February 19, 2011
Saudi Oil Exports Drop 4.9%

Growth in domestic oil consumption in Saudi Arabia is cutting into Saudi oil exports. This trend will continue. Higher prices enable them to export less.

Saudi Arabia’s exports fell to 6.05 million barrels a day in December from 6.36 million in November even as Saudi production rose to a two-year high of 8.37 million barrels a day, JODI said.

Saudi oil exports have probably already peaked. Rising domestic oil consumption eats into exports. This is known in Peak Oil circles as the Export Land Model problem. Export Land is experiencing much faster consumption growth than the rest of the world. Export Land is exporting less as a result. This trend will continue.

What I expect will happen:

  • The peak in world oil exports will happen before the peak in world oil production.
  • The peak in US and other Western imports will happen before the peak in world oil exports.

Western nations are going to shift to lower energy lifestyles and spend more on technology that raises energy efficiency. India and China will displace Western nations from parts of the oil market. So Western consumption will peak sooner than China and India consumption. But their oil consumption will peak sooner than oil consumption in the big current oil exporters.

Share |      Randall Parker, 2011 February 19 11:24 PM  Energy Peak Oil Adaptations


Comments
theBuckWheat said at February 20, 2011 8:22 AM:

People must understand how "peak oil" relates to the fuels we need to run our vehicles and aircraft. First, we don't burn crude oil. We burn gasoline, Jet-A and other highly technical refined fuel products. These fuels are made by breaking down the hydrocarbons from a source feedstock and then using those atoms and short hydrocarbon molecules to assemble the target fuel almost atom by atom. Just about anything that is rich in hydrocarbons can be used as the feedstock for this refining process.

In a free market, supply and demand are always in balance at the market clearing price. We don't need to know a thing about the level of supply as long as the price is acceptable. In other words, concerns about "peak oil" are worthless. What counts is the price of the desired fuel product and only the price.

As inexpensive sources of crude oil are sucked dry, buyers will have to raise their bids to get sellers of crude with higher costs to agree to sell. The higher price justifies new drilling investment, but just as important sets the price that alternatives to crude oil must meet in order to be considered as alternatives to crude.

So, for example, a process that the Germans used during WW II to convert coal into diesel and aircraft fuel can break even at around $75/barrel. The US has an immense amount of coal that could be converted in this way to supplant or even replace more expensive crude oil imports. We can switch sources and the price may even go down as efficiencies improve, that is if government does not intrude and forbid the market from making that decision.

Our distant grandparents did not fret about "peak whale". When the price of whale oil for their reading lamps got to high, it became cost-effective to use oil made from other sources. Whale oil cannot be purchased any more, and I suppose coal oil is not available either. For a while people lit their homes with gas flames. However, lamp oil made from kerosene is still used, and just about any antique store will have several kerosene lanterns for sale. But few people light their homes with it. They have found that electric lamps are superior in every possible way. The free market made all those peaceful transitions possible. We did not need government to intrude and coerce any of our grandparents to switch sources of energy. And we did not see sources of energy being hyperbolized into ideological causes, or to further agendas that really were far more about the destruction of our liberties and prosperity than they were about reducing energy usage.


Nick G said at February 20, 2011 9:26 AM:

theBuckWheat,

I don't see a mention in your discussion of two things:

1) the value of forecasting future prices, and

2) external costs, like pollution.

You'd agree these are important, right? We can't have efficient markets without good information about future supply and demand (as any futures trader will tell us), and we can't have efficient markets without proper accounting.

xd said at February 20, 2011 9:57 AM:

Randall, all things being equal I think what you think will happen is more or less correct.

That said, bearing in mind that Saudi Arabia is a one trick pony then in 2015 when they have no oil left to export they won't be able to buy any imports either.
The Saudi balance of trade is oil for food and technology.

It's interesting also to note that gasoline prices in Saudi are currently running at less than a dollar per gallon.

How long can the Saudi's continue subsidizing low cost fuel at the expense of food imports? Ain't gonna happen.

The Export Land Model doesn't take into account that the export nation needs to eat.

