A study released on 7/30/08 by Amercan Clean Skies Foundation and Navigant Consulting states that U.S. unconventional natural gas deposits are sufficient to supply 118 years of U.S. demand at 2007 levels. Newly developed fracking and horizontal drilling techniques have made it possible to recover enormous quantities of gas from tight sands, coalbed methane, and gas shale formations, reports the Oil & Gas Journal (8/4/08)
On the demand side, some leaders are starting to advocate the use of NG in lieu of petroleum to power cars. Two Congressmen, Rahm Emanuel (D-IL) and Dan Boren (D-OK) have introduced legislation to push NG into use for cars. “We’re going to have a paradigm shift in the automobile business. You don’t often get a hat trick in politics,” said Emanuel. “Natural gas vehicles solve three problems: the environment, the economy, and energy security,” he said.
Emanuel is one of the canniest politicians going, so I would not discount the possible effectiveness of his enthusiasm, particularly since he seems to be right. Of course, the problems of evolving a distributing network for CNG, of making cars available, and of providing retrofits that meet safety and insurance standards are not small. It seems unlikely that NG could take much market share from oil in the short term. But if a concerted effort, especially one that is coordinated at the national level, is made, NG might have a significant impact in, say, five years.
In the meantime, it would seem that a super-abundance of NG - U.S. production is already said to be increasing at an 8% annual rate - would have a negative impact on the price of the commodity and possibly on companies in the business of producing it. But it should have a positive impact on land drillers and any company involved in bringing NG to use in vehicles.
Natural gas is finding more demand from electric utilities. It is fairly cheap and easy to create and operate a natural gas facility for generating power, not to mention the environmental advantages over coal. Considering all these factors, a new super-abundance of gas may hinder efforts to promote solar, wind, and other renewable forms of electrical generation that may need subsidies to make them competitive with gas.
Stepping back, it seems likely that it will take some time for all of the implications of a new NG super-abundance paradigm to make themselves understood in both the investment and political realms. It will be fascinating to see just how significant this development will be.
Related Articles
|
Top Rated Comment Streams:
-
1.Hedged In661
- 2.
-
3.Smarty_Pants399
-
4.cos1000304
-
5.axelrod608297
This article has 23 comments:
-
TheRealBull
-
22 Comments
Aug 11 11:47 AMThe problem with throwing out supply numbers is the fact natural gas use is accelerating. This is especially true when you start seeing it being used as an oil substitute to run everything our transportation system to powering the grid, to the creation of oil from the Canadian oil sands.
Folks, don't buy into these so called resource estimates that the media throws out as being fact. These numbers are deceiving because they are always based on our current rate of use rather than our never ending growth model we run our economy off of. They always, always, always leave out the most crucial factor in determining the actual supply: THE EXPONENTIAL FUNCTION. If we were smart, we would plan our actual use based on that principle. We would then have far more accuracy and better planning to mitigate potential shortfalls.
But alas we are short term thinkers, only concerned what next quarters profit will bring, living like there is no tomorrow. In the end we will pay for our exploitation and short sightedness.
-
Allen Fuller
-
28 Comments
Aug 11 12:43 PMYou do have to factor in increasing use whenever you hear these estimates. If demand grows at 2% per year (which is a common assumption) then 118 years' worth at 2007 levels actually lasts for only 61 years.
If demand grows at 5% per year (which is likely, as people switch away from more expensive oil), then 118 years' worth at 2007 levels actually lasts for only 39 years.
-
pockyclips 2020
-
154 Comments
Aug 11 02:03 PM-
Jim Kingsdale
-
29 Comments
My Website
Aug 11 05:05 PM-
The Proclaimer
-
64 Comments
Aug 11 08:41 PMHow about this senerio: Biofuel from algae grown on desert & wastelands, using waste stubble not food resources, a truly renewable energy resource. Said to be the highes grade crude known! Glen Kertz's process is just one of the many that are in production arround the world. This one new source has the potential to supply all of this country's diesel & jetfuel needs within 5 years. Imagine how much fuel will be produced when others get involved. Then there is the natural gas found below the shale in the Applachian basin, 5.7 trillion cf of reserves, the deep oil fields under the Rockies, Gulf of Mexico and other coastal reserves, the Artic circle reserves reported to be 90 billion barrels and 1,640 trillion cf of gas not to mention the numerouse other finds reported recently. Energy Sortage I think NOT!
Get onboard People! Stop speculating and be ready to make the best use of the new energy resource technogies. Think about it, could all that I have written about come true? You better believe it can!
