The politics of natural gas

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NEW DELHI - The dispute between Russia and Ukraine over natural-gas supplies that has rattled Europe has once again brought to focus the geopolitics that revolves around the control, transportation and consumption of energy, and more specifically, natural gas.

Natural gas has emerged as a more environmentally sound, cheaper and more easily available substitute for oil. Compared with oil at more than US$60 a barrel, an energy-equivalent amount of gas costs in the region of only $20. Experts predict that gas, which was once considered a wasteful by-product of oil exploration, will turn into the No 1 fossil fuel. Vying for gas resources are the world's top guzzlers of energy, the United States, Europe, China and India.

The problem is that the US and India, as well as Japan and European Union nations, are all some distance from major reserves of gas in countries such as Iran (with reserves of 971 trillion cubic feet - tcf), Qatar (910 tcf), Yemen, Russia (with the world's largest reserves of more than 1,700 tcf), Central Asia, Nigeria, Angola and Venezuela. There is also the issue of these supplier nations facing unstable political situations, so the gas from fields there has to be carried through disturbed and often dangerous physical and political quarters.

China and India have been quickly tying up with these countries to tide over future requirements, with the US trying to balance growing Asian demand with its own rising requirements. India has signed a $22 billion deal to buy liquefied natural gas (LNG) from Iran over a period of 25 years starting 2009, this after protracted negotiations. India has also signed an LNG deal with Qatar.

However, the tussle will turn more acute. A global energy crisis is brewing as the economic powerhouses continue to consume more oil than they can possibly produce or import. It is estimated that by 2025, today's global demand for 84 million barrels of oil per day will have grown to 121 million to 130 million.

http://www.atimes.com/atimes/South_Asia/HA06Df01.html

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High Noon for Natural Gas
[2004, Chelsea Green Publishing Co, ISBN 1931498539]

By Julian Darley
Reviewed by Deborah Frith
October 21st, 2005

Courtesey of www.sandersresearch.com

Non-renewable resources are naturally a hot topic worldwide given their fundamental importance to the way we live. Oil is probably the primary non-renewable resource that springs to mind. We assume it is the most widely used and consequently the most at risk from depletion. Julian Darley suggests otherwise. While oil is set to run out before gas, it is equally clear that gas is following the same pattern of discovery but is roughly 40 years behind. As oil is set to peak soon—if not already—its price has skyrocketed along with gas regarded as a substitute. Perhaps its very invisibility makes gas depletion seem less of an issue. So Darley’s main purpose is to raise awareness of peak gas and to that end is full of sho cking facts and straight to the point information. His core point is the widely ignored carbon chasm; increasing fossil energy demand and dwindling supply; and the problems faced when that supply is exhausted.

Darley begins with the common uses of gas such as synthetic fertilizer. The well-known consequences of which have been massive population growth and serious damage to the natural productive capacity of the soil. Natural gas is also widely used to keep America warm in winter and cool in summer with electric air conditioning. So Americans have become accustomed to a more moderate, artificial climate. Should this change suddenly without sufficient notice, the death toll could be high.

So why are gas supplies finite? The formation of gas takes millions of years under specific conditions; so, as far as we are concerned, it is non-renewable. The production curve of gas is completely different from that of oil. Due to the restriction of the pipes through which the gas must flow, there is a limit on how much can be produced. On the other hand, the market for oil is fast-paced and its production curve reflects that: a bell-shaped curved whose top or peak occurs when the oil has been half depleted. The slower production of gas can be seen in a curve that flattens off. This means there is no defined gas peak but it also hides the warning that the system is about to decline. The producer has little or no warning of when his reserves will run out; and once gas begins to decline, it is a rapid and difficult process to reverse. This does not occur only on a local level, but is true for global production as well. The curve looks exactly the same. Therefore it is i mpossible to predict the exact timing of a global gas production peak.

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"World conventional oil discovery, with actual and unconstrained production, past, present, and future. The black bars show discovery; the dotted line shows how production would have behaved without the 1970s oil shocks; the solid line shows actual production, and prediction. Source: Colin Campbell." Page 124

The author makes it clear that in addition to the masked decline, the extent of global gas reserves is unknown. Politics has no small role. One could say that gas is a “political substance” so it is very difficult to learn the truth about the quantities available. There are usually two versions of how much gas is left in a given country: the government’s version which is public, and the petroleum geologists whose technical findings are kept secret. Governments are inclined to inflate gas reserves to strengthen their bargaining position while corporations downplay their reserves with an eye on reduced tax and avoiding bidding wars.

