[MarkJ]

No one needs natural gas for anything. It's completely optional.

Oil on the other hand...

This is why peak oil is much, much worse than peak gas.

Where natural gas is available, the typical new construction home in the Northeast has gas furnace(s) or boiler(s), gas water heater(s), gas fireplace(s). Many use gas for cook tops, ranges, clothes dryers, hot tubs, pool heaters, space heaters, garage heaters etc. Where natural gas is available, the majority of all existing homes use natural gas for heat and hot water as well. We perform dozens of electric-to-natural gas or oil-to-natural gas heat and hot water conversions every year in existing homes due to the lower price of natural gas and/or lower cost of equipment.

Most all commercial and industrial buildings use natural gas for space heating, hot water production, cooking etc.

Cheap natural gas is why we see so many larger uninsulated or poorly insulated, poorly weatherized homes with old windows and oversized grossly inefficient heat and hot water systems in the cities of the Northeast.

[BigTex]

All it takes is 1 home to go into foreclosure and thieves breaking in to rip the copper pipes out for scrap metal and that would instantly bring the whole street down. Imagine 12 houses being broken into and the whole neighborhood can snowball from "middle class" to "Boyz n the Hood" real quick like a feedback loop.

Now that's more scary then natural gas prices.

I always have to remind myself that silly cartoonish Cuba Gooding Jr. was pretty good in that movie.

[Starvid]

No one needs natural gas for anything. It's completely optional.

Really? Tell that to farmers who use fertilizer. Or companies that make plastics. Or anyone heating & cooking with it.

--Steve

You don't need natural gas for fertilizer or plastics. You might as well use electricity or oil/coal, respectively.

Nor do you need it for heating and cooking.

I have used a NG cooker once, on Cyprus. I was scared to death that I would blow myself up.

[Starvid]

No one needs natural gas for anything. It's completely optional.

Oil on the other hand...

This is why peak oil is much, much worse than peak gas.

Well, if that is so, then we can simply convert all natural gas into synthetic crude and put it into our gas tanks.

Or even better, just convert our cars to run on natural gas. It's very cheap.

[Starvid]

Starvid,

A little update on natural gas usage:

Over the last 20 years 75% of new homes in the US use natural gas for heating (that surprised the hell out me when I read that report...why I can still remember the stat.)

Also, most of the electrical gid in Texas is powered by natural gas. Which is why consumers are starting to be clobbered here now that they're cranking up the AC. aAl the electric utilities in the state have fuel surcharges to recover their higher costs for NG.

Most high energy consuming industries, like aluminum, rely soley of natural gas.

Perhaps you live where NG isn't utilized to a great extent. Or maybe you were just being sarcastic. But that's OK...I enjoy sarcasm butI'm a little slow so don't be too subtle about it.

There is no NG used within 500 km of my home. Except for a handful CHP-plants, no NG is used in this entire country.

It's really easy to heat homes, generate power, or run aluminum factories with other things than NG. Just as I said, NG is optional. There are easy alternatives. Not so for oil.

[FoxV]

6,000 TCF in known deposits and a 100 TCF/year consumption rate means it might be a problem sometime, but it sure isn't one of scarcity during the next couple of decades.
...
Absolutely. CBM and unconventional production completely reversed the US production decline and brought it to a new peak level, and the rest of world ignores that end of the resource spectrum. To say "there is alot more to be found" is an understatement.

Can you provide some links for details on these resources particularly the cost to exploit them.

I've seen many reports about lots of natural gas available in North America

And I've also read many reports about lots of Natural gas exploration going on.

The reports I haven't read yet is how the cost of Natural gas is coming down due to all the new supply coming online (the natural result of having an abundant resource with large scale exploration)

[btu2012]

Except for a handful CHP-plants, no NG is used in this entire country.

I bet that all Swedish agriculture is fully organic.

[cube]

Except for a handful CHP-plants, no NG is used in this entire country.

I bet that all Swedish agriculture is fully organic.

Lets be fair and give credit where credit is due, Sweden has managed to produce an economy without having to rely on NG natural gas for electricity or heat.
hydro power == 61 TWh (44%),
nuclear power == 65 TWh (47%)
or do you prefer the alternative....Do you want this man to be in control of your energy supply?

those eyes --> *scary*
instead of being strong armed I guess Europeans can use the American approach by kissing up? How's that for an energy policy?

If I was a dictator of a nation I'd give serious thought into using CHP cogeneration nuclear power plants.
That would take care of the heating and electricity issues, so the only thing left to worry would be liquid fuels transport.

[yesplease]

Here in California we won't have to worry in most cases about heating, but I've read about 60% of our electric power comes from it.

~40+%, most of the supply is in house so to speak.

I for one don't mind the heat. But we will have VERY HOT summers without air conditioning. Places like Palm Springs, Twentynine Palms, and where I grew up in the San Joaquin Valley are going to be for the desert rats only!

