BP's Gulf of Mexico Disaster - Palinology Versus Geology

Andrew McKillop | Jul 13, 2010

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Rooting for further onshore drilling in her Alaskan State, Sarah Palin had this to say against the environmentalists she judges almost exclusively responsible for BP's catastrophe:

Palin writing in one of her preferred media supports and outlets, that is Facebook, said:

With [environmentalist] nonsensical efforts to lock up safer drilling areas, all you're doing is outsourcing energy development, which makes us more controlled by foreign countries, less safe, and less prosperous on a dirtier planet. Your hypocrisy is showing. You're not preventing environmental hazards; you're outsourcing them and making drilling more dangerous.

Extreme deep water drilling is not the preferred choice to meet our country's energy needs, but your protests and lawsuits and lies about onshore and shallow water drilling have locked up safer areas. It's catching up with you. The tragic and unprecedented deep water Gulf oil spill proves it.

To be sure, Palin has serious competition from other conspiracy theorists to explain the disaster. These have let imaginations and prejudices rip, to explain it as due to a North Korean or Venezuelan mini-submarine attack, or why not an Al Qaeda suicide scuba diver in really deep water. Almost never do we hear the real reasons, a lot more to do with geology and rarefied remaining oil reserves onshore, than bomb-wielding terrorists.

Extreme deepwater oil exploration and development, along with Canadian tarsand oil are two of the last, best hopes for US domestic oil production and import supply. Both are what Palin would call dirty or very dirty, although they protect innocent US oil consumers -- each using an OECD record high quantity of oil each year of about 23 barrels -- from being "controlled" by foreign suppliers. These, as Palinology tells us, are apart from Canadians almost all hostile and bent on making the US less prosperous.

Deep offshore oil production, meaning oil produced at water depths below about 1000 metres, is surely growing, and with Canadian tarsand oil production raising accounts for as much as two-thirds recent annual world production increases. However this in turn is a small figure, after depletion loss of production and rising losses through the "well to wheel" production and supply chain. Less than 4.5% of world oil production is from deep water plus tarsand oil, and neither are candidates for sudden stepwise jumps in supply.

Both the IOCs (international oil corporations), like BP or Exxon and the NOCs (national oil corporations), like China's Sinopec or India's ONGC are struggling to find, develop and extract oil from overwhelmingly "mature" oil provinces and prospects. Examples of "very mature" provinces and prospects with downward-tilted outlooks for production are as commonplace as upward revisions of the daily oil volume gushing from BP's hole in the seafloor, a mile below the Gulf of Mexico's waters. All the onshore US oil provinces including Alaska and south of Alaska (in the Lower 48 States), except for the recently-found Bakken field, and all the North Sea province are two examples. The common thread is that these provinces are worked out or depleting, often rapidly, many are high cost due to exotic production technology being needed to tweak the remaining oil, but are either onshore or shallow offshore which reduces risk.

Simple facts underline this: US oil production, excluding oil-like biofuels and tiny volumes of coal or gas-based synthetic oil production, is given by the US EIA as around 5.4 million barrels a day (Mbd) in May 2010; net imports of oil are around 12 Mbd and total consumption of oil, biofuels, LPG and other oil-like and oil-substitute fuels and chemical bases is about 20 Mbd and tending to grow again with the hesitant economic recovery. As Palin knows only too well, BP's once prolific Prudhoe Bay and all related fields like the North Slope also part-owned by BP, the first of which was discovered in 1977, are in long-term and irremediable decline, some for more than 15 years. At best, around 2 to 3 billion barrels remains to be extracted from all onshore and shallow offshore Alaskan fileds -- enough for 4 or 5 months of US oil consumption. Chances of a 'magic recovery' in production are very close to absolute zero.

For the North Sea's "very mature" complex of fields, exactly the same question can be asked: how many, if any North Sea oil producers, IOCs or NOCs, are producing more each year ? How many are producing less ? Do they expect future prospective finds and production outlooks to go on declining, or not ? These answers are easy to find, and summarize what "very mature" means.

Gambling On Deep Water Oil

North Sea oil was, and for remaining producers still is a relatively easy-to-operate shallow offshore province, with many large differences to extreme deep water exploration and production. This special category features extreme high costs to work in many cases wat more than a mile's water depth, before start drilling another 2 or 3 miles, or more into the Earth's crust, to find pockets of very hot oil, and sometimes enormous volumes of very hot pressurized gas.

