Modeshift

WILLISTON, N.D. — A pad of ice four inches thick greeted Ron Ivory on a clear and cold December morning at the busy water depot south of town. Ivory is 47 years old, a stocky and bearded truck driver from Vernal, Utah, with 23 years in the business. He’s been in North Dakota two weeks, working 14 hour days and earning $25 an hour hauling fresh water, 130 barrels a load, to oil production sites.

One of the reasons that North Dakota and the other big U.S. shale energy fields have generated so many new jobs is because extracting  gas and oil from solid rock two miles deep is as close as man has gotten to really drawing blood from a stone.

It takes a lot of water, millions of gallons per well, to perform the operation known as hydraulic fracturing, or “fracking.” The typical well receives 300 to 400 tanker loads of heated fresh water that is mixed with sand, solvents, and other chemicals and then pumped down 10,000-foot well bores at pressures eclipsing 7,000 pounds per square inch. Coupled with explosives and other evolving production practices, the water cannon-shot pulverizes the shale, opening spaces in the rock through which oil and gas flows.

Thirty-five fracking crews work day and night in North Dakota now, and there are likely to be 45 next year. Some 100 to 150 jobs are connected to a frack crew, according to the state Oil and Gas Commission. Some of those jobs involve operating the powerful fracking pumps. The rest are connected with transporting water from pumping stations, known as depots in North Dakota.  There are dozens of depots scattered across the territory and the roads of western North Dakota are jammed with thousands of water tanker trucks.

“Everybody is up here to make money,” said Ivory (see pix above), adding that he anticipated that his next paycheck would have a 4 followed by three zeros. “That’s the game here.”

In a series of ModeShift posts this week I’ve described the accelerating pace and mammoth dimensions of the nation’s oil and gas boom, and steadily closed in on a firm answer to this question: How much influence has it exerted on the American economy?

Today, with the help of a new analysis prepared for ModeShift by Economic Modeling Specialists, Inc., an 11-year-old labor market research firm based in Moscow, Idaho, we’ve reached a clear conclusion.

Since 2005, the oil and gas boom has been one of the most important sources of new jobs in the United States.

EMSI’s findings are based on federal Department of Labor and Department of Commerce data.

In addition, “production of oil and gas requires all sorts of inputs, from pipe, pumps and transport equipment to engineering, business, and legal services.  At each step, wages, taxes, and property incomes are generated and the associated spending creates multiplier effects,” said Henry Robison, the firm’s chief economist.  “Using traditional economic modeling techniques, EMSI estimates that for every oil and gas sector job, another 2 jobs are generated in support and other affected industries through multiplier effects.”

Bottom line: The 187, 000 oil and gas production jobs are generating 400,000 more jobs in related industry, service, and product sectors like tanker, pipe, and gas turbine manufacturing, construction equipment, real estate construction and the like.

One other point. EMSI found that the roughly 600,000 new oil and gas sector jobs generate an annual payroll of nearly $38 billion.

“Combine this with significant property incomes, taxes and royalty payments and one gets a picture of an industry growing not only in employment terms but also in terms of its effects on the nation’s gross domestic product, and its local, state, and federal government revenues.”

“It’s certainly stunning and noteworthy,” Robison concluded. “I don’t think the public is aware of this. You hear about the windmills and solar power initiatives. But this is striking.”

– Keith Schneider

WILLISTON, ND — The Saturday morning earlier this month that Scott Terrell and I had breakfast at Gramma Sharon’s Family Restaurant, every seat was taken by roughnecks and drivers fueling up before heading out to work this state’s giant oil patch. The line of customers waiting to pay their bills was so long I did something I rarely do on reporting trips. I left cash on the table and utterly violated the ethos expressed on the hand lettered sign next to the cash register.

It said in plaintive neat cursive: “Please be patient. We are short staffed every day.”

Since the collapse of Lehman Brothers in 2008 the national background music of America’s hard recession has been the persistent lament of earnest adults unable to find work where they live. Largely missed was another soundtrack of energy-related job growth and economic activity. It steadily built into such a rumbling crescendo that the bang-bang-bang of hammer on steel is finally being heard in every corner of the country.

There’s more work in the oil fields of the northern Great Plains, Texas, Pennsylvania, Ohio, California, Colorado, Kansas, Utah, and Wyoming than there are people to do it. And almost all of it pays really well.

Scott Terrell, who turns 58 the day after Christmas, heard it. Terrell is a carpenter and painter from Coeur d’Alene, Idaho. He solved a nagging problem of underemployment in his craft in Idaho by heading across Montana and washing up on the shores of North Dakota’s riotous oil and gas boom, which has generated 45,000 new jobs. He very quickly gained work with a friend’s company driving a heavy Volvo haul truck involved in earth moving activities. He makes $20 an hour working 70 to 84 hours a week. That’s $1,600 or $1,700 a week, good money in a down economy in Idaho.

Like almost everyone you talk to, it’s not the adventure, the calling, the national moment that has attracted men here. It’s the money. “Work those many hours. I tell you I’m worn out,” Terrell said. “It’s just chaotic, every day. It’s cold. It can be dangerous. I’m away from my wife. It’s a whole different outlook from what anybody is used to.”

The surge of jobs and oil also is completely altering the economic and demographic geography of North Dakota. There are 59,000 more jobs in the state than there were before the boom. The U.S. Census reported today that North Dakota’s population surged to almost 684,000, more than at any time since the 1930s. The agency also reported that North Dakota, once described by native born journalist Eric Sevareid as a “blank spot on the nation’s mind,” is now the fifth fastest growing state in the nation. From 2000 to 2010 it ranked 37th.

The other four fastest growing states – Texas, Utah, Alaska, and Colorado — also are experiencing big energy production booms and associated job growth.

