Buried deep in the earth are the remnants of earlier life forms—hundreds of millennia of rotting vegetation, decaying animals, and marine plankton. Today this “organic material” (so-called because it was once alive) has turned into rock that is laden with carbon, which can be burned for fuel. “Fossil fuels,” such as coal, oil, and natural gas, were formed some 286 to 360 million years ago in the Carboniferous period, which predated the dinosaurs and is part of the Paleozoic Era.1
The word “carboniferous” is rooted in carbon, the basis of fossil fuels. During the Carboniferous period the earth was populated by trees, large leafy plants, and ferns, and its water bodies were rich with algae, a common phytoplankton. As these plants and animals died, they sank to the bottom of the swamps and oceans, forming layers of spongy earth called peat. Over millions of years, silt, sand, and clay covered the peat; as the layers of minerals built up, the peat was compressed until the water had been completely squeezed out of it. Eventually, the organic material was buried deeper and deeper and turned into rock. Increasing heat and geologic pressure transformed some of the rock into fossil fuels. Today, man drills deeply into the earth to reach the geologic formations in which coal, oil, and natural gas are trapped.
Unlike “renewable” wind or solar power, fossil fuels are “nonrenewable,” or finite, energy supplies: once they are used, they are gone for good; their excavation and burning creates pollution, including greenhouse gases such as carbon dioxide (CO2). Nevertheless, fossil fuels remain our primary source of energy.
That wasn’t always the case. Until the late eighteenth century, the United States was an agrarian society, in which wind and water provided much of the power used to mill flour, saw wood, or irrigate crops. Burning wood or peat provided heat to people’s homes. But as the nation industrialized, those fuels were largely replaced by fossil fuels—coal replaced wood, and eventually petroleum eclipsed coal—to power the steam engines that led to the Industrial Revolution. In the nineteenth century, animal oils, especially whale oil, used to produce light in oil lamps, were replaced by petroleum.
Today, the US Energy Information Administration (EIA) estimates that 25 percent of America’s energy comes from petroleum, 22 percent from coal, and 22 percent from natural gas. Nuclear power accounts for 8.4 percent, and “renewable” energy—such as wind, solar, geothermal, or hydropower—supplies 8 percent.2
Coal is a combustible, brown or black sedimentary rock made of carbon, hydrogen, oxygen, nitrogen, and sulfur. Plentiful and cheap, it is the most abundant fossil fuel produced in the United States.3 Coal is used around the world to fuel power plants and is an important resource for the iron and steel industries. But it is also highly polluting. According to the Union of Concerned Scientists, coal plants are the nation’s primary source of CO2, the leading greenhouse gas. A typical coal plant generates 3.5 million tons of CO2 per year; in 2011, utility coal plants in the United States emitted 1.7 billion tons of CO2.4
There are four major types of coal: anthracite, bituminous, sub-bituminous, and lignite. They are classified by the type and amount of carbon they contain, and by the amount of heat energy they produce:
• Anthracite is a scarce coal found only in Pennsylvania. It is the hardest coal, and has a high carbon content (86–97 percent) that provides more energy than other coals.
• Bituminous is the most abundant type of coal, containing 45–86 percent carbon, and is between 100 and 300 million years old. It is found in West Virginia, Kentucky, and Pennsylvania.
• Sub-bituminous coal is the second-most abundant type of coal in the United States. It contains 35–45 percent carbon, is over 100 million years old, and is mined in Wyoming.
• Lignite is the youngest and softest coal, and tends to be high in moisture. It contains only 25–35 percent carbon, but is high in hydrogen and oxygen. It is mainly used by power plants and is found in Texas and North Dakota.
Coal has been used as an energy source around the world for centuries. The Chinese, who thought coal was a stone that could burn, used it to smelt copper some 3,000 years ago. Coal is mined by various methods, including drilling of vertical and horizontal shafts; strip-mining, in which enormous shovels excavate surface layers of rock and earth to reveal coal seams; and mountaintop coal mining, in which entire mountaintops are removed, exposing coal deposits, while the waste rock is dumped into valleys and streams.
