Power Hungry

by Robert Bryce

  World War II was a turning point. The massive production of airplanes, ships, and motor vehicles during the war years accelerated the demand for oil. And prolific oil fields in Texas and Oklahoma were ready and able to provide nearly all the gasoline and diesel fuel that consumers and industry wanted. Between 1945 and 1950, the number of cars on U.S. roads increased by 60 percent. Over the next ten years, the U.S. auto fleet grew by another 50 percent.1 The increasing mobility of the average American resulted in a huge increase in demand for oil. In 1949, coal accounted for about 37.4 percent of the U.S. primary energy market, with oil trailing close on its heels with a 37.1 percent share. But in 1950, oil hit the tipping point, surpassing coal as the biggest source of U.S. primary energy. And for the past sixty years, oil’s primacy has not been challenged. In fact, in 2008, oil’s share of the U.S. energy market was at the exact same level as it was back in 1950: 38.4 percent.2

  FIGURE 3 U.S. Primary Energy Consumption, by Source, 1825 to 2008

  Source: Energy Information Administration, Annual Energy Review 2008, Figure 5, “Primary Energy Consumption by Source, 1635–2008,” http://www.eia.doe.gov/emeu/aer/ep/ep_frame.html.

  Although oil has been the undisputed champion, the jockeying for second place has been ferocious. In 1958, natural gas sped past coal to become the second-largest source of primary energy in the United States. Gas kept its second-place status behind oil for nearly two decades, and by 1971, the United States was consuming nearly twice as much energy in the form of natural gas as it was in the form of coal.3 But Congress and federal regulators decided that the market couldn’t be trusted; thanks to their ham-handed interventions, coal rebounded in a big way. In 1986, coal overtook natural gas to reclaim second place in the U.S. primary energy market. Since then, coal and natural gas have been running neck and neck, with each claiming about 25 percent.

  The decades-long jousting for primacy among the various hydrocarbons provides more evidence of just how difficult it will be to replace them. As Vaclav Smil explained in his 2008 book, Global Catastrophes and Trends, there’s no reason to expect that the transition toward renewable sources such as solar and wind will be completed quickly. In fact, he says to expect the opposite:There is no urgency for an accelerated shift to a nonfossil fuel world: the supply of fossil fuels is adequate for generations to come; new energies are not qualitatively superior; and their production will not be substantially cheaper. The plea for an accelerated transition to nonfossil fuels results almost entirely from concerns about global climate change, but we still cannot quantify its magnitude and impact with high confidence.4

  Furthermore, the longer we use hydrocarbons, the more entrenched they become in our way of life—and the more energy we produce with hydrocarbons, the more energy we are able to produce. That may sound like an exaggeration, but it’s a statement that can easily be confirmed by looking back at the history of the coal business. The first railroads were built to haul coal, and the locomotives that hauled the coal also burned coal. As author Jeff Goodell wrote in his book Big Coal, the railroads were a key invention that led to more coal production because, “In effect, coal hauled itself.”5 Of course, the railroads were only part of the equation. By perfecting the steam engine, James Watt enabled British mines to produce coal more economically, because his engines pumped water and lifted coal out of the mines.6

  The idea that hydrocarbons beget more hydrocarbons can also be seen by looking at the Cardinal coal mine in western Kentucky. The mine produces more than 15,000 tons of coal per day. And the essential commodity that facilitates the mine’s amazing productivity is electricity. The massive machines that claw the coal from the earth run on electricity provided by power plants on the surface that burn coal. In fact, about 93 percent of Kentucky’s electricity is produced from coal.7 To paraphrase Goodell, at the Cardinal Mine, the coal, in effect, is mining itself.

  Hydrocarbons are begetting more hydrocarbons in the oil and gas business. Modern drilling rigs can bore holes that are five, six, or even eight miles long in the quest to tap new reservoirs of oil. And the energy they use to access that oil is ... oil. Diesel fuel has long been the fuel of choice for drilling rigs around the world. On offshore drilling rigs, the power is often supplied by diesel fuel. But in some cases, the power is provided by natural gas that the rig itself produces. Thus, on those offshore platforms, the natural gas is, in effect, mining itself.