The torrent of oil-related money, nearly $20 billion annually now in this state alone, is the leading edge of an estimated $100 billion-plus annual capital investment nationally by the energy, pipeline, refining, chemicals, transportation, and related services sectors that economists say appears to be leading the country out of the recession.

Today I interviewed Mark Perry, an economics professor at the University of Michigan in Flint, a resident scholar at the American Enterprise Institute, and one of the few economists who’s viewing the oil boom from a national perspective. I asked him whether the oil and gas surge in North Dakota and a dozen more states can account for at least a portion of the drop announced today in unemployment claims, and the rise in leading economic indicators. Perry said that seemed like the case.

He then pointed out a December 15 report by PricewaterhouseCoopers on the influence of the shale gas sector on American manufacturing.

That study reports that 17 major American manufacturers told the Securities and Exchange Commission this year that natural gas abundance is dramatically changing their strategic outlook. Low prices for natural gas are expected to “spark a U.S. manufacturing renaissance over the next few years,” said the PWC study, “boosting revenue and driving job creation.” The firm estimates the shale gas boom alone “could lead to approximately 1 million more manufacturing jobs by 2025.”

That renaissance looks to be in nearly full swing already. In Ohio, where the Utica Shale is starting to yield big finds of oil and gas, Vallourec, the big French pipe maker, is building a $707 million manufacturing facility in Youngstown, Ohio that has begun to employ a staff that is expected to grow to 450 workers. Mac Trailer in Kent Ohio is opening a facility to manufacture tanker trailers to haul liquids involved in hydrofracturing in the Ohio and Pennsylvania gas fields. It will eventually employ 250 workers.

Republic steel is opening a new furnace in Lorain, Ohio to manufacture steel pipe. US Steel is spending $95 million to expand one of its Ohio plants to meet demand from the gas and oil fields of the mid-Atlantic. Big chemical manufacturers are building new gas-to-liquids processing and chemical manufacturing plants in Louisiana and Texas. Truck and heavy equipment manufacturers, led by Illinois-based Caterpillar, are reporting big surges in demand for their rigs.

Here in North Dakota, Tesoro is expanding its refinery west of Bismarck and this year added 40 new workers to its staff. The regional utility is preparing to build a new gas-fired electrical generating station. Pipeline construction is occurring at a frantic pace. Burlington Northern is buying new tanker cars to haul oil to refineries in Washington State, Oklahoma, and Texas.

To gain perspective on just how powerful the energy rush is in North Dakota, just stand for a few minutes at any place alongside U.S. route 85 north or south of Williston. Semis hauling heavy equipment, pipe, water, fuel, oil, rigging, and any number of other loads roll past, an unyielding train of oil field gear and supplies and products. And in the spaces where there aren’t semis, there are pickups hauling men back and forth to the drill sites.

Five years ago, say townies, U.S. 85 in early December was as quiet as a dance floor on Tuesday morning. The resident population grew older, more bent, and steadily less numerous. Western North Dakota’s small towns were receding like shallow lakes in the desert.

Now people are predicting with perfectly straight faces that Williston, where less than 13,000 people lived at the turn of the 21st century, and now is estimated at somewhere around 20,000, could reach 50,000 in the next decade or so, maybe 100,000 — just like Midland, Texas.

– Keith Schneider

MEDORA, ND — Buck Hill is one of the tallest points in Theodore Roosevelt National Park, which spreads across more than 70,000 acres of grass and tight canyons where North Dakota meets South Dakota and Montana. Several weeks ago Valerie Naylor, the park superintendent, hiked to the summit and counted six oil drilling platforms within eyesight.

In the next few months more rigs will surround the park’s boundaries. With them will come open waste pits full of toxic drilling muds and liquids lifted out of the two-mile-long drill bores. There are roads and drill pads scraped from the grasslands, diesel trucks by the hundreds, and plenty of men. When I interviewed her earlier this month Naylor delicately described the new steel towers, bright lights, gas flares, and guttural sounds of the oil boom gathering at the park’s perimeter as “an intrusion in the national park experience.”

That, of course, is like describing the head-on collision between a semi and a Volkswagen as a course correction that went unheeded.

About five years ago, the Department of Energy issued a projection for energy demand that predicted the United States would need to produce 40 percent more energy by 2050 to sustain the life of choice and mobility that Americans have come to expect. More than a year ago, in remarks to a gathering of Congressional staffers, journalists, researchers, and non-profit leaders in Washington, I noted that achieving that increase — which amounts to nearly 3 billion more barrels of oil annually, 400 gigawatts of electricity, 400 million metric tons of coal, 9 trillion cubic feet of natural gas — may be possible. But getting there would produce lasting scars on the land, reckless damage to rivers and lakes, more air pollution and climate changing gases, and incalculable risks to forests, grasslands, and America’s wild places.

Such consequences, while discouraging to conservation-minded Americans, also aren’t much of an impediment to a nation that consumes almost a quarter of the Earth’s available oil, heats and cools its homes to an even 70 degrees Fahrenheit, and is learning here in North Dakota and a dozen other states just how many good paying jobs are connected to the most massive energy exploration and production surge in U.S. history.

So the oil wells are advancing across a rugged and magnificent landscape that spoke so powerfully to Teddy Roosevelt that he established a ranch north of Medora in the late 19th century, developed a conservation ethic matched in the 20th century only by Interior Secretary Stewart L. Udall, and later wrote that “I never would have been president if it had not been for my experiences in North Dakota.”

Fortunately, drilling will not occur inside the park, which is home to cougars and a wild bison herd. (See pix above). U.S. National Park Service policy forbids oil and gas exploration in any national park, so all production activities are occurring beyond the park’s boundaries.

The same can’t be said for the Dakota Prairie National Grasslands, a 1.259 million-acre stretch of wildlands in southwest North Dakota and northern South Dakota. The grasslands are administered by the U.S. Department of Agriculture, which is busy leasing federal minerals and preparing permits for at least 90 drill sites. Federal land managers hold operators to more rigorous production practices than state regulators.

