Crude

by Sonia Shah

  These inroads into oil markets filled environmentalists with hope for a carbon-free future. The oil industry may well collapse, some said. “The commercial implications of a transition to hydrogen as the world’s major energy currency will be staggering,” wrote the Worldwatch Institute in 2001, “putting the $2 trillion energy industry through its greatest tumult since the early days of Standard Oil and Rockefeller.”24

  The hydrogen fuel-cell car promised a future full of zooming vehicles but no more smog, no more noisy highways, and no more carbon-spewing tailpipes. Filling stations would provide a jet of hydrogen to feed the fuel-cells, their floors stained not with black grease but distilled water.

  Hydrogen-powered cars would be many times more efficient than internal-combustion-engine cars, too. Only about 16 percent of the energy in gasoline can be put to work turning the wheels of an internal-combustion-engine car. The newest fuel-cell cars could convert 42 percent of the hydrogen-oxygen attraction into wheel-turning power.25

  But where would all the hydrogen come from? Misperceptions abounded. “We can now look forward to running our automobiles on water,” enthused a California congressperson.26 Not exactly. Hydrogen fuel-cell cars might zip around dripping pure water, but the hydrogen-extracting factories in the distance could be just as dirty as the stinkiest coal-burning power plant.

  The oil and petrochemicals industry has been producing hydrogen for decades, extracting it from petroleum to make fertilizers, diesel, and other products. In 1997, Chrysler unveiled its own hydrogen fuel-cell car, one that extracted hydrogen from gasoline.27 Instead of being burned, the gasoline would be vaporized and infused with steam inside the car, “reforming” it into carbon dioxide and hydrogen. Then-President Bill Clinton hailed the gasoline-to-hydrogen technology as a “dramatic breakthrough.” The oil companies could keep producing and refining oil and piping it to gas stations. The pump at the filling station would still pour gasoline into cars. The only difference would be what happened to the gasoline once it got into the car.28

  The whole complicated procedure was a messy one that would emit over three-quarters as much carbon dioxide as a regular gasoline combustion engine, a far cry from the zero-emissions transport that environmentalists envisioned, or even the interim natural-gas-to-hydrogen system many consider both clean and practical.29 In addition, it would require just as much if not more gasoline consumption. “Though a more expensive and slightly dirtier route than the others that have been proposed,” commented the Economist drily, “this could make sense in an America wedded to keeping petrol cheaper than bottled water.”30

  In 2001, Toyota, Nissan, and Renault announced their commitment to gasoline-to-hydrogen cars. BP and Shell opened hydrogen divisions in their companies.31 Shell and General Motors announced they’d invest up to $1 billion to develop a “hydrogen economy” in 2003. President Bush earmarked nearly $2 billion to develop hydrogen fuel cells, and California governor Arnold Schwarzenegger vowed to build a $100 million “hydrogen highway” studded with over 200 hydrogen filling stations by 2010.32 “When you add it all up and talk about the sales of everybody that’s involved and all those kinds of vehicles we’ve talked about, you’re talking in the trillions,” GM’s CEO told a 60 Minutes crew excitedly.33

  Much of Bush’s billion-dollar R&D commitment would flow, via an industry-government project called the FreedomCAR initiative, straight into the research departments of GM, Ford, and Chrysler.34

  What precisely was the point? many wondered. The gasoline-hydrogen fuel-cell cars that the big automakers favored had the same fuel efficiency and emissions as the new, highly efficient electric-gasoline hybrid cars, which were cheaper to manufacture and already on the market to boot.35 “Talk of a hydrogen revolution is no more than an elaborate piece of window dressing and will never result in the new clean fuel economy that many people hope for,” opined the Engineer magazine in 2003.

  Many believe that hydrogen is being used to distract public attention from more immediate changes that could have a greater effect on carbon emissions but are less palatable to business. Environmental groups also claim that car and petrochemical firms promote the hydrogen option because they know that it would be many decades before a workable system could ever be contemplated.36

  Disappointed critics took to dubbing hydrogen fuel-cells “fool cells.”37 Undaunted, Shell opened its first hydrogen filling station in November 2004, on Benning Road in Washington, DC.38

  President Bush had another plan for showing how the hydrogen economy might work: by mining more coal. In 2003, Bush announced a $1 billion grant for companies to build a high-tech new facility, called “Futuregen,” that could produce hydrogen without emitting any greenhouse gases. The facility, strangely enough, would use coal,39 despite the fact that carbon-packed coal only holds about 5 percent hydrogen, as opposed to the much richer hydrogen content in methane or water.

