An Alternative to America’s Gasoline Crisis 44 comments
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Last week saw the price of crude oil inch closer to $140/ BBL. Some economists believe the price rise is mainly due to the world oil supply shortfall of about 4 million barrels per day [MBPD]. Proof of the shortage can be seen in the production numbers of the largest US multi-national oil companies ExxonMobil (XOM) and ConocoPhillips (COP), which fell 11% in Q1 2008. Last week Saudi Arabia agreed to increase crude oil production by 500,000 BPD to offset world shortfalls. So critical is the shortfall and the sensitivity of the gasoline price, that last week the US Senate defeated the Climate Change bill. Experts predict a crisis in 10 years when Iran curtails exports due to depleting crude oil production rates.
The US consumes about 21 MBPD of crude oil of which 5,102,000 BPD of crude oil is produced domestically. A typical refinery produces about 44% gasoline, 22% diesel distillates, 9% Jet fuel, 4% heavy fuel oil, 4% liquefied petroleum gas (LPG’s) and 17% other products. In 2008 US gasoline consumption is expected to be about 9,308,000 BPD of which 9,100,000 BPD is produced domestically.
The price of gasoline, currently hovering around $4.00 / gal, can be reduced by lowering demand in three ways. First, we can be drive less often and car pool. Second, we can seek alternate modes of transportation, such as public transit. Third, we can use another motor fuel as an alternative to gasoline, one that is not produced from crude oil.
The alternatives to gasoline motor fuel include diesel, propane, ethanol, methanol, CNG (compressed natural gas) and hydrogen.
To be acceptable as a replacement for gasoline motor fuel, the alternative must be;
a) Competitively priced compared to gasoline.
b) Produced by non crude oil refining multi-nationals.
c) Available in existing reserves for a minimum of 10 years at current rates of consumption.
d) Available in sufficient quantities to displace 25% of current annual gasoline volumes of consumption.
e) Available from countries of low political risk and low risk of supply disruption.
f) Available from multiple sources.
g) Currently in a surplus status.
h) Currently available at existing fueling stations nation wide.
i) Ideally available at fueling stations not owned by multi-nationals with crude oil refining interests.
j) Compatible with existing motor vehicles with minimal conversion cost.
k) Environmentally friendlier than gasoline.
l) Cheaper than gasoline on a BTU basis.
m) Equally efficient on an energy conversion basis.
n) Safe to use.
o) Possess state and federal regulatory approvals for motor vehicle fuel usage.
The motor vehicle fuel that meets the criteria above is CNG (compressed natural gas).
The historic BTU ratio of natural gas to crude oil is 6 MCF to 1 BBL crude oil. At today’s natural gas prices, this equates to a price of about $72 / BBL. With crude oil priced at $140 / BBL, CNG is selling at a discount of about 50%.
The cost of CNG in Utah is about $0.74/ gal and about $2.50 /gal in California compared to $4.00 / gal gasoline. World locations and prices are available on the web site CNG Prices.com
Natural gas is found underground sometimes in the presence of crude oil, sometimes in the presence of LPG liquids and sometimes alone. Exploration and drilling companies currently engaged in natural gas exploration and production include Encana Corp (ECA), Enerplus Resources (ERF), Talisman Energy (TLM) and Forest Oil (FST). Natural Gas is also found in coal deposits known as Coal Bed Methane (CBM). Exploration, drilling and coal companies currently engaged in CBM development include Consol Energy (CNX), CNX Gas Corp (CXG), EOG Resources (EOG), Duvernay Oil [DDV], Nexen (NXY) and Ember Resources [EBR].
In 2004, natural-gas-fired plants accounted for less than 20 percent of electricity generation in the United States, while coal-fired plants accounted for about 50 percent. The natural gas share of generation is projected to rise to 22 percent in 2015. After 2015, higher natural gas prices, along with tax incentives for clean coal technologies, are expected to discourage the construction of new natural-gas-fired plants in favor of coal-fired plants, leading to a decline in the natural gas share to 16 percent and an increase in the coal share to 57 percent in 2030. U.S. natural gas consumption for electricity generation is projected to peak in 2020 at 7.2 trillion cubic feet, followed by a decline to 5.9 trillion cubic feet in 2030. This will make more CNG available for motor vehicle use in the future.
To displace 25% of today’s rate of US gasoline production with CNG and not affect current consumption, requires an annual increase in natural gas production of 5 TCF.
