100 Years of Natural Gas

President Obama is right about the bright future of American energy.

“We have a supply of natural gas that can last America nearly 100 years,” declared President Barack Obama in his State of the Union speech last month. “And my administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade.” Hooray, right? Some environmental lobbyists aren't exactly celebrating—and some analysts say that the president doesn't know what he’s talking about.

Burning natural gas adds far less of the greenhouse gas carbon dioxide to the atmosphere than does burning coal, but many activists fear that cheap, abundant natural gas will out-compete the renewable energy sources—e.g., solar and wind—that they prefer. “Every dollar spent on new natural gas wells, pipelines, processing and infrastructure does not bring us closer to wind, solar, and energy efficiency," asserted Jennifer Krill, program director of the anti-mining Earthworks advocacy group last year. “Quite the opposite: It is taking us in the wrong direction by delaying the transition.”

In addition, analysts who worry that the global production of oil is nearing its maximum rate and will begin to decline forever afterwards, a.k.a. peak oil, similarly fear that natural gas production will peak, and soon. They claim that the president’s assertion that there is a 100-year supply of natural gas is a “myth.” Other doubters argue that the president has been misled by a confusion over proven reserves versus highly speculative resource estimates.

In fact, these doubts about future natural gas supplies seemed to have been bolstered by a new report issued just the day before the president’s speech by the Department of Energy’s independent statistics agency, the Energy Information Administration (EIA). In its preliminary Annual Energy Outlook 2012 [PDF] report, the EIA cut back its natural gas resource estimates from shale formations from 827 trillion cubic feet (Tcf) to 482 trillion Tcf, a drop of 40 percent.

The U.S. currently consumes a bit more than 22 Tcf of natural gas per year producing electricity, heating buildings, and providing feedstock to chemical plants. Proven reserves are 273 Tcf which would be completely depleted at the current rate of consumption in about 12 years. So if known reserves are so small, is it delusional to think that the U.S. has a 100-year supply of natural gas? Perhaps not. 

The new EIA report did cut shale gas resource estimates, but as that report explains it did so chiefly based on estimates derived from U.S. Geological Survey (USGS) modeling of technically recoverable gas reserves in the Marcellus Shale deposits that stretch through the northeastern Appalachian mountains. Keep in mind that back in 2002, the USGS estimated that the Marcellus Shale would yield only 2 Tcf of natural gas. The new median Marcellus shale gas estimate is now 84 Tcf. However, other knowledgeable experts think that estimate is way too conservative. Given the history of steadily increasing reserve and resource estimates of domestic supplies of natural gas, this is very likely to be the case.

Consider that 15 years ago, the EIA estimated that U.S. proven reserves amounted to just 166 Tcf [PDF]. At the time the country was burning natural gas at a rate of 19 Tcf per year, implying that if proven reserves had not somehow increased the U.S. would have completely run out of natural gas five years ago. In fact, since then the country has cumulatively produced and burned twice the amount of proven 1996 reserves. Yet, here we are merrily still burning natural gas—and even more than we did back then.

So proven reserves must have increased. Back in 1997, the EIA subtracted the proven reserves from its technically recoverable resource estimate to conclude that total U.S. unproved gas resource amounted to 1,166 Tcf, which even then would have supplied domestic consumption for the next 59 years. Interestingly, just a year later in its Annual Energy Outlook 1998, the EIA reported [PDF], “Total unproved gas resources are assumed to be 870 trillion cubic feet with 1990 technology and 1,186 trillion cubic feet with 2020 technology.”

The point is that proven reserves are far from the whole story. Just as you don’t buy your entire lifetime supply of groceries all at once, neither does the natural gas industry drill holes accessing all of the possible gas reserves for the next 100 years.

So how does the new EIA estimate of Marcellus shale gas affect estimates for total domestic natural resources? First, it could be wrong. Using gas well production data from the 16 most productive counties in Pennsylvania, Pennsylvania State University geologist Terry Engelder says, “We calculate a 10-year production of 189 Tcf.” Consequently, he adds, “To our way of looking at the Marcellus, we in Pennsylvania are well on our way of achieving the 410 Tcf that EIA predicted last summer.”