  The transition away from oil, coal, and natural gas will be a decades-long process because the companies that produce those commodities are getting ever better at finding and exploiting them. The oil and gas industry provides a clear example of this. For about a century, analysts have been forecasting an end to the supply of petroleum. And they have consistently been proven wrong. Why? Because the companies that produce oil and gas continue to discover new ways to gain access to previously inaccessible resources.

  Though environmental groups and energy analysts eagerly publicize the inventiveness of entrepreneurs working to improve wind- and solar-power technology and other ways to harness alternative sources of energy, they seldom mention the ongoing innovations that are occurring on the hydrocarbon side of the ledger. And in doing so, they frequently forget the sheer size of the industry that is constantly searching for techniques that can get oil and gas out of the ground and do so faster and cheaper than before.

  In the United States, there are about 5,000 independent oil and gas companies, every one of which is continually spending money and testing new concepts that will wring yet more petroleum and natural gas out of their leases.8 In 2007 alone, those companies spent $226 billion drilling and equipping some 54,300 wells.9 And that doesn’t include the money spent on research and technology. All of the money spent on drilling and outfitting those wells, and the investment those companies have made in research and development, helps to assure that the installed fleet of machinery that supplies us with horsepower will continue to be fueled primarily by hydrocarbons.

  It was only six decades ago that the oil industry drilled its first offshore oil well—the Kermac 16—out of the sight of land.10 And that well was drilled in just 20 feet of water.11 Today, Anadarko Petroleum is producing natural gas at the Independence Hub in the Gulf of Mexico, where the water depth is 8,000 feet, and that one platform provides enough natural gas to supply about 5 million homes.12 Moreover, the companies that are drilling for oil around the world are continually pushing into ever-deeper waters. In 2003, Transocean, the world’s largest offshore drilling contractor, announced that it had drilled a well in 10,000 feet of water.13 Five years later, the firm announced that it had drilled a well off the coast of Qatar with a horizontal section that extended some 6.7 miles. The total measured depth of the well was 40,320 feet (7.6 miles), making it the longest extended-reach well ever drilled.14 But that record will almost certainly be eclipsed in the next few years, as Houston-based Parker Drilling has recently completed the design and construction of a rig that will be capable of extended-reach wells with lengths of up to 44,000 feet, or 8.3 miles.

  Conceiving of an 8-mile-long well boggles the mind, particularly when you learn that the Daisy Bradford No. 3, the well that started the flood of oil development in the East Texas Field, was only 3,500 feet deep.15 By drilling deeper and faster, and in locations that were previously thought to be uneconomic, the oil and gas industry has continually extended its life expectancy.

  In the natural gas sector, recent breakthroughs in shale gas technology have unlocked vast quantities of methane. Over the past five years, U.S. shale gas production has soared, thanks to techniques such as micro-seismic analysis, horizontal drilling, and enhanced well completion. The ever-increasing use of technology in the oil and gas business has resulted in huge improvements in drilling success rates. For instance, the success rate today for “wildcats” (wells drilled in frontier areas) is 50 percent or better. Three decades ago, that success rate was about 10 percent.16

  While the oil and gas industry continues to improve the techniqu
es that allow companies to drill wells deeper, faster, with greater precision, at ever-lower costs, the coal industry continues to show its resilience. Although oil passed coal as the most important source of U.S. energy back in 1950, coal hasn’t gone away. In fact, over the past few years, thanks to soaring global demand for electricity, coal has enjoyed a resurgence. Although we now live in the Age of Oil, the Age of Coal hasn’t yet passed. The reason for coal’s enduring popularity is that it provides huge quantities of the essential commodity of modernity: electricity.

