Introduction: Safety and Regulations in Global Energy
Economic development has always depended on the application of new technologies in the production of new products and improved productivity. This has been particularly so since the beginning of the industrial revolution without much attention given to safety particularly when deleterious side effects could not be detected easily and left future generations to deal with it. The democratization of societies, higher education for what might be called the ordinary citizen, environmentalism and huge danger of some new technologies such as nuclear have in recent years resulted in critical eyes focusing on safety more intensely and demanding appropriate regulations in order to avoid catastrophes even at the expense of higher economic development. This has increasingly been evident in the field of energy. In the USA energy safety issues have become especially important because of the so-called Shale Revolution which has turned the country into an exporter of Liquefied Natural Gas (LNG) because of vast new reserves of shale-gas with prices at about 1/3 of gas in Europe and rapid production increases in shale oil which is rapidly replacing conventional oil imports. The Shale Revolution has raised safety and environmental concerns as described below. The paper describes environmental and safety problems in other energy sources as well as background for the debate, which is already in progress.
The Shale Revolution
As recently as 2007 many U.S. companies were preparing for a steady increase of imports of natural gas since they could see a decrease in domestic production and an increase in demand especially in electricity generation where both capital and operating costs were lower than coal electricity plants. Billions of dollars were invested in the South by the Gulf of Mexico, in the east as far as Boston and in the west, especially in California. New technologies, however, were introduced, which resulted in the rapid increase in shale gas production, which made it obvious that the USA could become a major LNG exporter rather than an importer. Companies reversed course and at least one company Cheniere Energy (LNG), started construction in 2012 and expects to start exporting LNG at the end of 2014 or beginning of 2015. The same company has announced the construction of a second plant and about two-dozen other companies have applied for licenses to export LNG. In the meantime, an oversupply of natural gas caused the collapse of prices and companies switched to the production of shale oil, which has proved to be much more profitable. Already in North Dakota alone, more than one million barrels of shale oil is produced every day and production is expected to increase considerably both in North Dakota and elsewhere. Demand for shale oil, however, was far away at the refineries of the Gulf of Mexico, California, and the East and companies could not wait for pipelines to be built since this would take at least five years. Instead, they resorted to rail transportation, which has caused some serious accidents including the worst one in Canada in 2013, which killed 47 people. A serious train derailment on April 30, 2014 contaminated the James River in Lynchburg, Virginia which led the Department of Transportation to issue an emergency order requiring that railroad companies inform state emergency management officials about the movement of large shipments of shale oil through their states and advised shippers not to use older model railroad tank cars that could easily rupture in accidents even at slow speeds. As reported by the Wall Street Journal “Bakken Crude Is Highly Volatile, Oil Study Shows” (Lynn Gok, May 15, 2014 pg A4), oil refiners confirmed that crude from the Bakken Shale in North Dakota is very unstable and contains high levels of combustible gases. A measure of volatility called Reid Vapor Pressure, which in traditional oil measured 3.3 pounds per square inch, in Bakken shale oil averaged about 8 pounds per square inch in warmer weather and 12.5 in colder weather. Many samples were at the high end of the range, with the highest at 15.54. Although the above will be disputed and discussed by various organizations and groups with conflicting interests the importance of railroad shale oil transport is obvious. Every two hours, yet another train leaves North Dakota with about 71,000 barrels of oil for the refineries of the West and East. Out of a total annual production of about 365 million barrels about 80% are shipped by railroad for a revenue of $29.2 billion per year at the current price of about $100 per barrel. Each train carries about seven million dollars worth of oil. The shale revolution has not added safety problems to shale oil transportation by rail. The Street Journal in its’ article “As Fracking keeps Pumping, A Qatar grows on the Bayou” by Dennis K. Berman (May 28, 2014 pgs. B1 and B6) notes that SASOL will build a giant plant by Lake Charles in Louisiana at a cost of $21 billion for the production of ethylene for plastics, paints, and food packaging as well as high-quality diesel and other fuels using shale gas with its own problems of disposing massive water supplies needed for fracking and the environmental effects will include the emission of 85 times Louisiana’s threshold rate of benzene each year as well as produce massive streams of carbon dioxide and treated water. Such problems are bound to increase with the expected expansion of industrialization in the USA because of the low cost shale gas. The US Transportation Secretary has announced that new safety regulations may be published by the end of 2014. The debate had started.
