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The Future of Natural Gas - An Interview with Raymond Learsy

By Daniel J. Graeber | Tue, 29 May 2012 22:56 | 5

Massive natural gas discoveries along with new extraction techniques have led many to claim nat gas as the fuel of the future – which could ensure U.S. energy independence, reduce geopolitical risks, and help meet U.S. electricity demands for the next 575 years.
Yet why have we seen so many negative publications and reports? Does natural gas really have a place in our future and is it the golden chalice we have been led to believe?

To help us investigate these issues and others Oilprice.com was fortunate enough to have a chat with the well known author and energy trader Raymond Learsy who has recently released his latest book which takes a look at corruption within the oil sector: Oil and Finance: The Epic Corruption Continues.

In the Interview Raymond talks about the following:

•    Why Natural gas could displace gasoline
•    The top 3 forms of energy for national security
•    The New York Times Vendetta Against Natural Gas
•    Nuclear Energy’s place in America’s energy future
•    The future of Fracking
•    Why we can’t rely on coal for future power generation

Oilprice.com: What do you think is the link between say the New York Times and some of the concerns in the commodity market?

Raymond Learsy: Well, some of the reporting of the New York Times I feel is weighted too heavily on the fiction that surrounds the pricing of oil. I've written a number of posts, some of which are in my new book, some of which are in my previous book, that deal with the way the New York Times repeats without any serious, in-depth questioning the sort of general handouts of the oil industry and OPEC. For example, if Saudi Arabia says, "Oh, we're having difficulty meeting current demands," there's no insightful discussion of what their potential is, how long they've been sitting on the fence before they expanded their production capability, etc., etc. It's always taken at face value. And then, of course, you have this extraordinary series of articles that came forward earlier in 2011 about natural gas.

Oilprice.com: Yeah, I saw that at Huffington Post. I actually used that in one of my media classes.

Raymond Learsy: Did you?

Oilprice.com: Yes.

Raymond Learsy: Well, thank you. I'm flattered. This was unbelievable for a leading newspaper to really take on the mantle of yellow journalism and to attempt to defame a whole new vista and direction of energy and the potential of what natural gas holds to place it into question and, thereby make people less focused on it, taking it less seriously, when it is really the golden chalice that has been given to us to make the U.S. energy independent.

Oilprice.com: Okay.

Raymond Learsy: I'm just amazed at the kind of language they use and the way that they try to undermine the whole focus on the development of natural gas in this country and elsewhere. And that much of what had been written that placed the whole natural gas enterprise into doubt was based on exchanges of emails that were unattributed. In other words, we didn't know who sent the emails.

Oilprice.com: Right.

Raymond Learsy: We had nothing but hearsay, and a very editorialized hearsay, supporting a particular pre-program point of view.

Oilprice.com: Well.

Raymond Learsy: I mean it was shocking.

Oilprice.com: Well, why do you feel that's the case? I guess we could look at the New York Times as some kind of the benchmark for U.S. journalism. What is the motive? Or is it lazy journalism? Or something else? Why do you feel the media, the New York Times specifically, is offering a mischaracterization of the energy markets?

Raymond Learsy: Let me show you this. It is from a study that MIT made shortly after the New York Times articles and I don't think it was specifically meant as a rebut to the New York Times, but it goes into a great deal of detail that natural gas will result in demand reduction and displacement of coal-fired power by a gas-fired generation. And because of its more limited CO2 emissions further de-carbonization of the energy sector will be required and natural gas provides a cost effective bridge to such a low carbon future. In other words, natural gas, the way it's structured, it's enormous availability (we are finding more and more of it since these articles have been written), and it's extraordinary low cost, present a very real danger to other forms of hydrocarbons. And I don't know quite what the New York Times' love affair is with the oil industry, but their articles were something that placed the whole idea of natural gas as a substitute, not simply for coal, but eventually for transportation fuel replacing gasoline, into jeopardy.

It just bedazzles me because you have at the current price of natural gas, which is about two and a half dollars an MMBtu, right? We have crude oil selling today at $95 a barrel. A week ago it was $100 a barrel.

Oilprice.com: Yes.

Raymond Learsy: At $2.50 an MMBtu, the amount of energy that is delivered by that quotient of natural gas, the price of oil would have to be around fifteen dollars a barrel.