Record depths, at present are in the West African offshore oil provinces, notably Angola. Hot, high pressure gas is always a risk with oil exploration and production from extreme depths. A gas blowout ripped through and sank BP's hired Deepwater Horizon semi-submersible rig, a $365 million jewel of high-tech, killing 11 of its crew on April 20, starting the USA's worst-ever oil spill and worst-ever environmental disaster, and BP's worst-ever financial disaster...

Palin's tirades are directed mainly at environmentalists -- and the Obama administration - who do not want oil drilling in the US Arctic nature reserve of Alaska, perhaps keeping this oil for harder times around the corner. The Arctic nature reserve drilling debate has gone for over 35 years, since the first Oil Shocks and the start of decline in US national total oil production, in 1970. The probable oil reserves are likely to be rather modest, few estimates placing them at much above 10 billion barrels extractible, equivalent to around 15 months of US oil demand.

Deep water oil is above all a way to avoid what Palin calls "control by foreigners" but her mental homework on US oil is woefully inadequate. She clearly hints that the US could "home source", rather than outsource, either overseas or in risky deep water foraging at the edge of the continent, its present or future oil supplies. Today, the US imports around 12 Mbd, making it the world's biggest importer, with China and Japan, N°2 and N°3, a long way behind. US domestic production, inlcuding about 1.65 Mbd of deep water oil is as mentioned above about 5.4 Mbd and this is declining. To be sure, the few new onshore fields recently found include the "giant" Bakken, which may yield 4 billion barrels, when developed and produced over a period able to extend over 25 - 35 years, but this will do little or nothing to dent US oil import dependence due to its fields being overwhemingly "very mature".

The often clearly stated claim that IOC exploration ad production in the OPEC states and Russia must be increased, even by military force as in Iraq, is also shown by Iraq to be a low performing option. Unsurprisingly, the OPEC states and Russia do not feel they have a burning need to develop, exploit and deplete their national oil reserves in a record short time, mainly to raise profits for the IOCs and keep oil prices low for OECD, Chinese or Indian consumers. Whether dependence on oil imports from overseas producers whose production is mainly onshore, not under the water, is dirtier than dependence on deep offshore oil from the Gulf of Mexico is however very easy to answer, with BP giving the answer every day. Whatever Palin means by "safe", deep offshore oil is now shown to be what multiple other, but rarely commented accidents, like the Mexican Ixtoc disaster of 1979 also show -- that is unsafe and risky.

To be sure, Canadian tarsand oil, certainly the dirtiest-possible method for producing synthetic crude from bitumen, sand and mud, is openly hailed as "safe", in the sense of national security, by America's leaders but this source of "new oil" is also highly limited in production scalability. The reserves, of course, can be estimated as "equal to Saudi Arabia", and 3 times Russia's remaining oil reserves, but "ramping up" tarsand extraction and producing more oil is dirty, expensive and slow. Even worse, Canada wants, and needs this oil itself, with tarsand oil now supplying around 75% of total Canadian production, due to declining onshore conventional oil reserves.

Facing Reality

Palin, like fellow extreme Republicans is fully in favour of the Iraq war, but extending this model for "opening up" access by IOCs to OPEC's neglected, or supposedly neglected remaining onshore oil reserves, is highly questionable, high cost, and thoroughly dirty in human terms. Selling new wars, even on Facebook, is not such an easy task despite Palin's bimbo smile.

For the IOCs, non-access or restricted access to OPEC, and Russian remaining onshore oil reserves is most surely the basic cause of the rush to deep offshore exploration and production. The basic cause of this is geology, and the massive quantity of oil coal and gas mostly thrown away in the "mature postindustrial" countries. These include Palin's USA, which has no qualms about outsourcing its industry, to provide the industrial goodies that the USA and other "postindustrial" societies avidly consume in massive quantities. Paying the right price for imported oil is a better strategy, but the best long-term strategy is cutting dependence on oil, and other fossil fuels, in a serious and committed way.

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Comments

Your biases are showing. Though I agree with you that "drill baby drill" is going to do little if anything to aleviate approaching sever oil shortages, I disagree with your claim that "Canadian tarsand oil, certainly the dirtiest-possible method" (though I do note that you've added a raft of qualifiers in order to allow the statement to even approach truth).

1) Tarsands production accidentally oiled up (wasn't it 30?) wayward ducks when one of their noise cannon systems on a tailings pond failed for a short time, and have ever since been hammered in the ecological community as the worst of nature killers, pictures and etc.. What about US duck hunters?