But the phalanx of industrial equipment required to wrest oil and gas from the deep shale here is utterly rearranging the big sky  landscape. Until the oil surge, this part of North Dakota — and for miles and miles extending south, west, north, and east — was so undisturbed, and so thinly populated, that East Coast academics Deborah and Frank Popper, in a famous 1987 essay, proposed to populate the region with bison and other hooved creatures and re-establish the center of the country as a national “buffalo commons.”

That idea is off the table now, and will remain so for generations. The Bakken formation in North Dakota and Montana, and its related Three Forks and Tyler shales in North Dakota, Montana, South Dakota and Wyoming are said by geologists to contain nearly 30 billion barrels of recoverable oil. Landmen, the advance guard of the industry, are swarming county clerk offices to lock up private mineral leases. Drilling rigs are poised to advance into South Dakota in the spring.

Another deep shale layer, the Niobrara, extends from northeastern Colorado into Wyoming. Early production reports indicate that the Niobrara, which looks to be nearly as big and productive as the Bakken, is capable of yielding 500 to 1,200 barrels per well per day.

In Utah, oil and gas production is occurring with accelerating urgency in the shale of the Uinta basin in the state’s northeast region. In Oklahoma, exploration and production is picking up in the Granite Wash region, and the Anadarko. Kansas is seeing new drilling activity. The old Permian Basin of west Texas and southern New Mexico is being reworked with new technology. And  there are nearly 200 drilling rigs, almost as many as operate here in North Dakota, that are actively developing the Eagle Ford shale in southeast Texas.

And this is just a partial list. Texas also has big natural gas plays in the Barnett and Haynesville shale, which extends into Louisiana. The Utica shale in Ohio looks to be a big oil and gas producer. And the Marcellus shale in Pennsylvania is turning that state into a major natural gas producer that could also see a revival of big chemical and steel manufacturing plants because of the competitive cost of energy.

Economic Modeling Specialists, Inc., an 11-year-old analysis and research firm based in Moscow, Idaho, just completed a study of the fastest growing job sectors in the United States from 2007 to 2011. Using federal Bureau of Economic Analysis and Bureau of Labor Statistics data, the 50-member firm found that three of the top five fastest growing jobs, and nine of the top 15, were related to the oil and gas boom occurring nationally. The study also points out that the new jobs pay well, which accounts for the wave of population growth in North Dakota, a state that had been losing people for decades.

– Keith Schneider

WILLISTON, ND — After dark beyond Williston’s last lit living room, and heading east on state highway 1804, North Dakota’s landscape turns alien. Steel towers of active oil drilling rigs, flooded by lights as bright as a sports stadium, flank every steep rise. The orange flare gas fires, like 20-foot birthday flames, break the pitch dark of every plunge into deep valleys. The sound of ceaseless prairie winds, and big trucks hauling water and drilling wastes and metal pipes is the theme music of what seems almost certain to become the biggest onshore American oil field ever.

A lot is at stake here for the nation, for this region, and for the 45,000 people, most of them men who’ve come from every corner of America to find work. Last August Jon Moore and Rick Harding migrated over from their home town in Sandpoint, a small resort city in northern Idaho. They are both 26 years old, unmarried, and have partners back home with young children. They also are ambitious.

Within days of landing in Williston they secured good jobs paying $60,000 to manage nine freshwater pumping stations for tanker trucks hauling water to drilling sites. In January Moore and Harding plan to bring their families to the mobile homes they rent, perched side by side at the top of a big hill overlooking highway 1804 and the Red Mike Valley. In the distance, two drilling rigs are visible. (See pix at bottom). The valley is a target of energy companies. Mineral leases have been sold for $10,000 an acre. Moore and Harding, high school graduates with a few college credits, see opportunity to become executives and investors in the shale oil energy surge that began in 2006, really got rolling in 2008, and now is an economic cyclone that has engulfed western North Dakota and shows signs of turning south and west into South Dakota, Montana, Wyoming and Colorado.

“I think I’m here for awhile,” Moore told me earlier this month. (See him on left in pix above.) “Back home there was just nothing going on. We heard about North Dakota and came over to get jobs. It’s working out real well.”

There is good reason for the American left to be nervous about the oil and gas boom unfolding on the northern Great Plains, and in almost a dozen other states. The gas and oil industry has generated 600,000 new jobs in the United States since 2002, according to a new study by IHS Global Insight, a respected energy research group. North Dakota has produced 59,000 new jobs since 2005, according to the U.S. Census Bureau, at least 35,000 of them oilfield related. The state produces 500,000 barrels of oil a day worth $45 million at current market prices, and oil and gas production generates $4.5 million a day in state tax revenue, according to the state Oil and Gas Commission.

The all-too-brief contest from 2008 to 2010 between “drill baby drill” and clean energy is a rout. The oil and gas industry is spending $100 billion a year now in the U.S. and Canada to drill, process, and transport liquid fuels and natural gas from new energy fields. Nearly $20 billion annually is being spent in North Dakota alone to drill 2,000  wells a year, and undertake all of the related service and infrastructure development. There are two proposals for new refineries here. Enbridge, the Canadian transport company, is planning a $145 million expansion to its oil pipeline network here. Burlington Northern is building prairie depots to load oil aboard unit trains that transport 100,000 barrels a day to the Gulf Coast.

Last year, in contrast, the Pew Environmental Group reported that spending on clean energy technologies in the entire U.S. was $18.6 billion. Wind turbine and blade manufacturers are in trouble. Solar companies are closing. Federal interest in clean energy development subsidies is fading. America seems to be heading back to the future, clearly ready to embrace a profligate new era of petroleum and natural gas abundance while forsaking the innovation, jobs, and wealth that China already is developing in its clean energy sectors.