But assume that the new EIA estimate is correct, does that mean that President Obama is wrong about the 100-year supply of natural gas? Not really. As John Staub, the team leader for exploration and production analysis at the EIA concedes, the cutback in shale gas production estimates simply drops the EIA’s domestic natural gas resource total from last years’ 2,543 Tcf to 2,214 Tcf. Dividing the newer and lower estimate by current consumption of 22 Tcf per year, yields a ballpark figure of a 100-year supply of natural gas.

Other natural gas resource estimates are fairly close to the new EIA one. Last September, in a report to the Secretary of Energy, the National Petroleum Council (NPC) issued a study reviewing a number of technically recoverable natural gas resource estimates ranging from a low of 1,500 Tcf to over 3,600 Tcf [PDF]. The report by the NPC, whose members are appointed by the Secretary of Energy to advise the federal government on oil and natural gas issues, noted, “This resource base could supply over 100 years of demand at today’s consumption rates.” In its 2010 The Future of Natural Gas [PDF] report, the Massachusetts Institute of Technology Energy Initiative reviewed the literature and settled on a technically recoverable resource estimate of 2,100 Tcf of natural gas.

Of course, future gas production depends on both technological advances and the price of natural gas. Since 2008 the price of natural gas [PDF] has fallen from over $12 per thousand cubic feet (Mcf) to just over $2.50 per Mcf now, so it's not surprising that drilling activity has dropped off recently. Low prices means less demand* less effort will be put into finding new supplies or developing advanced production technologies.

With regard to future advances in gas production technologies, recall that back in 1997 the EIA estimated using “2020 technology” that total domestic natural gas resource would amount to 1,186 Tcf. “We are certainly not able to foresee what technological breakthroughs are going to happen,” acknowledged the EIA’s Staub. He’s right. After all, using “2012 technology,” the new domestic resource estimate is almost twice the 1997 estimate.

The bottom line: President Obama does not appear to be deluded or peddling a myth when he states that the country likely has a 100-year supply of natural gas. On the other hand, overzealous regulators could see to it that the country has access to considerably less than its 100-year supply, but that’s a story for another time.

Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

*Grrrr. That will teach me to try to shorthand demand and supply. Thanks to the commenters who reminded me of downward sloping demand curves. 

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  • Sean Hannity||

    But Obama won't let us drill here!

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  • ||

    We have 100+ years of natural gas.

    We have 100+ years of U-235.

    We have 10k+ years of Thorium 232.

    And the Federal Government is standing in the way of developments that would take advantage of these supplies.

    As a wise man once said:

    "Move Bitch, get out the way"

  • we||

    America isn't the only country on the planet. If there was a nuclear free lunch for energy, the Chinese or some other major player would have showed the way, with no pesky regulations as an encumberance.

  • ||

    Right. So eventually someone will develop it and reap the rewards, but at this rate it won't be in this country.

    I don't understand this skepticism of "nuclear free lunch," it's not as if the knowledge of this free lunch magically pops into the head of the market instantaneously and it gets developed. Institutions matter. Path-dependency is a real phenomenon that leads to suboptimal outcomes.

  • annonymous commenter some guy||

    It hasn't happened yet because coal is so damn cheap. Nobody said that nuclear was free. They just said it was cheaper than solar.

  • davidst||

    I've never seen a responsible estimate that says we have 100+ years of uranium. And don't forget the cost of storing spent fuel and other radioactive waste in your cost calculation (a cost that will probably be at least partially externalized and born by the government).

  • ||

    "And don't forget the cost of storing spent fuel and other radioactive waste in your cost calculation (a cost that will probably be at least partially externalized and born by the government)."

    That is only a COST if you require that we use Generation I and II light-water nuclear power plants. Actually, even those old plants can be used to consume most of the spent fuel (i.e. radioactive waste). With reprocessing you can destroy about 80% of the spent fuel. With fast reactors or liquid salt reactors you don't even need reprocessing to do this.