Oilprice.com: Okay.

Raymond Learsy: And so if we were able to convert our transportation fleet for the use of natural gas, which we have in plentiful supply in this country, we would no longer have to import crude oil, etc., and we would be in a position to displace gasoline. Instead the New York Times undermines and places into question the one solution and salvation that we have for true energy independence.

Oilprice.com: Okay. So, what about other renewable forms? I've had some
discussions with some folks at Rand recently about converting from a highly carbon intensive economy to a low carbon economy and the conversation always winds up on things like infrastructure, on things like converting everything from petroleum to natural gas to wind. Where does that conversation factor into this conversation?

Raymond Learsy: Well, I mean, you have other alternatives. You have nuclear energy, but on the other hand you do have a situation where we have not built a nuclear facility since the 1970s and China is going to be building 25 nuclear facilities in the next 15 years. Now, the question needs to be asked seriously and analyzed seriously, who is going to be better off at the end of 15 years? We, without having built any, or the Chinese with having built 25?

Oilprice.com: Right.

Raymond Learsy: And can we build them safely? And can we solve the problems of waste disposal? Now the Russians have done that. The Russians are very extensive in their nuclear facilities and they moved all of their waste disposal up into the edge of the Arctic somewhere in one of the peninsulas bordering on the Arctic Sea. And it's not only that, they've taken in waste disposal not only from their own plants but from other European plants such as France. Look at France, 80% of its electrical energy is generated, by nuclear power.

Oilprice.com: Right.

Raymond Learsy: So we are trailing the rest of the world in something at least, in a focus on nuclear energy. And then in terms of coal we have enormous reservoirs of coal, but on the other hand the carbon footprint of coal is far greater than that of natural gas.

Oilprice.com: Right.

Raymond Learsy: Basically on all these issues there are three items of focus; economy, national security and the environment. Natural gas gets top marks on all three. Coal gets top marks on two of three. Crude oil gets top marks on maybe one of three. And nuclear energy is still, we're still debating how safe it is and how comfortable we are with it.

Oilprice.com: Right.

Raymond Learsy: And then of course we have alternatives; ethanol, bio fuels, hybrid cars, etc., etc., all of which could substantially reduce our consumption of fossil fuels. The carbon footprint of natural gas is far less than that of gasoline, significantly reducing the carbon footprint of our energy consumption.

Oilprice.com: Well, then what about the fracking debate? I know a couple weeks ago Sierra Club had filed a few suits with the Department of Energy, I believe, protesting liquefied natural gas export facilities planned for Louisiana ports on the premise that it's going to lead to more fracking, which is the hot issue of today in terms of the new energy debate.

Raymond Learsy: Fracking is something that has to be studied and has to be mastered and I think the oil companies are not irresponsible, they’re not irresponsible entities. They fully understand their civic responsibilities and also their commercial and their legal responsibilities. They are beginning to take this problem and really work it through to the point where it is going to be as safe as it reasonably can be and then we have to consider is it safe enough?

I mean, with all of these problems the environmental groups look at them from one point of view only and what we need is leadership where all these things are taken into consideration; the economy, national security and the environment, and where the judgment is made based on the pros and cons of each of these energy sources. I don't think that is really done, nor is it discussed in a lucid, candid way and with regard to natural gas. I mean, we are the beneficiaries of something we didn't even know existed four or five years ago.

And the potential in terms of our economic development, in terms of our national security is enormous. The question is how much of a problem is it environmentally and can the oil companies really deal with it in such a way that it is minimal.

Oilprice.com: So, let's take it a step further and kind of work our way back to the media argument because I think that there isn't one; you can't really have a motivating campaign on energy based on pragmatism. You need some level of excitability, and if you're calling for elimination of this myopic debate on fracking, it doesn't make for a sexy headline. It's not as motivating as the doom and gloom of the Keystone/Nextel pipeline or ethylene glycol in your drinking water and people lighting their taps in their kitchen on fire because of the natural gas concerns. How does the public mentality figure into the conversation on natural gas?

Raymond Learsy: Well, I think the people have got to be made aware what the benefits are. You have something like the New York Times articles that I'm referring to which make virtually no reference to fracking. What they make reference to is loaded estimations of how much natural gas there is, inferring that they have been spiked by the oil companies and by the investors. It's unbelievable some of the language that went into this and a year and a half later it's been proven total consummate nonsense.