Moore and Harding understand the shifting economics of energy production. They worry about the damage to the landscape that comes with thousands of drill pads scraped from the prairie and miles of new roads and pipeline corridors. Migratory birds die in the toxic waste pits that accompany the drilling, an outcome that the US Fish and Wildlife Service is addressing with high profile prosecutions here. The state has counted over 1,000 oilfield related spills of fuel, oil, saltwater, and waste, five times higher than the number of spills in 2004. Traffic deaths this year are double what they were in 2010, and injuries are 40 percent higher than in 2010, according to the state police. A bad drilling pad explosion and fire in September killed two young workers and burned two others. Emergency medical and ambulance crews describe in published reports how picking up the pieces on the drill sites, highways, and man camps that have sprung up everywhere is like treating the wounded in a war zone.

Still, young men come because there are good jobs that pay very well in a growing sector that also has geopolitical consequence. “This is energy that we produce here,” said Harding. “We’re not sending dollars out of the country.”

– Keith Schneider

WILLISTON, ND — Past midnight at the station platform in Spokane, 850 miles east of this riotous Great Plains city riding the lashing tail of an oil drilling dragon, the roustabouts and heavy equipment operators kiss wives and girlfriends, then reluctantly board Amtrak’s Empire Builder. Twenty-one day shifts, 14 hours a day, in wind-whipped cold and in a perilous work zone that can maim or kill has a way of quelling enthusiasm — even when wages are high enough to put most men in six figures. Truck drivers start at $85,000.

Seventeen hours later they descend into a much bigger crowd at the Williston train station. Men coming. Men going. Big pickups rumble in the driveway. The sound of Williston is diesel engines. The scent is diesel fuel. It is below zero, windless for a change, and exhaust vapors hang in the air. The swirl of men, talking loud and walking fast to warmed pickup cabs, is like a swift eddy in a strong stream. The currents of purpose and planning, assignments and destinations, are so keen it feels like a military campaign, though there are no tanks and no bullets.

Last year, as a senior editor of Circle of Blue and a contributor to Yale Environment 360, I prepared some of the first dispatches about the scale and speed of the oil and natural gas production boom occurring at the center of the continent. Earlier this month, I spent two weeks in Idaho, Washington State, and North Dakota on assignment for OnEarth and Circle of Blue to gauge the magnitude of what is very clearly the leading edge of a national fossil fuel production boom that is rewriting what we thought we knew about hydrocarbon reserves in the United States.

In 2012, both publications will roll out the findings from this trip. But very briefly here is some of what I saw:

1. By itself, the Bakken formation, a deep shale layer beneath North Dakota, Montana, and Saskatchewan, now is said by state and industry geologists to contain 22 billion barrels of recoverable oil. That is five times more oil than the U.S. Geological Survey estimated a few years ago. State geologists say the entire formation holds 168 billion barrels of oil, and industry engineers say that the development of production technology is proceeding so steadily that perhaps half of the reserve is conceivably recoverable.

2. North Dakota will produce roughly 500,000 barrels a day by year end and will succeed California early next year as the country’s number 3 producer. The state seems likely to reach 1 million barrels a day by 2013, according to state geologists, putting it behind Texas as the number two producer. At that level, there appears to be easily enough oil in the Bakken to keep wells producing for 100 years.

3. Two other shale formations, the Three Forks and the Tyler, lie below and above the Bakken and extend into South Dakota, southeast Montana, and Wyoming. Each appears to hold billions more barrels of recoverable oil.

4. This year, 2,000 oil wells will be drilled in North Dakota’s Bakken oil field, which occurs across the state’s rolling northwest prairie. Each costs an average of $7 million to drill and complete. The success rate in recovering large quantities of oil is more than 99 percent. The average well yields 1,200 to 1,500 barrels a day for the first three months and then gradually drops to 250 to 500 barrels a day, and may yield at that rate for decades. At $90 a barrel, that’s $25 million in total revenue in the first year, and $13 million annually per well afterwards. Such numbers account for the frantic pace of drilling, which occurs 24/7.

At night, the 200 drilling rigs operating around Williston are lit as bright as carnival rides, white towers of floodlight groaning ceaselessly against the black. By day, the orange flames of gas flares superheat the air at completed production sites. (See pix above).

5. North Dakota’s Bakken is just one of a half-dozen gargantuan oil and gas drilling fields opened or vastly expanded in the U.S. and Canada in the last decade by American and global energy corporations. The U.S. Gulf, the scene last year of the nation’s worst oil spill, is producing 1.6 million barrels of oil a day, and billions of cubic feet of natural gas. Pennsylvania, New  York, and Ohio have deep shale natural gas plays, and Ohio has the Utica shale, which may yield billions of barrels of oil, according to industry petroleum engineers. Texas has two big shale gas plays. Kansas, Colorado, Utah, California, South Dakota, and Wyoming all are the focus of intense mineral leasing and production activity. And the tar sands region in Alberta, Canada is producing 1.5 million barrels of oil a day, of which 1.1 million barrels daily is transported to the U.S.

I’ll have more to report in the coming days. Very quickly, though, there’s a lot to consider here, not the least of which are these thoughts. Is the idea of peak oil off the table for the next generation? Maybe. Is the production surge, which has pushed U.S. oil production to the highest levels since the 1970s, a reprieve for the country? Probably. But is it also a capitulation to the future? Almost certainly.

– Keith Schneider

The New York Times today published my latest piece on places that are doing many of the right things to prosper and thrive in the 21st century. In this case it’s the collaboration between city officials, developers, institutions, universities, foundations, and bankers in Cleveland to produce the new Uptown District along Euclid Avenue.

In the last couple of months I’ve reported on how Toledo is recruiting Chinese investment capital to redevelop its Maumee River waterfront. And how Owensboro, Kentucky found the nerve to enact an $80 million tax increase to rebuild its downtown.