-
blanco-dee
-
17 Comments
Aug 12 01:51 AMI use nat gas every day, and as a heating fuel in the winter. If only I had a compressor in my garage I could top off my tank when I needed to, and then drive to a nat gas station when I needed alot for a longer trip than going to work.
There's plenty of basic infrastructure that could be beefed up in 10 years, and I looked into it 12 years ago to see what it would take to get a Ford E-150 van converted. The saddle tanks were overpriced at $600, but the whole conversioo was pretty easy, and most I could have done myself (carburated vehicle). That's about when BP opened their first CNG filling station in Farmington, NM mostly for fleet use(may have been (BP-Amoco at the time)
I do love the algae idea in the long term, I think of coal fired power plants with adjacent carbon sequestratioon facilities growing mass quantities of algae. Oil getting squeezed for bio-diesel, and the cellulose converted to ethanol (or liquor)
And I have 220 volt power at my house too - for a daily use commuter vehicle I could charge at home, it would be great except for the fact that GM will want to charge me $20K for one in 3 years.
I should mention I'm an investor in Canroys, because I work for the government getting involved in too many energy issues, so I have a conflict of interest in most US nat gas E&P/oil companies, and pipeline companies, and soon it will be solar and wind and the larger scale project's footprints on the land are pretty hideous. I am consideriing solar on my rooftop, , but that's another utility company fiasco, even with tax breaks it is a large investement and break even in the long run.
Right now my carbon footprint is awesome - and that's fun until gas gets over $5, I only have 3 gas guzzlers and an electric or nat gas 2 seater would help alot.
Does anyone know if T. Boone Pickens actually said "If you don't rush the monkey, you'll get a better dance" ?
have a good one,
BDO
-
john s. gordon
-
707 Comments
Aug 12 08:43 AM> jack
-
Paul Killinger
-
1024 Comments
Aug 12 10:21 AMSo maybe the OPEC did us a favor. It seems we're finally beginning to WAKE UP to the idea that the U.S. has tremendous energy resources. It appears the high price of imported oil has unleashed a growing number of viable solutions to our energy transportation dilemma.
It is useful to note that these answers may be REGIONAL, and that a "one size fits all approach" is not optimal. When gasoline was cheap and abundant, it made sense for oil companies to set up and operate a nationwide system of gas stations. As this type of infrastructure grew, it served us well for over a century.
But today the energy layout is different. I live in Louisiana, where NG is abundant (oil companies once gave it away for FREE to communities in return for pipeline access), and we grow large amounts of sugar. NG is also plentiful in Rocky Mountain states like UT and OK, where they have CNG stations that sell to the public for less than $1 a gallon.
Texas has oil, gas, and wind. Florida has offshore oil and gas and sugar. Montana and the Dakotas have plenty of wind, and are building our nation's first new refinery in 30 years for the oil in the Bakkens. CO has its oil shale. CA has offshore oil. IA and NE like corn ethanol. Solar is optimal in the Western deserts. PA and NY are cashing in on Marcellus gas. There are over 200 years of coal reserves in the Appalachians and Rocky Mountains. Offshore AK (they've got it all!) and SC hold the world's largest reserves of gas hydrates.
I could go on and on, but you get the idea. When Jimmy Carter was president, the Congress placed a moratorium on using NG due to shortages. Once freed up, the markets have now discovered a 100-year surplus. The point is the federal government needs to STOP trying to pick winners and losers.
They can invest in R&D perhaps, and possibly incentivize conservation in the tax code. But beyond that, they need to get out of the way and let PRICES and MARKETS do the job. As we've proven over and over, we'll be just fine then, thank you.
-
john s. gordon
-
707 Comments
Aug 12 10:48 AM> jack
-
Paul Killinger
-
1024 Comments
Aug 12 10:48 AMI read alot in these pages about electrifying our transportation system, both rails and highways. We did the rail part once with considerable success in the heavily populated Northeast corridor. Entrepreneurs and private companies provided the funding.
More recently, this system has been taken over by publicly subsidized entities like Amtrak, with typical results. They lose billions of dollars annually with their centralized decision making, featherbedded unions and mushrooming bureaucracy.
If this is such a good idea, then, let's let Warren Buffett and Wall Street do it. Indeed, they could start today. But they won't, for too many reasons to mention.
Once again, we need to allow PRICES and MARKETS carry the load if such a concept is ever going to be viable and realistic. So, let's do ourselves a favor and pretend we never heard the word MANDATES. They're just another word for stealth taxation (ie. digging into our pockets) by the federal government!
-
Paul Killinger
-
1024 Comments
Aug 12 10:57 AM-
Paul Killinger
-
1024 Comments
Aug 12 11:11 AMWell, we've got endless mandates now. We've mandated moratoria on the OCS and ANWR, mandated losing corn ethanol, mandated not even writing regulations on oil shale, mandated a dozen formulations of gasoline, mandated not building oil refineries and nuclear reactors.
