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Recently I published an article recommending US Energy Secretary Steven Chu be fired for comments he made to reporters at a Washington energy conference sponsored by the EIA. Referring to natural gas transportation, Chu said “I am agnostic about it.” Chu said it was important to look at alternatives such as advanced biofuels and went on to express concerns about natural gas as a transportation fuel saying it could strain supplies for industrial uses, home heating, and electricity generation. “So again, it is a complicated issue.”

In my next article, I made a case for a natural gas centric energy policy. User283977 posted a comment to this article and said hey Fitzman, nice article, but your case (for a US natural gas centric energy policy) would be even stronger if you quantified the amount of natural gas supply needed to meet the natural gas transportation and electricity generation goals of such a policy. Considering that I called for Energy Secretary Chu to be fired because of his statements suggesting there is not enough natural gas to power transportation in the US, this was excellent feedback indeed. Previously, I have been relying on others to prove this point - as Robert Hefner did in his awesome book The Grand Energy Transition. However, I had never been through the exercise myself and I am going to walk through the numbers now. These calculations are more to satisfy my own curiosity and the wishes of my readers than to cast doubt about Mr. Hefner or any other energy expert’s work in this field.

Barack Obama has spoken of “restoring scientific integrity to government.” From now on, he said, scientists will be “free from manipulation or coercion,” and the government will “[listen] to what they tell us, even when it’s inconvenient.” Unlike a recent ex-president, Obama says he will ensure “that scientific data [are] never distorted or concealed to serve a political agenda.”

However, is it possible this is simply scientific rhetoric from Obama? He mentions “clean coal” every chance he gets and we know that’s a myth and an oxymoron. Is it possible that Energy Secretary Chu is also being lax with science? Energy experts are saying the US has enough natural gas reserves to power the US economy for the next 60-100 years. So, who is right – Secretary Chu, the Noble Prize winner in Physics who says there is not enough natural gas or the energy experts who say there is? If you are a believer of peak oil, and if you also believe natural gas is the key bridge fuel to see the US through it, quantifying the natural gas supply and demand numbers is very critical indeed. That is what this article intends to do.

How Much NatGas is Required to Fuel 50% of US Cars & Trucks?

Let’s begin with some basic facts, all of which are found on the EIA’s website:

  • The US uses 390,000,000 gallons of gasoline per day
  • 1 Gallon gasoline = 124,000 Btu
  • 1 cubic foot of natural gas = 1028 Btu

The Honda Civic GX (NYSE:HMC) is the only NGV for sale to US consumers. For the sake of this analysis, I will assume every car and truck in the US that is converted to run on natural gas will mimic the 2009 Honda Civic GX’s specifications:

  • Mileage: 28 mpg (combined)
  • Tank capacity: 8.03 GGE @ 3600 psi (GGE=gallons of gasoline equivalent)

As a starting point, let’s assume replacing half the cars and trucks in America with NGVs will halve US gasoline consumption. Let’s further assume average gasoline vehicle mileage in the US is 25 mpg and that these miles will be converted directly to NGV miles. So, for the number of miles to be converted from gasoline to natural gas we have:

(390,000,000/2 gal/day)*(25miles/gal) = 4,875,000,000 miles/day

Now, for the Honda Civic GX we have:

(28miles/gal)*(8.03 GGE/tank) = 225 miles/tank

However, I have heard a more realistic range for the GX is 200 miles per tank. This is because the pressure in the natural gas tank falls as it becomes closer to empty and therefore it is wise to refuel sooner rather than later. So, I’ll use the 200 miles/tank number to figure out how many GX tanks would need to be refueled every day to replace 50% of America’s gasoline powered cars and trucks:

(4,875,000,000 mi/day)/200 mi/GX tank = 24,375,000 GX tanks/day

But how much natural gas is contained in one GX full tank? Here’s where it gets a bit messy. We know from the EIA website what the energy content is for a gallon of gasoline and for a cubic foot of natural gas, and we know the tank capacity of the GX is 8.03 GGE, so we can figure out how much natural gas there is in one GX tankful as follows:

(8.03 GGE/GX tank)*(124,000Btu/gal gas)/(1028 Btu/cuft natgas)

= 968 cubic ft natural gas/GX tank

Before you ask, remember that natural gas in the GX is compressed natural gas (CNG) at a pressure of 3,600 psi, which is why the gas tanks don’t need to actually be 968 cubic feet in size. Now we know how many GX tanks we need to fill every day, and we know how much natural gas is contained in each tank, so it’s easy to compute the amount of natural gas needed to power one half the cars in trucks in America for one year:

(24,375,000 GX tanks/day)*(968 cuft/GX tank)*(365days/year)

= 8,612,175,000,000 cubic feet natural gas

= 8.6 TCF (trillion cubic feet) natural gas

Zow-eee, that sounds like a lot of natural gas! Now let’s look at the EIA website
and find out what the natural gas reserve estimates are. This website is a bit confusing. “Dry Natural Gas”, “Wet after Lease Separation”, “Associated” and “Nonassociated&r... I’m just going to add all the 2007 columns together and come up with a “total” US natural gas reserve estimate of 742,447 billion cubic feet, or, 742.4 TCF.

