[JRP3]

As long as we can put the next well in your front yard.

[seahorse3]

We hear lots of "news" stories lately about all the natural gas in the US. We hear its clean and plentiful and will make the US energy independent again, restoring us once again to our former status of a nation of plenty that needs nothing else from the rest of the world. We are literally told we have this vast, virtually untapped, clean energy source that can get us all off of dirty oil that is not only literally dirty and emmitting greenhouse gases but has dirtied third world politics and our own politics since it was first discovered. But is that true?

Let's start from the beginning. The US was a lot cleaner 200 years ago when the War for the West wasn't yet won and hundreds of thousands of native Americans still drank from streams and lived off the land eating buffalo. But the "West" eventually won the war, killed off the buffalo, and "industrialized" the nation linking each coast with the railroads powered by coal. So, what does that mean? It means our industrialized economy is inextricably and forever linked to energy to power 250 million automobiles in the US and countless trains and planes. Right now, all those trains, planes and automobiles are powered with oil.

So, business as usual in the US and West means we need oil and lots of it. The US uses about 18 million barrels of oil per day. The US produces less than 8 million barrels a day. So, if the US is to be independent once again, and if its economy and world economy are to grow, we need more oil, and lots of it. GDP means we make more stuff. To make more stuff, we need oil to make it.

Now, for some odd reason, we aren't producing more oil. The world produces about as much oil today as it did in 2005, even though oil prices are twice today what they were in 2005. In 2005, oil was about $40 per barrel and its about $100 a barrel as I type. So, if the price is higher, why aren't "they" producing more? Well, there is a lot of disagreement about that. It has the economists scratching their heads because higher oil prices are supposed to increase production but it hasn't worked. So, people get pissed and yell at politicians to do something about it. Politicians, being politicians, blame it on Middle East politics.

All that to say, if we are to continue this illusion of a perpetual goldilocks future with retirement for everyone, we either need more dirty oil or something to replace it. Maybe something "cleaner" like NG?

So, if we are to be energy independent using our NG, the question is, can all the planes, trains and automobiles be powered with NG? Is NG the answer its touted to be? Enter the natural gas industry. We've been inundated lately with all the news that "shale gas" is going to make the US energy independent once again. The NG industry is running lots of commercials about powering America's future. But I'm suspect. In America, commercials are intended to sell something, so what are they selling? Where is the product? If NG is the answer, why aren't there any NG cars for sale in my county? Why aren't there any NG stations in my county? Usually, when I see a commercial, the product is there to buy. So, where is the NG car? Where is the NG filling station? Commercials without products? What gives? Why, if NG is the answer, are only 114k cars out of 250 million running on NG? Doesn't sound like the answer its claimed to be.

Okay, if not now, when? If that is true, when is it going to happen that all our cars, planes and trains will be fueled with NG? Remember back in 2008 when former oilman Boone Pickens lead the political charge with his Pickens plan to get the US energy independent and off of foriegn oil and onto cheap US natural gas? Well, nothing has happened. Why? The reason NG is cheap is because, despite the hype, its not a replacement for oil. We simply don't use it as a transporation fuel. All the the NG they pump out of the ground just gets put in storage tanks. We keep adding more to storage, decreasing prices making it less economical to drill, but all this NG doesn't get used for anything, not transportation anyway, which is what it takes to be "energy independent." We don't use it to power planes, tranes and automobiles. How many US tanks use NG? How many planes use NG? There are an estimated 250 MILLION cars in the US and only 114k use NG. Big deal.

If NG is the answer to importing oil, why are Pickens and the NG industry needing legislation from CONgress to get it to happen? Why doesn't it happen based on its own economics? True capitalists always argue that government can't create solutions; energy people always say gov't needs to get out of the way and let them do there job, drill baybe drill; so if the capitalists and energy guys are right, why would the NG industry need legislation to make this NG panacea happen? The fact they need government intervention tells me, the layman, that it won't work based on the economics. Ifit takes legislation to make it work, its not economical on its own merits and its not as "clean" as they say, not if the politicians are involved. Already, we see that NG is not as clean, at least politically, its as dirty as oil. If NG was the great "hope" we've been looking for, it wouldn't need any help. It would make it on its own. This "legislation" to make NG feasible means NG isn't the answer. It is hype.