Welcome, to the world of tomorrow!


That being said, if Palm Springs wants wall to wall golf courses and a doubling of humidity, that's their ish.

[MrBill]

Natural gas is everyone's Plan B, so now that everyone is turing to Plan B it is not surprising the price of nat gas is going up as well. However, I think that has something to do with the time lags in exploratioin, drilling, building pipelines and then getting that nat gas to market. When crude prices were high and nat gas prices were lower there was almost no nat gas drilling going on in N. Canada, for example, over the past two years. Now that might change, but we are behind the curve so to speak.

It is also my understanding that although there are large untapped reserves here, there and everywhere we bother to look that many of those reserves will be very technically difficult and/or expensive to exploit. I think it is too early to talk about peak natural gas until we know how much is out there? Up to now it has not been profitable to even look. Up to now oil companies were just flaring it off in many cases.

You do not need natural gas to make nitrogen fertilizer. It is just the source of energy. Not a feedstuff. You can also use coal or nuclear to make fertilizer. And inorganic fertilizer is not the only source of nitrogen either. There are alternatives. It is just up to now inorganic nitrogen fertilizer made with natural gas (and lots of water) happened to be the least cost, most efficient alternative.

The market is very price sensitive, so even if, say, Australia has nat gas and wants to make nitrogen fertilizer for export, the value of the AUD might make production uneconomical at today's prices and exchange rates. Therefore that fertilizer plant might migrate to Egypt where the pound is weaker and costs are lower.

Believe it or not there are actually strategic planners in the business of making nitrogen fertilizer that examine all these factors before deciding where to build their plants. They have to take into account large capital costs upfront and long-term profitability using a variety of exchange rate and natural gas input prices when deciding whether it is profitable or not. That depends on the price they are getting for their fertilizer. If nat gas prices go up faster than fertilizer prices then those economics change quickly. Therefore, food, fuel and fertilizer should all pretty much rise in tandem. Plan C anyone?

[ROCKMAN]

FoxV,

It's difficult, for the moment at least, to speculate on the increase in NG reserves being developed in the "unconventional resource plays". I'm involved in the drilling of a couple of dozen such wells at the moment. Improvements in drilling (horizontal well bores) and completions (big fractuing jobs) has helped ramped up such efforts but is all being driven by higher prices.

I don't like to throw out wild unsupported numbers but I will. With just the results from the various NG resource plays there are many hundreds of thousands of wells that can drilled under current cost /price conditions. I just started working on a new NG resource play (that hasn't even been recognized by most) which could develop into one of the biggest in the country.

But is driven by the current NG pricing. Drop NG prices by half and many of these plays will fall apart. And there is a gray cloud inside this NG halo. These plays are very profitable because they pay back the drilling costs very quickly. But the have relatively short lives compared to the typical conventional NG reservoir. This is a big factor in the upswing in drilling activity. As production falls off from existing wells new ones must be drilled to replace them. Nearly all the big companies in the NG resource plays are publicly traded stocks. On the one hand they are ramping up there reserve base and cash flow. But as public companies they must not only replace depleting reserves but add addtional reserves. To not do so would greatly erode stock value and irritate the share holders.

A simplistic way of presenting the picture is to compare these efforts to that of a drug junkie. The companies have to have their fix (increasing asset value) or they roll over and die (or at least feel like it). There was a company here in Texas about 25 years ago that effectively killed itself with success. It drilled almost a thousand horizontal holes in an old oil play. Terrific growth in stock value. But these wells also had rapid decline rates. Eventually the entire play was drilled up and the company couldn't drill enough new wells to offset decline. Eventually the company's stock value crashed and they were sold for scrap.

The best we can hope for is a stable NG price base that supports continued development while also not hammering the economy into a low/no growth profile.

[Kingcoal]

From what I understand, when a NG well peaks, it falls off a cliff. Whereas an oil well's depletion curve looks like a bell curve, a NG well looks like a sawtooth

[ROCKMAN]

Kingcoal,

Lots of variations in the shape of decline curves fot both oil and NG. The new NG resource plays are drilled horizontally or verically receiving giant fracturing jobs. Both efforts yield very high initial flow rates that drop quickly. A 30% to 50% decline y-t-y is not uncommon. But it may produce at 5 to 10% of that initial rate for the next 10 years.

Horizontal oil wells behave in a similar way. But often these wells will start producing ever increasing amounts of water. This water production (and the asscociated processing costs) will eventually destroy the economic value of the well even though it's still producing a fair amount of oil.

Just a little advice: don't put too much stock in words like "average" or "typical" regarding decline rate. I've seen such rates vary 200 to 300% with the same formation in the same field. The temptation will always be to take "average" values and apply them to many situations. This seldom yields useful numbers.