The US conventional natural gas reserves increased by 12 TCF in 2007 over 2006. The untapped US / Canadian Utica Shale Gas reserves are reported to hold 24 TCF of recoverable natural gas. The untapped US Marcellus Shale Gas reserves are reported to hold168 TCF of recoverable natural gas. The proven reserves of the Alaska fields are estimated to hold 35 TCF and the Arctic Mackenzie Delta are estimated to hold 9 TCF.
From the years 2005-2007 the US consumed 22,010,596, 21,653,086 and 23,057,969 MMCF per year, respectively.
From the years 2005-2007 the US production increased 18,927,095, 19,381,895 and 20,151,218 MMCF per year, respectively. From the years 2005-2007 the US imported 4,341,034, 4,186,281 and 4,602,035 MMCF per year, respectively.
Current US reserves of CBM are estimated to be 700 TCF (trillion cubic feet) of which 100 TCF is recoverable. Canadian reserves are currently estimated to be 528 TCF and assuming 75 TCF is recoverable. At a consumption rate of 4.98 TCF per year, there are adequate CBM resources available to displace 25% of the US gasoline requirements for about 85 years.
98% of all US natural gas imports in 2007 came from the politically stable countries of Canada, Mexico, Qatar, Equatorial Guinea, Algeria and Trinidad (93% from Canada, Mexico and Trinidad).
Of 181 million US registered cars, trucks, and buses, only 0.017% or 30,000 vehicles are fuelled with CNG. To convert an existing gasoline fuelled vehicle to CNG, it takes only a few hours. The cost of a conversion kit and tank is about $3,500. The state of Utah offers a tax credit of $3,000 per new or used vehicle converted to CNG. Questar (STR) not only supplies CNG but it is provides storage and dispensing facilities at existing service centres in Utah and Wyoming. Every state in the US provides an internet listing of CNG dispensing locations. Environmentally, when compared to gasoline vehicles, CNG vehicles reduce:
- Carbon monoxide [CO] by about 70 percent
- Non-methane organic gas [NMOG] by about 87 percent
- Nitrogen oxides (NOx) by about 87 percent
- Carbon dioxide (CO2) by about 20 percent
All Federal, provincial and state government agencies allow CNG powered vehicles.
CNG, which is 90 percent methane, has a much higher octane rating than gasoline, allowing for higher compression ratios and therefore greater efficiency in the engines that use it.
By lowering the demand for gasoline by 25% the price at the pump should drop significantly. Also, displacing 25% of the US refining capacity of gasoline production, it will force multi-nationals to reformulate their crude oil intake to produce more diesel motor fuels from less costly crude types, thereby in theory lowering the price of diesel as well.
Will America take up the challenge of switching to CNG vehicles?
Disclosure: I have shares in ECA, ERF-UN, TLM, EOG, DDV, and EBR.
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In the early 1970's we concluded it was going to take hybrid electric vehicles for anything beyond the basic 40-50 mile daily commuter using fully electric cars, when and if he was ready to switch from huge gas guzzlers (we knew this because we built and tested electric vehicles! And, there is a market for both types of vehicles). The shackles have been off for the private sector for 40 years.
We were also growing silicon ribbon and producing solar volataic panels in the 70's. The shackles have been off for the private sector for 40 years.
We have used windmills for long before many of you folks existed. Seems like we know how to make and use all of the components. The shackles have been off the private sector for a long time.
One of the major problems is the selfish consumer. His shackles have been off - he's had some free choices.
Another major problems is we have permitted our Government give our tax dollars to big oil thru tax breaks (research, investestment credits, depleption allowances, and on and on).
WE HAVE NOT DONE THE RIGHT THINGS;
NOT EVEN THE THINGS WE WERE/ARE CAPABLE OF DOING. BUT........... THAT ..........
Didn't stop France from going 80% nuclear.
Didn't stop Germany from going 40% solar.
Didn't stop Brazil from going 60% biofuel.
Didn't stop Switzerland (and many other European countries) from going electrified rails for people and goods, and even electric ferries (they put rubber tired hiway diesel busses on electrified rail cars for certain legs of their journeys).
Didn't stop Europe from building and using small economical cars, nor electric delivery vehicles, etc.
So where has the US been??
I guarantee you, without LEADERSHIP, we will not get there....................
We have had the techonologies; we've had the money; we've had the resoures; we've had our heads somewhere, like where the sun doesn't shine.