2) Production of the average gallon of end-use fuel from crude from Canadian oil sands is not any more CO2 intensive than production of an exuivalent gallon of fuel from Venezuelan heavy or S. Arabian heavy for that matter. Your dream of all US imports being light sweet or whatever is nonsense. Also your typical imports are getting progressively worse, while technology improvements are rapidly making oil sands production better, see THAI in-situ process etc.

Did you actually read what she posted? Apparently not.

Trying to inform North Americans - and others - of the oil future is an unrewarding
enterprise. I've spent a couple of decades trying to do it, and also trying to convince myself. What happened though was that I became convinced about 2003 that bad news was on the way, and then in 2008 I was in Paris about to give one of my killer lectures, when the oil price started to move into orbit.

When or if the global macroeconomy gets back into gear, some very bad oil price news is likely. The present oil price is above $75/b, and that can only be explained by the strength of OPEC. As a result, the next oil price run-up will not start at about 39 dollars, but above 70 - maybe even above 80.. That is very bad news gentlemen, although if it is true that speculators are behind the next escalation - which is completely false and untrue - then perhaps this president will take a bus or jitney taxi to Wall Street and read the riot act to the Masters of the Universe, rather than flying to SA like the last president did, to demonstrate the lack of power in his personality to the King of that country.

How will the next president handle this matter? Three American university professors told me that they preferred Ms Palin to Mr Obama, because with the lady they felt safer. I don't know how many teachers and researchers in the faculties of economics feel that way, but I hope that it is a at least a couple of thousand, because if they really and truly feel that way, and make their feeling known in the same way that the completely ignorant Milton Friedman dis at the Nobel Academy's Centennial a couple of years ago, then even Joe Sixpack will go masculine when voting time comes.

"completely ignorant Milton Friedman"? How can anyone take you seriously?

On this topic I don't asked to be taken seriously. As far as I'm concerned that is what he was. When he spoke at the Nobel Centennial the things that came out of his mouth should have been laughed at, but naturally politeness keep the real scientists from laughing in his face. They saved their laughter for when they met at the Grand Hotel later that evening.

And if that doesn't satisfy you, try this on. The US government should have court matialed General MacArthur as a war criminal - not because of his blundering in Korea (when General Bradley called him "monumentally stupid") but for his nuttiness during WW2. that cost the lives of thousands of Americans and Australians.

The United States could put this mindless arguing over oil drilling on the back burner where it belongs by simply enacting policy that would motivate automakers to start mass producing vehicles capable of using both liquid petroleum-based motor fuels AND natural gas. Mass produced, optimized multi-fuel vehicles could tive CONSUMERS the choice to buy the motor fuel that fits their budget and ethics.

Immediate retooling to mass produce multi-fuel capable vehicles in all types and sizes would give engineers time to work the bugs out of plug-in hybid electric vehicles and hydrogen fuel cell electric vehicles. It would also give ecologists and agronmists time to figure out how to produce advanced biofuels that do not cause more ecological problems than they are supposed to solve.

American voters would embrace this simple action by the US Administration and Congress with overwhelming support and gratitude for several reasons: they save money, make less pollution, create jobs in America and reduce oil imports.

What's to lose? Why is this simple solution NOT being embraced by our progressive Aeministration?

David makes the most important point here. Wind mills will not power my car any time soon, and batteries may be great around town, but not for a ski trip or any longer drive. Natural gas as vehicle fuel is pretty close to a no brainer. So maybe "drill baby drill" is half right if we include natural gas in the phrase. It is a bit frightening when Sarah Palin, at perhaps half right, is leading the pack on realistic energy ideas.

The grim reality is we are using oil 4 times faster than we are finding it, and I believe about 95% of all our oil has been discovered already. The planet is not likely to be hiding any more super giant oil fields. Here's a good article on the subject of peak oil: http://www.associatedcontent.com/article/3018604/aviation_after_peak_oil_is_there_a.html?cat=15

I think with the way oil is going we should look at something different, like doing something about the population.
One of the reasons we have been able to survive so long without too many hiccups is oil and went it goes we got problems.
It would be a good idea just to let people know that any child born this millennium is going to have a tough life, they are going to see the end of cheap oil and that could mean the end of globalization and plentiful food.
Just a thought

David, what you are asking for would not be easy to bring about, Think about it. Think about the amount of natural gas that would have to be moved. It's possible that the gas would be more efficiently used if it generated electricity for vehicles that used electricity as 'fuel'. Unfortunately, something will have to be done about replacing oil, and I don't see any real progress being made.