So, according to official EIA natural gas reserve estimates, there are enough natural gas reserves in the US to power half the cars and trucks in the US for:

(742.4 TCF)/(8.6 TCF)/year = 86.3 years

However, natural gas is also used for home heating, electricity generation, and industrial uses. So, we need to add in the 8.6 TCF/yr needed for natural gas transportation to the current natural gas yearly demand and see how we look. But before doing that, let’s see how much natural gas it would take to replace coal-fired electric generation.

How Much NatGas is Required to Replace US Coal-Fired Electric Generation?

The following table lists the top three sources of US electrical power generation. Renewables is also added to the table as a reference point.

Table 1: Net Generation by Energy Source

Thousand MegaWatt Hours (T-MWHr):

Year

Coal

Natural Gas

Nuclear

Renewables

&nbs... Total US

2006

1,990,511

816,441

787,219

96,525

4,064,702

% Total

50%

20%

20%

3<%

Coal accounted for 50% of US electrical power generation in 2006 whereas natural gas was 20% of the total. In 3rd place is nuclear power at 19%. Hydroelectric was 7% and all renewables combined (wind, solar, geothermal, biomass, wood, agricultural, etc) were less than 3%.

I maintained in my strategic long-term comprehensive energy policy (previous SA article) that primary objectives in future US electrical power generation policy should be to:

  1. Never build another coal-fired electrical generation plant.
  2. Replace existing coal-fired power generation with natgas.
  3. Increase natgas, renewable, and nuclear power generation.

I consider these logical policies based on environmental and economic perspectives. Now, let’s realistically consider the magnitude of the problem here: coal generation is more than 20 times the renewable total. Considering how many wind turbines or solar arrays would need to be added to make up such a huge difference, the length of time it is taking to buildout these infrastructures, and the amount of CO2 and toxic particulate emissions that could be saved in the meantime by deploying natural gas generation (NG is also the best choice for backup power source for wind and solar intermittency), it seems logical to replace a large hunk of coal generation capacity with cleaner and cheaper natural gas. Now, before everyone jumps on my head, I fully support continued wind and solar investment and deployment. I also fully support licensing and construction of nuclear power. But nuclear plants take a long time to build, and meanwhile coal is spewing CO2 and toxic particulates. We need to be pragmatic when considering the magnitude of this problem and so too its realistic solutions.

So, how much natural gas would it take to cut coal consumption by 50%? By 100%? Table 2 below shows the amount of coal and natural gas it took, in 2006, to produce the power totals shown in Table 1. This data is again from the EIA website.

Table 2: Electric Power Generation by Fuel Source

Year: 2006

Consumption

Units of Consumption

Power Generated

(T-MWhr)

Coal

1,030,556

Thousand Tons

1,990,511

Natural Gas

6,222,100

Million Cubic Feet

816,411

With the figures in Table 2, it is easy to figure out how much natural gas would be needed to replace 50% or 100% of coal-fired power generation in the US:

50% replacement of coal with natural gas:

= (1,990,511/2)* (6,221,100)/816,411

= 7,585,121 Million Cubic Feet Nat Gas

= 7.6 TCF/year

100% replacement of coal with natural gas:

= 15.2 TCF/year

Summary and Conclusions

Table 3 summarizes the findings.