  Over the past two decades, global electricity consumption has grown faster than any other type of energy use, and since 1990 electricity use has increased nearly three times as fast as oil consumption. In their thoughtful 2005 book, The Bottomless Well, Peter Huber and Mark Mills declared that “economic growth marches hand in hand with increased consumption of electricity—always, everywhere, without significant exception in the annals of modern industrial history.”17

  Electricity is the energy commodity that separates the developed countries from the rest. Countries that can provide cheap and reliable electric power to their citizens can grow their economies and create wealth. Those that can’t, can’t. The essentiality of electricity takes us back to coal. Love it or hate it, coal provides the cheapest option for electricity generation in dozens of countries around the world, and in heavily populated developing countries such as China, India, and Indonesia—all of which have large coal deposits—the need for increased capacity for the generation of electricity is acute.

  Nearly 130 years ago, Thomas Edison began electrifying the world by burning coal—and in the intervening century, not much has changed.

  CHAPTER 5

  Coal Hard Facts

  PHOTO 3 A cold day at 255–257 Pearl Street, New York City, January 15, 2009

  THE BEGINNING OF the modern world can be traced to a single address: 255–257 Pearl Street, New York City.

  Modern visitors to that address, located just a block or two west of the entrance to the tourist attractions at South Street Seaport, are unlikely to be impressed. The ground floor of the red brick high-rise building that now occupies the site is dominated by a Duane Reade drugstore. Aside from a bronze plaque mounted on the outside of the building, there’s nothing that tells visitors about the importance of that plot of ground. And yet, on September 4, 1882, Thomas Edison’s operations at 255–257 Pearl Street ignited a revolution that transformed the world. On that date, he and his team of workmen began producing commercial quantities of electricity at the world’s first central power station.

  Edison chose the Pearl Street site because it was affordable and close to office buildings full of likely customers for his product. He paid about $65,000 for the two buildings, then reinforced the interior of the fourstory structure at 257 Pearl with iron beams so it could hold the weight of six generators, each of which was named “Jumbo.” On the floor below the generators were the boilers. The smaller building at 255 Pearl was used for office space, storage, and sleeping quarters for the workers.1 The location of the two buildings proved ideal. Within months of starting his business, Edison had 203 customers who were using a total of 3,477 of his incandescent lights. By October 1883, having more than doubled his business, he had 508 customers who were using 10,164 lamps.2 Edison clearly understood the importance of the Pearl Street endeavor, later calling it “the biggest and most responsible thing I had ever undertaken.... Success meant world-wide adoption of our centralstation plan.”3

  Edison’s technological breakthroughs at Pearl Street—that list includes not only the incandescent bulb, but also the safety fuse, the light socket, the key switch, the generator, and insulated wiring—led to a tsunami of electrification that continues to this day. By 1890, just eight years after Edison launched the beginning of the new world, there were 1,000 central power stations in the United States, and new ones were being added at a frenzied pace.4

  In retrospect, it’s remarkable to note just how small and inefficient Edison’s Pearl Street station was. In 1882, Edison’s state-of-the-art machinery converted less than 2.5 percent of the heat energy in the coal into electricity.5 For comparison, some modern coal-fired power plants, using “ultra-supercritical” technology, can convert nearly half of the coal’s heat energy into electric power.6 As for its size, the Pearl Street plant was a midget by modern standards. Edison’s first power plant produced 600,000 watts, or the equivalent of about 804 horsepower.7 That’s only a bit more output than a 2009 Ferrari 599 GTB Fiorano, which comes screaming out of the factory with a 620-horsepower engine.8

  PHOTO 4 The Wizard of Menlo Park next to his original dynamo at Orange, New Jersey, 1906

  Source: Library of Congress, LC-USZ62-93698.