As for the population, I seem to remember saying something about that in a book I published almost thirty years ago. Quite a few people told me that I was nuts: they preferred the ignorance of Milton Friedman and Julian Simon on that point.

Julian Simon was an A**. Even geniuses can't contribute if they are starving to death or need to work 18 hours per day just to scrape by. If he was right then modern Greece would be outputting 20X the number of Aristotles, Platos, and Parmenideses than they did 2000 years ago. As far as I can see, that hasn't been the case. Instead they now mostly produce disgruntled union laborers demanding shorter work hours from their bankrupt government.

With ethanol, biodiesel, and natural gas(methane is both a fossil fuel and a biofuel) there is no need for batteries, EVs or plug in hybrids.

There is also no need for oil, although it can still be used if need be.

The Fiat Siena Tetrafuel runs on gasoline, gasoline and ethanol mixtures, hydrous ethanol(unblended) and/or natural gas.

The Fiat Siena Tetrafuel is in manufacture, sale and in use on the road by consumers right now in Brazil and Argentina. And it has been for almost three years.

With the Fiat Siena---drivers can use pure petroleum, any mix of petroleum or biofuel(ethanol and methane), or no petroleum at all to run their vehicle as the situation demands.

Freedom of choice, no batteries required.

If this technology were required on all vehicles, oil would soon be as dead as the dinosaurs.

Fred Linn,

I had a mechanical engineering friend who was employed by a natural gas provider here in Ontario Canada for many years. His job was to manage the commercial sale and installations of vehicle conversion kits to enable natural gas in gasoline or diesel powered cars, trucks, buses, or fleet vehicles. The kits permitted the driver to switch between his factory fuel tanks or the retrofitted natural gas tanks with the flick of a switch on the dashboard.

One of the first projects over 20 years ago was to equip several buses in some major cities in Ontario with natural-gas-only equipment. It was one of the first such projects in North America and was very successful, where many municipal bus fleets today have natural-gas-only units on the road. There were / are problems however in getting widespread adoption for many other vehicle types. Equipping vehicles during their manufacture for natural gas added hundreds of dollars or more to vehicle costs, and the lack of station infrastructure for refueling natural gas made those types of vehicles much harder to sell to consumers.

The conversion kits in Ontario need large grants and tax breaks from Ontario's government to make any consumers buy into them. So if you want to see much natural gas (or biofuels) implemented on passenger cars in North America, you need to start by getting our governments and our vehicle manufacturers to adopt it as standard product, not aftermarket conversion kits, and to implement many more refueling stations. If consumers currently have to spend an extra $1000 or more on vehicles to get it from the factory, and have to invest in a home gas compressor for the convenience to refuel at home, it's not going to happen in large numbers here.

Also Fred, there is the problem of carbon emissions and environmentalists working towards using less fossil fuels, and not replacing oil with other fossils. Electric vehicles with batteries are viewed by many as potentially more eco-friendly in places where the electric grid supply (for recharging them) comes from greener sources, like nuclear or renewable sources.

It won't be easy getting natural gas or biofuels to compete with plug-in electric vehicles given most major car manufacturers have already started rolling out electric models as standard products.

One thing governments could do to encourage Natural Gas vehicles, Bob, is get out of the way. I investigated developing a new system of conversion which was very successful and a great improvement on existing in many ways, from greater efficiency and power to lower cost, but was thwarted by the government requirement for complete environmental and safety reviews of every model/year eligable for conversion, including crash testing of several of each model year authorized for conversion. I can see doing such tests once, and perhaps periodically for assurance, but such restrictive rules as every model every year (plus immediate voiding of any manufacturer's warranties) are IMHO clearly designed by the incumbent manufacturers to eliminate the possibility.

Question: Why would manufacturers care about whether customers preferred electric vehicles over gasoline, to the point of crushing a fleet of 500 good vehicles with customers standing in line? Perhaps some cross-influence from the petroleum industry?

I wouldn't be overly surprised if the petroleum industry has some cross-influence on vehicle manufacturers.

Since the manufacturers set their selling prices for vehicles, they have tremendous influence over consumers' buying preferences e.g. if they were to set electric vehicle or natural gas vehicle prices considerably lower, many more consumers may then "prefer" to buy them. Of course this doesn't happen, but they routinely do it with their gasoline vehicles e.g. during bad economic times recently when oil and gasoline prices spiked much higher, we got much bigger discounts with bargain sale prices for SUVs and pick-up trucks.