  • we||

    Maintaining "current consumption rates" is unlikely. Oil is hovering at $100/barrel and we are at or near peak, so were are likely to reduce our reliance on it for heating, electricity and even transportation rather quickly. Gas-fired electric plants are going to be in greater use. U.S. population is projected to grow markedly. Moreover, once we have burned through more than half of the total gas reserve, we will hit a gas "peak," just like with oil, and gas production will decline regardless of demand.

    The dirty nasty energy future is coal, and we will keep burning it up like our atmosphere is a public no-charge sewer for dumping carbon and methane. There is no way out of our current predicament. With no predators above us in the food chain, the biological process of our die-off has to play itself out.

  • ||

    "Moreover, once we have burned through more than half of the total gas reserve, we will hit a gas "peak," just like with oil, and gas production will decline regardless of demand."

    Nope. Just like with oil, people will find continuously better ways to get NG out of the ground, or increase consumption efficiency, or make synthetic NG from waste heat. Hydrocarbons are just excellent energy transfer products.

    "The dirty nasty energy future is coal, and we will keep burning it up like our atmosphere is a public no-charge sewer for dumping carbon and methane."

    Nope. That's interesting, since Natural gas is at least 20% methane. Coal has no inherent advantages over natural gas. Liquids are simply easier to transport, store, and produce.

  • we||

    NG is not a renewable resource. The faster you "efficiently" suck it out of the ground, the quicker you deplate a fixed and unreplenishable supply. And "waste heat" isn't going to save your sorry @$$ unless the second law of thermodynamics gets repealed by God.

  • ||

    "NG is not a renewable resource."

    Methane, the main component of NG, is CH4. It is not a difficult molecule to make.

    "And "waste heat" isn't going to save your sorry @$$ unless the second law of thermodynamics gets repealed by God."

    Energy can neither be created nor destroyed, but it can be converted from matter. An enormous amount of energy can be extracted from nuclear sources, just like stars do.

  • Sevo||

    "Methane, the main component of NG, is CH4. It is not a difficult molecule to make."
    I believe cows provide the conversion from plain, old, grass to methane on a regular basis.
    See? Bio-fuel!

  • smartass||

    You need to go learn something about a fascinating new subject called physics. It's been all the rage in fashionable circles for, oh, over a century now.

  • smartass||

    Coal has no inherent advantages over natural gas.

    That's not actually true. The HHV (higher heating value) of coal is substantially higher than natural gas. What this means is that coal, and oil for the same reason (but a step lower), both offer the potential to provide higher efficiency processes. The theoretical upper bound on efficiency is higher for coal and oil than for natural gas.

    I'm with you on the rest of your points. Just saying, there are reasons one might prefer oil and coal over natural gas in some settings. Including large scale electricity generation.

  • annonymous commenter some guy||

    and we are at or near peak,

    *Citation needed.

  • smartass||

    The Book of Mother Earth and Al Gore says....

  • davidst||

    Citation needed... that's what they said in 1971 and even for several years later until it became obvious that US lower-48 oil production had peaked just as Hubbard predicted. Peak oil is not hard to predict if you have individual field depletion data (and we've got a century of it). Conventional oil has already peaked, 40 years after discoveries peaked (just as with the US 1971 peak). Alt liquids can only make up the difference for a few years. Peak oil is much easier to grasp, understand and believe than global warming. Go do your own homework.

  • smartass||

    And nobody ever *ever* finds new sources of oil, anywhere or at any time.

    No oil fields have *ever* replenished and started producing again.

    All the oil in existence was created all at one time somewhere back in the dinosaur age and there will never be any more dinosaurs, so there's never going to be any more oil produced by the earth.

    And besides it's a hell of a lot easier to hi-jack the world's political and economic systems if you can convince people to believe all this BS, because then they'll cower in fear.

  • ||

    The conversion of automobiles to natural gas fuel is already (slowly) underway; it's happening at a faster pace among commercial fleets that need to contain costs, such as bus lines, delivery services, and trash haulers.

