Friday, June 10, 2016

Energy

PRESIDENT'S CORNER

By Norris McDonald

I have worked on energy issues for 36 years and felt that I had a pretty good handle on the issue until recently.  Now don't get me wrong, energy has always been a complex issue area, but lately things have gone upside down on me. The biggest confounding variable in my energy thinking has been the mixed phenomenon of fracking and horizontal drilling.  This technology changed the entire American energy game.

Fracking has been around for decades but when it was combined with horizontal drilling, it revolutionized the recovery of natural gas and petroleum. About a million wells used fracking before it was seriously applied to horizontal drilling.  Now, instead of being dependent on Arab or OPEC nations for oil, America is exporting oil and natural gas.  Amazing.  I am still trying to digest the full implications of how this technology has revolutionized American energy policy.

I also suspect that although only one percent of our electricity is currently generated by oil, I think this will go up by several percentage points in the next decade.

Below is some interesting energy information from the U.S. Department of Energy Energy Information Administration.

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Americans use many types of energy

Pie chart showing: Total=97.7 quadrillion BTU; Petroleum 36%; Natural gas 29%; Coal 16%; Nuclear electic power 9%; Renewable energy 10%. Total Renewable 9.7 quadrillion BTU; Hydroelectric 25%; Biofuels 22%; Wood 22%; Wind 19%; Waste 5%; Geothermal 2%; Solar 6%. Note: Sum of components may not equal 100 percent becuse of independent rounding. Source: EIA, Monthly Energy Review, Table 1.3 and 10.1 (April 2016), preliminary data
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Petroleum, natural gas, coal, renewable energy, and nuclear electric power are primary sources of energy. Electricity is a secondary energy source that is generated from primary sources of energy.

U.S. Primary Energy Consumption by Source and Sector graphic. Petroleum 36%, Natural Gas 29%, Coal 16%, Renewable Energy 10%, Nuclear Electric Power 9%. For sector values see Tables 1.9, 2.1-2.5 in the Monthly Energy Review (April 2016)
Click to enlarge and see chart footnotes »
Energy sources are measured in different physical units: liquid fuels in barrels or gallons, natural gas in cubic feet, coal in short tons, and electricity in kilowatts and kilowatt hours. In the United States, British thermal units (Btu), a measure of heat energy, is commonly used for comparing different types of energy to each other. In 2015, total U.S. primary energy consumption was about 97.7 quadrillion (1015, or one thousand trillion) Btu.

In 2015, the shares of total primary energy consumption of the five energy-consuming sectors were:

  • Electric power—39%
  • Transportation—28%
  • Industrial—22%
  • Residential—7%
  • Commercial—4%

    • The electric power sector generates most of the electricity in the United States, and the other four sectors consume most of the electricity it generates.

    The pattern of fuel use varies widely by sector. For example, petroleum provides about 92% of the energy used for transportation, but only 1% of the energy used to generate electricity.

    Domestic energy production is equal to about 91% of U.S. energy consumption

    U.S. Primary energy production by major source in 2015 graphic showing natural gas = 28%; crude oil = 20%, coal = 18%; nuclear = 8%; biomass = 5%; natural gas plant liquids = 4%; hydroelectric 2%; geothermal, solar, wind = 2%
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    In 2015, energy produced in the United States was equal to about 89 quadrillion Btu or about 91% of U.S. energy consumption. The difference between production and consumption was mainly in net imports of petroleum.

    The three major fossil fuels—petroleum, natural gas, and coal—accounted for most of the nation's energy production in 2015:

    The mix of U.S. energy production changes


    The three major fossil fuels—petroleum, natural gas, and coal—have dominated the U.S. energy mix for more than 100 years. Several recent changes in U.S. energy production have occurred:

    • Coal production peaked in 2008 and trended down through 2015. Coal production in 2015 was about the same as production was in 1981. The primary reason for the general decline in coal production was the decrease in coal consumption for electricity generation.

    • Natural gas production was higher in 2015 than in any previous year. More efficient and cost-effective drilling and production techniques have resulted in increased production of natural gas from shale formations over the past ten years.

    • Crude oil production generally decreased each year between 1970 and 2008. In 2009, the trend reversed and production began to rise. More cost-effective drilling and production technologies helped to boost production, especially in Texas and North Dakota. In 2015, crude oil production was at nearly the same level as in 1972.
    • Natural gas plant liquids (NGPL) are hydrocarbon gas liquids that are extracted from natural gas before the natural gas is put into pipelines for transmission to consumers. NGPL production has increased along with increases in natural gas production. In 2015, NGPL production was about two times greater than it was in 2005.

    • Total renewable energy production and consumption both reached record highs of about 9.7 quadrillion Btu in 2015. Hydroelectric power production in 2015 was about 18% below the 50-year average, but increases in energy production from wind and solar helped to increase the overall energy production from renewable sources. Energy production from wind and solar were at record highs in 2015.

(EIA)
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