The contents below are paid advertisements. Their appearance does not imply an endorsement by The Oil Drum.
“Of all races in an advanced stage of civilization, the American is the least accessible to long views… Always and everywhere in a hurry to get rich, he does not give a thought to remote consequences; he sees only present advantages… He does not remember, he does not feel, he lives in a materialist dream.”
—Moiseide Ostrogorski (1902, 302-303)
Search The Oil Drum with Google
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
Personnel
- Editors: Prof. Goose, Heading Out, Stuart Staniford, Nate Hagens
- DrumBeat Editor: Leanan
- Contributors: ace, Engineer-Poet, Gail the Actuary, jeffvail, JoulesBurn, Khebab, Robert Rapier
- TOD:Local: Glenn
- TOD:Europe: Chris Vernon, Euan Mearns, Francois Cellier, Jerome a Paris, Luís de Sousa, Rembrandt, Rune Likvern, Ugo Bardi
- TOD:Canada: benk, Libelle
- TOD:ANZ: Big Gav, Phil Hart, aeldric
- Technician: Super G
Recently on TOD:World
TOD:Local
- Summer Streets a Success!
- Plan for Hydro-Fracture Drilling for Unconventional Natural Gas in Upstate New York
- Enjoying Life Close to Home: Fun Streets
TOD:Europe
- Russian gas and European energy security - a reprise
- Russia: There Is Life After Peak Oil
- Should EROEI be the most important criterion our society uses to decide how it meets its energy needs?
TOD:Canada
- Compressed Air Energy Storage - How viable is it?
- Oil Megaproject Update (July 2008)
- Weekend Energy Listening: Wind Power with Paul Gipe
TOD:ANZ
Peak Oil Primers
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- From the Wilderness
- Life After the Oil Crash
- Peak Oil Crisis
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Matthew Simmons
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- EcoGeek
- Eco Street
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- The Big Picture
- Casaubon's Book
- Cleantech Blog
- Clusterf
k Nation (Jim Kunstler) - The Cost of Energy
- Ecological Economics
- David Strahan
- Econbrowser
- The Energy Blog
- Entropy Production
- Environmental Economics
- European Tribune
- GraphOilology
- jeffvail.net
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
- Mobjectivist
- Peak Energy (Australia)
- Peak Energy (USA)
- R-Squared
- Resource Insights
Organizations
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
Red Queen Update
We haven't talked about natural gas for awhile - here are a couple of things to ponder:
1) Canadian crunch: From Baker Hughes, we have the following:
Canadian NG rig count:
2006 year-on-year increase in rigs (percentage):
Q1 was 128 (+31%)
Q2 was 42 (+23%).
Q3 was -21 (-5.0%)
Q4 was -125 (-29%)
Now, to 2007:
Q1 so far: -190 rigs (-34%) (first 11 weeks compared to same in 2006)
Q1 so far -78 rigs (-17%) (first 11 weeks compared to same in 2005)
Since July 2006, year-on-year Canadian NG rigs are down an average of -128(-27%) per week, and accelerating:
...............07 count........06 count.....YOY........%change
2/2/07.........431..............592........-161........-27%
2/9/07.........409..............576........-167........-29%
2/16/07........397..............596........-199........-33%
2/23/07........368..............579........-211........-36%
3/2/07.........344..............561........-217........-39%
3/9/07.........305..............558........-253........-45%
3/16/07........208..............526........-318........-60%
The decrease in the later period is presumably due to break-up (early spring).
Let's assume Canada's NG production profile per well is similar to that of the US, i.e., declining 40% or so in the first year. The 30% decrease in drilling activity should then result in a (30%) x (40%) decrease in Canadian NG supply, or about 12%. That's 2.5 billion cubic feet per day, given total Canadian production of about 20 billion cubic feet per day. Presumably, that gas won't be exported to the US, meaning Canadian exports to the US (currently a bit less than 10 billion cubic feet per day) will drop by 20% in the near future.
2) Barnett shale red queen: The Barnett shale, in the vicinity of Dallas/Fort Worth in Texas has been one of the "saviors" of US natural gas supply in recent years. It is a source of unconventional, tight gas, i.e., fracturing needed, high capital costs, high initial depletion rates. According to the Texas Railroad Commission:
Barnett Shale - Gas Well Gas Production –
January 2004 through December 2004 = 380 Bcf
January 2005 through December 2005 = 495 Bcf
January 2006 through November 2006 = 571 Bcf
For 2005 production accounts for 9% of Texas
Production.