Coal is a cheap and plentiful fuel that has provided employment for millions of people around the world, and yet the carbon dioxide it produces is the most significant greenhouse gas, and it wafts ash into the air. This air pollution is environmentally destructive, and, according to the National Research Council, kills more than 10,000 Americans every year.5
Nevertheless, coal remains popular: even in this day of global networks and hybrid cars, coal provides two-fifths of the world’s electricity.6 In the last decade, the world’s electricity production has doubled, and two-thirds of that increase has been powered by coal. Indeed, if this growth rate continues, coal could supplant oil as the world’s primary energy source by 2017.7
The main drivers of increased coal use have been the surging economies of China and India, and steady demand from Western Europe. In 2001, according to the IEA, China’s demand for coal was roughly equivalent to 60 million tons of oil.8 By 2011, that demand had tripled, and China surpassed the United States as the largest energy producer in the world. (China’s domestic coal industry produces more primary energy than oil from the Middle East does.) India’s demand for coal is also booming. By 2017, the IEA estimates that India could overtake the United States as the world’s second-largest user of coal.9
Even green-conscious Western Europe is burning more coal, although it is considered the most polluting form of energy. Coal is cheaper than natural gas in Europe, whose domestic gas industries lag far behind America’s. Countries like Germany are pushing renewable energy, such as solar and wind power, which has eroded the creditworthiness of conventional utilities. US coal exports to European countries like Britain and Germany were up 26 percent in 2012 over 2011.10 Coal consumption in economically battered Italy and Spain has also jumped, despite efforts to capitalize on Italy’s wind and Spain’s sunshine.
Thanks to the shale reserves tapped by hydrofracking, America is moving in the opposite direction. In 1988, coal provided 60 percent of US power; by 2012 that number had been cut in half, and coal generated only a third of US electricity—about the same amount as natural gas.11 This dramatic shift was due in part to high costs and stricter emissions standards. Modern coal-fired plants take twice as long to build and are more expensive to run than gas-fired plants. And gas-fired plants meet environmental regulations far better than coal-fired plants.
Perhaps more important, the White House has been taking concrete steps to limit climate change at just the time that fracking has made shale gas affordable. The Obama administration touts itself as “pro energy,”12 and has put rules in place to govern emissions of mercury and other airborne toxins by 2015. The Environmental Protection Agency (EPA) has proposed new limits on carbon emissions that would effectively ban new coal-fired plants after 2013 unless they are equipped with carbon capture and storage (or CCS) technology.13 According to Navigant, a consulting group, expensive regulations and cheap gas could result in one-sixth of all coal-fired power plants in the United States—representing 50 gigawatts worth of power—being shuttered by 2017.14 (A watt is a unit of power, equivalent to one joule per second, or 3.412 BTU/h. A gigawatt is equivalent to one billion watts.)
Oil is a fossil fuel that was created more than 300 million years ago, when diatoms died and decomposed on the sea floor. Diatoms are tiny sea creatures that convert sunlight directly into stored energy. After falling to the bottom of the ocean, they were buried under sediment and rock; the rock compressed the diatoms, trapping the energy in their pinhead-sized bodies. Subjected to great heat and pressure, the carbon eventually turned into liquid hydrocarbons (an organic chemical compound of hydrogen and carbon) that is called “crude oil.”
The word “petroleum” means “oil from the earth,” or “rock oil.” As the earth’s geology shifted over millennia, oil and natural gas were trapped in underground pockets. In regions where the rock is porous, oil can be trapped in the rock itself. Man has used oil for approximately 5,500 years to produce heat and power and for many other purposes.15 The ancient Sumerians, Assyrians, and Babylonians used crude oil and “pitch” (what we call asphalt) from a natural seep at what is now Hit, an Iraqi city on the Euphrates River; oil was also used to build ancient Babylon. In North America, Native Americans used oil to treat illness, to waterproof canoes, and to protect themselves from frostbite. As America grew, petroleum was used to fuel lamps for light. When whale oil became expensive, petroleum oil began to supplant it as a fuel. At the time, most oil was made by distilling coal into a liquid, or was skimmed off of lakes, when petroleum leaked to the surface from underwater seeps.16
On August 27, 1859, Edwin L. Drake struck oil in Titusville, Pennsylvania, setting off what has become known as “the Oil Age.” Drake pumped oil from underground into wooden barrels. As the oil business grew in the nineteenth century, producers emulated distillers, who transported whiskey in 40-gallon barrels; oilmen copied the idea, adding two gallons to account for spillage. This was significant because it marked the first time purchasers knew exactly how much oil they were acquiring. Although oil is no longer transported in barrels, it is still measured in “barrels” (bbls), or the equivalent of 42 gallons.17
