US NATURAL GAS SUPPLY
By Jay Hanson, September 16, 2000

"There is a crime here that goes beyond denunciation.
There is a sorrow here that weeping cannot symbolize.
There is a failure here that topples all our success."
-- THE GRAPES OF WRATH, John Steinbeck

Although oil protests are in the news, not much is being said about natural gas. In fact, the US natural gas supply may be even more at risk than the oil supply!

NATURAL GAS
Colin Campbell says that natural gas production is best described as a "plateau" followed by a "cliff" due to the high mobility and recovery of gas. Whereas oil declines slowly as it moves through the porespace of the rocks under declining pressure, the decline of gas is a cliff -- not a slope. Thus, the gas market gives no warning of the cliff because it is no more expensive to produce the last cubic foot than the first.

Unlike oil, natural gas can not easily be shipped by sea. It must be liquefied prior to shipment, then shipped in specially designed refrigerated ships destined for specially equipped ports, and then regasified for distribution -- at an estimated 15 to 30 percent energy loss. Moreover, natural gas cannot easily be stored like oil or coal. Global natural gas production is expected to "cliff" sometime between 2010 and 2020. [ 1 ]

US NATURAL GAS
In April 26, 2000, industry experts announced that US natural gas suppliers face a tough challenge in meeting the strong demand for the fuel. Chevron Corp. executive Andy Hardiman said that to meet demand of 30 trillion cubic feet by 2020, average daily gas production in the Gulf of Mexico would have to rise from about 14 billion to 22 billion cubic feet. Hardiman pointed to factors such as declining production rates in shallow water fields and the predominance of oil rather than gas in the deepwater where most future exploration and production is expected to take place. "If a lot of things line up... we can get pretty close to 22 billion cubic feet. On the other hand, if a lot of things don't line up, we'll fall way short," he said. [ 2 ]

One industry expert recently analyzed the difference between "wildly optimistic" EIA gas estimates and industry estimates. He found that EIA estimates were not credible:

"Who would have guessed that after 30 years of decline, the lower 48 states were primed for a renaissance that would surprise even Erasmus, or, for that matter, Lazarus? And it will all happen without price increases, since the forecast assumes a wellhead price of $2.81/Mcf (1998 $) in 2020. Unfortunately, EIA is a little vague on how this could possibly happen, other than suggest that technological progress will play a role." [ 3 ]

CANADIAN NATURAL GAS
Canada currently provides about 13% of the US gas supply and is supposed to increase its exports enough to provide 17% by 2005. It is hoped that Canadian imports will rise from 3 trillion cubic feet in 1998 to 4 tcf in 2007. But a March, 2000 study by Canadian industry and government geoscientists casts doubts on the ability of Canada to meet US demands for gas much longer:

"Based on 1993 reserves data, Canada's total marketable endowment of conventional natural gas resources was estimated at 373 Tcf by the CGPC in 1997. Removing the gas consumed through 1998, about 250 Tcf of conventional marketable gas resources remain to be exploited in all of Canada."

"In addition to this volume, Canada holds undetermined amounts of conventional gas in frontier basins where no discoveries have been made, and unconventional gas in place in the forms of coalbed methane, tight gas, shale gas and gas hydrates. Estimates of these volumes are highly speculative. Technological and economic uncertainties about these resources are sufficiently high that no forecast of the conversion of these resources into future supply can be justified at this time."

"Demand continues to increase and is expected to continue to increase (particularly for electricity generation). Supply however, is lagging behind. In recent years all export pipelines have been full - often carrying more gas than their rated capacity. This is no longer true, and in 1999 the flow through the ANG/PGT pipeline from Alberta to California has fallen below 80% of capacity. The consensus is that the Alliance Pipeline, when completed in the fall of 2000, will not increase deliveries materially. Rather, gas transported by Alliance will be at the expense of gas moving through TCPL. For the first time since Canadian gas markets were liberalized we have entered into a period during which transportation capacity exceeds supply. Is this just a temporary phenomenon?" [ 4 ]

Canada exports most of its gas to the US under short-term contracts. Canadian law allows it to rein in the petroleum trade whenever it appears to be in its interest (and making the US pay dearly was in its interest in the late 70s). So don't count on Canadian gas much longer...