The US government has been giving large rebates for consumers buying electric vehicles so I’m not so sure they are “in the way” all the time, but often they are with the myriad of regulations on the books as in your experience. Even our Ontario government publicly admitted last year there were untold hundreds of thousands of regulations passed over the years still on the books that actually hinder businesses, and have vowed to revamp them. I suppose it’s a daunting task since once in place it becomes much harder to rescind them without a review of each one. And we know how long it takes to review stuff by government officials.

(About the only way to get governments to react quickly is with huge widespread public backlashes as what happened this week with Ontario’s new “eco-fees” they foisted on all retailers July 1st, now rescinded after massive backlashes.)

Jim, Julian Simon was disgruntled too. He didn't believe that he was appreciated. I don't know what his idea of appreciation was, although I can guess. Start with a very very highly paid professorship at Harvard or California, and maybe a Nobel Prize. He also had some advice for other disgruntled people: don't think so much about people who don't appreciate you.

That's deep isn't it. No wonder he came to the magnificent conclusion that the more people the more brainpower. He was just a glutton for spontaneous appreciation.

Bob and Len,

For some reason, the major automakers really do not like NG vehicles. I had an e-mail discourse with a GM engineer who cited fueling anxiety (where is the nearest NG filling station?) as a problem with NG, but in the same note, espoused the benefits of hydrogen!! Amazing.....

One could speculate about oil company influence, but I think the mundane truth is that NG vehicles are more expensive, as you need to pay several hundred dollars more for the pressure tanks compared with a $20 plastic gasoline tank. The volume of the NG tankage also impacts on interior space available to the consumer. I think the shorter range probably impacts the consumer somewhat as well, but I think the cost is the main barrier at this point.

In terms of regulation, I was told that any NG vehicle must be completely emptied of fuel before it can be towed. This means extra equipment and costs for any towing. I'm not sure how necessary this really is from a safety standpoint.

I think in terms of displacing oil, NG for vehicles is a very good idea. I don't know what price gasoline has to get to (and the ratio of NG to gasoline) for it to make sense economically. Government rebates make sense if it can be reasonably assumed that gasoline prices will rise higher than the current price (which should account for future pricing, at least theoretically) indicates.

Fred,

I think you are right about Julian Simon. It looks like it didn't help that Paul Ehrlich ("The Population Bomb") is/was a piss-poor counterforce to Julian's beliefs. The problem with citing/predicting time tables for problems to occur is that politicians are very good at dutifully kicking a problem down the road for another 10 years or so. (The problem with this "kicking" strategy is that the new problem that arises is always more severe than the original one, so as a global society we are constantly doubling down, such that when a problem actually does occur, it is likely to be very severe indeed.)

My gasoline powered small Toyota pickup truck uses just under 5,000 BTUs per mile (sorry about not using metric energy measures). In California, that costs me somewhere around 12-13 cents per mile. Assuming a 100% markup from the current wholesale price, natural gas would run around a nickel a mile. I drive between 8,000 and 12,000 miles per year so the savings would amount to between $650 and $1,000 per year.

There may or may not be a natgas charging station up here at Lake Tahoe but I usually refuel somewhere else anyway where gasoline is typically 30 cents cheaper and there's more likely to be a natural gas filling station. Or, I could install the infrastructure at my home, which uses gas for heating and cooking.

The economics are pretty compelling, especially since I would have paid the premium for a diesel powered vehicle if Toyota sold them in the US (they make diesel powered versions of my vehicle but do not sell them here). Even more so since we tend to drive our vehicles until the wheels literally fall off.

Jack,

I assume the gasoline cost includes fuel taxes. Another bugaboo with NG (this time from the government perspective) is that there is no easy way to impose road taxes on it. I guess the filling stations are specialized enough that it could be imposed at that point. But the incentive for bypassing the taxes is obviously there. And unlike diesel, you can't dye NG to indicate that is for road use or stationary applications.

The tax situation obviously applies to electric vehicles as well.

Jim, Paul Ehrlich visited my uni once, and gas a nutty seminar, in which he concentrated on bad mouthing economists. Needless to say, this didn't bother me very much until I asked a question, and was forced to plead guilty to being an economist - which raised a horse laugh from his audience of about 200 people.

That didn't sit too well with me of course, but when I looked around I didn't see any of my finance students, but a lot of politically correct types. Then I got the message. He and Simon were like two peas in a pod. Very smart guys, with some very good ideas, but at the same time a heavy load of bad ideas. In other words, they reminded me of myself when I was sweet sixteen or so, and some know-nothing referred to me as an interleccher (i.e intellectual).

