Reply #33: Seems like we might be looking over the edge of the cliff.

[JohnyCanuck]

THE NORTH AMERICAN NATURAL GAS "CLIFF"

More than 275 North American gas-fired electrical generation plants are planned to begin operations through 2006, up from 158 a year ago, which would increase gas consumption by more than 8.5 tcf!

Unlike oil, natural gas cannot easily be shipped by sea. It must be liquefied prior to shipment, and then shipped in specially designed refrigerated ships destined for specially equipped ports, and then re-gasified for distribution -- at an estimated 15 to 30 percent energy loss. Moreover, natural gas cannot be easily stored like oil or coal.

Campbell says that gas production is better described as a "plateau" followed by a "cliff" due to the high mobility and recovery of gas. Under declining pressure, oil declines slowly as it moves through the porespace of the rocks, but the decline of gas is a cliff -- not a slope. The gas market gives no warning of the cliff because it is no more expensive to produce the last cubic foot than the first. North American production is at or near (< 10 years) its "cliff" now:

"North American natural gas has no excess capacity. It disappeared several years ago. What we do have is extremely aggressive decline rates in almost every key production basin making it harder each season to keep current production flat.

"The electricity business has also run out of almost all existing generating capacity, whether this capacity is a coal-fired plant, a nuclear plant or a dam. The electricity business has already responded to this shortage. Orders for a massive number of natural gas-fired plants have already been placed. But these new gas plants require an unbelievable amount of natural gas.The supply is simply not there." (ENERGY IN THE NEW ECONOMY: The Limits to Growth, Matt Simmons)

http://www.dieoff.org/synopsis.htm

The next gas crisis
by ANDREW NIKIFORUK
If you thought the worst was over, get ready. Demand is up, supply is dwindling, and new finds are scarce. Here's how to hedge against the price hikes to come
2001-08-20

If, like the vast majority of Canadians, you are dependent on natural gas to heat your home, ponder this thermostat-shattering truth for a moment. The largest natural gas find in Western Canada in the past 25 years is now playing out in a marshy area of northeastern BC near the Alberta border. Some analysts expect the Ladyfern field to gush about a trillion cubic feet (tcf) of natural gas, which to a layman's ear might sound like a lot of burning power. But Ladyfern probably contains just enough fuel to heat all the gas-fired homes in Canada for a year or two at most. And it's a clear freak of nature. A typical new gas well, in fact, produces barely enough gas to heat 90,000 homes for a year.

Now add some more disturbing math to this natural gas picture. Canada now produces 6.2 tcf of gas a year, which just barely meets domestic and export demand. That represents about one-fifth of North America's gas consumption, which is still growing by 2% a year thanks to gas-fired electrical generation. "We need 6.2 Ladyferns a year to just keep up with gas consumption and stand still," explains Rob Woronuk, 60, a veteran Calgary gas analyst and one of the nation's independent natural gas watchdogs. "The really scary part is that we are finding a Ladyfern only every 25 years."

Anyway you look at it, the glory days of cheap natural gas at $1.50 a gigajoule are over. Even though Canadian politicians may not be fretting as dramatically as President George W. Bush about future energy supplies and prices, they probably should be. Despite the stabilization of gas prices at about $4 a gigajoule (that's double the decade average), Canadian companies still can't find enough gas to keep.

The whole demand-supply situation is so vulnerable that a major hurricane in the Gulf of Mexico or a terrorist attack, say, on the Alliance pipeline, which runs from northern BC through Alberta to Chicago, could abruptly send natural gas prices soaring back to the rude and shocking heights they reached last winter: US$10 a gigajoule. "Everything is in a crunch and has to be working 100%. We can't even afford too many plant turnarounds," says Woronuk. "We are in a dangerous situation."

http://www.canadianbusiness.com/article.jsp?content=37081

Running on Empty
North America is low on natural gas supplies. What are we doing about it?
2004-04-26

Don't blink, but natural gas is well on its way to becoming a hotter and scarcer commodity than cod in North America. Just consider, for example, the geopolitical implications of the US$2.7-billion purchase of Tom Brown Inc., a mid-size Denver-based energy company, by EnCana Corp., now Canada's largest gas producer. The acquisition not only offers EnCana president and CEO Gwyn Morgan fertile political connections (the former CEO of Brown, Donald Evans, is now the U.S. secretary of commerce), but also a healthy natural gas base, including 3,200 potential drilling sites in the West. And why is that important? Well, the National Petroleum Council in Washington, D.C., a veritable who's who of the continental oilpatch, has identified deep Rocky Mountain drilling as just one of several potential solutions to rapid natural gas depletion--or as the NPC politely puts it, "undesirable impacts on consumers and the economy."

Though EnCana's U.S. purchase is a savvy business catch in the short term, it probably won't mean much in the bigger scheme of things. "It's not going to solve our natural gas supply issues," says Rob Woronuk, a senior analyst with the Canadian Gas Potential Committee, an independent resource assessment body in Calgary. And those issues, no matter where you look, are becoming messier by the minute. "One of the sad realities is that North America is natural gas impoverished," notes Woronuk. "We may be the Saudi Arabia of coal, but not gas."

And that's a conclusion shared by a number of prognosticators these days, as natural gas prices remain stubbornly high with little relief in sight. Let's start with the National Petroleum Council. Last September, it calculated that natural gas shortages had the potential to cost the American economy nearly US$1 trillion over the next 20 years if governments don't act now to conserve the disappearing staple or flatten demand. In fact, the U.S. Department of Energy now predicts that North American demand will outstrip supply by two trillion cubic feet by 2010, and that the gap could grow to almost five trillion cubic feet by 2020. In other words, North America will likely become dependent on gas imports from Russia or the Middle East within a decade.

Dave Hughes, a geologist with Natural Resources Canada, not only seconds that assessment, but adds that "Canada is unlikely to be able to fill the supply gap." He predicts that the country might even fail to meet its own forecast needs (demand is now growing by 2.2% a year) or U.S. export expectations after 2004--unless consumers switch fuels or big industrial burners such as fertilizer and petrochemical plants move offshore.

http://www.canadianbusiness.com/article.jsp?content=20040426_59516_59516