So, commercials that NG will save us from the Arabs yet no product to buy? Something doesn't add up. Maybe, they are selling a political message, hype if you will, to get us to overlook the fact that NG isn't really that clean. All this new shale gas is done by pumping toxic chemicals into the shales to get the NG out of the rock. That requires lots of fresh water we arguably don't have and, worse, dirties local water supplies. They dispose of this water by sending it to local municipalities to take care of and pump the chemicals deep into the earth hoping they never surface again. This new method of NG drilling has also been linked to earthquakes in various places in the US, Arkansas and Oklahoma to name two. So, whenever someone runs a commercial without a product, maybe they are selling hype to get you to overlook the fact that its not as clean as they hype it to be and is not really the economic panacea that they want you to believe.

[Plantagenet]

$this->bbcode_second_pass_quote('seahorse3', '
')Let's start from the beginning. The US was a lot cleaner 200 years ago

[Plantagenet]

Low natural gas prices in US fueling manufacturing boom

low natural gas prices help US manufacturing

Jobs jobs jobs thanks to frakking for NG

[kublikhan]

$this->bbcode_second_pass_quote('Plantagenet', 'A')ctually, all those horses and horse-drawn buggies meant the streets in cities and towns were full of horse-poop. Towns were filthy cesspools 200 years ago.

[Oilguy]

Massive natural gas discoveries along with new extraction techniques have led many to claim nat gas as the fuel of the future – which could ensure U.S. energy independence, reduce geopolitical risks, and help meet U.S. electricity demands for the next 575 years.
Yet why have we seen so many negative publications and reports? Does natural gas really have a place in our future and is it the golden chalice we have been led to believe?

To help us investigate these issues and others we were fortunate enough to have a chat with the well known author and energy trader Raymond Learsy.

In the Interview Raymond talks about the following:

• Why Natural gas could displace gasoline
• The top 3 forms of energy for national security
• The New York Times Vendetta Against Natural Gas
• Nuclear Energy’s place in America’s energy future
• The future of Fracking
• Why we can’t rely on coal for future power generation

Oilprice.com: What do you think is the link between say the New York Times and some of the concerns in the commodity market?

Raymond Learsy: Well, some of the reporting of the New York Times I feel is weighted too heavily on the fiction that surrounds the pricing of oil. I've written a number of posts, some of which are in my new book, some of which are in my previous book, that deal with the way the New York Times repeats without any serious, in-depth questioning the sort of general handouts of the oil industry and OPEC. For example, if Saudi Arabia says, "Oh, we're having difficulty meeting current demands," there's no insightful discussion of what their potential is, how long they've been sitting on the fence before they expanded their production capability, etc., etc. It's always taken at face value. And then, of course, you have this extraordinary series of articles that came forward earlier in 2011 about natural gas.

For the full interview please visit: http://oilprice.com/Interviews/The-Futu ... earsy.html

[Plantagenet]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('Oilguy', 'T')he New York Times Vendetta Against Natural Gas

[Plantagenet]

$this->bbcode_second_pass_quote('pstarr', '
')I hope you two have dis-invested from Chesapeake et.al.

[Plantagenet]

$this->bbcode_second_pass_quote('pstarr', '
')I guess that makes you smarter than the other playa's

[ronwagn]

I don't know if or where I fit in on this blog, but I am a proponent of natural gas as a cleaner and cheaper fuel than gasoline and diesel. My goal is to use this resource worldwide for the benefit of all economies, and for the environmental benefits. I would appreciate any suggestions on threads along the alternative fuels line etc.

This is my spiel: Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, vans, buses, locomotives, aircraft, ships, tractors, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It lowers CO2 emissions. Over 2,600 natural gas story links on my blog. An annotated bibliography of live links, updated daily. The big picture of natural gas.
ronwagnersrants.blogspot.com

[kuidaskassikaeb]

Dear Ronwagn;

I gotta say, transportation is not a good place for this stuff. Having just spent 2 days at a natural gas explosion,
not this one. This one is great if you like to watch things blow up.

http://www.youtube.com/watch?v=QTQrVXEPQrM

This one was actually using liquified natural gas. A car would probably used pressurized gas.

Since 100 cubic feet of gas contains about the same amount of energy as a gallon of gas 20 gallons of gas would require 2000 cubic feet of gas. A 10 gallon tank is about 2.5 cubic feet. So the gas would have to be pressurized to say 800 atmospheres. Well thats too much so lets so 4000psi. That is a bomb , even before the gas burns, and causes another explosion. Frankly I just don't see how you can solve this problem.

[ronwagn]

It is actually safer than gasoline, and has been used since the sixties. Gasoline or natural gas are explosive.

[kuidaskassikaeb]

Your right.