Cleveland, too, is finding ways to rebuild itself around successful clusters in health care, higher education, fresh food, transit, and entertainment. The daily newspaper last summer reported that $5 billion in new development is under construction or close to getting under way.

Public investment in each of these cities is attracting significant private investment and new jobs. The University Circle area of Cleveland has generated 5,000 new jobs in the last five years.

For those in Congress and state legislatures fixed to the idea that austerity and disinvestment produces new wealth, the lessons produced by these cities and many others provides valuable evidence of the foolishness of that approach.

– Keith Schneider

The Department of Energy earlier this  month reported that crude oil production in the United States climbed to 5.88 million barrels per day, the most since 1998. Meanwhile the share of oil demand taken up by imports is declining. After nearly three decades of steadily falling domestic production, the U.S. is now in the midst of an oil boom that is in its third straight year, with no sign of abating.

Last night on the way home from Grand Rapids I paid $3.16 a gallon for regular gas. I can’t recall the last time gas was so close to the $3.00 mark in Michigan. A number of factors account for the moderating price of gas, not the least of which is lower demand and increasing supply in the United States.

Big Texas and North Dakota Oil Plays
The latter is closely related to the deep shale oil drilling booms now underway in North Dakota, soon to be the second largest oil production state, which is on track to supply 150 million barrels of oil this year, nearly 40 percent more than in 2010. The other big new oil play is the Eagle Ford Shale in east Texas, where deep shale oil development has helped push that state’s daily production to 1.4 million barrels per day, up from 1.1 million barrels per day last year.

The U.S. once produced an average of 9.84 million barrels per day. That was back in 1970, when we were using 11.1 million barrels per day. The ample domestic supply and its low price fueled the drive through economy, the spread out life of cars and convenience, that is now in a state of accelerating collapse.

Still, this new oil boom, and its related boom in natural gas production, is providing a period of reprieve for the principles of choice and mobility that motivate what’s left of our national spirit. Domestic oil production could well climb to near the 1970s levels, reducing imports, limiting our interference in oil-exporting regions of the world that hate us, holding prices in check, and adding to domestic stability. It is providing hundreds of thousands of new jobs, and making a handful of companies and their executives and owners even richer than they are.

The big question for the United States is twofold. One, can we summon the will to limit the environmental damage the drilling is causing across the country? Two, can we break through the rhetorical impediments — no new taxes, regulations are killing jobs, government doesn’t work, etc  — to require developers to pay state and federal fees on every new barrel of oil and thousand cubic feet of natural gas produced?

A 15 percent state and federal fee just on the new oil production alone would generate $10 billion annually, enough to resolve the deficits in new energy producing states like New York, Ohio, and Pennsylvania. A similar tax on new natural gas development would generate $20 billion annually, by my calculation. That would be enough to make substantial investments in science, research, education, infrastructure, transit, and clean energy to put the U.S. in contention globally to at least compete in the new markets of the 21st century. Moreover, as oil and gas production increased, as it now seems likely to do over the next generation, so would revenues to invest in public projects.

My sense is the environmental community has an opportunity to lead on this one. Along with demanding accountability and transparency to limit damage to land and water, environmentalists also have the chance to move beyond their own institutional inertia. They should call for a public return on natural resources to reposition the country to leverage the wealth from new energy development to speed the new era of efficiency, low carbon energy generation, innovation and job growth. Use the power of organizing to move the country to a new thought. Otherwise the same old thinking will prevail with a few getting filthier rich as they damage the land, water, and what remains of our national purpose.

– Keith Schneider

Since June 2010, Circle of Blue has pursued a comprehensive and ground breaking reporting project – Choke Point: U.S. — to understand the confrontation between energy production and fresh water supply. Circle of Blue, where I serve as senior editor, is a non-partisan, non-profit, online news organization covering the global freshwater crisis from our six-person newsroom in Traverse City, Michigan. You’ll see from the Web site that when it comes to serious original reporting on water, energy, food, law, and policy, we’re punching way above our weight.

Simply put, rising energy demand and diminishing fresh water reserves are two trends in dramatic collision across the country. Moreover, the speed and force of the collisions – what we call choke points — are occurring in the places where growth is highest and water resources are under the most stress: California, the Southwest, the Rocky Mountain West and the Southeast.

These regional energy-water choke points are getting tighter because the defacto national energy strategy is devoted to more production, particularly for unconventional sources of deep shale oil and shale gas, which use three to four times more water to produce a gallon of fuel or 1,000 cubic feet of natural gas than from conventional petroleum and natural gas reserves.

Moreover, not nearly enough attention is paid by federal and state governments or the energy industry to addressing water supply and distribution, the primary impediments. We found, in fact, that a far-reaching federal program of research and analysis, funded by Congress and designed to help the nation anticipate and temper the mounting conflict between rising energy demand and diminishing supplies of fresh water, has been brought to a standstill by the DOE.

The research program, known as the National Energy-Water Roadmap and ordered up by Congress as part of the 2005 Energy Security Act, was meant to provide lawmakers and the executive branch two studies of the impending conflict between energy and water. The program also explains what to do about the collision. The first, completed by a team of federal scientists in December 2006 and made public a month later, described the serious consequences the nation is already encountering, as the United States encourages more energy production, which is the second largest water-using sector, but gives scant consideration to water supplies, which are in retreat in most regions of the country.

Meanwhile, the second and final report that Congress commissioned-a comprehensive research agenda to better understand the nation’s energy-water choke points and begin developing real world solutions – has been held out of public view for more than four years. The DOE declined repeated requests for interviews about the reasons for keeping the report from publication.

Technical Basics
Scientists define water consumption by two basic measurements. One is how much water is withdrawn from America’s rivers, lakes and aquifers for domestic, farm, business and industrial use, most of which is returned to those same sources. The second is how much water is actually consumed in products, by livestock, plants and people, or evaporates in industrial processes.