  Turning coal into hydrogen gas isn’t a particularly futuristic application, the plant’s name notwithstanding. The chemicals industry routinely does so to make ammonia and other feedstocks. The twinkling innovation in the project is that the carbon dioxide released by the process would be “sequestered.”40 Generally carbon dioxide emissions from coal “gasification” float out the smokestack along with other pollutants. Under the Futuregen plan, those emissions would be trapped and closeted somewhere.

  ExxonMobil’s grantees at Stanford, among others, plugged away at figuring out how to stash the excess carbon dioxide. Some could be pumped into aging oil wells to help pump out more oil. More could be stored in abandoned coal mines and other geological formations, but these may not provide enough space, so the deep ocean might provide a final resting place.41

  With all the renewed attention, the coal industry was jubilant. “King coal is back!” thundered the headlines in the coal-industry trade press. By 2003, ninety new coal plants were in the works.42 “The second coal age is beginning,” agreed a researcher at the National Energy Technology Laboratory, a government lab well-funded by the Bush administration. “The issue is not whether this is a good idea or not, because it will happen no matter what,” he added.43

  The coal industry had helped put George W. Bush in the White House. The head of West Virginia’s Coal Association called Bush’s beneficence to the industry “payback.” The president is “appreciative,” he said. “He knows if not for us, he wouldn’t be president.”44

  But even a rejuvenated King Coal could scarcely eclipse oil. Coal companies burn oil to mine coal. Right now, the worker-deprived coal companies use giant oil-burning machines to mine coal, lopping the tops off mountains and turning alpine villages into wastelands. Their machines burn as much as one hundred gallons of diesel an hour.45

  Another initiative that appeared, in Orwellian fashion, to promote renewable energy was the push to ramp up ethanol production. In his 2003 energy bill, which passed in 2005, President Bush aimed to double ethanol use to at least 5 billion gallons a year by 2012.

  Ethanol, an alcohol made from fermented grain, “doesn’t require the Defense Department to protect it, and doesn’t pollute the atmosphere,” as one ethanol advocate put it. By requiring that drivers fill up with ethanol rather than gasoline, the new rule would reduce oil consumption by 250,000 barrels a day by 2012, advocates said.46

  Corn farmers and giant agricultural conglomerates such as Archer Daniels Midland have been touting ethanol as a renewable and secure alternative to foreign oil since the 1970s. If ethanol took off as a fuel, midwestern farmers could stop growing corn merely for cows, sheep, and soda syrup. Instead, in a world in which over 800 million went hungry every night, they could grow corn to feed Americans’ cars, “creating a new market for local corn and some added income from the processing,” as the Washington Post described.47

  But the oil industry hasn’t been so keen on the farmers’ fermented corn. Although they can ship gasoline from their refineries to their gas stations through pipelines, they can’t do the same with ethanol. Moisture
seeps into the pipelines along the welded seams. This isn’t a problem with gasoline, because the water can easily be drained off at the end of the pipeline. But it is a problem with ethanol. Ethanol blends with water, emulsifying into an inseparable brew. If it became necessary to ship ethanol from its midwestern cradle to gas stations across the country, special tankers would have to be built and pipelines updated, all at extra cost.

  In 1997, when the first ethanol-burning cars were unveiled, about 0.03 percent of all the gas stations in the country supplied ethanol-based fuels, which cost more to burn than gasoline anyway. Drivers filled their more efficient, ethanol-burning cars with less efficient gasoline instead. Eventually, automakers stopped promoting the ethanol-burning capability in their dual-fuel vehicles, mentioning it only in passing, deep within the fine print of owners’ manuals. According to a 2001 study by the Department of Transportation, so unavailable was the fuel and so poorly marketed was the capability that most drivers of the ethanol-burning cars didn’t even know their vehicles could burn anything other than gasoline.