Fred

Jim Beyer-------" I assume the gasoline cost includes fuel taxes. Another bugaboo with NG (this time from the government perspective) is that there is no easy way to impose road taxes on it."-------

All cars manufactured since 1991 have a computer "black box" that monitors and records all major parameters. This includes mileage and pollution control device function.

Here in Oregon, you can not renew the license plates without a DEQ computer readout of the car's computer pollution control function.

It would be a simple matter to simply include mileage and charge a tax on the miles driven rather than tax the fuel. There are already two bills in the legislature now that would do that.

The reason natural gas is not widely deployed in vehicles is Governments do not want it to happen. All you need to do is to look at who makes the most money from gasoline sales. It is the Government. There is no easy way to tax Natural Gas without doing serious damage to other users. I looked into converting my cars to Natural Gas. Of the three cars that I owned at the time none NONE of them had conversion kits available.

Natural Gas vehicles are far safer that gasoline vehicles. Rather than some flimsy plastic tank Nat Gas cylinders are extremely robust and easily able to withstand collisions without rupturing. When the gas tank of a car breaks the vehicle and driver are surrounded by a liquid pool hydrocarbon fire. If a gas line rupture all you get is a readily dissipated cloud of gas. Much much safer.

But as I said if you want the real reason why natural gas vehicles are not widely produced all you have to do is look at where the money goes and you will be looking right into the face of the Governments you elected. They don't want Natural Gas Vehicles.

Malcolm

Gentlemen,

Natural gas is a wonderful fuel and a wonderful feedstock, with many current and potential applications. However, it is not without its limitations. We ignore those limitations at our peril.

Natural gas is just that: "natural". Its chemistry is not as controlled as the chemistry of gasoline and diesel fuel, although its chemistry is routinely adjusted by removing heavier hydrocarbons with separate markets, such as propane, from the flowing gas stream where economical. That means that natural gas engines cannot be optimized to the extent that gasoline and diesel engines can, since the octane number of the fuel varies as a function of the percentage of the various gases in the specific natural gas supply. That could be corrected, at some cost. However, that is not the case today. That is the reason that Burlington Northern used refrigerated liquid methane (RLM), rather than LNG, in their railroad engine testing.

Natural gas, in general, has a higher octane number than gasoline, but it is currently not feasible to take advantage of that higher octane number in vehicles designed to use either natural gas or gasoline or E85 or ..., because the engine compression ratio would have to be changed to optimize for each of the fuels.

The capacity of the natural gas transmission and distribution infrastructure is currently matched to the demands of the existing end uses of the fuel. The growing use of natural gas as a power generation fuel has placed additional stress on the transmission infrastructure. A decision to switch to natural gas as a vehicle fuel would require significant expansion of the transmission and distribution infrastructure, as well as increased exploration and production efforts to match supply with demand.

However, natural gas combustion produces carbon emissions. Therefore, expanded use of natural gas cannot reasonably be discussed without including the issue of climate change in the discussion. How far in the future would natural gas no longer be acceptable as a fuel for various applications? Certainly, CCS would be difficult (and prohibitively expensive) for vehicles, as well as for the residential and commercial consumers who use natural gas for a variety of applications. Large industrial and power plant applications might be suitable for CCS, if the technology becomes economically viable.

Investments in NG transmission infrastructure typically have long lead times and substantial investment requirements. They also typically have long depreciation periods. The investments would not be made unless: the resource base is large enough to effectively use the expanded capacity for the entire period required to recover the investment; and, natural gas combustion at the rates required to effectively use the expanded capacity would be permitted by environmental regulation. Uncertainty regarding either or both of these issues would require higher investment returns, if the investment capital could be raised, which would be problematic in a highly regulated industry.

As I have suggested here before: "Don't begin vast programs with half-vast ideas."

Ed,

Marvelous explanation of the economics of NG, you should perhaps have been an economics professor like Fred Banks. The high investment levels needed to make NG widely used in vehicles, and the risks in making them sound very similar to the financial problems nuclear faces in building large numbers of new central generators. It’s unfortunate since we need nuclear, but not many are prepared to put up the huge investments up front given there are much less risky ways of getting a decent return in a shorter time period.

NG is widely used in Canada for residential heating and water heaters. It will be fascinating over time to see what it is replaced with if NG is phased out.