  Though the scale of what happened at 255–257 Pearl Street may seem downright puny, the conveniences and necessities of the modern world—lights, air conditioning, television, heart monitors, cell phones, iPods, and a panoply of other gizmos—were all made possible by the work that Edison pioneered at those two long-gone buildings near the southern tip of Manhattan. And though much of the world has undergone radical change since Edison began selling the juice from that power plant back in 1882, one crucial element of the electricity-generation business has not changed at all: coal.

  At Pearl Street, Edison’s Jumbo generators were driven by coal-fired boilers. Today, coal continues to play a central role in the global electric sector. In fact, no other fuel comes close. In 2006, coal provided 41 percent of the world’s total electricity, with the next biggest share of the market belonging to natural gas, with 20.1 percent. From Pearl Street to the present day, coal has always been an essential element in electricity production. And electricity means prosperity.

  FIGURE 4 Consumption Increases for Various Energy Types, 1990 to 2007

  Source: BP Statistical Review of World Energy 2008, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/downloads/pdf/statistical_review_of_world_energy_full_review_2008.pdf.

  The world’s thirst for prosperity has led to huge increases in electricity demand. Between 1990 and 2007, electricity generation jumped by 67.8 percent. During that same time frame, demand for oil increased by 25.3 percent and coal demand increased by 42.5 percent.9

  Despite the soaring demand for electricity—and the coal needed to produce it—there is a growing chorus of voices calling for an end to the use of coal. And while that may be a laudable goal, it raises an obvious question: If not coal, then what?

  There’s an old saw about the garbage business: Everybody wants their trash picked up, but nobody wants it put down. The same thing is true about the coal industry, the red-headed bastard stepchild of the modern energy business.

  Everybody wants electricity—and all of the conveniences of modern life that come with it. But few people, particularly in wealthy countries like the United States, want that juice to be manufactured from coal. There’s nothing new in that attitude. For the three centuries or so that humans have been using coal in significant quantities, the black fuel has always engendered an intense love-hate relationship. Coal heated people’s homes and fueled the factories of eighteenth- and nineteenth-century England, but it also made parts of the country, particularly the smog-ruined cities, nearly uninhabitable. In London in 1812, a combination of coal smoke and fog became so dense that, according to one report, “for the greater part of the day it was impossible to read or write at a window without artificial light. Persons in the streets could scarcely be seen in the forenoon at two yards distance.”10 In 1952, a killer smog in London caused more than 4,000 premature deaths.11 And the problems with coal-related pollution continue to this day, particularly in China. In Datong, known as the “City of Coal,” the air pollution on some winter days is so bad that “even during the daytime, people drive with their lights on.”12 Nor is it just Datong. In 2007, the World Bank reported that sixteen of the twenty most polluted cities in the world
are located in China, and much of that air pollution is due to the country’s heavy reliance on coal.13

  Coal is under attack. In September 2008, Al Gore encouraged activists to engage in civil disobedience to keep new coal-fired power plants that did not meet certain standards from being built. “If you’re a young person looking at the future of this planet and looking at what is being done right now, and not done, I believe we have reached the stage where it is time for civil disobedience to prevent the construction of new coal plants that do not have carbon capture and sequestration,” he said.14

  A few weeks after Gore’s declaration, anti-coal activists got a boost when a huge coal-ash holding pond failed at a power plant operated by the Tennessee Valley Authority. The resulting spill flooded more than 300 acres with coal ash contaminated with a variety of heavy metals, including arsenic, lead, barium, chromium, and manganese.15 In December 2008, James Hansen, the high-profile NASA scientist who is closely aligned with former vice president Al Gore on the issue of global warming, sent an open letter to President-Elect Barack Obama and his wife, Michelle, in which he called coal-fired power plants “factories of death.”16 Two months later, Hansen wrote an opinion piece for Britain’s Guardian newspaper in which he said that “coal is the single greatest threat to civilization and all life on our planet.”17

  FIGURE 5 Global Electricity Generation, by Fuel, 1973, 2006, and Projected to 2030

  Source: International Energy Agency, Key World Energy Statistics 2008, 24, and World Energy Outlook 2008, 507.