There are many scientists and even oil company executives who subscribe to the theory of "Peak Oil'. Many believe that we reached peak oil in 2008 and the global recession, which led to a drastic reduction in the amount of oil being consumed, is the only reason prices fell. What many people who continue to deny peak oil fail to understand is that it does not imply that the world has ran out of oil, rather that the so called "easy oil" or oil that can be found and extracted easily with conventional methods, is all but gone.
Now to find the same amount of oil have found in the past we must push into deeper offshore waters or use methods such as secondary recovery using steam or CO2, or horizontal drilling. All of these methods are much more costly than drilling a simple vertical well on land was just a few years ago. There is lots of $200 to $1000 a barrel oil left but can we afford to extract it without seeing another economic collapse? Probably not.
We have reached the peak in terms of what the world economy can bear. More efficient cars don't solve the problem that so many other things we depend on, such as fertilizer, plastics, asphalt, etc, all come from oil and have no cheap substitutes.
As the shortage again becomes evident as the economy ramps up and consumption increases we will see oil heading back towards $100 a barrel.
What About Peak Natural Gas?
So, does that mean a peak in natural gas too? After all both are fossil fuels and both come from wells, often from the same well in some areas. In the past prices of natural gas and oil moved in unison.
The natural gas paradox is this: In the past decade a technology called horizontal drilling was perfected and now shale rock, which was never before seen as a reservoir of natural gas or oil, is being exploited all across the country. This revolution is going full swing in the United States with areas like the vast Marcellus shale in the Northeast and the Haynesville shale in Louisiana, proving to hold trillions of cubic feet of natural gas. Even the die hard prophets of peak oil doom are finally waking up to the fact that we have many more years worth of this resource left.
We suddenly have over a one hundred year supply of natural gas at current consumption rates and that number has been growing by about one decade more each year since 2005. New discoveries such as the Eagle Ford shale in south Texas are adding trillions more cubic feet to the natural gas inventory. So, peak oil, yes. Peak natural gas, no way.
Shale Everywhere, A Worldwide Glut Of Natural Gas Coming
By the way, those shale beds that are full of natural gas don't just exist here. There are dozens of such areas around the world. Only because the U.S. pioneered horizontal drilling has the majority of drilling been done here. As we begin to export horizontal drilling to China, Australia and Western Europe, the worldwide glut of natural gas supply will only get bigger.
Why We Need To Switch To Natural Gas Right Now
Natural gas is a low carbon fossil fuel. It produces from one third to two thirds less CO2 than oil or coal when it is burned. It can power cars, trucks, trains and be used in small home fuel cells like those made by Clear Edge power. I was amused to see natural gas powered fuel cells in the spotlight on ABC news last week. The story made it sound like home and business fuel cells were a brand new invention. The fact is they have been around for over a decade and there are already hundreds in use around the country. About the size of an outside air conditioner, they make electricity, as well as hot water and heat, cleanly from natural gas with far less CO2 produced. Home fuel cells cost about $20,000 and cut energy bills by thirty percent. They are ideal for business such as restaurants and laundromats since they make hot water as well as electricity.
Natural gas can also be refined into gasoline by a catalytic process called "gas to liquids". There are gas to liquids factories being built in countries like Malaysia and Qatar but none here. Why is that you may ask? I personally believe that it is because of resistance coming from the oil and gas industry itself, and the refiners who stand to make even more money as the price of oil goes up.
Converting The Economy To Natural Gas Means Thousands Of Jobs
The conversion of vehicles to natural gas, building domestic gas to liquids plants and fuel cell manufacturing plants will add badly needed jobs to our economy. Unlike "make work" projects that will leave few lasting benefits, converting our country to run on natural gas will spawn lasting jobs and leave us with a legacy of energy security.
Perhaps most important of all, natural gas does not have to come from a conflict plagued region. The use of natural gas can keep billions of dollars out of the hands of nations who hate us. Every dollar we keep at home makes our country stronger.
If you care about the energy security of our country and want our government to wake up and smell the surplus of natural gas then please take the time to drop your elected officials an e-mail or letter. Natural gas won't solve all of our problems and we do need to gradually switch to renewable energy but it will take a transition fuel to get there. Luckily we have decade's worth of natural gas to do it with. And if that's not enough, scientists estimate there is a nine thousand year supply, at current consumption rates, lying frozen on the seafloor off of the Atlantic coast of the United States. All we need to do is build some high tech underwater Roombas to go down there and vacuum it up. No, peak natural gas is not coming anytime soon.
By Nolan Hart
The author works in the horizontal drilling industry and blogs about the energy industry at Energyindustryphotos.com
For more on shale discoveries in the United States see: The Marcellus Shale and The Eagle Ford Shale