Bruce said at February 20, 2011 9:57 AM:

"Western nations are going to shift to lower energy lifestyles"

Or switch to cheap plentiful natural gas.

India: 600 to 2000tcf of shale gas. 200 years at current consumption.

http://www.nohotair.co.uk/index.php?option=com_content&view=article&id=1767:indias-story-gets-bigger&catid=120:lng

The Peak Oil proponents are just people who secretly wish the end of western civilation as we know it. They feel guilty. They want the rest of us to suffer.

And they dread shale gas. They make propaganda movies and try and convince people that 2000tcf is just a "fad".

With cheap plentiful natural gas the kerogen in oil shale can be cooked into sweet light crude. There is 3 trillion barrels of oil in the Green River formation.

If the current US president didn't secretly hate his country, there would already be an NG "Marshal Plan" to move away from oil and to NG ... instead of the insanely costly, useless green plan to bankrupt the country by forcing a switch to costly, unreliable wind and solar.

xd said at February 20, 2011 10:05 AM:

@Bruce,

The Shale Gas reserves are there but I think you might be a little disappointed about how much we can actually bring online.

For example: we need to bring online an additional 3 trillion cubic feet of new production per year while still maintaining the current output of 20 some TCF.
Not saying it can't be done (obviously it can) but right now all we've managed with a record number of rigs is 1TCF extra per year since 2005.

I suspect that yes, natural gas will take the edge off the decline, but without the electric cars you seem to despise and without increased fuel efficiency at the same time, it's going to be hard (not impossible) to do and because of the difficulty in doing so and the profit to be earned from closing the price spread gap between natural gas and oil.

The reality is that like additional Nuclear plants, Shale Gas is one component only in a suite of technologies we need to use to countervail the increased global consumption of energy in the face of massive competition from China and other developing nations.

The idea that we're going to continue happy motoring at $1.50 a gallon equivalent of natural gas instead of gasoline or diesel is just that, an idea.

Likely all of us are going to be paying north of $5 a gallon by 2015 if we insist on using fossil fuels.

I'm going to be using electricity for most of my travel personally.

A Gentle,Bearded Left-Winger. said at February 20, 2011 11:37 AM:

What about methane clathrates? - apparenty there are enormous reserves of clathrates at the ocean's depths.
The Japanese are making serious attempts to exploit this overlooked resource.

xd said at February 20, 2011 12:07 PM:

@left-winger

There's also more shale oil in the United States than all the conventional oil in the world put together.
So far it's been technically impossible to produce. Methane Clathrates might be easier but so far nobody has been able to crack it.

@Bruce
I read the piece about India. Interesting. There's also shale gas in Australia and in South Africa in the karoo basin.

I hope you're right and I'm wrong.

Randall Parker said at February 20, 2011 1:34 PM:

Bruce,

For India 200 years at current consumption is the wrong calculation. They are industrializing, their population is growing, and natural gas will be needed to substitute for oil. So their demand and therefore consumption rate of natural gas will soar.

You get this exactly backward in my case:

The Peak Oil proponents are just people who secretly wish the end of western civilation as we know it. They feel guilty. They want the rest of us to suffer.

I want to avoid suffering and I want to avoid decline. I see the price of Brent oil above $100 (a more accurate measure of world prices than WTI at Cushing) and I see economic stagnation awaiting as oil prices go even higher.

Cooking oil shale to release kerogen: What's the Energy Return On Energy Invested? As long as EROEI is near 1 or below 1 you aren't going to see much cooking of oil shale. Several years ago Shell made optimistic projections on oil shale extraction costs and the date when they'd start to do oil shale extraction. They've backed off from their earlier optimism.

Randall Parker said at February 20, 2011 1:41 PM:

theBuckWheat,

As I've pointed out previously, past energy transitions were to cheaper and more convenient energy sources. Not this time.

I am skeptical about our ability to rapidly transition to new energy sources. Peter Tertzakian's book A Thousand Barrels a Second: The Coming Oil Break Point and the Challenges Facing an Energy Dependent World sketches out information about previous energy transitions (e.g. sperm whale oil to petroleum oil for lighting) and how long they took. Many of those transitions were to more convenient energy forms. Well, liquid hydrocarbons are the most convenient energy form, especially for transportation. So the next transition is going to be to less convenient energy forms that cost more to use.