  • Sevo||

    we|2.14.12 @ 4:50PM|#
    "Maintaining "current consumption rates" is unlikely. Oil is hovering at $100/barrel and we are at or near peak,..."

    So, please tell us, we: When is the rapture? How many times are Malthusians going to tell us 'WE'RE ALL GONNA DIE!' and be proved wrong until stupid Malthusians wise up?

  • smartass||

    Only after they're finally right and we all do in fact die off.

    It's gonna be a while but you realize, odds are they might eventually get it right.

  • Sevo||

    smartass|2.14.12 @ 11:52PM|#
    "Only after they're finally right and we all do in fact die off.
    It's gonna be a while but you realize, odds are they might eventually get it right."

    Yeah, dumbass, and the sun is going to burn out one day.
    Do you have a point or are you just one more ignoramus?

  • smartass||

    ???

    Like I said, I'm a smartass.

    Please recalibrate your sarcasm meter.

  • Alan||

    I have to admit that Obama has been pretty good on environmental and energy policy - not great, but pretty good. Moving us towards natural gas is the best thing to do right now. We probably won't need more than a 30 year supply, if that, before better technologies are available - but in the mean time it allows us to become energy independent and less polluting, while decreasing the need to interfere in the middle east. Natural gas supplies are plentiful worldwide, too, so this won't just be an American thing.

  • Canman||

    Obama hasn't moved us toward natural gas -- the market has. If Obama had his way, we'd be sinking under Waxman-Markey cap-n-trade.

  • ||

    "Low prices means less demand and so less effort will be put into finding new supplies or developing advanced production technologies."

    I think you mean less SUPPLY. If I could get my converted (cheaply) to run on CNG I would. It's like going back to sub-dollar/gallon gasoline.

  • ||

    I accident a word.

  • shrike||

    This is one case where demand has increased while prices have fallen.

    So maybe Bailey meant that.

  • ||

    Demand almost always increases while prices fall.

    That's that whole "downward sloping demand curve" thing. This is just a movement along the curve.

  • shrike||

    Seriously, wingnut chatter aside, this is one area the market is plain stupid in. I forget the exact calculation but a natgas car would cost the equivalent of something like $1.10 a gallon of crude-derived gasoline for the same mileage.

  • ||

    Shrike, it's not the market, it's the regulation. It is illegal to modify cars for the general public, except in the case of fleets and one-off productions. The only natural-gas powered cars you can buy in the states are Hondas, because the other manufacturers don't yet see a point of taking the risk to offer a CNG engine. There are a couple of Venture-backed companies, and automakers themselves, developing engines that can run on multiple liquid fuels, which would 'fix' the issue.

  • GW||

    Many of the 1/2 ton and 3/4 ton trucks can be converted, and driven by anyone, legally. It's just not cheap, so not much market penetration outside of fleets.

  • ||

    I'm sure a big part of the reluctance to move to NG cars is liability. All that pressurized gas is a lawsuit waiting to happen.

  • West Texas||

    Not necessarily. The tanks are pressurized such that they empty pretty quickly if ruptured and one of the characteristics of methane is that it disperses quickly and doesn't burn easily in air except in a fairly narrow band of concentration.

    A gasoline spill is probably more likely to catch fire and explode than a fuel leak from an NGV.

  • smartass||

    True that.

    But you're far more likely to start a fire with a leaking gas rail (pipe loop) that feeds fuel injectors, than with the old fashioned carb.

    I heard the automakers were looking at replacing the liquid fuel rail with a gas rail containing the air-fuel pre-mixed, and feeding that straight into the cylinders. To meet future efficiency mandates. Not sure where that all ended up but I hope it died. Talk about a fire hazard, we'd all be driving bombs.

  • ||

    It's now a common component in engines. My 2010 VW diesel uses a common gas rail injection system. Good mileage and reliable as all hell.

  • ||

    The biggest drawbacks are range and lack of fueling stations. There is bakery distributor in my area that has had NG powered vans since the 80's. Burlington VT. also runs the busses on NG. What makes if viable for them is they don't go great distances and always return home at night.

