The Oil Drum

Canadian natural gas is important in a number of ways: It provides 17% of total US NG consumption and today contributes roughly 11% [see calc at bottom] of the energy content in a barrel of tar sands oil (which will only increase with in-situ recovery growth). By no means (conventional or unconventional), can Canada be considered to have lots of natural gas, yet, we produce more than our fair share. Accurately predicting Canadian NG supply is, of course, important for all the usual North American energy security reasons and, among others: It would be nice to know if Canadians will have NG for things other than tar sands and exports to the US. Half of all Canadian homes are heated primarily by natural gas and about 6% of Canada's electricity sector relies on natural gas, a lot of which is used as peak electricity generation.

It’s well known that Canadian conventional gas peaked around 2001, but according to a continuing trends prediction case from the National Energy Board, it doesn’t appear as if unconventional gas will be playing a big part, at least compared against 2001 peak production levels. Below I summarize some predictions for future production of Canadian natural gas and try to estimate how much of Canada's natural gas will be left over for regular Canadian citizens.

I recently visited BP America's tight gas facility in Wamsutter, Wyoming on a trip paid for by the American Petroleum Institute. I was the only representative of internet media on the trip. The other reporters on the trip were from AP-Cheyenne, Casper Star-Tribune, and Natural Gas Weekly. On the trip, we spent a day and a half listening to presentations and touring facilities. We also stayed overnight at the facility BP built for visiting workers.

Figure 1 - Two natural gas wells plus solar panel - Click for larger picture

In this post, I will tell a little about what I learned. I will also look at prospects for the future -- both in terms of being able to expand operations and threats to maintaining current production levels.

US natural gas production has been flat for a number of years. We keep hearing that US production is expected to begin declining sometime in the next few years, but it doesn't seem to happen. While it is not obvious from most published data, the reason production remains level is because unconventional gas production has been rising at the same time that conventional production has been declining. In this post, I will look at unconventional natural gas, since it plays such a pivotal role.

Figure 1

Here we go again, this story is about natural gas supplies in North America and the US in particular. Lately, TOD has had some posts on Liquified Natural Gas (LNG) imports as the way to solve the North American natural gas crisis (here, here and here). The point of these posts concerning LNG is that there are real unavoidable concerns that LNG imports will not provide us with sufficient supply to meet inelastic demand soon enough by 2010 or even come anywhere close to meeting these supply problems in the period beyond the end of this decade. Beyond oil and the apparent world-wide peak in light sweet crude, the more I think about our energy problems, the more I come to the conclusion that natural gas shortages in North America are imminent in the timeframe beginning now and for the forseeable future (perhaps 5 to 10 years out or beyond). The damage this could do to the US economy is enormous. In my view, there is a real crisis pending so this post examines another whole part of the equation in future projections for providing natural gas to meet projected demand involving drilling for Unconventional Natural Gas Resources (pdf)-- an overview of what these resources are. The importance of unconventional gas (pdf) is expected to grow out to 2025.

I hope you'll bear with me here. This is one of those really long posts I do from time to time to try to understand an important issue I didn't know much about. I even try here and there to emulate HO's "techie talk" tradition here on TOD though with, I'm sure, limited success.

** -- Or, Everything You Wanted Know about LNG but Were Afraid to Ask

Liquified natural gas (aka LNG) involves cooling the gas to minus 160 degrees (Celsius). That shrinks it to about 1/600th of its original volume, allowing significant quantities of this LNG to be loaded aboard tankers for shipment overseas. When the gas reaches its destination at an LNG terminal, the gas is reheated (regasification) and shipped through pipelines to end users.

[ED: Dave's really put together an amazing post here...much to read under the fold.]