Tertzakian's book surprised me with details of past energy transitions. More info about types of whale oil than I ever expected from a book which I expected would be about petroleum resource depletion. Whale oil itself was a step up from other animal fat alternatives that were less desirable for lighting. On each transition vested interests manufactured propaganda against the new energy source. Only today the new energy sources really are less convenient and more expensive to use.

Bruce said at February 20, 2011 2:07 PM:

xd, Shale Gas was 1.3TCF in 2007 and 3.1TCF in 2009. Its growing at 1TCF per year.

http://tonto.eia.doe.gov/dnav/ng/ng_prod_shalegas_s1_a.htm

Reserves jumped from 23TCF to 60TCF to in just 3 years.

http://tonto.eia.doe.gov/dnav/ng/ng_enr_shalegas_a_EPG0_R5301_Bcf_a.htm

And I've seen much, much larger numbers from non-government sources.

Randall, ROI on kerogen is 3-4 to 1.

"The whole process is clearly energy intensive; but Shell estimate that – on the basis of the complete life-cycle of a field – 3.5 units of energy would be produced for every unit used in production."

http://www.geolsoc.org.uk/gsl/geoscientist/features/page874.html

Bruce said at February 20, 2011 3:28 PM:

"The technically recoverable unproved shale gas resource is 827 trillion cubic feet (as of January 1, 2009) in the AEO2011 Reference case, 480 trillion cubic feet larger than in the Annual Energy Outlook 2010 (AEO2010)"

http://www.eia.gov/forecasts/aeo/executive_summary.cfm

xd said at February 20, 2011 5:16 PM:

@Bruce,

That's exactly what I said:

Shale gas is increasing at 1 TCF per year.

We NEED it to increase at 3.5 TCF per year to cover the likely decline rate (5%) all by itself.

That's why I say you're wrong to despise electric vehicles. We need them along with shale gas.

@randall,

Electricity *is* convenient. We just haven't built fast charge and/or battery swap stations in quantity yet. But we will. And this time it will be at breakneck speed.

Bruce said at February 20, 2011 7:37 PM:

xd, the EIA says Shale Gas will offset all declines.

http://www.eia.gov/forecasts/aeo/images/figure_1es-lg.jpg

And that ignores the fact that Canada also has vast quantities of conventional and Shale gas they are willing to sell the US at a very low price (the price is low because of shale gas).

And there will be huge amounts of really, really cheap gas on the spot market available because of countries like the US, India and China no longer needing to import any gas from the middle east ...

And the EIA is cautious ...

And there are Shale gas formation like Utica under existing Shale gas formations.

Nick G said at February 20, 2011 8:23 PM:

Only today the new energy sources really are less convenient and more expensive to use.

I'd say that an EREV like the Volt is more convenient - very few trips to the gas station.

And, the real costs of oil are much greater than the pump price: pollution, security costs ($500B per year!), economic dangers (trillions?)....

JAY said at February 20, 2011 8:43 PM:

Gee maybe we should start drilling in the gulf again.

Engineer-Poet said at February 20, 2011 8:49 PM:
The Peak Oil proponents are just people who secretly wish the end of western civilation as we know it.
Bruce, I need to remind you here that you're (a) projecting, and (b) not terribly bright.

Western civilization developed before the internal combustion engine and can be continued without it.  The problem is that our current infrastructure is a huge pain in the neck to run without large supplies of liquid fuels; we can electrify our heating and cooking with relative ease, but getting ourselves and our goods around without it needs a lot of planning and building that we have barely even looked at.

