Friday, June 09, 2006

Natural Gas and the End of Oil

All this month, I'm attending a seminar on peak oil run by Richard Heinberg, and one thing its doing for me is providing a lot of pessimistic data and arguments regarding aspects of the problem I had some confidence about. I count my self a peak oil moderate: there is a very serious problem here, but it is one we can handle with the right combination of cooperation and foresight. I am fond of this comparison of Peak Oil to the Y2K problem: a disaster is possible, but if enough important people actually listen to the doomsayers and Cassandras, it can be so thoroughly averted that people will wonder what all the fuss was about.

One of the keys to this work together optimism is the possibility of finding a bridge fuel to tide us over until real renewable technology is in place. In the end, we will probably all live off wind and solar energy, perhaps stored in hydrogen fuel cells, or perhaps in ordinary batteries, but we need something to tide us over until that point, because the oil is running out now. The leading candidate for a bridge fuel is natural gas, which is why I was so dismayed to hear so much bad news about natural gas at the seminar yesterday.

Oh, sweet clean burning natural gas, who knew you were so fickle? I had believed that the natural gas peak would come after the oil peak, but apparently I should not be so sure. Colin Campbell, the dean of peak oil studies, believes that natural gas will peak at the same time as oil. Heinberg said that credible estimates for the peak for natural gas range from 2010 to 2050, and there is no way to adjudicate between them. More troublingly, the production curve for natural gas is likely to look like a plateau with a rapid decline at the end, rather than a nice, smooth bell curve. Heinberg’s power point at the seminar described the evidence for this as simply coming from what is known about the discovery curves for natural gas. Natural gas discoveries tend to quickly rise to a stable rate, stay at that level for a long time, and then drop precipitously. That is what the discovery curve for North America looked like. Since the production curve generally mirrors the discovery curve, we are likely to see all the natural gas disappear from under our noses quite quickly. Colin Campbell, in this interview attributes the problem to the inability of a free market to recognize the kinds of signals natural gas supplies give when they are about to run out. On the other hand, it is also clear from that interview that Campbell never met a central planning regime he didn't like.

So natural gas production tends to drop off suddenly without notice, and could do so at any time. What other bad news is there? Well, both Heinberg in the seminar and Colin Campbell in the interview I just linked to are very pessimistic about the ability of liquefied natural gas to create a global natural gas market. Right now there is no spot market for natural gas. [correction: no spot market for liquified natural gas] The gas is [mostly] traded locally using long term contracts. From what I gather, you have to build a pipeline from buyer to seller, and agree to send a lot of gas down that pipeline for a long time. The only way to create a global market for natural gas like the one that exists for oil is to start trading in liquefied natural gas, which can be put aboard tankers and shipped anywhere. The problem is that liquefied natural gas (LNG) is expensive to make and ship. There is a 15% energy penalty right away for liquefying it, that is, you loose 15% of the energy content of the fuel when you turn it from a gas to a liquid. LNG also requires all sorts of special tankers and transfer facilities which need to be built and operated. Roberts (2004) opens his chapter on natural gas with an awe inspiring description of a massive LNG port under construction on the Baja peninsula. Heinberg and Campbell simply don’t think the expense of building all of these will allow for the kind of cheap energy we are all used to. Thus the natural gas market will always remain local.

If natural gas can drop off precipitously and at any time, and we are dependent only on local natural gas sources, North Americans are in trouble. Local natural gas is already in decline. This is affirmed both in the seminar I’ve been attending and in Roberts’ book. In other words, North America could find itself in a severe natural gas shortage very soon. Heinberg predicts more rolling blackouts in California next summer for precisely this reason.

Roberts, Paul. 2004. The end of oil: on the edge of a perilous new world. Boston: Houghton Mifflin. 0618239774.

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