In both measurements of withdrawal and consumption, energy is at the top of the charts. The United States withdraws 410 billion gallons of water a day from its rivers, lakes, aquifers and the sea. About half is used to cool thermoelectric power plants, and most of that is used to cool coal-powered plants, according to the most recent assessment by the United States Geological Survey (USGS).

Similarly, the country consumes about 100 billion gallons of water a day. Nearly 85 percent is used for crop and livestock production. Of the 16.1 billion gallons that remain, half is devoted to producing energy. That balance is tilting to more water consumption for energy production:

Findings
Among other details, Circle of Blue found:

• The region that is confronting the energy water choke point first and most dramatically is the Southwest, as climate change steadily diminishes snowmelt in the Rocky Mountains. The Colorado River transports less water than it did a decade ago. In 2010, when we did our reporting, Lake Mead, which stores water from the Colorado River and is one of the largest reservoirs in the country, was 41 percent full. The lake’s water level had fallen 135 feet since it was last full in 1999. Declining water levels prompted federal managers to reduce the Hoover Dam’s hydroelectric generating capacity 33 percent. Last winter, heavy Rocky Mountain snows put more water in the reservoir, but generating capacity is still reduced.
• The next era of hydrocarbon development is well underway in the United States as energy companies tap the “unconventional” oil sands of Canada, the oil shales of the northern Great Plains, and the gas shales of the Northeast, Texas, Oklahoma and the Upper Midwest. But tapping each of these carbon-rich reserves is producing more damage to the land, generating more carbon emissions, and using three to four times as much water than the conventional oil and gas reserves they are replacing. Essentially, the energy industry is becoming a mining industry, turning carbon-rich sands into fuel and using water shot into the ground under super high pressure to shatter deep shales to release oil and gas. The scale of the industrial enterprise is immense and moving with amazing speed. In tar sands production alone, oil companies and pipeline developers are spending $15 billion to develop the tar sands; $30 billion to build a new network of pipelines from Canada to U.S. refineries (including one that has produced a dispute between state and the EPA), $20 billion to modernize refineries in the Great Lakes, Illinois, Oklahoma and the Texas Gulf.
• The political influence of the energy industry has few equals in the U.S. In Kern County, Calif., where the agriculture industry and the oil industry compete for diminished supplies of water for irrigation and energy production, the big winner is the oil industry. While a severe drought wracked the state, and agricultural and environmental groups wrangled over sharply reduced water shipments to irrigate the arid San Joaquin Valley, the oil industry received 8.4 billion gallons a year-as much water as it needed-from the web of aqueducts and canals that carry water from rivers and reservoirs high in the Sierra Nevada.
• Carbon capture and storage technology, which is the favored tool to reduce carbon emissions from fossil-fueled electric generating plants, is undergoing a handful of tests, including at a new electric-generating plant just permitted and partially financed by the DOE in arid Kern County. But the technology also increases water consumption at coal-fired utilities 40 percent to 90 percent, according to the Department of Energy.
• Unless the United States plans more carefully, generating energy from clean alternatives is almost certain to consume much more water than the fossil fuels they are meant to replace. Generating one gallon of fuel from irrigated corn, for instance, takes 650 gallons of water. Generating one gallon of gas from oil takes one gallon. Solar thermal power that is conventionally cooled consumes more water than a coal-fired and nuclear-powered plant. Of all the available green energy technologies, only wind and solar photovoltaics consume less water than fossil-fueled energy. Geothermal can save water or consume more depending on the technology used and the location.

Stories

• Contest between energy and water could cause huge electricity price rise in Arizona
  When it was completed in 1974, the 2,250-megawatt Navajo Generating Station (NGS) near Page, Arizona, provided the power to draw 1.42 billion gallons of water a day out of Lake Havasu, fed by the Colorado River and along the border with California, and pump it 336 miles and nearly 3,000 feet uphill in the Central Arizona Project (CAP) canal all the way to Tucson. The power plant and the canal reflected the hubris of a rich nation at the height of its wealth, and determined to build in one of the driest regions on the continent energy-hungry and thirsty cities that defied the laws of nature. Nearly four decades later, in an era marked by the warming climate, the increasing financial and environmental costs of generating power with coal, and declining reserves of fresh water in the West, the historically tenuous cords of legal agreement and civic support that have always defined the CAP are threatening to come unraveled. At the core of the problem is the price of water, which is closely tied to the cost of operating the plant. Both could rise substantially if the Obama administration and the U.S. Environmental Protection Agency issue new rules to limit emissions of carbon dioxide and other haze-producing gases. There is also a drought that has persisted for more than a decade on the Colorado Plateau, raising a serious question about how much Colorado River water will be available to both cool the giant power plant, and also supply the CAP’s farm and business customers, and 80 percent of Arizona’s residents.

• Very big new hydro dam in Alaska
  At a press conference in Anchorage on July 25, Alaska Governor Sean Parnell signed a ceremonial copy of a bill to authorize a 200-meter (700-feet) rockfill dam on the currently dam-free Susitna River. Parnell signed the official bill on July 13, after it had passed the state legislature in June, the Anchorage Daily News reports. Senate Bill 42 gives the Alaska Energy Authority (AEA), a public corporation owned by the state, the power to issue bonds and enter into contracts to build the dam, which is scheduled to be completed by 2023 and is estimated to cost $US 4.5 billion – a figure that does not include some of the new transmission lines that would be built, according to Karsten Rodvik, AEA’s external affairs manager. The Susitna Dam, planned for a site halfway between Anchorage and Fairbanks, will create a storage reservoir 63 kilometers (39 miles) long and three kilometers (two miles) wide at its broadest. If completed, the dam would be the tallest built in the U.S. since the 218-kilometer (717-feet) Dworshak Dam in Idaho, which began construction in 1966 during the height of the American dam-building era.
• Scarce Water in Texas prompts power plant cooling design change
  Earlier this month, the Lower Colorado River Authority in Texas rejected a permit application from the White Stallion power plant to use billions of gallons of water for its proposed coal plant in Matagorda County. The authority’s decision, the first of its kind in Texas, was prompted by the historic drough, which forced White Stallion to change the design of its cooling system from once-through wet cooling to dry cooling towers, which are more expensive and reduce generating efficiency. Local residents and farmers have been actively opposing the new plant because of concerns for water supply in the Lower Colorado River basin.