  • Sevo||

    Perfect application for fully electric vehicles also.

  • smartass||

    range

    That is also true. See above about higher heating values of fuels. Natural gas has one of the lowest energy contents per unit mass of any hydrocarbon fuel. Compressing it still doesn't get it seriously in the running against conventional gasoline.

  • Sevo||

    shrike|2.14.12 @ 4:53PM|#
    "Seriously, wingnut chatter aside, this is one area the market is plain stupid in."

    Hint, shriek:
    If you think you know better than the market, just blow your entire wealth investing in your belief. You will soon learn that the market is always right. You are stupid enough not to know why, but we'd love to watch you prove it.
    Hey, for a couple of grand, I'll tell you why you're wrong and save you the rest of your dough!

  • davidst||

    I hate religious libertarianism

  • Tony||

    The only way the energy production status quo is going to change is when oil companies start burying solar panels deep in the earth and then drilling for them.

  • Sevo||

    Tony|2.14.12 @ 7:26PM|#
    "The only way the energy production status quo is going to change is when oil companies start burying solar panels deep in the earth and then drilling for them."

    Shithead, the only way you'd pass a kindergarten graduation exam is with help from someone who learned to think.

  • West Texas||

    There are ~8 gallons of gasoline in 1 mmbtu, which is the standard denomination of natural gas. If you take the wholesale price of natural gas - roughly $3/mmbtu in most places - and divide that by 8, you get ~$0.38 / gasoline gallon equivalent (GGE). The problem is that most consumers won't buy NGV's because they're worried about there being no stations and running out of fuel and most providers won't build fueling stations because there's no market for the vehicles. Very chicken and egg.

    As far as conversions, the kits themselves and the materials are relatively cheap. What's expensive is the permitting process for each conversion performed and also per shop and regulating the integrity of the cylinders (gas tanks). The EPA (and state agencies like CARB) classify methane as an extremely potent greenhouse gas and as such are real sticklers when it comes to regulating NGV conversions and possible leaks and accidental emissions. Which, when you get down to it, is incredibly ironic.

  • Sevo||

    "If you take the wholesale price of natural gas - roughly $3/mmbtu in most places - and divide that by 8, you get ~$0.38 / gasoline gallon equivalent (GGE)."
    Roughly, what volume of natural gas is required to deliver this energy?
    Conversely, what is the pressure required to deliver the same energy from the same volume?

  • West Texas||

    A CNG cylinder is pressurized at 3600 psi.

    Most transport pipelines are around 1000 psi and most distribution (utility) systems are < 100. Site selection is important, obviously, else you are going to end up repressurizing the gas twice and losing more energy in the process.

    FWIW, EROEI (energy return on energy efficiency) for CNG is around 9:1. For petroleum it's (roughly) 10:1.

    If you liquify the natural gas, which obviously uses a lot more energy to do, you get closer to 6:1.

    Compare this to most ethanol and biofuels which is very close to 1:1 for most plants and possibly 1.5:1 for a really efficient modern ethanol plant. Most people don't seem to realize at all how much natural gas goes into making ethanol.

  • ||

    This whole thing is insane. If you look at the energy that you need to extract, gather, and transport the gas and the energy content of that gas you find a very low return on investment.

    Just as big a problem is the lack of homogeneity of shale formations. While some areas in good formations are decent and can be developed at a reasonable cost most are not economic. After the huge error that the EIA made when it it was more than 50% too low when estimating the depletion rate for conventional fields why are we supposed to believe its optimistic pronouncements now?

    And why should we think that shale gas is economic when after more than five years of drilling a company like Chesapeake has run out of cash and needs to sell off pieces and take on massive amounts of debt so that it can keep on going for another year?

  • Sevo||

    Vangel|2.14.12 @ 9:07PM|#
    "This whole thing is insane. If you look at the energy that you need to extract, gather, and transport the gas and the energy content of that gas you find a very low return on investment."
    As a gas at atmospheric pressure or as compressed or liquefied?

