Gas supplies continue to be negotiated
Posted by Heading Out on April 4, 2006 - 3:06pm
Production growth hasn't followed the increase in reserves, noted Chris McGill, AGA's managing director of policy analysis."In 2005, over 27,000 gas wells were completed in the United States, which is the highest level of completions on record," he said. "However, most of these wells were drilled onshore in shale, tight sands, and coal seams, which are low-yield and slow-yield resources."
"Despite record-level demand and prices, federal policies continue to drastically restrict exploration and development, drastically limit supply of domestic natural gas," said NAM President John Engler in a speech last week to the Economic Club of Pittsburgh. "And remember, natural gas is by and large a regional market -- unlike oil, we cannot ship in additional supplies from the Middle East or Russia to meet growing demand."
He appears not to have heard of LNG, a world resource that seems to be growing. While given that we don't have the resources yet to fill all the anticipated gap, BG has shipped 40 cargoes this year of which a third went to the US, and Europe and Japan were also strong customers. Increased profit came, however, as the Guardian reports, more from increased prices than from increased sales volumes.
Analysts at Citigroup said the first-quarter performance of the LNG business was roughly double consensus expectations.The question remains as to whether the production rates will be able to meet market demands, given that the Asian-Pacific demand continues to rise. Schlumberger reports
About one quarter of Russia's gas exports will go to the Asia-Pacific region as of 2020, compared with about 5% now, and the proportion of Russian oil exports to the region will increase tenfold to 30% from 3%, Industry and Energy Minister Viktor Khristenko said Monday.And Gazprom continues to expand its activities, with discussions now going on with Bolivia and Tajikistan. Perhaps this is not surprising given thatRussian gas supplies to China may reach 68 billion cubic meters by that year, being pumped through two pipelines beginning in 2011, Viktor Khristenko said.
Gazprom is the largest gas company in the world with an approximately 20% share of global gas production, controling almost 60% of Russia's gas reserves and producing about 90% of Russian gas, according to the company website.(Actually that's a bit out of date the website now says 25% of world gas production.) Meanwhile possible partners for development of the Shtokman field are being interviewed prior to a decision within the next two weeks.
However, while supplies from Russia may still be questionable, the supply from Qatar appears to be becoming a little more assured. Qatargas 3 and 4 are now being developed to produce about 1.4 bcf per day of LNG equivalent, that will be supplied mainly to the US, with delivery from Q3 coming in 2009, and that from Q4 in 2010. However it should be remembered that the US need, by that time, will likely exceed 5 bcf per day, though this should supply more than 50% of that need. Incidentally the vessel cost alone for the project will be $2.5 billion.
Meanwhile, after getting a natural gas pipeline promised by Russia, and having got a pipeline for oil from Kazakhstan, China has now signed an agreement with Turkmenistan for a natural gas pipeline. Which is probably something that the government of Ukraine might worry about (if they didn't have enough domestic problems) given that the reduced price that they are supposed to get for Russian natural gas is predicated on blending cheaper Turkmen gas with the more expensive Russian gas. But if the Turkmen are now going to be selling their gas to China at perhaps world market prices . . . . .
But don't forget that Russian gas lines to Europe still pass through Ukraine, and that if current political problems go away, the alternative Baltic Sea pipeline still won't be flowing gas into Germany until the next decade, leaving Western Europe, to a degree, still at the hands of the Ukrainians. Which may be bad news for the Italians and those in the UK.
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We have a crunch in production, prices force adjustment, and we end up with roughly the same production in a few years.
Growing reserves, declining production (if true) is a good step towards an easier transition. A gentle downslope.
In both cases, nonconventional production will primarily serve to slow the rate of decline of total production.
Given that you've got basically only two alternatives, pipelines or LNG for transport and also that both involve long-term contracts in most cases, the scramble is on now to secure supplies up to 5 years out and beyond. I'm not saying there isn't a spot market. But the major positioning (eg. the US with Qatar, the Russians with the Chinese) is going on in the present. I wonder if people appreciate the importance of the current geopolitical positioning over securing future natural gas supplies.