I think Gen IV nuclear is the fix; technologies like LFTR can run at temperatures high enough to do chemistry, creating liquid fuels and chemical feedstocks from our waste streams.  I don't see the USA overcoming the political roadblocks to this without a huge shift in our power structures, though.  This is probably what Bruce (limited as his vision is) is referring to:  he sees the "environmental" movement trying to block oil drilling (which it has mostly failed to do) and nuclear power (which it has succeeded in doing, as the cat's paw for the coal and gas industries).  So long as the USA's pols are beholded to the FF establishment, we'll go down with the FF supplies (the suppliers don't care, they'll be happy and profitable while we suffer).  The problem is that Bruce and his peers in talk-radio land don't have the brainpower to ask "cui bono?" and follow that to the real culprits.

xd, the EIA says Shale Gas will offset all declines.
Yeah, right.  Look at the EIA's past projections of world oil production.  If you don't feel like an idiot yet, you're still high.

Bruce said at February 21, 2011 9:00 AM:

EP: Insults and fantasies.

If you go to the Oil Drum, the negativity about shale gas is breathtaking, until you realize the writers and commenters are invested heavily in doom and gloom and detest any kind of optimism. They WANT the country brought down by energy probems.

Peter said at February 21, 2011 2:57 PM:

I've been reading up the last few days on tight oil. I was under the impression the the Bakken formation in ND was fairly unique, but I was mistaken. Check out http://oilshalegas.com/. There is a huge field in Texas called Eagle ford, Another in CO (the niobra) then the montery shale that goes halfway thorough the state, plus many more. The technology to get this oil (it is not really shale oil, rather conventional oil locked into shale) is new. The ability to do computer guided horizontal drilling, then "Frack" the well, opens up giant oil resources that were not considered economic before. I don't know how this will alter the picture globally, but for the US it may help. Ideally, we would be moving towards electric vehicles while increasing production of oil at the same time.

theBuckWheat said at February 21, 2011 4:07 PM:

I am amazed at how many people who consider themselves to be rational will stand on ground that overlays a 100 year supply of coal and lecture the rest of us about the need to use "sustainable" fuel sources. And they will do this while working assiduously to forbid any more nuclear plants to be built.

The truth is that we are almost literally AWASH in hydrocarbons that can be converted into liquid fuels and the ONLY issue is price. To Nick G's question: the price someone has to actually pay carries far more weight than any forecast, especially when the current price is near the break-even cost of some conversion process.

A few years ago, Dr. Theodore K. Barna. then Assistant Deputy Under Secretary of Defense published a study for the Office of the Secretary of Defense, the Clean Fuels Initiative (http://www.westgov.org/wieb/meetings/boardsprg2005/briefing/ppt/congressionalbrief.pdf) showing that the US had hydrocarbon resources that exceeded 2x that of all Arab OPEC.

One company (Changing World Technologies) studied conversion of other hydrocarbon resources. Their conclusion: there was enough hydrocarbons in our sewage sludge to replace all oil imports. Their proprietary process failed only because their costs could not be brought down to successfully compete against the price crude-oil based fuels. See: Anything to Oil, Discovery Magazine: http://discovermagazine.com/2006/apr/anything-oil

If that is not enough, we have methane hydrates, a source that the USGS said: "The worldwide amounts of carbon bound in gas hydrates is conservatively estimated to total twice the amount of carbon to be found in all known fossil fuels on Earth."
(see: http://marine.usgs.gov/fact-sheets/gas-hydrates/title.html) Sure, it would be expensive and difficult to extract and use, but the issue is costs, not supply!

Nobody can seriously propose any source of fuel that is as space and weigh efficient as hydrocarbons for use in aircraft. Sure, we may enjoy advances in electricity storage so we can use utility power (coal, hydro, nuclear, wind) to charge those batteries, but I doubt we will find it cost efficient to do so for heavy trucks. Given this trend, it is irrational in the utmost to not want to fully develop nuclear power replacements for coal fired power plants. Here in central Missouri, over 90% of our power comes from burning coal. So, anyone proposing electric vehicles is really proposing coal-fired ones.

