Friday, September 16, 2016

We Still Despatately Need a Natural Gas Bridge

[This is a republication of part of an article I wrote back in 2011, when oil was marching up to its highest average price ever in 2012. Now a shale oil blitz has taken everyone's mind off the need for anything but oil. But as I will show in a future article, this may not last very long. In the meantime, when we should be using the shale reprieve to help in a scramble to get our transportation switched over to natural gas, we are instead leaving the Natural Gas Act of 2011 dead in the Congress. This will come back to haunt us in the years ahead]

I have said in many past writings over the years that the US is the global village idiot when it comes to energy policy. I'd like to reiterate that here. But there seems to be a change happening in our Washington D.C. that is warming the heart of me, T. Boone Pickens, Jim Cramer, Harry Reid and a whole new army of nat gas fans.

I have described the danger of trying to safely get to a post carbon world without a carbon bridge. The problem with solar, hydrogen, ethanol, and wind is that they take about as much fossil fuel to make these forms of energy as the energy it gives us. They do not displace much fossil fuel if any. There are exceptions, like sugar ethanol; but until we have a good scientific handle on what is really worth a big infrastructure build, in net energy terms, we desperately need a good old fashioned high net energy bridge fuel - like natural gas.

Even before the fracing revolution of the last 5 years, there was a span of about 25 years between the Hubbert calculated peak production of conventional crude oil and the corresponding peak for conventional natural gas. As we pass the oil peak, and I'm referring to oil from conventional pressurized reservoirs which takes relatively little energy to retrieve, the still climbing nat gas curve starts to form a criss-cross where we embark on the "bridge" to a stable energy supply for the next couple decades. If you put all the forms of energy on a time-line, you see this bridge and its relation to the developing fuels of the future: (click to enlarge)

You basically have the huge separation by scale between the fossil fuels and the renewables. The fossil fuels are here and now while the renewables are a tiny fraction of our supply and aren't going to replace fossil fuels any time soon. This is why Washington's veto of anything with carbon in it is so dangerous. It prevents maybe a fraction of the CO2 that gets emitted by volcanoes and other natural sources, but surely cripples a massive share of our energy supply and keeps a post peak-oil bridge from being built for the civilized world.

As the chart shows, a twenty year bridge can be built on either coal or nat gas. Coal has two major problems. It is dirty, and it is of questionable net energy. You can burn it as has been done for hundreds of years with decent net energy, but poison our globe. Or you can go the CTL route (Coal-To-Liquids) and put coal derived fuel into your gas tank without having to burn it. The problem with this is that the EROEI (Energy Return On Energy Invested) calculations I've seen for this process are all over the map with most of them around 3.5 or so. This doesn't do much good in displacing crude - you need around 6 or higher, nat gas and oil are estimated at 8-11 currently. CTL certainly needs to be developed, as Sasol SSL and others are doing. But we know that nat gas is 30% cleaner than the oil we're using and we know that the shale gas net energy, at least for now, is good. The recent tech breakthrough in fracing, by the way, pushes the nat gas peaking curve much further out into the future.

The combination of peak oil and gas fracing has radically altered the oil and gas markets. Traditionally, one could judge valuations of the oil or gas price by just multiplying gas by 6. But the last 5 years has seen the end of this age:

We are now entering an era of troublesome oil prices and cheap nat gas. I still see arguments that gas must rise because it's so out of sync with oil. But that won't happen until a massive switchover of usage happens from oil to gas.

Which brings us to The Nat Gas Act of 2011. This bill was introduced into the House mid year and now has been sent to the Senate as of late November. It used to be mostly a Republican idea, but it is gathering strong bi-partisan support with Senate Majority Leader Harry Reid a key ring leader. This bill would give tax breaks to the purchase and usage of trucks designed to run on nat gas, and other gas infrastructure incentives. It's strengthening support is chronicled in DC Tripwire: NAT GAS Act: Is The Time Finally Right ?

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