Historical Natural Gas Production in the US

I've been having a conversation with a fellow peak oiler about historical natural gas production in the USA and I decided to have a look at it.
First of all, according to dieoff theory, once a resource peaks the only way to extract any more is at lower EROEI and lower EROEI and since our inputs are also declining we reach a point of diminishing returns and at that point peak is reach and nothing can be done to reverse the decline in supplies. So let's take a look at the graphs. This is the graph of US natural gas production since 1970 leading up to 2000.

And this is the graph of natural gas production from 1990 project out
to 2035 from the EIA.

Now what you can see from these graphs is the following:
The highest point of production (i.e. the "peak") in the first graph was in 1970 at 21TCF and subsequently production dropped to about 16TCF in 1985. Production bounced around 16-18TCF until abut 1990.
On the second graph you can see that production continued bouncing around 16-18TCF (not including imports from e.g. Canada) until 2000 when conventional supplies started on a downslope (aka the "final" peak and decline).

Five years later, however, you can see that the decline has been reversed by the addition of shale gas (which has been enabled by the development of fraccing technology to liberate natural gas from the massive shale deposits). In 2010 we are slightly above the 1970 domestic production of natural gas. Including imports from Canada, the US consumption is currently running about 3TCF higher than the peak in the 1970s.

Now if you were a doomer you might turn round and say that it's hardly a mark of success that it has taken us 41 years to return to the same production levels we had in 1970.

On the other hand, any alleged peak is supposed to be final and lead to the collapse of industrial civilization.

But, the doomers might say, you're still doomed because we can barely get back above 1970s levels even with increased production.

Not so. In order to keep the wheels turning, we only need to cover the percentage decline from oil. If we look at transportation as the main consuner (2/3 of all oil usage) then we run about 12 million barrels per day consumed in the US. If we don't try to increase mpg and don't use any other substitutes at 5% decline rate (brutal by anyone's imagination and likely decline rates are in the region of 2%) that means we have to replace 0.6 million barrels per day in the USA to keep the fleet running.
Using the conversion factor of 1 million cubic feet of natural gas equals 172 barrels of oil. So to replace 600,000 we need 3488 mmcf which is 3.5 TCF. If we look at production from 2005 to 2010 we increased production about 5 TCF so that means we can do an increase of 1 TCF per year.

So we're short using all the assumptions and taking the position that 1 TCF increase per year is the maximum increase we can do.

If we ignore imports from Canada which could probably boost production, we're short about 2.5 TCF per year increased production to replace the lost 0.6 million barrels per day oil supplies. We'll also ignore the increasing domestic US oil production from the bakken and similar formations and also ignore increasing Canadian oil production from the oil sands.

The current US fleet runs about 15 mpg. Can we increase efficiency by 3 times?
Yes we can.

So how many increased fuel efficiency vehicles do we need combined with a yearly increase in production of natural gas of only 1TCF when what we need is 3.5 TCF if we did nothing?

We need to increase the fuel efficiency equivalent to the decline rate.
That means if 5% of our fleet no longer has any oil to fuel it, then we need to increase the fuel efficiency of that component of the fleet in order to be able to utilize the available increased natural gas production.

The current US fleet is about 220 million vehicles. 5% of the fleet is therefore 11 million vehicles.

What is the current annual market in new US vehicles? The answer is about 18 million vehicles.

So clearly we are already buying enough vehicles every year.

My conclusion is the following: If we ignore increasing domestic oil supplies from the bakken and other similar formations, ignore increasing oil production from the Canadian oil sands, then we can maintain the US fleet at the current size with no interruption if half of new vehicles purchased each year have a fuel efficiency rating of 45 miles per gallon and are converted to natural gas.

Of course we also have the facility for some of those vehicles to be hybrids or diesel or electric, so we don't really need to convert 10 million vehicles a year to high fuel effiency.

New Coal to Liquids Process significantly more efficient

Yet another process which will shore up hydrocarbon based heavy trucking during the depletion phase of peak oil has been created.
Previously there has existed the Fischer-Tropf process which allows conversion of coal to liquids, with significant energy costs, coal and other inputs including hydrogen.

