Wednesday, 3 November 2010

Yet more substitutes: Natural Gas from Shale powered delivery vehicles

Continuing on the theme of viable substitutes:

Many in the doomer camp say "we're screwed because we can't possibly replace all of our current oil production before we peak".

First of all, we don't need to replace ALL of our current oil production.

We ONLY need to blunt the decline rate.

Given that we can do this by substituting away some of the demand for the likely 1-2% decline rate the challenge seems much less insurmountable and great strides have been made so that we no longer have a need to destroy demand by 1-2% a year as we may have needed to do if peak oil had come say, in 2000-2002 when many of the substitutes we now have were not technically available.

One such substitute that is effectively a snap-in is the huge reserves of shale gas which have been developed in the United States through the progressive development of increasingly sophisticated horizontal drilling methods combined with advanced fraccing technology. This has led to the lowest prices for natural gas in the US and Canada in more than a decade because there is frankly a glut of supply.

This couldn't have come at a better time. We now have an arbitrage opportunity (read money-making opporutinty) whereby natural gas joule per joule is cheaper than oil. All that's required is to shift some of the demand from oil to natural gas.

I've been saying for some time that some enterprising auto or truck manufacturers will likely start to shift production of their vehicles to natural gas which is a drop in to existing fueling infrastructure (many gas stations already have natural gas pumps).

Now one of the major automobile manufacturers has released a natural gas powered version of their delivery vans (Daimler-Chrysler with their newly released natural gas powered Sprinter).

I expect other van manufacturers to soon follow suit. What this means is that we now have a second leg of the logistics delivery infrastructure shored up both by natural gas and battery electric.

Like I said before, I'll be ordering pizza from dominoes delivered by unconventional fuel powered vehicles while the doomers cower in their MRE filled basements awaiting the zombie apolcalypse.

Peak Oil? Yawn.

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