Natural Gas: The Excruciating Transition

Natural Gas: The Excruciating Transition R.E. Oligney; R.E. Oligney University of Houston Search for other works by this author on: This Site Google Scholar M.J. Economides M.J. Economides University of Houston Search for other works by this author on: This Site Google Scholar Paper presented at the SPE Annual Technical Conference and Exhibition, San Antonio, Texas, September 2002. Paper Number: SPE-77371-MS https://doi.org/10.2118/77371-MS Published: September 29 2002 Cite View This Citation Add to Citation Manager Share Icon Share Twitter LinkedIn Get Permissions Search Site Citation Oligney, R.E., and M.J. Economides. "Natural Gas: The Excruciating Transition." Paper presented at the SPE Annual Technical Conference and Exhibition, San Antonio, Texas, September 2002. doi: https://doi.org/10.2118/77371-MS Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll ProceedingsSociety of Petroleum Engineers (SPE)SPE Annual Technical Conference and Exhibition Search Advanced Search AbstractNatural gas has gone through an unprecedented roller coaster in 2000 and 2001 which among other things included the collapse of Enron, one of the biggest players in the field. Prices rocketed from $2 to over $10 and then declined to below $3 per Mscf. Yet, fluctuations notwithstanding, the "new" natural gas price is $3.00 to $3.50, both floor and ceiling. The floor, calculated by us, is set by full-cycle costs, which include potential reserves, discovery rates, proved reserves, the activation index by region and well decline rates. The price ceiling is set by liquid natural gas (LNG) imports and Arctic gas. Both require the $3.00 to $3.50 price range.The problem with a calculated average national equilibrium price of, for example, $3.25 gas is that it is made up of $1 to $10 fluctuations. Even when demand forces natural gas prices to the high levels that were observed in 2001, reservoir physics of the mature United States environment precludes a quick response. Thus, spikes of $10 gas cannot generate new domestic supply.In a number of our previous writings, we have suggested that the trend toward natural gas as the premium fuel in the near future is not reversible. The key and the excruciating problem is the transition.We examine in this paper a number of potential sources of natural gas, their limitations and potential. We also present a number of issues, which involve both national policy and rational business decision-making, to take the nation through the transition.Managing the transition to natural gas is critical to the well-being of the nation and, considering the position of the United States on energy markets, the rest of the world. We finally show in this paper a stark example of the enormous impact of energy supply interruptions on the employment history of the United States, a situation, which may be the harbinger of major future economic hardships if the transition to natural gas is not managed properly.IntroductionAt a time that energy has rightly been pushed to the fore in America, many politicians and media folks have decided to focus the nation's attention on idyllic 50-year (maybe) solutions, skipping over the excruciating transition all together. This is clearly irresponsible.Even worse is the frequent mention by environmental and social ideologues who point to wind or solar or even unnamed alternatives as solutions to our pressing national energy needs.Conservation, which has in many ways become a code word to rally the presumably pragmatist folks, often falls in the same category.We think that our ideas on natural gas are disruptive and revolutionary enough, for sure appropriate to address the immediate and 20- to 50-year energy needs of the country.This is the third in an annual series of papers on what we have called the natural gas revolution. It has become increasingly difficult to write an earth-shuttering article on the topic. Announcing a revolution is easy. Having to explain the details once your audience has accepted the notion or even joined the revolution can be a bit more tedious. Nevertheless, there are important, even crucial, details to be explored.BackgroundOur original article, titled, Natural Gas: The Revolution is Coming,1 demonstrated an undeniable secular trend in the world toward natural gas, starting first with the United States, then the rest of the G7 countries (Canada, France, Germany, Italy, Japan and the United Kingdom), and then indeed the rest of the world. At that time, the list of countries "going gas" was already very long, including major pronouncements and real activities in Venezuela, Colombia, Brazil, Peru, Mexico, Saudi Arabia, China, Cyprus and Bangladesh. Today the list is even longer.Venezuela, with the second largest natural gas reserves in the Western Hemisphere, had just made a grand pronounce-ment that it would develop a natural gas industry and reserves using its domestic market as an impetus. Keywords: liquified natural gas, natural gas supply, upstream oil & gas, compressed natural gas, lng, gas production, natural gas, natural gas reserve, consumption, forecast Subjects: Pipelines, Flowlines and Risers, Natural Gas Conversion and Storage, Compressed natural gas (CNG), Liquified natural gas (LNG) This content is only available via PDF. 2002. Society of Petroleum Engineers You can access this article if you purchase or spend a download.

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