This new process has been developed by a company called Quantex Energy based out of Calgary, Alberta and is significantly more efficient than the Fischer Tropf process to the point of estimating that it could be easily scaled to "millions of barrels per day in North America".

See www.quantex.com for news. Quote from the site follows:

"Quantex Energy Inc is developing a process which seeks to refine coal as easily and inexpensively as crude oil processing. Taking advantage of the fact that the hydrocarbon refining industry has already developed the technology for "upgrading" heavy hydrocarbons such as Venezuelan Orinoco crude, or Alberta Oil Sands crude, Quantex Energy Inc seeks to produce liquids that meet the same specifications as heavy crude.

This new process is in distinct contrast to processes of the 1970s and earlier, which assumed that coal should only be made only into sweet light crudes. Consequently, protocols of the 1970s called for adding 30 pounds of hydrogen per barrel of synthetic crude, in turn requiring enormous high pressure reactors with hour long processing times. In contrast, the Quantex Energy Inc process requires only a few pounds of hydrogen to liquefy coal. It is primarily a depolymerization and cracking process. The reasons why the Quantex process is perceived to be advantageous compared to conventional direct liquefaction are:

* Requires significantly less hydrogen per barrel versus other CTL technology
* Hydrogenation is accomplished through a patent pending process
* Requires only minutes of processing time rather than hours in the break through bio-hydrogenation reactor
* Is accomplished at pressures significantly lower then competitive processes
* No molybdenum or cobalt catalysts are required.

Unlike the Fischer-Tropsch indirect liquefaction process, the Quantex coal to liquids process produces no carbon dioxide during the liquefaction process. The Quantex process is not based on gasified coal at all. Rather, the Quantex process is a simpler-cheaper-faster direct liquefaction process, which seeks to produce commodity fuels and chemicals-particularly heavy products such as pitches and heavy crude at the lowest achievable pressure and residence time.

Hence, given the enormous amount of coal reserves in Canada and the United States, the Quantex process can be scaled to the level of millions of barrels per day at a fraction of the cost of conventional liquefaction schemes."

EROEI for doomers debunked

The EROEI myth debunked.

The concept of EROEI.
It stands for Energy Return on Energy Invested.

The party line:
The original oil get an energy return of one hundred barrels of oil for each barrel of oil equivalent that was put in. Since oil is getting harder and harder to extract we are now down to one barrel of oil equivalent gets twenty barrels of oil out.

The reader is invited to extrapolate all the way down the curve and conclude that we are sliding down the curve till it will take more than one barrel of oil equivalent to get one barrel of oil out.
When we hit that stage it will not be possible to get any more oil out and we will leave it in the ground.
There is nothing wrong with the mathematics there, but let's examine the assumptions.

Barrels of oil and Barrels of oil equivalent.
There is a difference between barrels of oil and barrels of oil equivalent.
On the one hand we have barrels of oil equivalent sitting in the ground that when they are used up they are gone. (Oil, Natural Gas, Tar Sands, Nuclear fuel etc).
On the other hand we have barrels of oil equivalent that are not sitting in the ground but are replenished every day. Sunlight is one such barrel of oil equivalent and it is the basis of all of the other barrels of oil equivalents like wind, wave, oil, natural gas and tar sands. Only nuclear does not come from the sun.
The problem with this definition is it invites us to think of energy as barrels of oil instead of just energy. Thus we are led to the idea that you need to burn up barrels of oil equivalent to get some more barrels of oil equivalent back.

In the case of oil, natural gas, tar sands and nuclear this is indeed exactly the case.

The Second Law of Thermodynamics
Some people over at TOD quote quite correctly that Net Energy = Energy In - Energy Out. In the context of barrels of oil to get barrels of oil it looks like we have a dimishing resource and once it's gone we have no energy left. They then go on to say that the second law of thermodynamics says we will run out of energy because we need to use up barrels of oil to get more barrels of oil. This is part of the same fallacy propounded by Jay Hansen all those years ago. In fact the second law of thermodynamics says that "in the absence of energy being added to the system, the amount of energy in the system always runs down". This is a more helpful way of describing Net Energy = Energy In - Energy Out because it makes you realize that we're not living in a closed system with a limited stock of energy. Sunlight is continually pouring in. We have a full tank of sunlight and every morning it is refilled. This new tank of energy is added to the system every morning.