  Automakers kept building the ethanol-burning cars anyway. GM, Ford, and Chrysler manufactured 1.9 million ethanol-burning cars by 2001. As New York Times auto reporter Keith Bradsher explains it, the auto industry could use the dual-fuel vehicles’ higher ethanol fuel efficiency, rather than the lower gasoline fuel efficiency that the cars actually achieved on the road, when calculating the average fuel efficiency of their fleets. The ethanol-burning cars, in other words, allowed the car industry to sell more gas-guzzling SUVS while still meeting their average fuel efficiency requirements. According to Bradsher, “by making possible the sale of more gas-guzzlers, the dual-fuel vehicles had actually increased American gasoline consumption by 473 million gallons in 2000.”48

  Not only that, but growing enough corn to ferment into ethanol requires nearly as much fossil fuels as the stuff’s use replaces, as a University of California study revealed. American drivers might save 250,000 barrels of oil a day by using ethanol instead, but corn farmers and processors would need to burn 214,000 barrels of oil a day in order to provide enough ethanol for them.49

  Should the auto and oil industries have their way, ethanol, like hydrogen fuel cells, would scarcely make a dent in Americans’ consumption of crude. “The promotion of ethanol in the United States has been so tied up in federal pork and corporate welfare,” opined the Los Angeles Times in early 2006, “that it’s hard to see it as anything but a boondoggle.”50

  While the oil industry swatted away the pests challenging its primacy—hydrogen fuel cells, coal, ethanol—they groomed their own royal successor: methane-rich natural gas. Although it would require major investments and risks, the oil industry appears to view natural gas, its hitherto neglected stepchild, as its key growth industry during the long slide down oil’s decline.

  “There is an obvious consensus,” according to reporters at the Petroleum Economist, “that natural gas will assume increased importance in the world’s energy mix over the next thirty years.” Shell hoped that demand for natural gas would outshine that of oil by 2025.51 Half of the $8 billion investment BP earmarked for alternative and renewable energy in 2006 would go not to renewable solar, wind, or wave power, but to natural gas, using it to produce hydrogen and electricity. With its record earnings of 2004 and 2005, ExxonMobil 52 launched its single largest investment in a new project ever: a $7 billion project to turn natural gas into diesel, the New York Times reported in 2006.53 The next two decades, Shell’s chairman Philip Watts said, are a “window of opportunity” for the oil industry to shift their customers from shrinking oil supplies to relatively more abundant natural gas.

  Natural gas is generally found with oil, but unlike oil, it is difficult to get the stuff to market to sell. Gas can’t be shipped in conventional tankers because even small quantities expand to fill the whole tank. It takes years to build the specially coated, high-pressure pipelines needed to transport gas into factories or homes, and if such a market isn’t nearby, the investment isn’t worthwhile. For years, the natural gas found in association with oil in remote fields has essentially been considered a waste product.54

  The solution has been to simply burn the stuff, flare it.

  But with many countries cracking down on the dirty, wasteful practice, the price of oil on the rise, and others gearing up for Kyoto-imposed carbon cuts, the natural gas market has started to look more interesting. Many newly discovered deposits of fossil fuels hold little oil but swarm with gas. And so, industry researchers have aggressively studied how to compress or cool natural gas so it can be transported and sold.55

  Of course, an expensive new infrastructure would have to be built to provide more gas for Western consumers, including special tankers and specialized ports and processing facilities. The gas would have to be cooled to negative 260 degrees Fahrenheit—nearly absolute zero—to render it liquid before it can be shipped.56 Over the last decade, however, the economies of scale have improved and the cost of shipping liquefied natural gas has dropped by more than 25 percent, analysts say.57 With a veritable boom in liquefied natural gas plants, “there is no shortage of supply potential,” said Watts. In 2006, the CEO of Dow Chemical would set off on a public campaign to urge Congress to build dozens of terminals for liquefied natural gas. In 2005, only 4 such terminals existed. “We need 20 to 30 times as many,” he said. “I want Congress to declare a national emergency.”58