Today, oil is the world’s most popular fuel, representing 33.1 percent of global energy use.18 The EIA predicts global demand will jump from 98 million barrels a day in 2020 to 112 million in 2035.19 Nevertheless, the use of other fuels is also surging, and oil has been losing market share. According to British Petroleum (BP), oil’s market share in 2012 was at its lowest point since the company began compiling data in 1965.20
To access oil, energy companies drill deep into the earth, then pump the oil from deposits to the surface. It is sent to refineries by pipeline, ship, or barge. Crude oil is considered “sweet” when it contains a small amount of sulfur, and “sour” when it contains a lot of sulfur. Crude is further classified as “light,” which flows easily like water, or “heavy,” which is thick and viscous like tar.21
Oil refineries break down hydrocarbons into various commodities, known as “refined products,” such as gasoline, diesel fuel, aviation fuel, heating oil, kerosene, asphalt, lubricants, propane, and the like. Oil can be converted into naphtha, which is the “feedstock,” or basis, for high-octane gasoline or lighter fluid. Oil is used to produce many other products, including fertilizers and plastics. As it is processed, oil expands (much like popcorn growing bigger as it pops). A 42-gallon barrel of crude oil generally produces 45 gallons of petroleum products.22 The vast majority—about 70 percent—of US petroleum consumption is used for transportation.23
Gasoline—commonly referred to as “gas” in the United States (and “petrol” in Great Britain), but not to be confused with natural gas—is a fuel made from petroleum. At US refineries, gasoline is the main product produced from crude oil. In 2011, Americans used 367 million gallons of gasoline per day, the equivalent of more than a gallon of gas per day for every citizen.24 One 42-gallon barrel of refined crude oil will produce about 19 gallons of gasoline. Most gas is used by cars and light trucks, but it also fuels boats, farm equipment, and recreational vehicles.
Natural gas is a pure form of fossil fuel composed of methane, or CH4, a chemical compound made up of one carbon atom and four hydrogen atoms. Natural gas is lighter than air, has no natural odor (we mix it with mercaptan, a chemical with a strong sulfur odor, as a warning of leakage), is often found near petroleum deposits deep underground, and is highly flammable.
The first discoveries of natural gas were made in what is now Iran, 6,000 to 2,000 years BCE (Before the Common Era). Natural gas seeps there were probably ignited by lightning, and fueled the “eternal fires” of the fire-worshipping ancient Persians.25
To find gas deposits today, geologists study seismic surveys—using echoes sent by a vibrating pad under a specially built truck—to identify natural gas deposits deep below ground. At a promising site, a drill rig bores test wells. Once a productive deposit is found, gas is pumped to the surface and is sent to storage tanks by pipeline.
Once stored, natural gas is measured by volume: a cubic foot (cf) of gas is equivalent to the amount of gas that fills a one cubic foot volume, under set conditions of temperature and pressure. A “therm” is equivalent to 100 cf; and “mcf” is equivalent to 1,000 cf. To help compare fuels, energy content is measured in BTUs, or British Thermal Units. One BTU is the amount of heat required to raise one pound of water (about a pint) one degree Fahrenheit at its point of maximum density. One cubic foot of natural gas releases approximately 1,000 BTUs of heat energy (and one barrel of oil equals 6,000 cubic feet of natural gas).26
Natural gas requires minimal processing. “Wet” natural gas contains liquid hydrocarbons and nonhydrocarbon gases, such as butane and propane, which are known as byproducts. Once the byproducts are removed, the methane is classified as “dry”—or “consumer grade”—natural gas, and is widely distributed.27 The production and use of natural gas creates fewer emissions than oil and coal.
Conventional natural gas wells tap into large free-flowing reservoirs of trapped gas that can be accessed by a single, vertical well. In “shale gas” and “tight gas” fields, the gas is trapped in tiny bubbles embedded in dense (or tight) rock formations that are accessed by a combination of vertical and horizontal wells and hydrofracking, as we will see in chapter 2.28
In the early days of US energy production, natural gas was considered an unwanted byproduct of oil extraction. (In many parts of the world natural gas is still “flared off,” because it requires too much work to collect, transport, and use.) After an enormous gas field was found in the Texas Panhandle in 1918, it was used to manufacture carbon black, which in turn was used to make car tires. Eventually, Americans used natural gas to heat their homes and to fuel power plants.29 But not until the last decade did it become as important as coal, oil, or nuclear power. Today, natural gas is used for generating electricity (36 percent) and for industrial (28 percent), residential (16 percent), and commercial use (11 percent). The remaining 9 percent is used by energy industry operations, pipelines, and vehicle fuel.30 Gas is important for manufacturing steel, glass, paper, clothing, and many other goods, and provides raw material for plastics, paints, fertilizer, dyes, medicines, and explosives. It can be converted into ethane, a colorless and odorless gas that is important to the chemical industry. Natural gas provides heat for over half of America’s homes and commercial establishments, and it powers stoves, water heaters, clothes driers, and other appliances.