US: OUT OF GAS
Colin Campbell says that it is not possible to cover the looming US gas shortfall by shipping gas in from the Middle East (energy loss, not enough LNG facilities or tankers). However, the construction of a new gas line to Alaska and the Canadian arctic where there probably are large untapped deposits could temporarily mitigate the US gas cliff.

It seems inevitable that the new natural gas power plant in your neighborhood will run out of gas long before it's paid for. It certainly won't be the first time that ratepayers and taxpayers have spent years paying for utility company lies, corruption, and stupidity... [ 5 ]

THE NEXT TEN YEARS
Mexican "light" oil production peaked a few years ago [ 6 ] and overall oil production is expected to peak this year. As Mexican collateral for foreign loans is depleted, capital will flee the country. The disintegration of the Mexican economy and the ensuing anarchy will cause a tidal wave of illegals to cross into the US. [ 7 ]

The flood of illegals will force the US to deploy troops along the border -- essentially constructing a new version of the Berlin Wall. These two events will cause the twelve million Mexican nationals living in the US to riot because their families are being ripped to pieces on the other side of the wall. This will lead to martial law -- a permanent suspension of civil liberties -- in the US.

Recall that Hitler was elected to office on the back of a failed economy. A new WHITE-AND-RIGHT Party will blame the Mexicans for their missing "rights" and call for relocation camps, etc. (Just put a new coat of paint on the old Japanese camps and we are back in business!)

Canadians will soon discover (the hard way) that they can not keep their pipes from freezing with solar panels, and will cross the border to a warmer climate as fast as their snowshoes can carry them. Of course, the folks in Phoenix and Las Vegas can't survive without water (no electricity = no pumps), so they will head for greener (literally) pastures. With no transportation fuel, the 15 million folks in greater Las Angeles will be stranded in a city that is 70% pavement -- and no water... I wonder which way they will go? Monterey? Oregon?

Just imagine NY doormen carrying rich folks up 40 flights of stairs on
their backs!

"The origins of the cataclysm lay in the utopian endeavor of economic liberalism to set up a self-regulating market system."
THE GREAT TRANSFORMATION, Karl Polanyi; Beacon, 1957;
http://www.amazon.com/exec/obidos/ASIN/0807056790

References:
[1] http://dieoff.com/page175.htm
[2] http://dieoff.com/nagas.htm
[3] See Policy Pete's excellent analysis at http://dieoff.com/pp.htm
Home page http://www.qv3.com/policypete/policypete.htm
[4] http://tabla.geo.ucalgary.ca/NatGasCan/opipaper.pdf
[5] http://seattletimes.nwsource.com/news/local/html98/altwpps_112098.html
http://tmia.com/PressP2.html#strand
[6] http://www.egroups.com/files/energyresources/juliopemex.gif
[7] http://www.washingtonpost.com/wp-dyn/articles/A30254-2000Jun20.html
http://www.ranchrescue.com
http://www.americanpatrol.com

BLAIR MADE A FOOL BY ECONOMISTS

A Special Message from Anthony Blair, Prime Minister of the United Kingdom at the World Economic Forum Annual Meeting 2000 Friday, January 28, 2000, Davos, Switzerland:
"Twenty years on from the oil shock of the 70s, most economists would agree that oil is no longer the most important commodity in the world economy. Now, that commodity is information."
http://www.asiamedia.ucla.edu/Davos2000/Speeches/Blair.htm

Eight months later... Blair sends for the troops: "TROOPS were put on standby last night to intervene in the deepening fuel crisis as the health service went on emergency alert, supermarkets began rationing food and schools and businesses closed. The problem is, of course, that not only is economics bankrupt but it has always been nothing more than politics in disguise ... economics is a form of brain damage." -- Hazel Henderson

Who should Blair have been listening to? Franco Bernabe, chief executive of the Italian oil company ENI SpA, correctly forecast the 1970s-style oil shocks starting this year!
http://www.forbes.com/forbes/98/0615/6112084a.htm

US GOVERNMENT ENERGY DISINFORMATION CAMPAIGN
"There's plenty of cheap oil, says the US Geological Survey (USGS)."
http://www.sciam.com/2000/0900issue/0900scicit4.html
But is the USGS telling the truth? Many energy experts believe that USGS and US Energy Information Agency (EIA) are very wrong about US energy resources. I (Jay Hanson) believe they are lying for national security purposes. There have been numerous email messages attacking USGS and EIA studies. To review critiques by experts, visit
http://www.egroups.com/messagesearch/energyresources?query=usgs and
http://www.egroups.com/messagesearch/energyresources?query=eia