Bob,

Thanks. I suspect Fred would disagree. :-)

Ed

Ed---very good post. All of what you say is true, to a certain extent. However, I do not think the problems you highlight are nearly as insurmountable as you seem to feel that they are.

------" Natural gas, in general, has a higher octane number than gasoline, but it is currently not feasible to take advantage of that higher octane number in vehicles designed to use either natural gas or gasoline or E85 or ..., because the engine compression ratio would have to be changed to optimize for each of the fuels."----

This is true, comparative octane rating for methane is ~120, compared to regular gasoline at 85-87. This makes methane suitable for use in high compression, high efficiency engines. Ethanol has an octane rating of about 110 to 115.

Diesel engines are already high compression engines and methane bi-fuel systems have been used on diesels for years.

Variable compression engines are possible with the use of turbo boost or superchargers. This technology was originally developed for fighter aircraft in WW2---hardly new or untried technology.

The VW Passsat Ecofuel uses variable turbo boost and fuel injection to get very impressive performance from a bi-fuel engine that uses both gasoline and/or methane and variable turbo boost and computer controlled timing from which ever fuel it is using at the moment. The computer control system is necessary to adjust the performance under the gasoline phase-----the much high octane rating of methane makes it a fuel much better suited to high performance use than gasoline. The same is true of ethanol.

------" Therefore, expanded use of natural gas cannot reasonably be discussed without including the issue of climate change in the discussion. How far in the future would natural gas no longer be acceptable as a fuel for various applications?"-------

Indefinitely. Methane is both a fossil fuel, AND a biofuel. CO2 is a GHG(greenhouse gas) but is not the only greenhouse gas. Methane is also a greenhouse gas. And methane has 17X the infrared capture and heat transfer capacity that CO2 has. If we capture methane that would have ordinarily escaped into the atmosphere anyway---say, treating sewage or tapping landfills--mix that methane with fossil natural gas and burn it---say in vehicle engines, we would be exchanging high GHG effect methane, to relatively low GHG effect CO2. Only a 6% mixture of biomethane in fossil methane will produce 0 net atmospheric heat gain compared to doing nothing. Any mixture of greater than 6% biomethane will have a negative effect on atmospheric warming compared to doing nothing. This is the only way we have of actually cooling the atmosphere. We can't even do that with wind, solar, hydro or any other means.

Fred Banks doesn't disagree to anything. The problem is that natural gas CAN substitute for conventional fuel, but not if the cost is given the right kind of consideration. People hear that gas can be used in vehicles, and is being used, and there is apparently more gas available than previously believed, and so gas becomes their answer to rising oil prices. Some of that kind of nuttiness has shown up in Sweden, which is to be expected,

Unless I am mistaken, which is not impossible, the Finns are going electric. The new nuclear plant is over cost, but they have started to plan for two more. As for the costs of these plants, if Wall Street can't help them, then the taxpayers will have to do the job - which they want to do, only they don't know it.

Ed's post is obviously, well though out, (as opposed to many of mine), but upon reading it, all of it is basically picking at nits. Noting his comments:

1. NG chemical makeup: NG piped into your house is 95% methane, 5% CO2, perhaps a trace of some other stuff. For all practical purposes, NG is a fairly well-known commodity.

2. NG octane: Yes, engines could be optimized to make better use of the higher octane. Again, no big deal. Flex-fuel technologies (which enable cars to run on gasoline or 80/20 ethanol) is a known and inexpensive technology. What's stopping flex-fuels from using NG easily relates more to the injectors (which are used to injecting a liquid fuel) rather than the combustion mix.

3. NG infrastructure: Mostly in place. You just need to add more dispensers for vehicles. There won't be many NG vehicles to start with, so not a problem. If you simply look at how much one spends heating a home in the winter vs. the fuel needs of a single vehicle (for that home) you will see this argument is largely specious.

4. NG carbon emissions: Yes, NG produces CO2. Not really the point. A better point would be the prospects of producing the same fuel from biological sources (anaerobic generation) is cost-effective (unlike ethanol) and would be carbon neutral as well. NG has the prospect of utilizing non-conventional sources of methane in the future. That's probably the best thing it has going for it.

5. NG infrastructure costs: For some reason, Ed mentions infrastructure again. Well, adding pumps to dispense it to vehicles doesn't take that long. As mentioned earlier, a house burning $100 of NG monthly in the winter would use about 25 MMBTUs. That's equal to about 220 gallons of gasoline. We can afford to fuel a few NG cars!