Yet, we seriously propose to burn corn instead of coal, even committing to buying over one third of the US corn harvest no matter what effect that has on world grain prices. Contrary to progressive claims, wheat and other food prices are not disconnected from the price of corn. Because of the higher price, there are lots of acres that are now growing corn that used to be growing wheat or soybeans.


th said at February 21, 2011 4:56 PM:

sayeth the one who swears texas wind can power the world,

"the "environmental" movement trying to block oil drilling (which it has mostly failed to do) and nuclear power (which it has succeeded in doing, as the cat's paw for the coal and gas industries). So long as the USA's pols are beholded to the FF establishment, we'll go down with the FF supplies"

Where else in the world besides the US do any pols based on environmental whims of a few, deny the oil industry access to drill where it thinks large amounts of oil exist?
Exxon, since it runs the USA pols, should at least be mentioned for it's restraint when the rest of the world....it also must run?... would at least have them crawling all over probable oil rich areas. There's no question, these same USA pols would love to include the entire country off limits to any form of fossil fuel extraction, the skinny flake raised in Indonesia by a transvestite tops the list. Exxon is really behind it all, never would have thought that.

Engineer-Poet said at February 21, 2011 5:57 PM:

Quoth Bruce:

If you go to the Oil Drum, the negativity about shale gas is breathtaking
Because they know that none of the SG plays are making money on gas.  Three things are keeping production up at the moment:
  1. Associated liquids (which sell for much higher prices),
  2. Use-it-or-lose it leases, and
  3. Speculation.
The economic parts of the SG plays are also quite a bit smaller than previously touted.  Add this up, and you get much higher prices in the near future.
the writers and commenters are invested heavily in doom and gloom
I am getting info straight from people like Arthur Berman, who's an industry analyst.
They WANT the country brought down by energy probems.
You're grossly over-generalizing.  That segment is noisy but small.

Engineer-Poet said at February 21, 2011 5:59 PM:

Quoth theBuckWheat:

I am amazed at how many people who consider themselves to be rational will stand on ground that overlays a 100 year supply of coal and lecture the rest of us about the need to use "sustainable" fuel sources.
Maybe if you've seen what happens after that "supply" is removed, you'd consider their POV.  Little details like the results of the TVA ash dump flood figure, too.
they will do this while working assiduously to forbid any more nuclear plants to be built.
That doesn't include any present company, so who are you railing at?
The truth is that we are almost literally AWASH in hydrocarbons that can be converted into liquid fuels and the ONLY issue is price.
Simplistic, and thus wrong.  Money is a proxy for energy, so the problem ultimately comes down to physics.  The reason our "trillions of barrels" of oil shale aren't filling SUV tanks today is because the physics of turning kerogen in the ground into liquids in a pipeline have an absolutely horrible EROI.  Shell is saying 3:1, when the minimum EROI we need for society is about 8:1; worse, Shell's process requires energy to be supplied as electricity.  Coal to liquids has similar issues; even Sasol is switching to GTL!

If you want to talk about being awash in energy, consider sunlight.  Humanity uses about 400 quads/year from all sources; the Sun delivers that much energy to the top of the atmosphere in around 40 minutes.  The problem is the same as oil shale and coal:  converting it to the forms we use today, when and where we want them, isn't cheap.  Pretending otherwise is just plain stupid.

Engineer-Poet said at February 21, 2011 6:01 PM:

Quoth th:

Not the world, just the USA.  If you think the figures for Texas wind aren't greater than total US electrical use, take it up with the EIA and NREL; they're not MY numbers, they're as official as they get.
Where else in the world besides the US do any pols based on environmental whims of a few, deny the oil industry access to drill where it thinks large amounts of oil exist?
What do you mean, where ELSE?  It doesn't happen here either; there are oil wells in freaking Huntington Beach, California, smack in the middle of Green party territory.  There's horizontal drilling out to deposits offshore.  The only reason you think it's not happening is because the oil companies are discreet about it.

Bruce said at February 21, 2011 6:24 PM:

EP, SG is doing fine. Pretty much every well is a good producer which is quite unusual in the drilling business.

As for "getting info straight from people like Arthur Berman ... "

Lucky for us, the Shale Gas drillers are ignoring his doom and gloom ... as should everyone else with half a brain.

