by James C. Sherlock
Headlines from the war in Ukraine have raised exponentially the interest in natural gas and the extreme price volatility caused by supply constraints.
It is perhaps useful to understand the uses of natural gas, the prices Virginians pay relative to West Virginians, the decline of production in Virginia, and the costs and risks of supply constraints by the actions of green energy absolutists.
Not the enthusiasts, but the come-hell-or-high-water absolutists, who get way out in front of the thoughtful left. In Europe, greens let slip the dogs of war.
Putin thought Europe, with its far too early and thoughtless response to green pressure, too dependent upon Russian energy to oppose him. He proved wrong, but now both free Europeans and Russians will suffer. Ukrainians and Russians are dying for that miscalculation.
Virginia greens need to reconsider the value of natural gas and the risks of insufficient supply. And, like the German Green Party this week, get over their opposition to gas until real renewable alternatives at the scale of the economy are, well, real.
Virginia’s greens must first acknowledge that alternatives to natural gas are not readily available. Not today. Not soon, measured in decades.
They won the battle against coal. The alternatives to coal were clean natural gas for multiple uses and nuclear power for electricity generation.
They saw China Syndrome in 1979 and turned against nuclear power after Three Mile Island in that same year. And have stayed that way regardless of technology advances.
Now they hate natural gas even though it led reductions in U.S. CO2 emissions to 27-year lows immediately before COVID, and is projected to continue to lead further declines.
Virginia and West Virginia. Virginia needs access to the vast and reliable supplies available in West Virginia. Virginia’s State Energy Profile from the U.S. Energy Information Administration (EIA).
In 2020, natural gas accounted for 61% of Virginia’s utility-scale electricity net generation, nuclear supplied 29%, renewables, mostly biomass, provided 6%, and coal fueled less than 4%.
In 2020, more than four-fifths of Virginia’s natural gas production was coal bed methane, and the state accounted for about one-tenth of the nation’s total coal bed methane production.
Virginia’s proven reserves of natural gas are 2,298 billion cubic feet, West Virginia’s 40,130 billion cubic feet. Only Texas and Pennsylvania have more natural gas reserves than West Virginia.
Natural gas withdrawals from Virginia reserves declined 15% from 2016 – 2020. West Virginia produced 25 times as much natural gas as did Virginia in 2020.
If you do the math from the EIA charts, you will find that Virginia Natural Gas Prices for various classes of consumers exceeded West Virginia Natural Gas Prices in November of 2021 by the following percentages:
- Residential: +29%
- Commercial: +9%
- Industrial: +18% (August 2021 industrial prices in Virginia were +66% of those in West Virginia)
Supply constraints equal highly volatile prices. Supply constraints can very quickly triple natural gas costs in entire economies. And they have.
American natural gas supply constraints are not tied to reserves. The greens are the threat.
A significant slice of Pennsylvania’s reserves were taken offline by a decision of the Delaware River Basin Commission to ban fracking in that basin. The ban applies to two counties in Pennsylvania’s northeastern tip that are part of the nation’s largest gas field, the Marcellus Shale.
In Virginia, with a radical 4th Circuit Court of Appeals in their corner, greens killed the Atlantic Coast Pipeline and are in the process of killing the Mountain Valley Pipeline.
If you want to see the prices some Americans already pay for constrained availability, look at imported LNG.
On peak demand days, LNG contributes up to 35% of New England’s natural gas supply. New England, where gas supply is constrained by fracking bans and limited pipeline and storage capacity, paid $34.77 per thousand cubic feet. (re-gasified volume) for imported LNG in 2021. That price at the pier is three and a half times the price of natural gas delivered to residential customers in West Virginia in November.
New England, and therefore the United States, gets virtually all of its imported LNG from Trinidad and Tobago, which is facing its own production and reserves issues.
The international LNG price is highly volatile since the start of the war. For an up-to-the-minute update on European gas supplies and prices, see here.
What to do.
Virginians are not now bringing more West Virginia natural gas into Virginia. The price differences will be exacerbated by declining Virginia natural gas production.
The Green Party in Germany figured out in one week what supply constraints mean to that country. They upended decades of their signature opposition to carbon.
They supported German Chancellor Olaf Scholz’s decision to stockpile coal and gas reserves and build two new terminals to import liquefied natural gas from countries other than Russia.
Robert Habeck is minister for the economy and climate in Mr. Scholz’s government. He is also the leader of the Green party.
As the Wall Street Journal editorialized:
“The hours after Mr. Scholz’s Sunday speech revealed the Greens understand the stakes in Ukraine and the energy-policy sacrifices they must make for their pro-democracy and human-rights principles.”
“Mr. Habeck had agreed to the LNG terminals before Mr. Scholz announced it. That required political courage for the leader of a party whose name reveals its environmentalist bent. It would have been easier to insist only on some pablum about accelerating renewables, a la the U.S. climate left.”
Costs and supply risks in Virginia will only increase in the future if Virginia’s greens continue to fight natural gas.
Absent more pipelines to bring gas from West Virginia to the Commonwealth, the future of not only the Virginia economy but also our massive national defense posture in this state are in jeopardy.
Virginia’s green leadership, including our two U.S. Senators: please call a meeting and talk about this issue as serious American patriots. Refuse to be held hostage by petro-state thugs. The policy you have pursued has not yet cost America nearly as much as it has cost our European colleagues and allies.
Realize that environmental absolutism can cause Virginia to fail in so many vital ways. Check on the natural gas usage of your local hospital or the facilities supporting the Atlantic Fleet.
So stop it.
Support the restart of the Atlantic Coast Pipeline and the completion of Mountain Valley Pipeline. You have some supporters who will oppose that. Deal with them.
Continue to support the shift to renewable sources by 2050, or whatever date you think achievable. But deal with the issue at hand today.
Or share with the rest of us your plan for what Virginia will do before reliable renewables are available at sufficient scale to replace natural gas across the economy.