Nuclear Power Safety
After the destruction of the Japanese cities of Hiroshima and Nagasaki by the first atomic bombs in 1945 with hundreds of thousands of casualties, attention focused on the use of nuclear power for electricity generation, which, according to Louis L. Strauss, the federal official promoting nuclear energy would be “too cheap to meter” (The New York Times, August 22, 2006, pgs C1 and C4). Nuclear power plants were built in the USA and several other countries but costs proved to be much higher than expected. More relevant for this article was the complete failure of the nuclear promoters to provide for the proper disposal of radioactive waste produced by nuclear reactors, which they knew could retain its destructive potential for thousands of years. For the United States efforts were made and billions of dollars spent to establish a national waste repository on the Yucca Mountain, Nevada at a potential cost of $60 billion, but the state did not agree and the hundred or so nuclear power plants now operating keep their waste on site. What appeared for a while to be a deathblow to nuclear electricity were the partial meltdown of a nuclear reactor in the Three Mile Island, Pennsylvania in 1979 and the destruction of a plant at Chernobyl, Ukraine (former Soviet Union) on April 26, 1986. According to a UN study the Chernobyl disaster would ultimately cause 4,000 deaths from diseases caused by direct exposure to radiation. Other estimates claimed up to 90,000 potential deaths. (The New York Times, April 26, 2006, pg. A8). Since then some countries, such as France, have concentrated on nuclear electricity for national demand and nuclear plants have been built in both the USA and several other countries. Other countries have closed their existing nuclear plants and prohibited the building of new ones. Perhaps two memories of the author from his experience with the energy secretariat of the United Nations in New York would illustrate the above points. The first memory is a month long attendance as an observer of a nuclear conference organized in Geneva after the Three Mile Island accident in the USA. The American representative in addressing the conference emphasized the safety of nuclear power. The following day newspaper headlines informed the world on inspectors visiting the computer control center of a nuclear power plant near Philadelphia and found all the working staff fast asleep! The second memory is of visiting Japan in the mid-1980’s as a guest of the Government for a week and instead of the expected behavior of a tourist I took it upon myself to visit with the Director of Planning of Tokyo Electric because I was concerned of their plans to build about 30 nuclear power plants despite the earthquake prone areas in most of the country. My concern was raised by a colleague of mine who was a seismologist who had visited the Philippines and found out that General Electric was planning to build a nuclear power plant at an earthquake prone area of that country. Both the government and the company dismissed his remarks. Unfortunately, I had the same experience in Japan. By 1990 nuclear power supplied 27.3% of Japan’s electricity, which increased to 34.3% in 2000 and was forecasted to reach 42% by 2010 (The Wall Street Journal, February 19, 2003 PG A12- “Will Tokyo’s Lights Go Out? Dispute Over Safety of Nuclear Plants Prompts Critical Closures.” By Todd Zaun). In 2012 it was claimed that Tokyo Electric Power Co. had falsified records on safety checks and the company had to shut down 13 of its 17 reactors for thorough inspections. Tokyo Electric denied such accusations, but could not convince inhabitants and politicians in affected areas. Japan went on to build 54 nuclear reactors by March 1, 2011, more than any other country except the USA and France. On that day an 8.9 earthquake triggered a seven meter tsunami, which knocked out the power and back-up generators of the 40-year old Fukushima nuclear plant, which caused the worst nuclear accident since Chernobyl in 1986. The most powerful earthquake caused 15,000-20,000 deaths and damages were estimated at $300 billion. Public authorities in Japan obliged the Government to close all nuclear power plants and the Japanese people still appear to be divided between supporters and opponents of going back to nuclear power dependence. Supporters claim that Japan needs to power its industries putting economic demands against safety concerns in the worlds most earthquake prone country. Yet many other countries have given up on nuclear power and prefer to depend on imported fossil fuels at great foreign exchange expense although they are not as rich as Japan. In affect they accept a lower standard of living but a safer life.