Table 3: Natural Gas Replacement Supply Needed

Natural Gas Total Consumption

(2006)

21.7 TCF

Natural Gas Required to Fuel

½ US Cars & Trucks for 1 year

8.6 TCF

Natural Gas Required to Replace

50% of US Coal Power Generation

7.6 TCF

Natural Gas Required to Replace

100% of US Coal Power Generation

15.2 TCF

Total US Natural Gas Reserves (2007)

742.4 TCF

OK, so now we have the raw data to make some conclusions and policy decisions. My energy policy suggests fueling half of all American cars and trucks with natural gas. Further, I suggest we immediately begin swapping out 50% of coal fired plants with natural gas electric generators. Given the data in Table 3, how long would US natural gas supplies last? The amount of natural gas needed to supply the US with its existing consumption (21.7 TCF) plus fueling half the US car and truck fleet (8.6 TCF) plus replacing 50% of the coal-fired plants (7.6 TCF) is equal to 37.9 TCF/year. US reserves would then last:

= 742.4 TCF/ 37.9 TCF/year

= 19.6 years

Hmmm…not very long. I can hear all of you now: “Ohhhh Fitzman! Secretary Chu was right, you are wrong!” Not so fast boys and girls. The natural gas reserve number quoted (742.4 TCF) was EIA data as of 2007. This total US reserves figure has not been updated to include some of the newer shale fields. Consider that Chesapeake Energy (NYSE:CHK) predicts the Haynesville Field (east TX / northwest LA) will become America’s largest natural gas field and the fourth largest gas field in the world. It is estimated to contain 700 TCF with recoverable reserves of 250+ TCF. This means that the Haynesville Field by itself could supply all the natural gas needed for US existing use, 50% car & truck fuel, and 50% replacement of coal-fired plants for 6.6 years! One field alone! Remember too, big oil has been prioritizing crude oil exploration, not natural gas. Imagine if natural gas became a priority.

The US Geological Survey estimates total global natural gas hydrate reserves in “the range of 100,000 to 300,000,000 TCF”. To put these numbers in perspective, that equals about 10,000 times the world’s estimated coal reserves and 15 to 40,000 times the world’s remaining oil reserves. That is, the world’s natural gas reserves have more energy content than the world’s coal and oil reserves combined. [The GET, Robert Hefner, III.]

Focusing back on US reserves, the most recent independent review of America’s natural gas supply was estimated to be 2,247 TCF (Navigant Consulting Inc., July 2008). Robert Hefner estimates 3,000 TCF. Let’s take the average of these two estimates and call it 2,550 TCF and further assume this number is 50% optimistic: so the real reserve number is 1,225 TCF. Using his very conservative estimate, we have:

= 1,225/37.9 TCF/year

= 32.3 years

And if Hefner is right:

= 3000/37.9

= 79.1 years.

Based on Hefner’s over 30 year track record, I would hate to bet against him. Regardless, the US alone has enough natural gas reserves to power home heating, industrial demand, 50% of its cars and trucks, and to replace 50% of the coal-fired plants with natural gas generation! This is, indeed, wonderful news. So, I stand by my recommendation that Energy Secretary Chu step down, or, be fired.

Now, 32 years (or 79 years) is not forever, but it is certainly much longer than peak oil predictions say oil is going to hold out (remember, it’s not just oil supply, it’s oil supply AND demand). One should also consider that the conversion of 50% of the nation’s cars and trucks over to natural gas will not happen overnight, nor will conversion of 50% of the coal-fired electric generators. So, 32 years could realistically be stretched to 40-45 years. This is plenty of time to build out significant wind, solar, and nuclear power as well as deploy a formidable EV fleet.

Natural gas can truly be the “bridge” fuel to see America through the age of peak oil and into the age of renewable energy and onto a hydrogen based future. We can do it, but we need policymakers who will stop saying “clean coal” every chance they get and an Energy Secretary who is not “agnostic” about natural gas. We also need TV shows like 60 Minutes to invite natural gas knowledgeable folks on to debate Duke Energy CEO James Rogers when he says there is no alternative to building more coal plants (Duke Energy is currently building two more). Mr. Rogers: can you hear me? There is a very viable alternative – and it’s called NATURAL GAS.

DISCLAIMER:

This is my first attempt at independently quantifying the natural gas supply and demand requirements based on my natural gas centric energy policy. I used the EIA website for all base data, which was taken from 2006 (the most up-to-date year all data was available). I had to make some assumptions, and while those assumptions are debatable, overall, I don’t think they meaningfully influenced the big picture. I am most concerned that I may have made an arithmetic or other miscue that influenced the results in a material way. If so, please respond with comments to the article in a constructive way. Any error was not intentional in order to support my own outspoken policy suggestions. I certainly encourage all readers to go through the numbers, verify their accuracy, or enjoy the pleasure of giving me a hard time if there are indeed errors. Thank you.

Investment Suggestions:

I continue to pound the table for oil producers COP, CVX, XOM, PBR, and BP. The natural gas group may take longer to come around, but there I like CHK, RRC, DNR, and KWK.

Disclosure: The author is long COP and PBR.

Source: Is There Enough Natural Gas?