New reports show companies earning big profits from natural gas shale deep underground. Meanwhile, banks heavily involved in the economic crash of 2008 have been doing quite well, thank you, supporting King Coal.
Chesapeake Energy, the current front runner among the out-in-front natural gas drillers, began in 1989 with $50,000 and two men who had some far out ideas about producing gas from deep beneath the surface of the planet. The process relies on drilling 7,500 to 8,000 feet down from the surface, and more than 13,000 feet horizontally, then injecting millions of gallons of water, sand, and chemicals under high pressure to break apart the deep shale and release natural gas created from the decomposition of long-dead dinosaurs.
In the second quarter of 2011, the company took in $3.32 billion – a 65 percent increase from the same period a year before, according to the financial blog, “Wall St. Cheat Sheet.” The company realized $510 million profit, shared with several foreign investors, doubling it’s profits of a year earlier and beating financial estimates of how well the company would do.
Sunoco, which as late as 2007 made most of its money refining oil, also has found profit in the new supplies of natural gas. Refinery profits have fallen off sharply, and Sunoco has been shutting down and selling its facilities. Last month, the company won a waiver from Congress that would allow it to use non-U.S. ships to transport ethane from a loading facility it plans to build in Marcus Hook, Pa. to buyers on the Gulf Coast.
Natural gas may have come at an opportune time for consumers who currently rely on coal for their electricity needs. Coal is under considerable pressure from environmentalists unhappy with “mountain-topping,” the practice of peeling back layers of Appalachian mountains to reveal seams of the black gold. The unusable dirt and rocks are pushed into neighboring valleys, burying streams, destroying habitat and leveling the mountains as eight or more layers of dirt are removed to reveal successive coal seams.
The process is economically advantageous since it required less physical labor than old ways of mining – a feature mountain-topping for coal has in common with natural gas production and transport. Natural gas production has made thousands of jobs for lawyers, title researchers, truck drivers and hoteliers in the drilling areas, and Sunoco claims its proposed loading facility in Marcus Hook will give jobs to 300-400 construction workers.
But when the wells are drilled and hooked to the pipelines, they will require only a handful of fulltime operators, and Sunoco’s loading dock promises only 25 permanent jobs. The three ships that will carry Sunoco’s gas will be under the flag of the Republic of the Marshal Islands and crewed by non-U.S. sailors.
Meanwhile, some familiar names in banking have been profiting from supporting coal. Heading the list of the top 20 coal financiers, according to a report published this month, were JP Morgan Chase ($22 billion), Citi ($18.27 billion) and Bank of America ($16.79 billion).
“We chose to look into coal financing as coal-fired power plants are the biggest source of man-made CO2 emissions and the major culprit in the drama of climate change,” said Heffa Schuecking of urgewald, one of four environment organizations involved in the research.
“In spite of the fact that climate change is already having severe impacts on the most vulnerable societies,” Schuecking said, “there is an abundance of plans to build new coal-fired power plants.”
The report analyzed 93 international banks from the U.S., United Kingdom, Germany, France, Switzerland, China, Italy and Japan, measuring their support of 31 major coal-mining companies (representing 44 percent of global coal production) and 40 coal-fired electricity producers (which together own over 50 percent of global capacity).
Continued financing of coal production and burning, the groups say, will make limiting global warming to 2 degrees Celsius more difficult. Burning coal is one of the major contributors to CO2 production, which acts as insulation trapping heat in the atmosphere.
Clearly, natural gas burns cleaner than coal, and even with recently with recently reduced estimates, there is plenty of it in the ground. And companies which satisfy our consumer needs have a right to their profits.
On the other hand, there is growing evidence, when production is included, natural gas may not be much, if any, cleaner than burning other fossil fuels.
Photo by Wigwam Jones
Powered by Facebook Comments
- Richard Nixon: The Last Liberal President? ~ Economy, Energy & Environment, Featured, Legal, Political 28 Jul, at 12 : 27 PM
- ‘Made in America’ Just a Political Slogan to Conservatives ~ Energy & Environment, Featured, Watch Dog 10 Feb, at 13 : 48 PM
- PA Pension Debt has passed $66 billion ~ Featured, Pennsylvania Issues, Political, Watch Dog 6 May, at 11 : 31 AM