AND FOR THAT, THERE IS JUST TOO MUCH EVIDENCE!!!!!!!!!!!!!!...
And, continue to be the selfish greedy American's we really are; and, admit it.
Nuclear also should be used more. Europe has a massive amount of its power derived from it. Don't believe the fear mongerers. Believe the science.
Back then in 1978, in the middle of the second oil crisis we were tasked by NASA/DOE to come up with vehicles that would break our dependence on imported fuel and if possible reduce emissions as well. By 1979, in cooperation with Socal Gas we had a number of dual fuel CNG/Gasoline ICE cars on the road. All of them used stock cars with minor modifications added. Our next project was more ambitous, a CNG fuelled plug in-extended range hybrid. The conversion of a VW stock Rabbit to electric and installation of the CNG fuelled charger (30 kW at 15000 RPM) were completed in 1981. The prototype had a range of over 400 miles at 49mpg (equivalent) under standard driving conditions, used an abundant domestic fuel selling compressed at about 1/3 the price of gasoline and had less than 10% emissions and more power than the new catalytic converter equipped ICE model used for comparison.
But all of a sudden in 1981 it was "morning in america" and with the new dawn came the cancellation of all contracts, the prototypes disappeared, the teams were disbanded and we were back to the old ways.
For those of us who worked in this field, energy independence for motorized personal transportation has neither been a technical nor economic problem since early 1980 and not even then were there any major technical hurdles to overcome.
It was and will be for the forseeable future a political problem. Unless the grip of the legacy industries on political and financial power is broken by economic calamities, or the adoption of available technologies by other countries leaves the US transportation industry in the dust, it will be business as usual even if that means a marked decline in the standard of living for the majority.
The benefits of developing our own oil and gas include an estimated $600-$700 billion per year in oil payments, currently going overseas, which would all stay inside America creating millions of new jobs and prosperity, here, not there.
Do we have enough domestic energy? The answer is yes we do!
In 2003, MMS estimated that there was 406.1 Tcf of remaining undiscovered technically recoverable natural gas and 76 billion barrels of oil in U.S. offshore regions. A precise inventory with modern equipment has not been conducted in over two decades due to the uncertainty created by federal moratoria.
These MMS estimates for available recoverable reserves are too low.
1) There’s more reserves than the entire continental shelf estimates in the Blake Ridge gas deposit alone, than the MMS estimates for the entire US OCS moratorium area.
2) The Bering Sea Abyssal probably contains 20 billion barrels OEL in natural gas alone.
3) The Gulf of Mexico Deeps probably contains at least 150 billion barrels.
4) The Chukchi Sea probably contains 50 - 100 billion barrels OEL.
5) The Beufort Sea probably contains 50 billion barrels.
6) The part of the Arctic Ocean Commons area adjacent to Alaska and Canada’s EEZ probably contains 400 billion barrels.
7) The mean estimate of technically recoverable oil in ANWR is 10.4 billion barrels – all of which is now economically recoverable. That’s more than twice the proven oil reserves in all of Texas . That’s almost half of the total U.S. proven reserve of 21 billion barrels. That represents a possible 50 percent increase in total U.S. proven reserves.
8) The Strategic Unconventional Fuels Task Force has estimated that 800 billion barrels of oil equivalent could be recoverable from oil shale resources in the Green River Basin depending on technology and economics - enough to replace the amount of oil we currently import for more than 160 years. And 576 of the 800 billion barrels of oil are on Federal resources.
These amounts of oil and gas could easily last America hundreds of years!
I propose the following measures to bring about the transformation of American energy industry and indeed the entire US economy within ten years.
This would include;
1) Cancel the Moratorium on drilling on the US Continental Shelf.
2) Cancel the Moratorium on drilling on the ANWAR 10-02 area.
3) Support the three international waters resources rights Claims made by American Companies to adjacent oil and gas reserves that could be developed without any regulatory lags.
4) Put aside most of the permitting requirements for urgent projects as listed here, “in the national interest” by creating a fast-track office to evaluate and approve any leases within 90 days.
5) Enlarge new OCS post-moratorium lease block sizes from the paltry 5 mile by 5 mile area to a more realistic size or perhaps 100 miles by 100 miles in frontier regions.
6) Provide strong financial incentives to get oil flowing sooner, i.e., Offer a ten year tax and impost holiday on strategic new oil and gas development projects. Offer matching funds for seismic and EM surveys, to be repaid from eventual production.