• Water supply limiting factor in oil shale boom
  In North Dakota, now the fourth largest oil-producing state and quickly heading to number two behind Texas, energy companies and state officials are racing to head off an oil production disruption caused by shortages of water. State figures project oil developers will need 5 billion to 6 billion gallons of water annually to frack the more than 1,000 wells drilled each year in North Dakota. For the time being, say state officials, there is enough supply. The problem is that oil developers are concerned about access. Private companies are building their own water supply systems, using pumps and miles of pipes; the state last year authorized a $150 million water distribution system, the largest in North Dakota.

  Similar issues emerged in the last few years with the development of the Eagle Ford Shale formation in Texas, which requires more water per well than in other locations. A single well in the Eagle Ford Shale can require 7 million to 13 million gallons. To obtain this amount during the drought, companies have offered farmers 70 cents per barrel of water.

– Keith Schneider

When you ask his friends and family what they most admired about Donald Spitzer, the answers included his quick wit, his considerable intelligence, and his great love for family and friends.

They also note that in a family of gifted athletes Donald was tall and slim and gawky. And in a family of rugged Hungarian men  skilled in pounding wrought iron into graceful swirls and curves, Donald trained to be a graphic artist in the last tough years of the Great Depression. He was, in short, a gentle man interested in space and lines and colors, and so easily contented that his comfort zone only rarely stretched much further than the home on Michaels Lane in Croton-on-Hudson, New York where he lived for 54 years.

Or so it seemed.

What most people did not know is that Donald Spitzer, who was 94 when he died after a short illness on November 16, 2011, was also a man of immense courage and purpose,  a combat military policeman who directed soldiers and traffic in the dark and blood on Omaha Beach on June 6 and June 7, 1944 and saved dozens, if not hundreds of lives.

Donnie, as I knew him, was my great uncle, the younger brother to my grandfather, Al Spitzer. He was the last surviving of  seven children raised on Sacramento Street in Cambridge, Massachusetts by Alexander and Katherine Spitzer. The oldest Spitzer child, a daughter named Theresa, was born in 1906. Donald’s death marks the end of an era in my family that spanned 105 years.

The story of Uncle Donnie’s bravery in the early hours of the Normandy invasion was told to me this week by Ed Malsberg, Donald’s closest friend since they met at the Massachusetts College of Art in Boston in 1936.

On June 6, 1944, Donald was a 27-year-old combat military policeman aboard an Army amphibious landing vehicle loaded with nearly 40 other frightened soldiers and approaching Omaha Beach in the late afternoon between the invasion’s first and second waves. The vehicle’s commander, Spitzer told Malsberg, decided to delay his vessel’s landing until night fell to avoid the murderous German defenses. But once the landing craft reached the beach and lowered its ramp into the surf and exploding crossfire, the soldiers didn’t move until Spitzer screamed into the dark: “Let’s Go! Get off of here or we’re all going to die!”

In a military invasion that produced 80 percent casualties during its earliest stages, Donald’s call to action prompted his military brothers to leap out of the craft and hustle to shore. Just three men were killed.

In the hours that followed, the tall and gaunt young policeman performed his duties on the beach without rest, guiding waves of soldiers and equipment to safety. At one point a colonel came by to order Spitzer to direct traffic toward a crest and dune in another direction. Spitzer ignored him. He knew there were German mines where the colonel pointed and that many Americans would die crossing the area. When the senior officer passed, Spitzer kept sending soldiers to a place on the beach that was safer.

Spitzer’s grit and determined presence on the beach, and later on the ridge above, signaling and guiding and managing the flow of soldiers and equipment, made him one of the invasion’s memorable figures. Much later in his life, while serving as the art director at the short-lived World Journal Tribune newspaper in New York in the late 1960s, a reporter at the new paper and a Normandy veteran recognized him and then wrote an article for Argosy Magazine about the “tall, gaunt, lonely figure” who directed traffic at Normandy.

“He said he never expected to survive,” said Ed Malsberg. “I asked if he was afraid. He said he was afraid but he did what he was expected to do. Troops landed and he had to stand there while the bullets were flying. If you know Donald, he seems the most unlikely person to be in that position. He was gentle, and all angles, and had poor eyesight.”

Mark Spitzer, his 57-year-old son and only child (see pix below with wife Kamila),  didn’t know many of the details of his Normandy service. “He never talked about World War Two,” Mark told me this week. “He couldn’t sit through “Saving Private Ryan.” He did say that the water was blood red.”

Donald David Spitzer was born in Cambridge on May 15, 1917, the second youngest of four boys and three girls raised in a stern Germanic home headed by an immigrant Jewish Hungarian master wrought iron craftsman. While his older brothers, Al and Richie, developed the hard muscles and the durable iron values of their father, Donald’s wiry frame and expressive spirit was clearly influenced by his sweet and generous mother.

For a time in the mid-1930s he sought to be part of the family business, making and installing great masterworks of wrought iron. After graduating from Cambridge High and Latin School he spent two years studying engineering at Boston University.

In 1936, though, he changed direction and enrolled at the Massachusetts College of Art, where he trained in graphic art and also served as the president of his senior class. He graduated in 1940 with the equivalent today of a Bachelor of Fine Arts.