Darley briefly explores the different types of gas and where they come from and highlights the problems of extracting gas whichever form it takes. Unconventional gas, for example, such as coal bed methane produces large amounts of toxic wastewater. The two main methods of transportation, by liquid natural gas (LNG) tankers or pipelines also have their detractors. LNG has to be cooled to a temperature of minus 160ºc which requires massive amounts of energy and is therefore consuming much of the energy it is trying to transport. On a LNG tanker, 1.5 to 2.5 cubic feet per 1000 cubic feet of gas is converted back into a gas form each day. Converting gas into a liquid and reverting it back again is hazardous to the surrounding areas of production. Liquidizing and shipping gas is a relatively recent proposal and will not be online until at least 2006. It will take anywhere from 3-7 years to get it confirmed and then built, by which time the author believes it will be too late and the massive investment will be wasted. Simply put, there will not be enough gas in the world to transport. The alternative, pipelines, are also very dangerous; there have been instances where pipelines have exploded killing many; polluting the atmosphere and increasing the ozone layer problem.

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"World oil and gas discovery and production (called demand here), with predictions according to ExxonMobil. The only real difference between Exxon and the 'peak' petroleum geologists, at least one of whom used to work for Exxon, is that oil demand cannot continue as projected. Source: ExxonMobil." Page 124

Japan, Korea and Taiwan are rapidly being overtaken by China and the USA as the largest consumers of gas. Gas reserves in Canada, the North Sea, Russia, and South America are in their last stages, little more gas will be found there. However the Caspian Basin, the Persian Gulf, Iran, Qatar, Saudi Arabia, Kuwait, Iraq and Africa have all reported substantial quantities of natural gas. It is likely that as gas becomes scarce these areas will be exploited by gas-starved economies. Many of the future’s problems will boil down to energy security. The Middle East has had decades in which to arm itself, whereas Africa with so many separate countries is unlikely to be able to act effectively to protect its reserves.

In his final chapter, Darley suggests both major changes for the whole world as well as small changes we can act out every day of our lives to alleviate the coming oil/gas crisis. Prices we are paying at the moment do not reflect the coming shortages. Huge demand and small supply will cause prices to soar. Price, which should act as an indicator, is failing to do this. Why? In a word: monopolies. These large companies conspire to addict the public to an abundance of cheap energy. They care nothing for the environment or rather anything much apart from profit.

Darley’s ideas include radical steps such as: reducing population and economic growth as, in his view, we have grown beyond the earth’s capacity, and the earth cannot cope much longer. He urges a reduction of gas use in the four main areas: heating, plastic, power and food; and preferably a complete stop in the use of nitrogen fertilizers. More generally, we are advised to down size; start using less of everything. Everything has to come from your local communities, have your families and close friends just that – close; as it will be expensive and hard to see them in the future if they live far away. We need to re-localize, have everything we need to survive close to us so we can walk to get it. But most of all we shouldn’t give up, just keep trying. Start by telling everyo ne you know the stark result that will occur if they do not begin to take action now. He warns us not to give up, because we just don’t have time.

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"Percapita ecological footprints of selected countries. Souce: Worldwide Fund for nature 2002." Page 197

High noon for natural gas is a detailed and informative book that concludes by warning us that unless the majority understand the dangers and act now we will wait too long – it is only when it is thought that we have gone too far that we will begin to act. It is high noon for natural gas, and unless we act soon it will be high noon for humans and maybe the planet as well.

http://321energy.com/editorials/darl...ley102105.html

Blackouts, rising gas prices, changes to the Clean Air Act, proposals to open wilderness and protected offshore areas to gas drilling, and increasing dependence on natural gas for electricity generation. What do all these developments have in common, and why should we care?

In this timely expose, author Julian Darley takes a hard-hitting look at natural gas as an energy source that rapidly went from nuisance to crutch. Darley outlines the implications of our increased dependence on this energy source and why it has the potential to cause serious environmental, political, and economic consequences. In High Noon for Natural Gas readers can expect to find a critical analysis of government policy on energy, as well as a meticulously researched warning about our next potentially catastrophic energy crisis.

Did you know that:
• Natural Gas (NG) is the second most important energy source after oil;
• In the U.S. alone, NG is used to supply 20% of all electricity and 60% of all home heating;
• NG is absolutely critical to the manufacture of agricultural fertilizers;
• In the U.S. the NG supply is at critically low levels, and early in 2003 we came within days of blackouts and heating shutdowns;
• Matt Simmons, the world’s foremost private energy banker, is now warning that economic growth in the U.S. is under threat due to the looming NG crisis?