China seems to be ignoring him, having just invested 5.4 billion to buy up half of a trillion tcf in a BC, Canada gas field.

http://www.theglobeandmail.com/globe-investor/china-pays-54-billion-for-bc-gas-play/article1901021/

And gas pipelines are being approved to carry BC, Canada Shale gas to the US.

http://www.canada.com/vancouversun/news/business/story.html?id=b813ad81-fb55-408b-a38e-fd50963c954d&k=8640


"Shell is saying 3:1, when the minimum EROI we need for society is about 8:1"

That is hilariously stupid. Trading a million BTU's of cheap gas to get 3 million BTU's of expensive oil is a bonanza you moron.

xd said at February 22, 2011 3:12 PM:

@Bruce,

FYI a check on CNG/LPG prices in gas stations across the country gives a range of $1.39-$2.50 for CNG across the country and $2.19-$4.00 for LPG.

If that's where we are right now then the market is probably fairly pricing it and I doubt you're looking at $1.50 a gallon with massively increased demand.

I believe the average driver is better placed to use electric power for their commute and fossil fuels for longer drives if it makes sense economically to do so.

th said at February 22, 2011 5:24 PM:

"What do you mean, where ELSE?"

Yeah, where the hell else do they do it? Nowhere. 26 rigs grandfathered in off SouCal coast as opposed to the hundreds if the 1981 ban was lifted, you call that a scandal? West Florida has a ban on offshore until 2022, the little south american colonel is violating a court injunction in the GOM, ANWR, if it was all combined, we're probably denying ourselves 2 or 3 mmbbls/d of domestic production. All of that Texas wind "potential" is a formula for burning your furniture to heat the house. I thought the EIA was a joke, with wind it isn't anymore?
Texas, after all the wind farm installations, is still only getting about 7% from wind, a long ways from the orwellian govt overreach that typifies alternative energy schemes.

Chris T said at February 22, 2011 5:25 PM:

xd- $0.75 GGE in OK.

http://www.cngprices.com/

Bruce said at February 23, 2011 10:15 AM:

xd, you need the home filler to get the cheapest gas.

Right now Utah residents are paying around 3$ per decatherm at home = 50cents a gge.

If you go to a filling station you pay double. The same would probably hold true for most states - way cheaper to fill at home.

http://www.sltrib.com/sltrib/home/50319857-76/gas-natural-prices-percent.html.csp


Heres story from 2008 on Utah's conversion to driving NG vehicles.

http://finance.yahoo.com/family-home/article/105680/Surge-in-Natural-Gas-Has-Utah-Driving-Cheaply


Don't you wish your state had gone down the NG route in 2008 or sooner?

Bruce said at February 23, 2011 10:33 AM:

UPS buying 48 more heavy duty LNG trucks for Ontario, CA to Las Vegas route. They can make trip on one tank of LNG.

"The added advantage of LNG is it does not compromise the tractor's abilities, fuel economy or drivability, and significantly reduces greenhouse gases," added Britt. "These trucks have a solid 600-mile range and with reliable fueling infrastructure make an excellent alternative fuel system."

http://www.pressroom.ups.com/Press+Releases/Current+Press+Releases/UPS+Clearing+the+Air+with+New+LNG+Tractors

Bruce said at February 23, 2011 11:38 AM:

My mistake on Utah prices

1 gge = 114,118.8 BTU's = 1.14 Therms

Therefore 1 decatherm at 3$ = 26 cents per gge.

Nick G said at February 23, 2011 11:52 AM:

The LNG trucks appear to save about $65k per truck per year ($1.25M x ($3.50 per gallon of diesel - $1 per 140k BTUs of LNG)/48 trucks). At $100k per truck, that's a 65% ROI!!!

If NG is at $4 per decatherm, then 140k BTUs of NG would cost about $.60. How much does the liquefaction cost, including energy, capital expense, operating costs, etc? I've assume $1 total cost, but is that realistic?

Randall Parker said at February 23, 2011 8:02 PM:

Bruce,

Very interesting about the UPS trucks running on natural gas. Thanks for the link.

Nick G,

Those are incredible savings. If the savings really are that big then why isn't UPS doing a far larger roll-out?

Engineer-Poet said at February 24, 2011 7:05 AM:

Heavy trucks are responsible for almost all damage to pavement.  If UPS isn't paying road tax on their LNG, they're being subsidized by the rest of us (even more so than usual; heavy trucks don't pay their fair share).  Corporate welfare, anyone?