Jim,

1. The natural gas piped to consumers varies in BTU content from ~950 - ~1200 BTU/scf. The difference results primarily from variations in the percentages of methane, ethane, ethylene, propane and butane in the gas. Regasified LNG may have BTU content as high as ~1400 BTU/scf, primarily as the result of higher heavy hydrocarbon content. Also, some utilities purchase both landfill gas and refinery off-gases and mix them for blending into their networks. So, it ain't that simple.

2. Combustion mix is not the issue. The issue is compression ratio, ignition conditions and spark timing.

3. The "dispenser" you mention for hone use is actually a compressor designed to raise natural gas pressure from an inlet pressure of 1/2 - 2 psi to either 3000 or 3600 psi. The compressor is typically designed for "slow-fill", overnight for example. Dispensers for public fueling also compress to and store at 3000 - 3600 psi for "fast-fill" operation.

4. The current US natural gas market consumes ~22 tcf per year. I have no idea how much it would cost to produce that much syngas by anaerobic digestion.

5. The US natural gas transmission system could certainly fuel a few NGVs. However, we're not talking about a few NGVs. We're talking about both a bunch of NGVs and a bunch more CCT power generation facilities.

I was responsible for both NGV and Powergen market development for a major natural gas utility in the early 1990s. Trust me, the issues are not as simple as you would like to believe.

Ed

More nits from Ed.

1-2. Range of BTUs is not enough to effect operation of vehicle. NGVs have been sold in the U.S. for years without such problems. In fact, an NGV (the Honda Civic GX) was one of the first vehicles to be designated with the ULEV-2 rating by the EPA. So all those ranges of NG input did not affect emissions. What I think Ed might be referring to is that some IC engines may not be optimized for the high octane for NG. They could run at a higher compression. The same is true for ethanol. But just like a high octane gasoline, it runs fine in a lower compression engine; it just might not be optimized perfectly for that.

3. I was referring to the public dispensers. We have one city-owned one in Ann Arbor, and several are provided by Meijer's at their gas stations. (Meijer's is a big box convenience store like a Wal-Mart, but regional.)

4. Anaerobic digestion is cost-effective, but there is not much feedstock to support huge amounts of methane production. You need to have PHEVs to displace fuel use as well.

5. Who is talking about CCT? NG prices only have to go up a little to create a preference for NGVs over CCTs. Didn't Wayne Gretsky say you should skate to where the puck is going to be?

The main issue with NGVs is the cost and volume of the tanks. That makes them several thousand dollars more expensive than a similar gasoline-fueled vehicle. Which means they make the most sense for fleets of vehicles that drive a lot, but for short distances (lots of short trips). The concern is NOT (in my opinion) variation in fuel, complexity of engines, infrastructure changeover, or NG availability, as Mr. Reid implies. Another concern I'd add is the lost road tax from NG fueling, which probably causes the gov't to drag their feet on NGs as well. (You could fix this by adding tax at the designated pumps; however, they don't seem to do this at this time.)

Jim,

1-2: Fuel composition variations limit optimization, which affects fuel efficiency. The gas will burn; that is not the issue. An engine set up for 1080 BTU natural gas will knock dangerously on gas with a lot of heavier hydrocarbons, even in stationary service.

5: The potential increased natural gas demand which would require expansion of the T&D infrastructure includes both NGVs and power generation using combined-cycle gas turbines.

You are correct that vehicle storage is the big issue for NGVs. The investment in public refueling compressors and storage is also a significant issue.

Collecting taxes at the public fueling location is no more difficult than it is for gasoline or diesel. Collection from home refueling is somewhat more of an issue, though separate metering would resolve that as well.

You are certainly correct that a few NGVs could be accommodated pretty much anywhere. A few combined-cycle turbine power plants - not so much. There really is not a lot of underused pipeline capacity sitting out there waiting for someone to fill it.

Ed,

Agreed. I also don't think there is really too much extra NG out there either. I think the fracturing technology will prove to be a flash in the pan. The wells don't last long and they seem to damage the groundwater tables.

What NG/methane DOES have going for it (at least compared to ethanol) is a modest cost for production from anaerobic digestion (assuming feedstocks can be supplied) and an existing infrastructure (at least compared with ethanol or hydrogen).

But NG or methane can't displace gasoline by itself. Best we can hope for is to have it help as a fuel for PHEVs. That leaves the existing oil for diesel and jet fuel; and of course all those disposal plastic bags I get from the supermarket....

:)