The final part of the fallacy is where they do an EROEI calculation on windmills and other forms of energy harvesting infrastructure but only using barrels of oil as an input. This is fundamentally wrong headed.
The reason is that if you artificially constrained the system to use only barrels of oil to get barrels of oil instead of barrels of oil equivalent to get barrels of oil equivalent you'd conclude that you need to burn up energy to get energy. In the case of the oil to get oil this is true. Thus saying "I burned a barrel of oil to get 20 barrels back" would make sense. The net result is 19 barrels of oil after one is used and it's a continual processing of burning barrels up till you have none left.


In the case of a wind turbine, however, you build the windmill and then it provides energy. If you use that energy to build another windmill, the first windmill is still there. So let's use EROEI in the correct context for a windmill.


Taking the ridiculously low extrapolation of a 20% return on energy invested what that means is that for every four barrels of oil you burn you get one back. This is equivalent to spending the principal.
Obviously not good as your supply is diminishing at an every increasing rate and a inversely corresponding larger amount of your economy has to go towards creating energy.

In the case of a windmill, though, what it means is fundamentally different. For every four windmills that are built, you get one free one and the other four are still there. Now you have five. Using the concept of EROEI here means that the interest is compounding. This is equivalent to investing the principal and growing it. The economy here would be growing, not contracting and an ever diminishing share of the economy would be going towards producing energy unlike in the case of using oil to produce oil.
Anyone who has studied compound interest knows that there is a doubling time. Let's look at that.
In the case of the ridiculously low EROEI of 1.2 quoted on the oil drum, that's a 20% rate of interest. The doubling time is about four years. Now even if you had to use half of that, you would still be left with 10% interest on your original principal. That means that your installed base of energy doubles every ten years and ultimately, this will result in many windmills.



ECONOMIES OF SCALE AND DIMINISHING RETURNS
These two concepts are related but opposed to each other but it's important to include them here because they apply in opposite ways to renewable energy and fossil fuels.
Economies of scale is where the bigger the manufacturing facility you build the more efficient it becomes. With windmills, the bigger the windmill is the more power you can get out of the wind due to it being a power cube rule. This means that the bigger the factories are to produce the windmills, the compounding effects means we get a higher and higher EROEI as we go. The economy can thus grow quicker and quicker.
Diminishing returns means that the more effort you put into something the less return you get back out. Oil is like this. The harder you suck it out, the faster you use it up. In an economy dependent on oil, more and more of the economy is used up to get the oil out faster and faster and ultimately it will collapse if there is no alternative to oil.

What is the conclusion?
Jay Hansen did us all a big disservice by propounding the myth that we need oil to get oil. He did us a worse disservice by inviting us to measure EROEI in barrels of oil equivalent leading us to think that the ability to extract energy was diminishing. This is the same myth that is being propouned on the oil drum. They claim that ultimately we will get down to 1 or less whereas in fact we will never even get down to the 1.2 I used for the argument. There is no possibility except perhaps in the case of nuclear war that declining eorei of conventional oil is going to lead to cannibalism as per "The Road". Even solar panels are better than that (1.2 factor return), and though the EROEI of oil is decreasing if we mistakenly use only the diminishing quantity remaining barrels of oil to calculate it, we still have that full tank of sunlight every morning to use up so we have a floor under us of the lowest EROEI of renewable energy devices (solar PV) which is more like 4.0-8.0 depending on whose calculations you use. So if we have renewable energy to create more renewable energy devices we can still have a growth economy up to the limits of resources on this finite world. But we have no problem of for ever diminishing returns on EROEI waiting for us up ahead. One day we will in fact find that it's pointless using electricity to pull oil out of the ground or make syncrude out of the tar sands, but way before we reach that point we will have already clued in to the fact that we can get by on electricity by using it directly instead of wasting it digging up or making oil.