The breakeven point for SG is way above current prices; real analysts say about $7/mmBTU is where prices need to go for these companies to be profitable on gas sales (NGLs make some plays profitable at lower prices).  That's still much cheaper than crude oil, but once substantial parts of the transport sector run on NG the price ceiling becomes a lot higher.

Don't forget that replacement of imported oil with NG requires roughly doubling US NG production and/or imports.  Not gonna happen.

Bruce said at February 24, 2011 8:16 AM:

"real analysts say about $7/mmBTU is where prices need to go for these companies to be profitable on gas sales"

But they appear to be very, very wrong. Shale Gas wells have a much higher rate of success than conventional gas. The techniques for fracking have gotten cheaper and the crews are more skilled.

On top of that Shale Gas wells exist that have been producing for 80 years. (Big Sandy pool, a Devonian black shale in Kentucky.)

On top of that Shale Gas regions are immense and have barely been touched.

"Don't forget that replacement of imported oil with NG requires roughly doubling US NG production and/or imports. Not gonna happen."

Very easy to happen. As other countries Shale Gas comes on stream, conventional gas producers will be shipping their gas to anyone willing to pay almost any low price.

On top of that as NG replaces oil, oil proces will go down as demand drops.

anonyq said at February 24, 2011 10:32 AM:

at theBuckWheat

In a free market, supply and demand are always in balance at the market clearing price.

Willing sellers and buyers are in balance, not supply and demand. It is cleared of buyers and sellers but not necessarily of product. Market price is the price at which the sellers makes the most profit, not in which they sell all their product

Nick G said at February 24, 2011 1:34 PM:

Randall,

I suspect that the problem is simple fear. Fear of: rising NG prices; falling oil prices; overinvestment in R&D of NG vehicles and infrastructure which would pay for economies of scale which competitors would get the benefit of.

CYA is a fact in all large organizations. My WAG: that will limit the growth of even a great investment to perhaps 50% per year. In this case, we're starting from a pretty small base...

Engineer-Poet said at February 24, 2011 9:19 PM:
Shale Gas wells exist that have been producing for 80 years.
According to Berman, the "steady state" production rate is about 5% of peak, at close to zero pressure.  This requires considerable energy just to pump the gas to pipeline pressure, and lots and lots of wells (= investment) for a given amount of long-term production.
On top of that Shale Gas regions are immense and have barely been touched.
Today's shale-gas regions are the source rocks for the oil strikes of the 19th and 20th centuries.  This is equivalent to going through the spoils heaps of coal mines, recovering combustible material that the first pass wasn't sophisticated enough to pick out.  There's no more after this.

We have enough uranium in inventory to run the country (everything, not just electricity) for several hundred years with FBRs.  It is time to give up on carbon-based fossil fuels.

Bruce said at February 25, 2011 1:27 PM:

I think Art Berman is wrong.

"Production rates even in the larger wells usually drop to about 20% of the initial rate before stabilizing to a nearly flat rate. The ensuing slow decline over several deca es is attributed to a nearly steady-state flow of gas from the shale matrix through the fracture system to the well bore."

http://search.datapages.com/data/open/offer.do?target=%2Fspecpubs%2Fresmi1%2Fdata%2Fa066%2Fa066%2F0001%2F0000%2F0001.htm

Those wells have been producing for decades and had produced 3tcf even by 1986 and had been producing decade after decade.

"There's no more after this."

Well, after the Shale Gas plays out in 200 years or so, methane hydrates should be just chugging along. The USA will be lucky if even half the current nuclear plants are running 20 years from now. I doubt any new ones will be built before 2035.

Bruce said at February 26, 2011 11:24 AM:

"The world may have twice as much natural gas than previously thought, according to the rich nations' think tank the International Energy Agency (IEA).

The world may have 250 years of gas usage at current levels thanks to "unconventional gas" from shale and coal beds, Anne-Sophie Corbeau, senior gas expert at the IEA told BBC News."

http://www.bbc.co.uk/news/business-12245633

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