[cube]

...
Just a little advice: don't put too much stock in words like "average" or "typical" regarding decline rate. I've seen such rates vary 200 to 300% with the same formation in the same field. The temptation will always be to take "average" values and apply them to many situations. This seldom yields useful numbers.

ever heard the joke:
"A statistician can have his head in an oven and his feet in ice, and he will say that on the average he feels fine."

Society will DEMAND some type of statistical "average" numbers be released....and I think they'll get it!

[Kingcoal]

Kingcoal,

Lots of variations in the shape of decline curves fot both oil and NG. The new NG resource plays are drilled horizontally or verically receiving giant fracturing jobs. Both efforts yield very high initial flow rates that drop quickly. A 30% to 50% decline y-t-y is not uncommon. But it may produce at 5 to 10% of that initial rate for the next 10 years.

Horizontal oil wells behave in a similar way. But often these wells will start producing ever increasing amounts of water. This water production (and the asscociated processing costs) will eventually destroy the economic value of the well even though it's still producing a fair amount of oil.

Just a little advice: don't put too much stock in words like "average" or "typical" regarding decline rate. I've seen such rates vary 200 to 300% with the same formation in the same field. The temptation will always be to take "average" values and apply them to many situations. This seldom yields useful numbers.

Thanks for the advice, but what is your point? Are you saying that NG wells, on average, don't tend to drop pressure at a much faster rate than an oil well as they hit peak?

[ROCKMAN]

Exactly Kingcoal. I've seen NG wells flow at high rates for years and then decline both slowly or rapidly. I've also seen NG wells flow a high commercial rates and then drop to a noncommercial flow in a couple of weeks.

There are three main variables (and actually 2 more that are used in flow modeling) to what determines the production curve of any well.

1. The reservoir drive method. Water drive is best explained by the nature of oil to float on water. As the oil colume is produced the rising water maintains the pressure which pushes the oil out of the ground. At the other extreme is pressure depletion. It's similar to a bottle of seltza water. As the oil is produced water is unable to flow to keep the pressure up. Just like the seltza bottle eventually there's too little energy in the reservoir to push the oil out. So you end up with half a bottle of seltza that won't squirt out.

2. The distribution of the the pososity and permeability in the reservoir. In a super reservoir like Ghwar in Saudi it almost seem like a giant cavern in the rock and not like fluid traveling thru microscopic holes in the rock (which is exactly what it's doing). At the other extreme you have the New Albany Shale gas play in the eastern US. It's the oldest gas play in the US. And there are still wells profucing that came online over forty years ago. They might flow 200,000 cubic feet of gas per day initially and drop to 20 or 30 mcfpd ($200 - $300 per day at current prices.) And then produce at that lower rate unchanged for the next 30+ years.

3. And to make it more complicated the completion technique has a huge impact. The development of horizontal completions has generated a whole new set of decline rate profiles for wells in established reservoirs. Also, fracturing the formation by pumping sand into the reservoir is a big ticket item now. Such jobs are commonly pumping 1 to 2 million pounds of sand into reservoir in order to change the production profiles.

Trust me....I really try to avoid hitting the technical issues this hard. It's hard to make the complex understandable without coming off smug. I think sites like this are critical to alerting the public to matters that we industry types saw decades. For what it's worth about 20 years ago I told my nephew that his daughters would be seeing an energy crisis when they reached adulthood in 2025. What I didn't anticpate was the booming economies of China et al and the big upswing in Deep Water oil development.

Some of these technical issues at hand are debated almost daily with my peers. Just as soon as I we think we have mother nature figured out she'll slap us with something new. As painful as it is for the avergae Joe the current high prices are allowing big experiments with new production techniques. But none of these efforts will change PO arrival but might allow us a few more years to prepare for it. Let's just hope the flurry of new production coming online in the next few years doesn't take the urgency away from PO reality.

[Starvid]

Except for a handful CHP-plants, no NG is used in this entire country.

I bet that all Swedish agriculture is fully organic.

Most fertilizer here is imported from Norway I'd bet, and at least they used to make it from hydrpower. Maybe they use gas now, but in the event of more expensive gas they could switch back.

[ROCKMAN]

PraiseDoom,

I think Kentucky folks might argue your claim but they are an argumentative group. Louisville may have had the first gas street lamps in the country.

At the moment I'm focused on tite sand reservoirs. But I've just started working on a new shale gas play that hasn't been talked about much. That's one of the silver linings to the run up in prices. Five years ago I would have been laughed out of the conference room for even mentuioning the possibility of this potential new play.

[ROCKMAN]

No PD...it's brand new and deep and expensive and a high flow rate/recover potential (potential, of course, meaning we don't really know crap yet) But if I say anymore I'll have to kill you and everyone else on the site. And that would such a waste of intellegence.

[MrBill]

And that would such a waste of intellegence.

Are you sure? ; - )