Natural Gas Nation?

Yesterday Andrew Littlefair, President and CEO of Clean Energy Fuels, appeared on Jim Cramer’s cable show “Mad Money,” to talk about the future of natural gas in the United States. But there was nothing mad whatsoever about Littlefair’s message, which is why Cramer welcomes him on his show anytime Littlefair has room in his schedule.

Natural gas burns much cleaner than petroleum fuels, particularly when used for diesel applications. Not only can vehicles run on natural gas – note Autoblog’s report today “Honda sells CNG home fueling device to Clean Energy Fuels” – but as Littlefair pointed out, natural gas can also fuel long haul trucks that currently rely on diesel fuel. So how much natural gas have we got? Can the U.S. become a natural gas fueled nation?

Something happened between 2001, when, for example, California experienced spot shortages of natural gas, and today, where we have T. Boone Pickens touting wind farms and natural gas as the solution to U.S. energy challenges for the next twenty years (ref. Significant new discoveries of natural gas reserves in North America, combined with the commercialization of new ways to efficiently extract natural gas from shale, have led to a dramatic increase in natural gas reserves. As of January 1st, 2006, according to the CIA, U.S. proven natural gas reserves stood at 5.5 trillion cubic meters. This would be enough to replace 100% of the oil consumed in the United States (8.0 trillion BBL per year) for about four years. That was then.

In a report last month posted by the publication Money Morning entitled “New Natural Gas Discoveries are a Boon for the U.S. Energy Sector ,” shale oil reserves both recently discovered or recently deemed to be recoverable using cost-effective new drilling technologies, have – according to the most conservative estimates released by the Dept. of Energy – nearly doubled the proven natural gas reserves. Worst case, we now have enough natural gas to replace 100% of our oil for about 7 years. So where does T. Boone Pickens get the 20 year number? Apparently these estimates from the DOE are still very conservative.

According to a recent study by Navigant Consulting, as reported in Money Morning, there could be as much as 842 trillion cubic feet of natural gas in shale within the USA, seven times the DOE estimate, and yielding enough natural gas to replace 100% of U.S. oil consumption for 24 years. And this estimate doesn’t include dramatic new discoveries in Canada or offshore. Natural gas is already being used, of course, so 100% of production can’t be diverted to replace oil – but nearly 50% of U.S. oil is produced domestically – so suggesting there is enough natural gas to offset 100% of U.S. oil imports for at least 20 years is not far fetched at all.

In general there is far more fossil fuel than is generally acknowledged by environmentalists and policymakers, who tend to display a malthusian bias. EcoWorld’s analysis “Fossil Fuel Reality” explores the potential worldwide recoverable reserves of all three primary fossil fuels, coal, oil, and natural gas, and calculates there is a 300 year supply of fossil fuel, even when based on the rate of global energy consumption doubling. The potential of domestically produced fossil fuel in the U.S., combined with development of alternative energy, makes energy independence for the U.S. an achievable goal. On the other hand, for the USA to achieve energy independence in the next twenty years, before next generation alternative technologies such as enhanced geothermal begin to scale – to name one relatively noncontroversial example – while phasing out fossil fuel instead of developing more fossil fuel, is far more challenging.

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