A series of energy-related crises have made natural gas increasingly popular. Coal-fired power plants have lost favor because of their sooty emissions. Deep-water oil exploration faced a setback with the blowout of a BP oil well in the Gulf of Mexico in 2010, which set off the largest oil spill in US history. And an earthquake and tsunami in Japan in 2011 raised questions about the safety of nuclear plants (nuclear plants are also much more expensive to build, operate, and maintain than equivalent natural gas facilities).
Nevertheless, traditional concerns about natural gas included limited supplies and volatile prices—until fracking, that is, which has significantly increased known gas reserves and lowered prices. In July 2008 shale gas cost $13.68 per million BTUs (MBTU) at Henry Hub, a concentration of pipelines in Louisiana that serves as the main pricing point for American natural gas.31 Thanks to the rapid proliferation of hydrofracked wells, natural gas supplies ballooned at just the moment that the economy—and demand—slacked off, sending gas prices plummeting. Between 2008 and 2012, gas prices fell over 60 percent.32 After tumbling below $2 per MBTU in 2012, prices doubled to $4.04 in mid-2013 and are expected to rise slightly higher in 2014.33
A number of other factors—including ready capital, a trained workforce, greater access to pipelines by third parties, the ability to hedge the risks of gas exploration, and a robust energy market—helped to accelerate gas’s acceptance. Utilities saw it as a stable, affordable, relatively clean source of power. In 2008, natural gas amounted to about 20 percent of the nation’s energy production; by 2012 it amounted to over 30 percent, a number that is likely to keep growing. The EIA forecasts that domestic natural gas production will grow 44 percent—from 23 trillion cubic feet (tcf) to 33.1 tcf—between 2011 and 2040.34
Natural gas emits less CO2 than other fossil fuels and requires less processing (or refining, to remove the other elements) than oil, and so it has been promoted as a “bridge fuel”—a cleaner-burning alternative to oil and coal that will ease the transition to renewable energy supplies such as wind, solar, and hydropower.35
It will take decades and billions of dollars to scale-up the capacity of renewable energy plants. In the meantime, natural gas advocates—such as the Texas energy billionaire T. Boone Pickens—believe it is a “second best” solution, one that will reduce greenhouse gas emissions in the near term while delivering energy independence from petro states.36
Yet some environmentalists deride natural gas as a “bridge to nowhere.”37 Humans have already pumped so much carbon into the air, skeptics say, that switching to natural gas will only cut the global warming effect by 20 percent over 100 years. “There are lots of reasons to like natural gas, but climate change isn’t one of them,” said climatologist Ken Caldeira and former Microsoft chief technology officer Nathan Myhrvold, who together published a critical study of the gas boom in Environmental Review Letters. “It’s worthless for [fighting] climate change.”38 Nonetheless, energy executives tout so-called unconventional fuels, many of which are extracted by hydrofracking.
Unconventional gas refers to shale gas, coal bed methane, subterranean coal gasification, or tight gas.
Unconventional oil is oil acquired by means other than drilling a traditional borehole in the ground. It includes oil shale, oil sands (tar sands), heavy oil, oil synthetically produced from coal or natural gas, natural gas liquids, and lease condensate (a liquid byproduct of natural gas extraction at the well, or “lease,” site).39
Thanks to horizontal drilling and hydrofracking, shale oil production has grown to provide 29 percent of total crude oil production the United States, and 40 percent of total US natural gas production, according to the US government’s Energy Information Administration (EIA).40
In a 2013 study of 41 countries, the EIA raised its estimates of global shale oil and shale gas reserves. According to the new report, 10 percent (or some 345 billion barrels) of the world’s recoverable crude oil resources, and 32 percent (or 7,299 trillion cubic feet) of global natural gas resources, are found in shale formations.41 (These estimates remain uncertain until more data become available.) More than half of the shale oil resources outside the United States are concentrated in four countries: Russia, China, Argentina, and Libya. More than half of the shale gas outside of the United States is found in China, Argentina, Algeria, Canada, and Mexico. For now, the United States and Canada are the only nations producing shale oil and gas in commercial quantities.42
Unconventional fuels tend to be more difficult to reach, more expensive to produce, and more polluting than conventional fossil fuels. These factors have made them a target of environmentalists. But as conventional supplies become depleted, unconventional fuels will prove increasingly important.