During World War Two Donald was sent to Rutgers University to briefly study combat engineering but ended up at Fort Belvoir, in Fairfax County, Virginia, south of Washington, D.C. Malsberg, who also enlisted and served as a Stars and Stripes illustrator, spotted his friend there one day on a truck collecting garbage.

Months later their paths crossed again at Camp Reynolds, near Pittsburgh, a busy itinerant base, lit at night by the red fires of nearby blast furnaces, where men were mustered before being sent to Europe. Malsberg recalls that one evening, early in his stay at the camp, he was lying on his bunk and looked up to see a wooden clothes hanger with the name Donald D. Spitzer neatly spelled out in black lettering.

“He was very methodical like that,” said Malsberg. “That’s how I knew he’d gone overseas. It was an incredible coincidence. I interpreted it as showing how we were together almost all the time.”

The next time the two friends came into contact was in the late spring of 1945 when Donald, then serving as a field headquarters clerk in Belgium with access to telephones and personnel files, tracked Ed down. Malsberg was stationed in Paris. One day in June Ed took an unexpected call. On the other end of the line was Donald, who was in the city on leave. The two soldier/artists spent the day drinking cognac and sight-seeing and ended up at Montmartre, where the French impressionists used to hang out. “It was a miracle how he found me,” said Malsberg.

After the war ended, Malsberg convinced Spitzer and two other college classmates — Don MacKay and Clifford Geary — to move from Boston to New York, where they felt their career prospects were keener. The four men rented two apartments at 433 West 45th Street, a five-story walkup tenement in the Hell’s Kitchen section of Manhattan. Malsberg lived on the fourth floor. Spitzer lived on the fifth.

Among their neighbors, and close friends, was a young married couple from the Midwest, Charlton Heston and Lydia Clark, who’d graduated from Northwestern University and were starting their acting careers in New York. Donald and his friends celebrated in 1947 when Charlton, whom they called Chuck, played Caesar’s lieutenant in a Broadway production of Shakespeare’s “Antony and Cleopatra.” Lydia’s first Broadway role was opposite Chester Morris in “Detective Story.”

Donald quickly launched a successful freelance graphic design career that earned him an interview and then a job in 1947 as assistant art director of the New York Herald Tribune, one of the country’s great newspapers. He also met a young legal secretary from Amesbury, Massachusetts, who in March 1951 became his wife,  Ruth Spitzer. Three years later their son, Mark Spitzer, now an emergency medicine specialist in West Virginia and an avid rock climber and adventurer, was born.

“Donald lived vicariously through his son’s world travel and adventures while he and Ruth lived a quiet life in Croton,” said Jo-Anne Spitzer Schneider, his niece. “He really enjoyed what Mark was doing and his son’s adventurous life.”

Donald’s career at the Herald Tribune ended when the paper closed in 1966. Its newsroom and assets merged with several more papers to form the World Journal Tribune, where Spitzer was named art director. Donald served long enough to participate in the original design of New York Magazine. He then heeded Ed Malsberg’s advice to see one of his friends at Reader’s Digest, where Donald was hired as art editor for the large book division based in Manhattan.

His first book project was an illustrated Bible. Noting his company’s strength in synthesizing articles and literature into short and lively reads, he joked about the company’s Bible. “Well,” he said, ” we got it down to seven commandments.” His work earned Spitzer a national design award for a book on car care, and he retired from Reader’s Digest in 1984.

By then, he and Ruth had been living in Croton-on-Hudson for 27 years in a white house just a few miles from Ossining, where Ed Malsberg settled in 1952. He took great interest in his family’s exploits, talking to his brothers and sisters who’d moved to Florida, keeping in touch with Mark, staying in touch with nieces and nephews, reading, discussing politics (he was a Big D Democrat), hanging out with Ruth and Ed and friends. His mind was sharp. He was gracious and happy. “He was cool and I loved him,” said Mark.

On October 13, 2011 Ruth died after a long illness at age 89.  Five weeks later Donald was gone, too. “He had a very stable life,” said Ed Malsberg. “He was recognized as an art director of good taste and he was pretty contented. It wasn’t a dramatic life. He wasn’t adventurous. He was a very loyal friend and people liked him.”

– Keith Schneider

The New York Times today published my article on Owensboro’s downtown development plan, much of it financed by a local tax increase enacted in 2009. Though the public spending has spurred new development and thousands of jobs in the last two years — Owensboro has generated 2,400 jobs in 2010 and 2011, more than any other Kentucky metro area — just two of the seven elected leaders who voted for it are still in office.

Nearly 40 of those new jobs are at Kentucky BioProcessing, a biotech production company (see pix above) in Owensboro. More details on the company are here.

Like other places in the United States, Owensboro is in the distressing grip of the politics of austerity and disinvestment, though that may be weakening. During the reporting for this article Mayor Ron Payne told me he is considering entering the race for a second term. The 65-year-old moderate Republican is credited with leading the work to spur downtown construction projects currently valued at almost $180 million.

The reporting and details of the Times article are based on the six months of research and interviews I did for Citistates, which prepared a lengthy three-part report — What’s Done, What’s Next: A Civic Pact — that suggested a new development strategy for the Ohio River city of 57,000. When I first got to Owensboro in May I was told by a number of people that if Payne ran again he would lose. The sense was that he’d stiff armed the city commission and local leaders into embracing the tax increase against the public will. In other words, Americans want real leaders but when they actually elect a real leader they often can’t wait to get rid of him.

The new assessment of Payne is that he’s likely to win if he runs again. He will announce by the end of January 2012.

I also learned today from Rodney Berry, the president of the Public Life Foundation of Owensboro, that six community meetings are planned to review the Civic Pact study, its 12 recommendations, and “to identify individuals and groups that may be interested in being involved in implementation.” The foundation contracted with Citistates to conduct the study.

– Keith Schneider