Drilling Permits Issued –
January 2004 through December 2004 = 1,387
January 2005 through December 2005 = 2,006
January 2006 through December 2006 = 3,180
So, the number of drilling permits issued went up by 60%, and the gas produced went up by 15%. And this is basically the best we have in the US for natural gas supply at this moment! Makes you go "hmmmm".
Thanks for the update I saw a survey report last week indicating 42% of U.S Natty producers would reduce drilling if the price was less than $7.50 per MCF. At current pricing they are indeed not expanding, not treading water but creating a potential big problem for the fall. However the Estrogen Choir on CNBC is singing the praises of lower prices.
You need to know the decline from all existing wells, which is less than the new ones... If drilling activity drops 100%, production will not decline 40% because the avg well declines say 25%. In this case, and given that canadian production was previously flat yoy, a 25% rig reduction results in a 6% decline, or, with half exported, a 12% decline in exports, say 400bcf.
The 160 canadian rigs didn't disappear, they migrated south. US avg in 06 was 1290, now 1440. Nice of them, we need around 10% more each year to stay even; however, as you note, canadian production is going down, and meanwhile tar sands will take maybe 300bcf more in 07. My latest guess is that canadian exports will decline 700bcf...
Where can you get current canadian production numbers?
I think that's exactly what I said (you say 12%, I say 12%), isn't it? I probably did overplay my hand a bit, but if drilling activity drops to nothing, the production will go down somewhere in the neighborhood of 40% - take a look at this (albeit for the US) -
Follow the line downward from 2004 to 2005 (i.e., no drilling), and you find that roughly 20 bcf/d out of the 50 bcf/d has vanished, i.e., 40%. Part 2 of my comment suggests that all these rigs are being dumped into the US just to maintain production, so the loss will still be there.
The most current Canadian numbers I used were EIA, but I'm sure there's a source in Canada that's more up-to-date.
Thanks for posting the chart. I've seen it before, but printed it this time.
I think you might be looking at 2 years... 32% means what it says, look at the slope of the line dividing 05 and 06.
If canada is the same, and if they previously had enough rigs to hold production steady around 6600 bcf, then a loss of 25% rigs will cut yoy production 8%, or around 500bcf. Of course this means that exports will go down this amount plus any increased consumption, and I separately heard that tar sands will soak up at least 300bcf more this year, so I now expect exports down 800bcf, a little less than my earlier guess of 1tcf.
Also worth noting that every year new wells decline at faster rates as we drill into eg tight sands, so even tho production has held steady on account of more rigs drilling more holes the slope is steepening, exlaining why we need more rigs every year. The trend averages 1% higher/y since 1990, but is accelerating, from say .5% higher/y to over 1% higher/y now. IMO we are the coyote that ran off the cliff, and is just now beginning to look down.
http://www2.nrcan.gc.ca/es/erb/prb/english/View.asp?x=449 has some useful Canadian natural gas production numbers. They have a different pdf file for each month.
I notice that the data source you give shows that US natural gas imports from Canada were down 5% for the year 2006, compared to 2005. This was before the drop in rig counts.
It should be an interesting year. We should be able to tell by mid-summer if Saudi Arabian oil production has peaked, because inventory draw-downs cannot continue for long and they will likely be called on to increase their production to meet rising demand. In the same way, we should learn the truth about our natural gas production situation.
Natural gas in storage last week was at 1516 Bcf, 11.6% above the five year average, which would be 1358 Bcf. This comfortable number is still well below last year's figure of 1840 Bcf. If Canadian exports to the U.S. continue to fall by 5%, that would be a drop of 18 Bcf per month. If U.S. production continues to fall by 2%, that will cost us another 40 Bcf per month. This means that in less than three months we are likely to drop down to the five year average, and by the beginning of the winter we will drop below the bottom of the average range, which would be a bad thing. The decline figures of 5% for Canadian exports and 2% for U.S. production are not especially high estimates, as previous TOD posts have postulated U.S. production declines in 2007 as high as 7%.
With winter ending, the natural gas storage numbers will not be pushed around as much by the weather, and we should be able to track the supply and demand situation fairly closely. There will be a clear call for more North American natural gas this year. We will see if it can be delivered.
I don't think us ng production will decline this year, rig count is up enough to maintain prod. However, the rigs came from canada, now down 25%. Their production looks to me to be down 8%, or 500bcf, and with tar sands increased demand 300bcf would mean exports down 800bcf, but accelerating into winter.