Hell, we've got tens of thousands of pages of mandates on energy production in the Federal Register.
And last time I checked, all we have to show for it is a $700 billion mandate to OPEC and $4 gasoline.
-
Brian Pursley
-
279 Comments
My Website
Aug 12 11:44 AM"The industry will never run out of oil, not in 10,000 years. Some day, it may run out of customers. Every mineral industry is a perpetual tug-of-war, between diminishing returns and increasing knowledge." -- Morris A. Adelman, 1997
"Neither we, nor our grandchildren, nor their grandchildren will live to see the end of the oil era." -- Karl-Heinz Schult-Bornemann, 1997
-
NOWHEREMAN
-
1499 Comments
Aug 12 11:44 AMHas anyone here thought about the thousands of wells that would have to be drilled to maintain the flow at the rates need to be incrementally higher every year? Or where is the labour going to come from. OR the pipe that has to be laid for horizonal drilling?
Jim, You should have included the estimated costs from the article on your Website.
-
Paul Killinger
-
1024 Comments
Aug 12 12:40 PMGetting back to your usually thoughtful post, you bring up several interesting points.
1. Boone Pickens is building wind farms to support the increased use of NG for transport. In particular, he is focusing on LNG for use in heavy fleet trucks (where substituting electricity won't work), not CNG in private vehicles.
2. The safety problems cited in the use of CNG are likely overblown. It has worked well in taxi fleets in cities like Las Vegas for 20+ years.
3. If you owned a large SUV or truck and had an NG connection to your house, you could convert it to CNG and buy a "Phill" manufactured by FuelMaker Corp., and fill up at home at night. (Many of these owners are $10-15,000 "upside down" in their vehicles now due to $4 gasoline prices.)
4. The Big 3 automakers offered "dual-fueled"... (gasoline+CNG) trucks and vans (and some cars, too) primarily for fleet use between 2000-05. They resell for thousands more than their gas only counterparts (on e-Bay) today, as buyers in UT and OK (where public CNG costs less than $1 a gallon equivlant) snap them up.
5. The domestic automakers could make this proven "dual-fuel" technology available again today, if only on an "order only" basis. Since I have an NG connection to my house, it would be my first choice. (Besides, it beats waiting around to go bankrupt!)
6. When the EPA tested the Honda Civic GX (the only remaining new CNG-powered vehicle sold in the U.S.) for pollutants, they said it was the "cleanest" vehicle they ever tested, cleaner than the hybrid Toyota Prius.
While LNG and CNG aren't a total answer to our energy transport dilemma, nothing else is, either. Subcompacts, hybrids, and ethanol (esp. from sugar) all have their place, and true plug-in electrics like the Volt may prove competitive someday, as well. Meanwhile, let's do them ALL and let the marketplace tell us what happens.
-
TheBIGpic
-
5 Comments
Aug 12 02:41 PM-
Brian Pursley
-
279 Comments
My Website
Aug 12 03:09 PM-
The Proclaimer
-
64 Comments
Aug 12 03:32 PM-
Jimbo
-
142 Comments
Aug 12 04:42 PM-
surgcare
-
153 Comments
Aug 12 08:46 PM-
mouth
-
47 Comments
Aug 12 09:14 PMto think that manufaturing could have a big impact on major fuel economy. Simple solutions
-
Paul Killinger
-
1024 Comments
Aug 12 09:33 PMI pride myself on being as skeptical as the next guy. But just because something's "different" doesn't mean we shouldn't keep an open mind to it.
There are 5 some million vehicles that run on forms of NG around the world, although only a small fraction of them are in the U.S., mostly in UT, OK, CA, and NV, as well as vehicles fleets. If NG power is such a problem with explosions and insurance, how come we haven't heard about it?
As regards price, NG has sold historically (and does today) at about HALF the energy price equivalent of gasoline. UT and OK drivers fill up right now at public CNG stations for less than $1 per gallon.
As for availability, we're reading a post that says the U.S. has a 100 year supply, and Boone Pickens is building wind farms to take NG off the electric grid as we speak (for use in heavy LNG vehicles).
Does that mean NG will replace gasoline as an automotive fuel? Of course not. But it way well prove itself a partial answer to our sending $700 billion a year we can't afford to Chavez and the Arabs.
(As the General in the movie War Games famously remarked, "I'd pi-- on a spark plug right now if I thought it would do any good." I'd say that fairly sums up the position we're now in oursleves.)
-
Kunst
-
762 Comments
Aug 17 11:10 PM