The amount of natural gas that is extant in this country has already been proven to be enough to last us a hundred years and we've just begun to scratch the surface on searching for it and on developing it. And it's amazing, not only this country but China is becoming a major producer of shale gas, Europe and Poland have also had major finds of shale gas. All around the world shale gas seems to be the answer to energy dependency. What everybody should do is read the MIT study. Let me give you the details of it.

Oilprice.com: Right.

Raymond Learsy: You know, if they don't want to order my book, they can order the MIT study which, If I had my druthers between ordering my book, which is called "Oil and Finance: The Epic Corruption Continues," and this study, I would order the study. The future of natural gas which is an interdisciplinary MIT study and I'm sure it can be gotten from MIT. It's called The Future of Natural Gas and it was published in June of '11.

Oilprice.com: Okay.

Raymond Learsy: What it tells you is the dramatic potential of natural gas in terms of our energy consumption and usage. And it is done in great detail by a whole bevy of authorities who really spent time, effort and enormous amount of research in coming up with this, not like the New York Times.

Oilprice.com: Okay. So, just to wrap it up, I remember, and as I said at the beginning of our conversation, I had referenced your Huffington Post article from last year when we were debating, the responsibility of the news media. Now I remember shortly after that article came out, I think about two weeks later, the ombudsman, the public editor at the New York Times, refuted the original article. I'm sure very few people read that because it probably didn't run as high profile as the previous story and I also...go ahead.

Raymond Learsy: The gas article in the New York Times was a front-page article and the public editor had his article on the second page of the Weekly Review section on Sunday.

Oilprice.com: Right.

Raymond Learsy: So, you're right, I mean the perception of the public editor's comments were, I'm sure, barely read by a handful of people.

Oilprice.com: Right. Then if I'm not mistaken, roughly a month later the New York State Legislature voted on fracking.

Raymond Learsy: Mm-hmm.

Oilprice.com: Is that correct to your knowledge?

Raymond Learsy: I don't know if it was a month later or so.

Oilprice.com: Shortly after.

Raymond Learsy: They put it all on hold.

Oilprice.com: Now do you think that that had anything to do with the New York Times article?

Raymond Learsy: Well, I think, yeah, the New York Times article gave natural gas, shale natural gas, a very bad taste. I mean, it gave it the illusion of being in the hands of shysters and people who were simply, I mean there were comments with words like "it's all about the money." I mean the kind of language that was used was incredible and without very much substantiation.

And I'm sure people don't follow these issues day to day and I'm sure it made it very easy rather than seeing natural gas as a source of economic energy for New York State. Not only energy but economic advancement, especially at a very difficult time in the economy. It was very easy to dismiss after the holy of holies, the New York Times, wrote about it in the manner that they did.

Oilprice.com: Good. So I mean what's the final word on natural gas? We understand the perception that public reactions rise and fall with the sun, and it's an excitable issue as it becomes a new issue as time goes on, you know, level heads sort of prevail. Where do you see the natural gas debate in say 2020?

Raymond Learsy: Well. I think people will be, in 2020, will be saying aren't we fortunate to be the Saudi Arabia of natural gas and that we have been able to develop this natural resource, this American resource, safely, responsibly and it has enhanced the lives of almost every American. Natural gas is a feedstock for much of our chemical production. Natural gas has been an absolute shot in the arm to our steel industry; the piping and the new drilling equipment that is being used and produced. It has created, in places like North Dakota where you also have shale oil as well as shale gas, a boom.

There is massive employment, not unemployment, but employment to the point they can't fill jobs in North Dakota and they can't find a place to live, they can't find apartments and they can't find a place to stay. I mean, the boom there is staggering and that boom is going to spread around the United States, if it's permitted to do so, if we have a coherent, intelligent and sensible discussion on this issue. And I think that the potential is so enormous that by 2020 the whole idea of energy independence will have been dissipated because of our resources in natural gas.

Raymond thank you for taking the time to speak with us.

For those of you interested in learning more about Raymond’s new book: Oil and Finance: The Epic Corruption Continues – please visit the books page at Amazon.