They solved the problem by putting in a half inch thick tank that takes up half the trunk, and only gives 150 miles range, but they did solve it.

You learn something new every day.

[basil_hayden]

I'll stick with my energy dense liquid petroleum, thank you very much.

[Graeme]

Sasol's Answer to the Natural Gas Highway: Convert the Fuel

$this->bbcode_second_pass_quote('', 'T')wo weeks ago, Sasol, Ltd (a South African company) announced its intention to invest between $16 and $21 bn in an integrated gas-to-liquids (GTL) and ethane cracker complex in Westlake Louisiana. According to the company press release, the complex is expected to create 1,253 direct jobs with salaries averaging $88,000. This would constitute one of the largest foreign direct investments ever contemplated in the US, and represent one of the top ten economic drivers in Louisiana, and the state is reportedly paying $2bn in tax incentives for the privilege.

The project would yield an estimated 96,000 barrels of diesel per day, with 48,000 bb/day to be delivered in an initial phase and the remainder to follow in a second. The ethane cracker would produce 1.5 million tons annually of ethylene – a basic element used in the chemical industry.

Sasol has been in the synthetic fuels business for over half a century, deriving its initial experience in South Africa when the country was isolated during the apartheid years, and it produced liquid fuels from coal turned to syngas. In 2007, it constructed a large GTL plant to take advantage of Qatar‘s abundant gas resources, and it now has facilities planned or under construction in a number of countries such as Nigeria, Uzbekistan, and Canada.

Sasol’s move to the US is driven by the shale gas boom. As stated on their website: “Along with the de-linking of oil and gas prices, and the abundance of gas at relatively low prices in North America, Sasol is well positioned to convert the low-priced gas into high-value transport fuels.”

The technology to be utilized is the Fischer Tropsch process, the same technology to be used to convert landfill gas to airline fuel for British Airways starting in 2014. The aviation company recently announced it was committing to purchase $500 mn worth over ten years. And while tried and true, the 90-year old technology is also expensive at scale. An article in yesterday’s NY Times highlighted a cost overrun of 3X for Royal Dutch Shell’s $19 bn Pearl plant in Qatar, as well as a joint effort by Exxon Mobil and Conoco Phillips that never got off the ground.

According to the NY Times, the economics only work when there is a significant arbitrage opportunity between the price of natural gas and the price of oil, where those prices are around $4 per thousand cubic feet and $100 for oil, and production capital costs are kept in line. It works at those prices because at $4 per mmBtu, the energy contained in natural gas is priced at the equivalent of $24 per barrel of crude oil, according to the Financial Times.

Sasol’s bet is an interesting variant of the so-called natural gas highway, and it approaches the same holy grail from an entirely different angle: Clean Energy, Shell Oil and others are building out the natural gas highway infrastructure, dotting the landscape with LNG and CNG stations. Meanwhile the major truck engine manufacturers are developing and manufacturing engines to run directly on natural gas.

By contrast, Sasol plans to leave the highway infrastructure and engine conversion to those other parties. They intend to convert gas into diesel for existing engines and infrastructure (don’t raise the bridge, lower the river).

Both approaches involve investments in the billions and rely on a healthy spread between low-priced natural gas and more costly petroleum-derived diesel.

[Graeme]

This Natural Gas Find Could Completely Change the World As We Know It

$this->bbcode_second_pass_quote('', 'O')ne thing that makes the energy sector so intriguing is the constant overlap between markets and politics. In many ways, energy security is synonymous with national security, and the supply and demand needs of the oil market can make the most unlikely bedfellows. One country that has been at the center of energy and politics for decades has been Israel. For years the country has been dependent upon foreign energy sources, but a major discovery by Noble Energy (NYSE: NBL ) and its partners has turned this situation on its head. Let's look how this massive natural gas find could affect both the political landscape and the pockets of major oil companies like ExxonMobil (NYSE: XOM ) .

With a name like Leviathan, it has to be big

In 2010, Noble Energy and its partners found something in Israel's offshore region that the country had been looking for since the oil embargoes of the 1970's; its own hydrocarbons. You might say that the company and the country found more than they could have hoped for. The Tamar and Leviathan fields are estimated to have as much as 30 trillion cubic feet of natural gas, which is enough gas to supply Israel for decades even if it were to convert all of its energy consumption from coal and oil to natural gas -- with enough left over to export. Noble Energy estimates that this gas field and the planned export projects could net the country more than $130 billion in energy savings and government revenue from gas royalties.