OIL UPDATE

"Currently, the US has approximately 600,000 oil wells in operation. Nearly 500,000 of those wells produce less than three barrels a day"
http://www.itds.treas.gov/ITDS/ITTA/oilprofile.htm
But are these wells really helping our energy problem? Studies suggest that oil wells and fields are "energy losers" before they become "money losers" and closed down.
http://dieoff.com/page197.htm

Petroleum experts Colin Campbell, Jean Laherrere, Brian Fleay, Roger Blanchard, Richard Duncan, Walter Youngquist, and Albert Bartlett, using various methodologies, ALL expect a "peak" in "conventional oil" around 2005. Moreover, the CEOs of Agip (Italian oil company) and Arco have both published estimates of a global oil peak in 2005. So it seems like a reliable estimate.

See this great (and obviously unofficial) USGS poster on oil depletion!
http://geopubs.wr.usgs.gov/open-file/of00-320/of00-320.pdf
or http://dieoff.com/of00-320.pdf

NORTH AMERICAN NATURAL GAS
From ENERGY IN THE NEW ECONOMY: The Limits to Growth, By Matt Simmons, Oct 2, 2000;
"North American natural gas has no excess capacity. It disappeared several years ago. What we do have is extremely aggressive decline rates in almost every key production basin making it harder each season to keep current production flat. The electricity business has also run out of almost all existing generating capacity, whether this capacity is a coal-fired plant, a nuclear plant or a dam. The electricity business has already responded to this shortage. Orders for a massive number of natural gas-fired plants have already been placed. But these new gas plants require an unbelievable amount of natural gas. This immediate need for so much incremental supply is simply not there."
http://www.simmonsco-intl.com/research/default.asp?viewnews=true&newstype=1

LAS VEGAS ELECTRICITY: New plant slated
Las Vegas Review-Journal, by John G. Edwards
Publication date: 2000-09-30
PG&E Corp., the giant San Francisco-based electric company, said Friday it intends to build a 1,000 megawatt natural-gas fired power plant at Moapa, 45 miles northeast of Las Vegas. The facility would employ 800 people during construction and 40 permanent workers after completion. The company hopes to start construction by year-end 2001 and to complete it in early 2004.
This new power plant should be completed about the time natural gas runs out.

Sending the Alaskan Gas Cap South
It has been agreed by the principals, following BP's purchase of Arco, that Exxon, BP, and Phillips each own a third of the Prudoe Bay gas cap. The reserves in question are enormous -- more than 35 tcf -- but, even though known about since 1970, they have been kept off the books as their was no economic way to get the gas to market. Now the trio have announced apparent agreement that it is time to start bringing the gas south. No doubt recent record prices helped in the decision. High prices will be needed to cover the $10 billion cost of a 1,200 mile pipeline, in part transiting Canada. Possible completion date: 2007. This could be a large part of the missing quads Pete has been trying to find.
http://www.qv3.com/policypete/policypete.htm
This last-of-the-American-natural-gas should keep Las Vegas slot machines spinning for another year or two...

CANADIANS RIPPED-OFF AGAIN
New pipeline expected to carry arctic gas to U.S.
Source: The Journal Record, 2000-10-02
INUVIK, Northwest Territories -- For three decades, geologists probing beneath the Arctic Ocean near here and in offshore Alaska have mapped the largest known untapped reserves of natural gas in North America: 165 trillion cubic feet, seven times as much as the United States will consume this year. This last-of-the-Canadian-natural-gas should keep Las Vegas slot machines spinning for another year or two... while Canadians freeze...

UK RUNNING OUT OF NATURAL GAS TOO!
UK Gas Imports Could Start This Winter, Transco Warns London, Oct. 4, IRNA -- Britain's natural gas could run out within the next 20 years because of the lack of growth in North Sea reserves, British Gas' transport firm, Transco has warned. In a 10-year statement forecasting gas supply and demand, it said that imports from Europe could start sooner than previously predicted. It did not rule out the possibility of imports through the gas pipeline to Belgium starting this winter.
http://www.irna.com/newshtm/eng/13151505.htm

Jay Hanson

Whatta Hero!

Mizaru, kikazaru, iwazaru.