7) Provide low-cost loan guarantees for development of urgently required new oil and gas project infrastructure.
8) Provide low-cost Government guarantees or loans for offshore oil-gas ships and vessels built to work in the US for the next 5 years.
9) Temporarily exempt Oil-gas projects from the US Cabotage laws so that projects can more quickly secure production equipment from overseas shipyards.
10) Set Aside Regulatory Delays. Make regulatory bodies set up departments to “fast-track” approval of energy projects to clear hurdles within 3-6 months.
11) Eliminate Frivolous Lawsuit Delays; Create a special court to hear energy related cases with a mandate to adjudicate on cases within 7 days.
12) Provide 200,000 grants for students to pay for college for petroleum engineers and geologists and for technical petroleum production job training programs.
All of the above measures will create a massive stampede of exploration and oil-gas production infrastructure to blossom on the US continental shelf areas, creating near immediate increases in oil and gas production, hence rapidly lowering consumer energy prices.
Much of the new offshore energy production would be in the form of Low C02 natural gas, which when used to make electricity reduces C02 emissions significantly.
any questions?
Gas storage tanks will have pressure ratings around 5 psig or less. CNG is probably over 100 psig in the car and the refill storage tanks would want to be higher than that. So simply there is no way gasoline storage tanks can be converted to CNG storage.
The answer is yes.
Yes, even if we had to further process the oil to make useable forms of liquid energy, thereby reducing the actual useful energy percentage even more; same for coal.
And then, as these energy sources required additional searching, digging, processing, transportation, etc., in order to keep on feeding the gorillia, would we do so? Yes, of course.
Even tho it became very expensive and messy and very complex with many new equipment and service industries being required - not to mention many regulations, etc.,......we would continue on. Yes, of course.
So when things got really bad and the price (cost??) for using these energies finally got higher than most people wished in the USA, and we happened to find several new energy sources essentially "bubbling" out of the earth and available (without the current complications of not-so-readily-availab... oil, gas and coal), would we use it?? Maybe, maybe not.
Would we use this new energy if we could convert only 20% into useful work, instead of 33% of the previous sources (I'm ignoring co-generation)? Maybe, maybe not.
What if this new easily convertable energy source did not require unknown technologies, basic discovey, new methods and products nor the numerous, multiple, complex industries required to support it?? Would we use it? Maybe, maybe not.
And if we knew this source of energy was never going to deminish; never?? Maybe, maybe not.
And, if this energy source was never going to become more difficult to find, required essentially no maintenance, leaving no messes to speak of by comparison, would we use it??
And, to implement and in order to fully use this "unlimited", forever, energy source with the means to transport and distribute and use were already known technologies and more or less already in place, short of having to beef them up, would we use it? Maybe, maybe not.
Would a clear thinking, forward looking nation jump at the chance??
Yes, by all means, in every way, and some nations have.
But not in the USA; not if big oil, gas and coal were already committed, led by selfish and greedy LEADERSHIP and also controlled the WEAK LEADERSHIP of the nation.
A leadership that funds searching out Mars having no use for the Moon since walking on it, that can't even build a fence on earth, and that is willing, thank God, to let fusion continue on the sun forever while it ignores all the free energy the sun provides us on earth, forever. Sad.
What do you drive? What region do you live in? And what oil shale did you just crawl out from under?
I live in California. Sold my Chevy Tahoe three years ago. Purchased a Honda GX CNG in 2005 (figured if I was going to have to tolerate the failed Bush/Cheney oil war for another 3 years, I did not have to support the policies it represented) Then paid $22K for the CNG Honda and received a 4K tax credit.
Now the math, I will keep it simple for you and base it on current pricing for anyone considering such a crazy move...
Chevy Tahoe (10-15Mpg) my average 12.5 MPG * 20K Mi/Yr @ $4 = $6400 per year...
(and that is going to be $8000 when it hits $5 bucks!)
Honda Civic GX CNG my average 32.5 MPG * 20K Mi/Yr @ $2.5 = $1538 per year...
Well genius, the car will just about pay for itself in 3-4 years.
As for the Phil unit, a few pointers peter... The unit costs $3-4K installed, but once again you get $2-3K back at tax time. Additionally, Gas companies like PG&E provide your a discounted gas rate for installing the phil unit at your home - so, the discount applies to your entire home - that's right - I also pay less to heat my home and take a shower!
