On August 11, Governor Peter Shumlin held a press conference where he claimed that the "job gap" from decommissioning Vermont Yankee would not happen for about sixteen years. He claimed that hundreds of plant employees would keep their jobs for many years. In an article in True North Reports today, I demolish these claims. Read "Decommissioning Vermont Yankee: the Governor Versus the Facts."
All That Cheap Gas--What Happened? The New Estimate on the Marcellus Shale
As I have mentioned in previous blog posts, buying electricity "at the market price" is basically placing a bet on the future price of natural gas. My favorite graphic on this subject, from ISO-NE, shows the price of natural gas and the price of electricity in New England for the past ten years or so. The blue line is gas prices, the green line is electricity. It's a little hard to see that there ARE two lines, but you can click to enlarge the chart.
Well, gas prices were predicted to stay low forever-and-a-day, or at least, for the next twenty years, because of abundant local Marcellus Shale gas. Electricity prices would follow them, remaining low, even buying electricity "at the market."
Unfortunately for those predictions, today the USGS announced a re-evaluation of the amount of recoverable gas in the Marcellus Shale formation. USGS now estimates it is 80% less than what they predicted earlier. Yes, that is right. The government geologists now estimate that there's only one-fifth of the gas in the Marcellus Shale, compared to their earlier estimates. Bloomberg has a good story on this today.
One problem is that shale wells have a short life-span because shale has intrinsically low permeability. It may be porous, but it is not permeable. That is, shale may have holes full of gas (pores) but they are not connected (permeable). Therefore the well plays out when the fracking-induced permeability no longer yields gas. Also, there may have been fraudulent estimations of the wells, and there certainly are some lawsuits. However, shale proponents point out that "one-fifth of a big number is still a big number."
I'm not going to pursue Marcellus Shale estimations in this post, but rather refer you to the Bloomberg article, and many articles which are sure to follow. It is worth pointing out, however, that the Marcellus Shale is a speculative resource, with estimates that can swing wildly. Good fun for speculators. Not so much fun for electricity prices.
(A USGS map of the Marcellus Shale ends this post.)
Conclusions About Vermont Yankee
Jobs: Decommissioning the plant is pushing the workers off a job cliff. There will be no "sixteen years" of good jobs at the site after shutting down Vermont Yankee. This is true despite what Governor Shumlin says in a press conference
Cheap Power from the Grid: It won't stay cheap. It looks like there won't be sixteen years of abundant shale gas to keep electricity prices low, either.
Vermont Yankee remains our most reliable source of inexpensive power for Vermont.
Note: On the subject of natural gas prices, let me also recommend Rod Adams recent blog post: Is Rowe Right? Will Natural Gas Remain Cheap for 10 or 20 years?