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Leave a comment

  • Mark Goldes on May 30 2012 said:
    Kudos to Ray Learsy. An excellent article.

    I will take exception to the nuclear comments. The reasons can be found on the Aesop Institute website.
  • Mel Tisdale on May 31 2012 said:
    As a species we are facing a period of enormous change in the fields of financial matters, energy provision and usage, and our climate. They are to a large extent interlinked and have major implications for our future well being. The results of many of the decisions that we are and will be forced to take today and in the near future regarding how these fields should develop (if possible e.g. climate) will be felt long into the future, well past when even the youngest person reading this has been dead, buried and forgotten.

    It would be foolish to let major players in any of these fields influence those decisions because they currently can ‘buy’ the opinion of the media by paying for advertising, or can ‘buy’ scientific opinion by funding – and thus paying the wages of – those scientists and their research, scant as such research sometimes is. We need to take a clear, calm look at where we are and where we want to be. And that process needs to be done on a global basis. I personally doubt that it is currently possible to actually achieve that, but the alternative is a race to the bottom and a future that no one would wish on their descendants, so we must at least try.

    If we take fracking as an issue, it is clear that there are large amounts of natural gas available in many places around the world and on the face of it, it would be an act of financial folly not to take advantage of such an abundance, especially when oil production is at or near its peak, and thus if the laws of supply and demand hold true, as they have for ages, then its cost can only escalate. Yet the price of natural gas, being so cheap, can only mean that the income for some people compared to that obtained from oil is going to be curtailed, which will impact on the financial markets, so we can expect more skulduggery.

    That however is small beer compared to the impact that the climate is going to have on all of us. We have made a start as a species by setting up the IPCC, which, I should remind people, does not do any research of its own. It simply examines the peer reviewed literature and summarises it for policy guidance. It does not deserve the criticism it receives, even when it makes the odd mistake. (What 900 page document could be so perfect it did not contain any?) Fracking and consequent natural gas consumption will impinge on the way the climate reacts to our CO2 pollution of the atmosphere. That is established science and Old Mother Nature is not going to change simply because it is inconvenient, or some shareholder demands his or her dividend.

    What we need is for the IPCC to be part of a wider exploration of how we develop our consumption of natural gas, coal, renewables and nuclear energy. On that last point, we really do need to look far more deeply into thorium reactors. They do not have anything like the waste products problem that uranium based ones do (or coal and oil, for that matter), cannot be used for weapon production, therefore exportable anywhere and are far more efficient and can be made so small they can be transported by road from the factory where they are made. They have the potential to influence energy supply at least as much as fracking will do and will outlive fracking as a process for centuries after all the natural gas has been ‘fracked’.

    Only when we can take a serious, unbiased (e.g. oil and nuclear are bad, wind and solar are unrealistic etc. etc.) look at all our options, will the right decisions be made. Climate is the big one and the current series of La Niñas is masking its inexorable progress. Perhaps we will have to wait until the next El Niño and the effect it will have on public opinion when the obvious extreme weather events it generates happen before we will be able to make much political progress in dealing with it. Let’s hope that it will not be too late to stop the positive feedbacks takings us to where we really don’t want to be, or our descendants to be.
  • david wright on June 05 2012 said:
    The guy's a shill for the energy industries and is misguided/misguiding for the fracking industry, fossil fuels. NO ONE in this country is talking publicly about the need for rational, strategic contraction of our urban footprints, of actually saying: "we need to reduce the size of our development footprints, and consider building our urban areas for ON SITE food production within the city, so that transportation can be reconfigured around micro-local distribution of food and water instead of saying to the country that we can continue to have our cake and eat it under the present growth dominated paradigm. That era is now over. Time to wake up and take responsibility for our lives.
  • eugene holman on September 08 2012 said:
    let the free market work.don't have our government put barriers in the way.
  • Doug Jones on September 25 2012 said:
    I think the most important thing this discussion brought out is our serious lack of national long-range planning and leadership. We need it badly. Without it, our purpose is unstated, our direction is unclear, and the harmful effects of clandestine industry greed will continue to undermine our progress every step of the way. We need a course correction and a skipper that can read a chart.

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About the author

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Daniel J. Graeber
Company: Oilprice.com
Position: Senior Analyst