So please, before you spread any more misinformation, I would set down the Kool Aid, turn off the Limbaugh, and really decide (as we all must) if you are going to be part of the problem, or part of the solution. This is not simply about politics, it is about our ignorance. CNG is not the answer; it is only one of them. But, as long as we choose to be ignorant, and choose to be sold and told what we are to think and do, then we deserve everything we get. This includes gas guzzlers, an oil industry that is taking away our wealth and freedom, and misinformed people like you.
We did kill the first hybrids in the 80's, the electric car of the late 90's, and all happened to coincide with a big special interest push at the beginning of new republican administrations. I am not making this stuff up - it simply is what it is. But once again this is not simply about politics, it is about our individual ignorance and whether we choose to buy what we are being sold, all parties have played a role in this, including us.
If you think the world that you yearn for can be drilled back into existence - then I am very sorry - that world simply does not exist anymore.
This is your brave new world and you should start getting used to it, unless you would like to start changing the way you have been thinking, and buying...
"One day I pulled up to the pump and asked myself what this machine really did for me as Americans were fighting and dying for an unnecessary war in the east. I then realized, nothing more then take away our freedom"
I wish you all peace and good choices…
I was not aware of the tax credit. I grew up in Australia. There it used to cost only $500 to convert any car to CNG. So I still have have a problem paying so much more for one. So I still think the $22k for the CNG Civic is a bit steep. It should be maybe $1,000 more than the gasoline version. But for most people the math still works fine, especially with the $5 gas price.
Yes we can drill our way out of this very simply and easily. There's actually probably $500 billion barrels of oil and gas on the US continental shelf. About 60% in the form of clean gas. see strategicnine.com
As for the shale. I flew over a demo shale oil plant near Grand Junction Colorado in the late 1980s. It was costing them $36 to make a barrel of oil then, using a really stupid retort design. There are lots better ones available now, that use part of the shale to fire the process.
I think the US could produce a modest amount of Shale oil without harming the environment. 1-2 million barrels per day. Everyones thinking about 10 million barrels a day and that would use too much water. the smaller amount would replace 10-20% of imports and power the midwest.
I like natural gas the best. Its a good clean fuel for everything. Texas A%M has developed a process to turn natural gas into gasoline. I think the economics don't quite pass muster yet though.
Some Individual Super-Giant Priority Energy Projects to Fast Track
1) Blake Ridge Gas: Instruct the MMS to immediately grant leases on priority development areas including the Blake Ridge super-giant gas lease. See; strategicnine.com
2) Bering Sea Abyssal Gas: Support the Strategic Nine Bering Sea Abyssal Claim so as to enable the consortium to fast track it’s gas development. See; www.strategicnine.com/...
3) Arctic Ocean Commons Claim: Support the United Oil & Gas Consortium’s Claim on the Arctic Oceans Commons area immediately adjacent to Alaska and Canada’s 200nm EEZ and beyond the bogus Russian Claim area, see unoilgas.com .
4) Colorado Oil Shale: Put aside the 1 year hold up on oil shale leasing activities and fast-track any required permits to enable production to commence quickly.
5) Alaska Chukchi Sea Leases; Put aside the often frivolous environmental lawsuits and permits requirements, which is holding up drilling on this and other properties.
www.strategicnine.com/...
Comments and suggestions for improvement great fully accepted
It is our Government fault for not doing anything about cutting the dependent on foreign oil and that is our President who said when he was voted in that was his major focus but he has oil investments and his whole cabinet has oil $ so that is why nothing has been done.
Why would he do anything to help the American people when he can get rich off the rising prices.
There is a lot to be said in Government who do you trust?
Making $ seems to be the most important thing to the existing cabinet ,Congress,Senate,and the ones who pay their way.
UPS would agree since they've been using Compressed Natural Gas (CNG) for more than 70 years and recently the added more CNG trucks their "greenest fleet" award because Natural Gas is the cost-effective, cleanest burning, and domestically abundant option that is viable right now.
Most vehicles are able to travel aprox 300 kilometers (200 miles ) before they require refueling ( depending on the capacity of their tanks and the rate they use the fuel.) . CNG converted engines loose about 20 % of their HP when converted from gasoline . It takes about 20,000 miles driving per year to pay for a conversion .The ideal use of cng is local fleets that have their own CNG fueling facility . ( Taxiis , mail vans , pizza delivery etc )