  • The Bearded Hobbit||

    My dad converted his pickup ~45 years ago to propane and had the local rural gas supplier provide him with a hose. He carried a large (200 gallon?) tank in the bed so range was not an issue.

    The conversion was very simple, an electric valve on the gasoline line with a counterpart on the propane line and a regulator that fed thru the air filter. He could switch fuels while driving down the road.

    Obviously this was before permitting and safety regs.

    ... Hobbit

  • Sevo||

    "He carried a large (200 gallon?) tank in the bed so range was not an issue."

    This is why NG is workable in certain (limited) circumstances and not others.
    Most autos struggle to find space for ~20g tanks, and those are not designed for pressure applications.
    Look at any pressurized tank: It's round, for good reason. Look at any fuel tank in an auto; it's typically some weird form needed to fit over the rear suspension and under the trunk. For good reason.

  • stuartl||

    So if my math is correct, we will run out of NG, hit peak oil, and have usable fusion power all at the same time.

  • smartass||

    Yes, but that is also the exact same time that The Book of Mother Earth and Al Gore tells us that the world will come to an end.

    Mother Earth is a real bitch, you see. She's going to let us find The True Solution one nanosecond too late to save our sorry asses. Then she's gonna let out one rip-roaring wicked-est witch of all laugh.

  • smartass||

    Okay so let's suppose for just a moment -- pure hypothetical here -- that we wanted our Government (Good and Great as it be) to make a genuinely smart investment in energy technology. I know right where my money would go down.

    We need materials technologies that will allow super critical steam power plants to go mainstream for electric generation. Super critical generators would give us a minimum 10% net increase in power plant efficiency, over the conventional power plant.

    That 10% translates into huge amounts of money, and emissions, if you look at the scale of electric generation in a modern first world nation. And there's no "wow! we glow in the dark mommy!" potential like you get with nukes, no "we need a billion acres for solar collectors and wind mills", etc etc.

    Okay, you can flog me now for my blasphemy. No real governing is ever going to do anything this smart.

  • davidst||

    I'd focus on generating electricity closer to where it is used to save on transmission loss and also direct the "waste" heat into direct heating applications. Spend R&D cash to speed the development of 4th gen nuclear and improve batteries for more efficient vehicles (diesel hybrids are probably our best bet) and maybe some day intermittent alt electric (solar especially). Long term, we're going to have to go solar I think. The sun is the only practically limitless energy source on human timescales.

  • Alan||

    I've already seen people talking about space-based solar being cheaper than coal within 20 years, and even if they're being a bit optimistic it's pretty clear that that is one possibility that will only be prevented if we find something even better. In the meantime, Natural Gas is a pretty good stopgap measure. Obama is right on this one.

  • Nancy smartass Pelosi||

    Obama is right on this one.

    Are you serious?

  • ||

    Super critical generators? Seriously. Stay away from my money. Gas turbines work just fine, thanks.

    If you want to increase energy supply, the best choice is fission, full stop. Retire the NRC, and start approving production of modular reactors and next generation designs.

  • smartass||

    Gas turbines work just fine

    Yeah, so do horses. Seriously. Or better yet just do it the old fashioned way and walk.

  • Eric||

    Who is already working on a thorium reactor? China, France, Czechs, Russia, India. Where is our Dept of Energy? Lost? Paid off?
    The current LWR nuclear reactors are based on a concept and design from the 50’s. Could you imagine driving cars, flying planes, or carrying telephones from the 50’s?
    The Liquid fluoride thorium reactor‎ LFTR was an incredible design devised by Alvin Weinberg and his team over 40 years ago. He holds the patent on the current Light Water Reactor but thought of it as temporary and was key in developing the LFTR thorium reactor which he preferred. A technology that was developed at Oak Ridge National Labs in the 1960s and has been sitting idle for 43 years.
    What is Thorium? http://www.youtube.com/watch?v=AZR0UKxNPh8 Google

  • Natural Gas Supplier PA||

    Looks like natural gas is the way to go for the country!

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