy security, their extraction continues to be seriously deliberated. Thus, in order to truly evaluate these fuels in terms of what they would provide, we must first establish their energy potential in terms of British Thermal Units (BTUs). A cubic foot of natural gas contains 1027 BTUs4; thus, 36.99 trillion cubic feet of natural gas contains 3.8 x 1015 BTUs. Similarly, a barrel of petroleum contains 5,800,000 BTUs4; thus, 3.82 billion barrels of oil contains 2.2 x 1016 BTUs. It is worth emphasizing that although the estimated supply of petroleum on the AOCS would last only one third as long as the estimated supply of natural gas, the energy potential of AOCS petroleum is nearly six times greater than the energy potential of AOCS natural gas. Furthermore, at a commodity cost of $0.06 per cubic foot5 for natural gas and well-head cost of $94 per barrel of petroleum6, the total cost to harvest these AOCS fuels is estimated at $2.2 trillion (for 36.99 trillion cubic feet) and $359 billion (for 3.82 billion barrels), respectively. Thus, while the total cost to harvest these fuels is exorbitant, their cheap commodity costs per BTU ($0.00058 per BTU for natural gas, $0.000016 per BTU for petroleum) ‘fuels’ their continued use.
Having established the BTU potential and cost for harvesting these AOCS fuels, I will now present alternative solutions to drilling for these fuels on the AOCS. Using a standard approach, the feasibility of providing fuel equivalents through conservation alone is discussed first.
With respect to natural gas, 34% is consumed for residential and commercial heating and 29% for electricity generation7; thus, these two sectors (63% of total consumption) can be collectively evaluated in terms of energy efficiency improvements. Sixty-three percent of the estimated AOCS natural gas supply contains 2.4 x 1015 BTUs (7 x 108 MW at 3,412,000 BTU/MW) and would cost an estimated $1.4 trillion to harvest. For the same amount of money, $4000 could be invested in each of over 188 million homes and if each home reduced energy consumption by 2 MW each, the same amount of energy would be saved in one year (and annually if maintained) as provided by the lifetime supply of AOCS natural gas destined for heating buildings and making electricity.
Seventy-one percent of petroleum is consumed for transportation fuels, followed by industrial uses (23%) notably the petroleum refining industry7. Among transportation fuels, gasoline represents 42% of every barrel of refined petroleum, followed by diesel (23%), jet fuel (9%), heavy fuel oil (4%) and liquefied petroleum gas (4%)8. Using gasoline as an example, 1.4 x 1011 gallons were consumed in 2008 (374 million gallons per day x 365 days). At 42% of every barrel of refined petroleum, 7 x 1010 gallons of AOCS gasoline are estimated to exist. However, a sustained 10% reduction in 2008 gasoline consumption levels would save 1.4 x 1010 gallons annually; thus, after 5.2 years the same amount of gasoline would be saved as could be produced from the estimated lifetime supply of AOCS petroleum. Given that a 10% savings is nominally achieved by carpooling two days a month (two of 20 work days) and through modest changes in driving behavior and regular vehicle maintenance9, this savings is virtually free. However, for comparative purposes, at $231 billion (gasoline and diesel share of AOCS petroleum cost), about $900 could be spent on efficiency for each of the 256 million registered vehicles in the US10.
Because theoretical savings from efficiency can not be ensured, nor will they adequately supply a growing consumer population, additional solutions to offshore drilling are now discussed.
Provided that feedstock could be produced in sufficient quantify and in an environmentally responsible manner (i.e., minimal use of fossil fuel energy and without excessive increases in water consumption), bio-fuels (notably bio-diesel) provide great potential for reducing our reliance on non-renewable fossil fuel energy sources. Bio-diesel could offset and eventually replace natural gas and petroleum fuels directly (transportation) or indirectly by burning biodiesel to make steam for electricity and industrial operations. At a conservative estimate of $5/gallon of biodiesel commodity cost for facility construction, production and fuel acquisition11, a $146 billion investment in bio-diesel could generate as much energy (2.92 x 1010 gallons x 130,000 BTU/gal) for 1/15th the cost of harvesting the lifetime supply of 36.99 trillion cubic feet of AOCS natural gas. However, because the BTU supply is greater and commodity costs of AOCS petroleum are cheapter than natural gas, the production of 1.7 x 1011 gal of bio-diesel needed to equal the lifetime AOCS petroleum energy supply would be four times as expensive. Nonetheless, the renewable nature of bio-diesel production (fuels and long-term jobs) and reduced potential for environmental damage shine a favorable light on bio-diesel as a viable alternative to harvesting AOCS petroleum as well.
More familiar renewable energy sources like wind and solar could also offset the fossil fuel energy estimated to exist in the AOCS; however, energy production at such power plants is less reliable than at power plants where fuels are burned to make steam. Large-scale wind farms can be installed for $1 million per MW boilerplate capacity12; thus, 359 GW ($359 billion) or 2219 GW ($2.2 trillion) of wind generator capacity could be constructed the same investment price to harvest AOCS petroleum and natural gas, respectively. Assuming operation at full capacity for 10 hours per day during 25% of the days each year, this investment would generate enough wind energy in less than two years as the lifetime supply of AOCS fuels. At a cost of $3.9 million per MW boilerplate capacity for concentrated solar power (CSP)13, 92 GW ($359 billion) or 568 GW ($2.2 trillion) could be constructed the same investment price to harvest AOCS petroleum and natural gas, respectively. Assuming full capacity operation for 10 hours per day for 75% of days each year, CSP could produce as much energy as AOCS fossil fuels within five years.
In conclusion, viable renewable energy solutions using proven technologies can supply our future energy needs, several (and not all) of which are presented here. While these solutions are not infallible, their short-comings and logistical hurdles pale in comparison to the decisions that future generations will be burdened with if we continue along the path of unabated and wasteful consumption that has defined the last fifty years. I sincerely hope that you will share the calculations and projections that I have presented here with a diverse audience, so that sensible discussions on energy issues may ensue. As the Eco-Cents mantra states, smaller footprints are achievable with affordable steps, and I greatly appreciate your assistance in sharing that reality.
Michael Arendt, Owner and Centsible Sleuth
Cc: Marirose Pratt, Southern Environmental Law Center
Hamilton Davis, Coastal Conservation League