  The disruptions of a stepped-up trade in natural gas will likely be just as severe as those of oil’s. Natural gas supplies in major markets such as the United States have already started to decline. In 1998, the Texas gas industry had to drill four thousand new wells in order to keep natural gas production steady; the following year, they had to drill sixty-four hundred new wells to do the same. In the Gulf of Mexico, the number of drilling rigs looking for gas shot up by 40 percent between 1996 and 2000, but produced virtually the same amount of gas.59 The United States increasingly relies on natural gas from Canada, but soon they’ll have to start competing with the tar-sands industry for it. Between 1998 and 2007, after drilling more than a hundred thousand wells, Canadian natural gas production was expected to essentially remain flat, analysts said.60

  In the Rocky Mountain region today, natural gas wells sprout like weeds. Nature-loving retirees “bought their five, ten, twenty acres of southwestern Colorado,” comments a local lawyer, “and all of a sudden, boom! They’ve got a gas well 150 feet from their back porch.”61 The Bush administration announced in 2004 a $1 billion subsidy for oil and gas companies prepared to continue drilling for natural gas in the depths of the Gulf of Mexico. “With demand for natural gas rising as more American families and businesses choose this clean-burning fuel,” U.S. Interior Secretary Gale Norton explained, “we must provide incentives for development of known resources that are harder to reach.”62

  The battle to pry open foreign lands for natural-gas drillers is not far behind. As with oil, the biggest remaining natural gas fields lay under places such as Nigeria, Angola, Venezuela, and Indonesia. “We’re on the verge of discovering that natural gas is almost as important as oil for our energy supplies,” commented one energy analyst. “Once we wake up to this, we’ll have to deal with the geopolitical implications of importing natural gas from some of the more unsavory parts of the world,” she added.63

  As with oil, unconventional sources of natural gas such as methane hydrates enticed. “The magnitude of this previously unknown global storehouse of methane is truly staggering,” shocked Department of Energy analysts reported. The Department of Energy, ever hopeful, anticipated that methane hydrates would be providing natural gas to consumers by 2015.64 In the spring of 2003, independent oil company Anadarko drilled three thousand feet down into the Alaskan permafrost to extract methane hydrates, in one of many multimillion-dollar experiments funded by the energy department.65 The Navy, too, puzzled over how to turn those deepwater hydrates into underwater gas stations for their submarines cruising the de
pths.66

  Setting aside the palpable threats to the climate and to local people and habitats should a drilling accident set off a hydrate meltdown, mining methane hydrates would be disastrously disruptive to the seafloor, oceanographers say. Many schemes to capture the underwater hydrates resemble strip-mining. “Go out with a vessel, put a great big tent over the sea floor, inject antifreeze under the sea floor and poof, all the gas is trapped under the tent. . .and then you would move along,” explains oceanographer Robert S. Carney.67

  Key to the industry’s sales pitch about natural gas is that it is a “clean” alternative to crude. Methane, packing just a single carbon atom for four hydrogen atoms in its molecules, is much less carbon-intensive than oil, and so burning it emits less carbon dioxide into the air. “It has virtually no contaminants,” said Chevron’s chief operating officer, referring to liquid fuel made from natural gas. “It exceeds all anticipated regulations anywhere in the world.”68 In a carbon-constrained world, added one Japanese official at 2003’s World Gas Conference in Japan, “shifting to natural gas, with its low environmental impact, is a powerful way forward.”69

  But intensified natural gas use could actually be as bad or worse for the climate as combusting crude.

  Because methane sucks up so much more heat than carbon dioxide, if even small amounts leak into the air—unburned—they could intensify global warming by twenty-three times more than an equivalent amount of carbon dioxide. As Jeremy Leggett points out, “just a 3 percent leakage of gas from the production, transportation, distribution, and use of gas and you would lose the advantages of its lower carbon intensity with respect to oil. At twice that, you were not even beating coal.”70

  Already, by the late 1990s, about 2.3 percent of the natural gas the industry produced leaked out of valves, old pipes and other porous infrastructure, floating straight into the smothering mesh of greenhouse gases sizzling the planet.71 By 2010, the International Energy Agency predicted, the amount of methane wafting out of the oil and gas industry’s leaky pipelines would be as effective at warming the planet, over a century’s time, as the burning of over 3.8 billion barrels of oil.72