Shale gas is natural gas that is trapped in minute deposits embedded in shale rock formations (much the way small air pockets form in a loaf of bread as it bakes). Shales are fine-grained sedimentary rocks. There are different kinds of shale, but the most common is “black shale,” which formed in deep water and without any form of oxygen present. Shale gas is usually accessed through a combination of vertical and horizontal drilling, and hydrofracking.43
About 33,000 natural gas wells are drilled in the United States annually, and today nine out of ten of them use fracking.44
The recent boom in shale gas has been phenomenal. As recently as 2000, shale gas provided only 1 percent of the natural gas produced in America. By 2010 it was over 20 percent, and by 2035 the EIA estimates that 46 percent of US natural gas will come from shale gas.45
Today, “Technically recoverable unconventional gas”—which refers to shale gas, tight sands, and coal bed methane—account for 60 percent of America’s onshore reserves. According to the EIA, these resources could supply the nation for the next 90 years. (Other estimates predict the supply could last even longer.)46
Tight gas is natural gas that is trapped in areas of low-porosity silt and sand. Tight gas has less than 10 percent porosity and less than 0.1 millidarcy of permeability.
Porosity is the proportion of void space to the total volume of rock. While beach sand has a porosity of about 50 percent, tight gas is trapped in pores up to 20,000 times narrower than a human hair.
Permeability is the ability of fluid to move through pores. A person can blow air through rock with 1,000 millidarcies permeability.47
In certain regions, like the Rocky Mountains, natural gas is mixed with elevated levels of sulfur, which creates the corrosive gas H2S, or hydrogen sulfide. Known as sour gas, H2S requires extra processing to purify it.
These are heavy, viscous crude deposits that cannot be produced and refined by conventional methods. Heavy crude oils usually contain high concentrations of sulfur and a number of metals, particularly nickel and vanadium. These properties make them difficult to pump out of the ground or through a pipeline and interfere with refining. These properties also create serious environmental challenges.48 The best-known reserve of shale oils is Venezuela’s Orinoco heavy oil belt, which contains an estimated 1.2 trillion barrels.
This consists of “tight” (dense) formations of sedimentary rock that are not permeable enough to allow the pumping of the oil trapped inside. This oil is in the form of kerogen, a solid mixture of organic compounds. Extracting oil from kerogen is difficult and expensive, and to date oil shale deposits have not been widely developed. But there is an estimated 2.8 to 3.3 trillion barrels of oil in oil shale deposits worldwide, 62 percent of which are in the United States. Aside from hydrofracking, technology for extracting such oil includes igniting the shale underground, which allows light oil to migrate out of the kerogen to pumping stations.49
Also known as “oil sands,” these are deposits of heavy oil so viscous they do not flow. Tar sands are extracted by injecting hot steam into deposits, which heats the sands and makes the tar more liquid so that it can be pumped out. The process requires large amounts of water and energy, is environmentally destructive, and only makes economic sense when oil prices are high. The world’s largest tar sands deposits are in the Athabasca region of Alberta, Canada. If approved, the controversial Keystone XL Pipeline would transport oil from the Athabascan fields across the United States to terminals on the Gulf Coast.50
This is a natural gas extracted from coal beds. It is usually produced by drilling a borehole into a coal seam, reducing the pressure of water flowing through the seam, and allowing the gas held in the seam to flow up the borehole to the surface.
This is a process used to produce “syngas” (synthesis gas), a fuel mixture of hydrogen, carbon monoxide, and carbon dioxide. Originally used in the eighteenth century to create heat and light, modern gasification plants supply fuel for a wide range of uses. One advantage of gasification is that carbon dioxide (the leading greenhouse gas) and other pollutants can be removed from the gas before it is burned. Yet gasification remains more expensive than coal itself, and while it is used for industrial purposes it has not been widely used as a fuel source yet. Research is ongoing to develop gasification plants that will capture and store carbon dioxide, a process that will raise capital costs but reduce climate-changing emissions.51
Synthetic fuels, or “synfuels,” are liquid fuels converted from coal, natural gas, oil shale, or biomass (plant-based fuels, such as wood, sugarcane, or algae). Conversion of coal to synthetic fuel was pioneered in Germany a century ago, and the Nazis greatly expanded the use of synthetic conversion to produce aviation fuel and oil during World War II. There are several methods, primarily the Bergius process, developed in 1913, in which coal is liquefied by mixing it with hydrogen gas and heating it (hydrogenation); the coal is mixed with oil; and catalyst is added to the mixture.