Also, aside from our (US) current importers, does the US have any deals going (outside Qatar, 2009) with any other major new LNG suppliers? I'm only aware of Shtokman (Russia) being a new US supplier but that's years away as well. Also, the Alaska pipeline is 7 or 8 years away. The next 3 years look shaky for US supply and it's still tight after that if everything goes as planned--which never happens.
According to the BG Webpage the US has commitments as follows Note that this is only for Lake Charles and Elba Island. I think the Nigerian Train 6 is aimed at a different destination. Chevron lists several potential sources for Point Pelican and the Baja California terminals. Poten lists several new sources including Oman and Australia that have just come on line. Though the comment in that report that "From a performance perspective the industry is showing strain across the board," isn't particularly encouraging, but could be just due to the shake-down of a lot of these newer operations.
Sorry, I am not a chemist or refinery engineer, but I recall calcium carbide lamps where pellets and water generated a flammable gas. Couple of links for youngsters:
http://wasg.iinet.net.au/clamps.html
http://www.epa.gov/ttn/chief/ap42/ch11/final/c11s04.pdf
Instead of turning natgas into LNG, would it be safer & cheaper, and have a higher ERoEI to turn the gas into a dry chemical similar to calcium carbide?
To heat your house: pour a bag into a tank and add water?
To power your car: pour a bag into a tank and add water?
Forgive me if this topic has been thrashed before.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Most of the process water is recovered and recycled. Pelletizing the oil sands and using the pellets as a fuel source is an interesting idea that I have not heard before.
One problem may arise from the fact that at the microscopic level each sand grain is "coated" with water with the oil on the outside of that coating. Trying to burn this as raw fuel might be like trying to burn green wood.
This lime is then heated in an electric arc furnace with coke. The coke is produced from petroleum or coal. Both sources waste energy and usually the release of some carbon dioxide. The electric arc furnace produces calcium carbide and carbon monoxide. Normally excess carbon is required over the stoichiometric ratio. The process is heavily endothermic and I believe not very efficient. I could not find exact figures but there was one reference to the possibility of increasing the efficiency by 22% which implies a low starting figure. The carbon monoxide is usually burnt to help heat the reaction producing more carbon dioxide.
The acetylene is produced by the action of water on the carbide which gives off the gas and produces calcium hydroxide. This gives off heat but this is usually wasted. The acetylene lamps still sometimes used for caving produce the gas in a box that straps to your waste and gets quite hot.
Finally you get to burn the acetylene to produce carbon dioxide and steam.
Roughly speaking for each ton of calcium carbide 1.8 tons of carbon dioxide is produced before the acetylene is used and 1.1 tons of carbon dioxide is produced in burning it. Which would mean a maximum of 38% efficiency from this alone and in practice would be well below this.
In principle you could absorb a quarter of the carbon dioxide in the calcium hydroxide turning it back into calcium carbonate and leaving an overall reaction of carbon plus oxygen gives carbon dioxide but I doubt it will be practical.
I think you could get better efficiency by burning the coal directly in a coal fired steam vehicle.
No. Huge losses in the conversion process, and harder to transport and distribute if turned to solid.
A much better idea would be to turn the nat.gas to methanol or to use gas to liquids. Both processes are very efficient and not that capital-intensive.
United States stopped the supplies of spare parts for the F-16 aircraft to Venezuela
http://www.itar-tass.com/eng/level2.html?NewsID=5780212&PageNum=0
then
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/04/04/wchavez04.xml
i call them mercs not independant contracors
http://www.worldtribune.com/worldtribune/06/front2453824.0319444444.html
and for fun
Yesterday, the Center for American Progress held a discussion about how to hasten the arrival of the "After Oil" era
http://www.americanprogressaction.org/site/apps/nl/newsletter2.asp?c=klLWJcP7H&b=700005
lmao
Yup.