Fossil Fuels
As shown in Tables 1 and 2-world consumption of primary energy continues to increase by about 3.0% per year and is dominated by the fossil fuels of oil, natural gas and coal. Despite substantial subsidies by governments especially in Europe, Japan, and the USA the contribution of renewables has reached only about 2% of world energy consumption and fossil fuels supply about 90%. Each of the fossil fuels has its own history of tragedies and substantial loss of lives at their various stages of exploration, mining, production, refining and transformation as well or in distribution and use. Coal mining in particular has had a disproportionate share because of the difficulty of underground mining and the explosive gases involved. Even the application of more safety procedures has not halted coal mine accidents in the USA and they are of course much more common in coal rich countries such as China and India. Oil has not been immune as demonstrated tragically by the destruction of a deep offshore well in the Gulf of Mexico drilling for BP in 2010, which caused 11 deaths and tens of billions of dollars in damages paid by the company. This so-called Deepwater Horizon explosion is regarded as the worst in USA oil history, but other accidents preceded in several places to the point that some have prohibited exploration and developments (eg. Florida) especially offshore because of fear of damages and effects on such other important income generating businesses as tourism.
Table 1: World Consumption of Primary Energy in Billion Barrels of Oil Equivalent
| Year |
|
% Change |
| 2002 |
70.35 |
|
| 2003 |
72.81 |
3.50 |
| 2004 |
76.30 |
4.79 |
| 2005 |
78.49 |
5.73 |
| 2006 |
80.67 |
2.78 |
| 2007 |
82.74 |
2.57 |
| 2008 |
83.85 |
3.94 |
| 2009 |
82.90 |
-1.13 |
| 2010 |
87.55 |
5.61 |
| 2011 |
89.61 |
2.35 |
| 2012 |
91.45 |
2.05 |
| 2002-‘12 |
896.72 |
29.99 |
Source: Calculated from BP Statistical Review of World Energy, June 2013 pg. 40.
Table 2: World Energy Consumption By Fuel
Billion Barrels of Oil Equivalent
|
2012 |
Percentage of Total |
| OIL |
30.28 |
33.11 |
| NATURAL GAS |
21.90 |
23.95 |
| COAL |
27.34 |
29.90 |
| NUCLEAR ENERGY |
4.11 |
4.49 |
| HYDRO-ELECTRICITY |
6.09 |
6.66 |
| RENEWABLES |
1.74 |
1.90 |
| TOTAL |
91.45 |
100.00 |
Source: Calculated from BP Statistical Review of World Energy, June 2013 pg 41 The tendency to use low cost techniques in energy is very well illustrated in an excellent article (Cassandra Sweet, Gas Blasts Hook, Inevitable as Pipes Decay, Wall Street Journal, May 21, 2014 pg B9), which describes the construction of gas pipelines in the USA with cast-iron and wrought iron as early as the 1830’s. In 2011 the U.S Transportation Department issued a “Call for Action” urging companies to replace thousands of miles of discrepant iron pipes with steel or plastic because iron lines are four times as dangerous and criss-cross cities and towns, especially in Boston, Chicago, Louisville, and New York. However, it costs $1.4 million per mile to replace iron pipes. It would take roughly 60 years and $5.6 billion to carry such a job just in New Jersey where the Public Service and Electric Gas Co. owns 4,000 miles of iron pipe. It could be done faster if consumers could and would pay at higher rates.
Conclusions
All energy sources have safety and environmental problems, but economic development requires increases in energy consumption even though technological advances may lead to considerable improvements in efficiencies and less energy inputs per unit of economic output. The structure of any capitalist system calls for speedy action in the production of goods and services in order to survive and prosper in a competitive environment. Adverse environmental and safety issues are likely to be ignored or even suppressed unless appropriate authorities, either voluntary organizations or governments at the local, state and federal levels get involved. The process is tedious, controversial and often lengthy but absolutely necessary especially in the main sources of energy.
Authored by Charles Constantinou
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