Vermont Yankee falls prey to cheap natural gas, can Vermont capitalize?

by Matthew Strong

Just last week Vermont Yankee, the only nuclear power plant in the state, won a victory in an appeals court, a step in a continuing a legal battle with the State of Vermont over its continued operation in the state. Yesterday however, the operating parent company, Entergy, announced it would be closing the facility by 2014 and decommissioning the nuclear operation. The announcement made national headlines, even causing a short worldwide trend on Facebook.

One of the primary reasons Entergy gave for shuttering the facility is the huge influx of natural gas into the energy market due to the recent advent of hydraulic fracturing, commonly known as “fracking”. Natural gas prices have gone from $12 per thousand cubic feet in 2008 to around $3 per Tcf. Thankfully, Governor Shumlin has already signed a law banning fracking in the state of Vermont. We wouldn’t want access to a cheap, abundant energy source that is putting nuclear power plants out of business. The move was purely symbolic however, as there is thought to be only a small amount of natural gas reserves under the northwestern portion of the state.

Having been personally involved in the Marcellus Shale boom in West Virginia and Pennsylvania, I know the technology is woefully misunderstood by those outside the booming zones, and environmentalists and the Shumlin administration normally cite two risks that have little evidence to back them up. 1) Underground water contamination from the chemicals used in the process, and 2) above ground water contamination from the chemicals. Let’s unpack the frack as briefly as we can, shall we?

Fracking consists of drilling down to a depth of between 5,000 and 10,000 feet. When the gas/oil rich shale is reached, the drilling then goes horizontal, and in multiple directions, creating a spider web of sorts. A single well head can access enough land to collect gas from underneath an entire town without being seen. Next, a “slurry” of water, sand and chemicals (typically, 90% is water, 9.5% is sand, the chemical additives about 0.5%) is pumped down into the well, causing the shale to crack enough to release gas trapped within itself. The sand then remains in the cracks, allowing the gas to be released continually. The water is then pumped back up and in most cases is removed from the site, and treated elsewhere. The entire process typically takes about 5 days, and results in decades of gas flow.

There have been very few (but extremely documented) cases where ground water has become contaminated with chemicals from the process, but they are few and far between, and not due to the process itself, but to mistakes made by large corporations who are in a hurry. The integrity of the well sites has improved significantly as competition and accountability has grown. And, since the fracking takes place between one and two miles below the water table, it is inconceivable the widespread amount of drilling is causing underground water table damage. To put it in perspective, there are now over 9,000 wells in the state of Pennsylvania, and the vast majority of them are safely and effectively managed, many landowners and entrepreneurs became overnight millionaires, and our energy independence has grown.

Geologists say there is enough natural gas under our feet in the U.S. to power the entire country for 110 years based on current known reserves and 2009 consumption rates. The technology already exists to convert cars and trucks to natural gas, and, oh by the way, according to Popular Mechanics “in a properly tuned engine, natural gas combustion delivers 20 percent lower carbon emissions and about a 25 percent reduction in greenhouse gases compared with the cleanest gasoline engines, all without damaging existing catalytic converter systems.”

While Entergy cited the natural gas boom as one of the reasons it is shutting down, another is the business environment that has been created in the state and was given national attention yesterday. The state legislature passed several laws to prevent the relicensing of the plant, all proven unconstitutional in court to date, including the appeals court decision last week. One of the laws they passed was to allow themselves authority to vote up or down before the Public Service Board could move forward with a certificate of public good, authority they did not possess within the state Constitution, federal law, or nuclear regulatory code. The governor attempted to have the state raise the company’s taxes from $5 million to $12.8 million. In essence, the legislature and governor have just put the business world on notice, if they don’t like your business they will do everything in their power, and above and beyond their power, to make sure you leave.

The Shumlin administration has now completed the trifecta of energy management. They have helped to drive out a nuclear power plant which provided 630 high-paying jobs, $5 million of “generating” tax, low cost electrical power, and increased energy independence from foreign countries (Canada specifically). They have increased wind farm development in the northeast kingdom, reducing its livability and tourist attractiveness, trampling property and community rights, increasing energy costs while still retaining the need for conventional power generation, and sending tax-payer funded profits to foreign countries (Canada specifically, GMP is owned by Gaz Metro of Canada). They have officially shunned the coming energy boom, telling all potential investors and energy providers their services, low cost energy, and potential influx of taxes are not wanted, and setting up a possible kerfuffle when the proposed Vermont Gas pipeline carries gas from the states that do allow it, and possibly crude oil and gas in the future.

The decommissioning process could take as long as 60 years, according to the CEO of Entergy, citing federal regulations of allowing the nuclear reactor to cool before disassembly and removal. That means it could take longer for it to be removed than it has been operating. It’s too bad we’ll have to deal with a nuclear power plant in our state for such a long period of time, without the electricity or taxes or jobs or energy independence it would have generated.

3 thoughts on “Vermont Yankee falls prey to cheap natural gas, can Vermont capitalize?

  1. In re Kurt’s post above: An intriguing new title on the abundant energy supply in the USA. Comeback: America’s New Economic Boom, by Charles R. Morris has extensive discussion about natural gas and fracking.

  2. Great article, Mr. Strong. Having the unique background of being an archaic Vermonter AND and a practicing oil and gas geologist intimately familiar with unconventional “plays” requiring fracking, I can only shake my head at those who refuse to study the process, draw the obvious conclusions, and enjoy the benefits of the new energy we have found in the USA. This energy can come to us cheaply, will keep us from giving a hoot about world energy despots, and provide real and high paying jobs to those who would otherwise collect “plumb enjoyment” checks. Not only do low education voters enjoy a majority in Vermont, they also seem to enjoy the energy from sources they find despicable, although they keep that fact to themselves. Education is widely available to bring people to a clear understanding of our new process of producing American fuels for Americans. Too bad some Americans are too close-minded to read it (although it is also commonly available in video for those low-info folks). Vermonters have been duped and will be ignoring what is now a very clean industry which provides jobs where $50K per year is low pay. I could use a few folks right now and would gladly put $80K in each person’s pocket, no experience necessary. THAT is what Vermont is missing out on.

  3. We are surely “Governed”, I say “”ruled””, by a bunch of business savvy geniuses, aren’t we? Rush has the correct term for them: Low Information Voters elect these genuises and the average Joe suffers the consequences.

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