News From Terre Haute, Indiana

Local & Bistate

October 9, 2013

Like Vigo County, U.S. oil production at its highest in decades

TERRE HAUTE — Within the last five years, North American oil production, largely from hydraulic fracturing of shale, has eclipsed that of Saudia Arabia.

And in terms of global market share, shale development has propelled the United States into being the world’s largest natural gas producer, James Clad, former U.S. deputy assistant secretary of defense for Asia Pacific Affairs, said Wednesday in a phone interview with the Tribune-Star.

And despite shale development, the production of oil and natural gas from hydraulic fracturing or “fracking” could have a future impact on the coal-produced power in Indiana, he said.

Such is the case in Vigo County, where several oil fields have been started. Yet such production also raised a concern of potential fracking in Terre Haute.

Opponents say fracking harms the environment, results in methane leakage and water pollution.

The city of Terre Haute this year adopted a resolution that imposed a moratorium on fracking for oil or gas in the city. The stated goal was to ensure safe drinking water in outer areas of the city where people use wells.

Clad said such local control is important. “It is a good idea to have the local authorities interested and watching. I think that any time there is an enhanced monitoring and watchfulness, it is a good thing,” he said.

Clad on Tuesday addressed the Indianapolis chapter of the American Committee on Foreign Relations, a national nonprofit group dedicated to advancing dialogue on international events and foreign policy. In addition to his former government position he has been an international political risk consultant and a professor at Georgtown University.

Total American oil production this year struck its highest since 1989, Clad said, referring to an article he wrote earlier this week for The National Interest, a bimonthly foreign policy journal based in Washington, D.C.

“During last year alone, U.S. oil producers added an extra million barrels a day, the largest one-year increase in America history, an astonishing turnaround,” he said.

Clad said investments in coal power technologies, such as coal gasification, may not match that of shale. “The one fixed thing that is keeping this innovation moving and alive is the floor price. Energy since the late 1990s has been pretty consistently high, which gives investors the confidence to hazard their money” in new shale technologies.

Some improved production efficiencies in fracking include a closed-cycle hydraulic method, which recovers and reuses water, Clad said. Another advancement is the use of a fine particulate “that is pushed out at great force and is also recovered. I am not saying it is a panacea, but I think the technology is moving in the direction of less troubling environmental [impacts] and becoming more efficient as well.”

Duke Energy’s Edwardsport coal gasification plant, Clad said, “is certainly the country’s most efficient coal plant,” but the project went over budget, he said. Clad said that while the plant is cleaner than traditional coal facilities, it would not meet EPA’s new carbon rule for emissions for new coal power plants.

“The abundance of natural gas seems to be steadily marginalizing coal as power plant feedstock,” Clad said.

“Coal gasification costs apparently seem to be far more expensive than to continually refine and reduce the per unit cost of fracking,” Clad said. In addition, Clad said he thinks “the availability of natural gas is leading to the retirement of coal power stations,” he said.

Citing information from the U.S. Energy Information Agency, Clad said that 175 coal-powered plants are expected to come off line in the United States by 2016. “The country is now the largest producer of natural gas in the world and it is coming primarily from hydraulic fracturing,” he said.

Angeline Protogere, Duke Energy spokeswoman, said the newest EPA carbon rules apply only to new power facilities. Edwardsport is an operational plant and is not effected by the rule. The EPA has not yet established new carbon rules for existing coal power plants.

Should the EPA require companies to develop new technology to capture and store carbon, Duke’s Edwardsport plant has the space “for carbon capture,” Protogere said.

“We believe it is important to have a diversity of fuel sources and to maintain coal in the mix,” Protogere said. “It powers the vast majority of electricity that is produced in this state. We think it is important to find ways to burn it cleanly, because it is an abundant resource.”

The U.S. has more coal that any other nation, Protogere said, and Indiana has an estimated 17 billion tons of coal reserves that can be recovered using current technology. At current production rates, the Indiana Geological Survey estimates Indiana’s recoverable coal supply could last about 500 years.

“The challenge is to burn that fuel in a cleaner, more efficient way and that is why we built the plant at Edwardsport. It uses advanced technology to gasify coal, strip out pollutants and burn that cleaner gas to produce electricity,” Protogere said.

“It substantially reduces the environmental impact of burning coal to produce electric power,” she added.

Duke’s Edwardsport plant has the ability to burn both coal and natural gas, Protogere said.

Clad said not all new oil production is from fracking, as oil is also being produced from companies returning to former oil fields and extracting oil without fracking.

“It is a very fluid picture,” he said.

Reporter Howard Greninger can be reached at 812-231-4204 or howard.greninger@tribstar.com.

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