Until it hurts. Literally.
http://www.cnn.com/2006/EDUCATION/04/04/doomsday.professor.ap/index.html
Look's like doomers aren't getting good rep these days.
I bet the students were asking the Prof to go first!
When HO and I post these stories on natural gas supply, people here at TOD do not seem to appreciate the scope of the problem, particularly as gas supplies for North America goes. This is reflected in the pausity of replies to these posts on the subject.
The near term situation could not be more serious and the longer term (involving LNG, drilling for unconventional gas resources, etc.) is not much better.
I would suggest that this is where the action is, even as we consider the apparent current plateau of global oil (all liquids) supplied to the markets. As to how that trend will play out in the next few years, I don't know. But the crisis in the natural gas situation is clear. There are many competitors for the resource, as HO's post makes clear. How this will turn out is anyone's guess but the various stories published here at TOD are alerting us to a very precarious situation.
Just a warning and food for thought.
In almost all areas of North America (except Quebec & New foundland) NG is burned for peak electricity. In Texas, OK & LA natural gas is burned 24 hours/day. New wind will displace some of that.
Also, Canada and US could agree to run the Niagara Falls hydropower plants at full capapcity during the summer. The equivalent of an extra nuke or two during daylight hours.
Not enough, but a good start.
SO how do you tell someone there's a problem when they see we still have a ten year supply of NG?? How does this relate to a short term problem?? I don't believe the average joe will look at this figures and believe we have a problem, IMHO.
IMO the NG issue requires more investigation.
The situation in the UK was particularly troubling as it illustrated what narrow balance, a cold snap and a fairly minor supply issue could do.
I am a little bit confused how the storage numbers look as good as they do in the U.S. given the hurricane shut in situation in the GOM. Chalk it up to the warm weather, but that does not intuitively seem to be an adequate explanation.
Back to your comment: Maybe oil has more sex appeal?
Rick
I continue to maintain that the typical household in the US will find it easier to reduce their gasoline consumption by 10% than to reduce their natural gas by a similar fraction. With no disrespect to Stuart's thoughts on vehicle miles, the household can accomplish the reduction by changing behaviors: some car-pooling, some errand-combining, giving the teenager the car less often, etc. I believe that the same household will find it much more difficult to make the natural gas reduction by behavioral changes -- they're going to have to make capital improvements. Lots of people can reduce their miles driven next week; far fewer of them can have their furnace replaced or new windows installed in the same timeframe.
However, I'm even more concerned about the impact of natural gas shortages or steep price hikes on affordable electricity supplies. As this graphic shows, while GDP growth has become less dependent on total energy use, the disconnect from electricity use is much less pronounced.
We have already had a lot of demand destruction, as industrial users shut down or moved overseas where natural gas was cheaper, and we can still cut back more. Plus, we are sort of prepared for shortages with natural gas (and electricity). Customers who are willing to be cut off when supplies are tight get lower rates. (I get sent home from work during power emergencies for that reason.) I don't think we have any similar mechanism with oil or gasoline.
From the US, when I see a title "Gas supplies continue to be negotiated", I think gasoline for cars, not natural gas.
I realize that most other parts of the world do not think like that.
But, I only think Natural Gas when I see Natural Gas.
Of course, once I read the discussion, I figure it out...and yes, I am attempting to change.
Rick
(1a) reassesing existing firlds using the latest data
(1b) reassesing existing fields based on better producability (more wells, enhanced recovery treatment)
(1c) reassesing existing fields using a higher assumed price (can invest more in fields)
(2) new discoveries of gas (mostly in non-conventional fields these days)
The amount of gas which can be stored in the USA appears to be somewhere near 3.5 TCF - storage generally peaks around there and is now at about 1.7 TCF. See USA natural gas news and analysis at Natural Gas Weekly Update.