Natural Gas - Fuel to Transition to Renewable Energy?
Natural gas is a vital source of fuel primarily used for electricity generation and heating in homes. It is also used as a feedstock for many organic compounds used in industry such as methanol and hydrogen. For peak oil optimists, natural gas is described as a possible fuel to help us "transition" from petroleum energy to various forms of renewable energy such as solar, wind, and hydro.
Natural Gas Background
Natural gas is an extremely clean fuel when combusted/burned and has the lowest amount of carbon emissions for any fossil fuel. Despite these advantages, there are many problems that natural gas must overcome. The first is that it is a gas and will only become a liquid at 77K (approximately -320F if we assume it is primarily methane) under atmospheric pressure. This leads to a problem that natural gas has an extremely low volumetric energy density which means that it is difficult to store and ship. We have only been able to transport natural gas because we have built an expensive natural gas pipeline network.
Natural Gas Production Decline
Jon Friese from The Oil Drum recently posted an article titled North American Natural Gas Production and EROI Decline. I could not possibly do the article just by trying to regurgitate the information, especially because the graphs are so vital for understanding the situation we are in. Please see The Oil Drum's article to see the details in depth.
I will state though, that the future of natural gas in the United States and Canada does not look very promising. Based on an extrapolation of the EROI trend line for Canada, it appears that natural gas may not be technically feasible to extract after 2014! This is significantly sooner than the government agencies have predicted based on their reported reserves.
I am always wary of extrapolations. However, I find that the analysis is sound and also looks at historical data to compare trends. It is not exact, but the analysis and extrapolation will give us a good idea where natural gas production is heading. To quote the conclusion of the article:
"The natural gas industry has clearly been mounting a heroic effort to keep natural gas production on plateau in North America. This effort has raised costs dramatically. The EROI of Canadian production shows a rapid decline. Drilling statistics suggest a similar EROI decline is happening in the US. The falling EROI makes it impossible for natural gas production to maintain both low costs and current levels of production. It is clear that most of the reserves in the official forecast will never be developed. Jean Laherrere’s predictions are more likely to be correct. And if EROI continues to fall at the current rapid rate, he will be remembered as an optimist."EROI - The forgotten statistic
What is EROI? It is an acronym for "Energy Return on Investment". Simply put, it is the amount of energy that a resource has once it is extracted, divided by the amount of energy used to extract it or Available Energy/Input Energy. According to the article, some natural gas fields peak at an EROI of 40:1 but then decline rapidly. See the article's graph for the trend of EROI.
This is particularly worrisome because it shows that the "Break Even" point according to the extrapolation of the trend line is 2014. After this point, it will take more energy input than energy available from the natural gas extracted. This means that it is no longer worth it to extract the natural gas because we spend more energy than we can recovery.
But I thought that the "Market" would solve our problems
Economists from the Chicago Economics school of thought, strongly believe in free market forces. The people believe that peak oil will be a non-issue because alternative forms of energy will become "available" as the price of oil and natural gas increase. This analysis has also been used to argue that we will "never run out of oil" because there will always be oil in the ground. The recoverable reserves are defined as the resources that we can economically extract and the recoverable reserves can increase when prices rise. That is, as prices go up, oil that was previously not economical to recover, will become affordable. Or so the theory goes.
The free market economists fail to recognize the physical and thermodynamic LAWS that NO market can solve. As the price of energy increase, we will afford to dig down further, pump oil further to a certain extent. But there is a limit to the amount of oil we can physically extract. As we dig deeper we expend more energy per unit of energy recovered. Once we approach the "break even" point, it will no longer be rational to extract the oil, no matter what the price is.
It doesn't matter if oil is $1 per barrel, or $1 million per barrel. If we need to use more than one barrel of oil to extract one barrel of oil, it won't happen.
My Thoughts
Just like with petroleum reserves, it appears that government agencies have once again overestimated the true recoverable reserves. They still believe that the "market" will ultimately balance the cost and therefore demand of oil/natural gas (or whatever natural resource is estimated).
However, for as stated above, cost will not be the only factor that will determine the amount of fuel we will be able to be able to extract. The Energy Return on Investment (EROI) will determine the physical limitations to extracting any resource and will ultimately determine the amount that we will be able to recover.
It will be interesting to see whether or not Jon Friese's analysis is correct and that the EROI is indeed in a sharp decline and if we will reach the "break even" point by 2014. If it is indeed correct, we have many problems ahead of us and will not be able to count on natural gas to transition us to renewable energy. Let's hope for the best but prepare for the worst.
- The Party's Over - Richard Heinberg: Book Review
- Fuel of War: Article Review
- Shell CEO Virtually Admits to Peak Oil
- Energyville Part I: How Will you Power it?
- Energyville Part II: The Discussion
- The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century - James Howard Kunstler
- Resource Wars - Michael Klare
- The Party's Over: Oil, War And The Fate Of Industrial Societies - Richard Heinberg
Review - PowerDown - Richard Heinberg
- James Howard Kunstler
- Richard HeinbergRecommended Movies:
1 comment:
I believe that one should not short-change the power that economics play in resource procurement. While one may contest that fossil fuel is the only source of energy, economics would dictate that at a certain price, the market will shift towards a substitute. This is not to say that some will be willing to pay for the high prices of oil, but all profit-maximizing firms will gain no marginal benefit from the additional marginal cost of trying to use oil.
I believe in general, peak-oil aficionados are too single-tracked into believing that oil is the only source of energy that the market has...this is short sighted and all-too pessimistic.
Historically, economics in the grand scheme has always been the invisible hand that guides consumption and I don't believe that peak-oil is as large of an issue as some may lead to believe.
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