Exploration, Production, Transmission & Distribution

 

The U.S.A. has been relying on crude oil for almost all of our transportation fuel for 130 years. In recent decades, we’ve been adding ethanol, which mostly comes from corn.

It was U.S.A. technology, investment and consulting that built the Middle Eastern oil monopoly. Today, world oil production (crude oil pulled out of the ground or from the sea and shipped for further processing) is approximately 92 million barrels per day and OPEC produces approximately 30 million barrels per day or 1/3 of the total world production. Saudi Arabia controls the crude oil market, especially with their association with OPEC who, together, have 4 of the top 5 proven crude oil reserves. OPEC adjusts crude oil supply to control the global crude oil price. Keep in mind the U.S.A. uses 25% of the global demand for crude oil for transportation while the U.S.A. maintains ~ 4% of the world’s proven crude oil reserves. This is not a sustainable economic model.

Exploration, Production, Transmission & Distribution
*Source: U.S. Energy Information Administration

The U.S.A. is a top “producer” of refining crude oil into finished petroleum products such as gasoline, Diesel and petrochemicals. However, keep in mind that a large portion of the crude oil feedstock we refine is imported. Low reserves and large production = prolonged (and probably permanent) net import of our energy.

Exploration, Production, Transmission & Distribution
*Source: U.S. Energy Information Administration

Our decades-long addiction to crude oil is at least partially resulting from our advanced industrial production capacity. It is also due to the fact that the U.S.A. has a higher vehicle-to-population ratio of any other country and is the world’s top vehicle fuel consumer.

Exploration, Production, Transmission & Distribution
*Source: U.S. Energy Information Administration

In recent years, > 98%% of the natural gas used in the U.S.A. was domestically-produced, and the U.S.A. is awash in an ocean of natural gas under our lands and waters. In fact, we’re battling back and forth in the top three natural gas reserves in the world (U.S.A., Russia and Canada).

Exploration, Production, Transmission & Distribution
*Source: U.S. Energy Information Administration

Notice in the map above how many more countries have their own domestic natural gas resource from which to transport and fuel their country compared to the monopolistic supply of crude oil. The global mass transition to natural gas fuel is eminent. Pakistan, Iran, India, China, Italy, Egypt, Ukraine, Thailand, Columbia, Argentina and many more all have already transitioned to CNG to a much larger degree than the U.S.A. We’re first in NG supply, first in total number of vehicles, 18th in number of NGV where fuel is 30%-40% cheaper. We’re getting a very painful economics lesson!

Rank Country # NGV # Stations
1 Iran 3,000,000 1,960
2 Pakistan 2,900,000 3,330
3 Argentina 2,140,000 1,902
4 Brazil 1,739,676 1,701
5 China 1,577,000 2,784
6 India 1,250,000 724
7 Italy 746,470 959
8 Ukraine 390,000 324
9 Colombia 380,000 690
10 Thailand 358,000 470
11 Uzbekistan 300,000 213
12 Bolivia 254,722 156
13 Armenia 244,000 345
14 Bangladesh 210,000 587
15 Venezuela 185,073 166
16 Egypt 185,000 162
17 Peru 150,000 190
18 U.S.A. 127,735 1,120
19 Germany 95,498 915
20 Russia 90,000 247
21 Bulgaria 61,256 103
22 Malaysia 51,364 170
23 Sweden 44,319 195
24 Japan 42,590 314
25 South Korea 33,840 186

Yes, the shift will seem painful at first, until enough stations are built and NGV overtake gasoline and Diesel. But consider how long it took for us to get from originally needing vehicle fuel to finally making serious considerations t convert to a different vehicle fuel! The world’s first purpose-built gas station was constructed in St. Louis, Missouri in 1905 at 420 S. Theresa Avenue. The second gas station was constructed in 1907 by Standard Oil of California (now Chevron) in Seattle, Washington at what is now Pier 32. Reighard’s Gas Station in Altoona, Pennsylvania claims that it dates from 1909 and is the oldest existing gas station in the United States. So, we’ve been commercially been using gasoline for over 1000 years. When did we start using natural gas?

In the 19th century, natural gas was usually obtained as a by-product of producing oil, since the small, light gas carbon chains came out of solution as the extracted fluids underwent pressure reduction from the reservoir to the surface, similar to uncapping a bottle of soda where the carbon dioxide effervesces. Unwanted natural gas was a disposal problem in the active oil fields. If there was not a market for natural gas near the wellhead it was virtually valueless since it had to be piped to the end user.

In the 19th century and early 20th century, such unwanted gas was usually burned off at oil fields. Today, unwanted gas (or stranded gas without a market) associated with oil extraction often is returned to the reservoir with ‘injection’ wells while awaiting a possible future market or to repressurize the formation, which can enhance extraction rates from other wells. In regions with a high natural gas demand (such as the US), pipelines are constructed when it is economically feasible to transport gas from a well site to an end consumer.

Natural gas can be “associated” (found in oil fields), or “non-associated” (isolated in natural gas fields), and is also found in coal beds (as coalbed methane). Natural gas can be mined from subsurface porous rock reservoirs through extraction processes, such as hydraulic fracturing. Renewable natural gas is an emerging fuel produced from decaying organic materials, such as waste from plants, landfills, wastewater, and livestock.

Natural gas is so abundant that most scientists agree we can economically supply this domestic fuel for over 100 years, some say 150 years. Using it for our transportation fuel frees up our domestic crude oil for non-combustion applications such as lubricants, pharmaceuticals, cosmetics, petro-chemicals and elemental raw materials. Freeing transportation from our addiction to crude oil may extend our current 45 year domestic supply of crude oil to 75 or more years? Who knows! Oil and gas exploration and production (“E&P”) have made great strides in unlocking centuries of new-found domestic energy. Properly managed, these technologies are safe and provide huge direct and indirect returns.

Due to modern E&P, natural gas supplies are projected to grow for the next few decades:

Exploration, Production, Transmission & Distribution
*Source: International Energy Agency

And as usual, the U.S.A. is leading the way with unconventional E&P technology innovation.

Exploration, Production, Transmission & Distribution

With U.S.A. technology and commodity supply, if a portion is exported to help other countries transition off of crude oil, that adds to domestic jobs and gross domestic product and reduces our national trade deficit.

Exploration, Production, Transmission & Distribution

Investments in exploration, production and transportation of the new expanded natural gas infrastructure will create millions of domestic jobs in many markets around the world. Again, transferrable skills already reside here in our country with our massive gas & oil capabilities, universities and leading energy companies. Vehicle manufacturing trades will rise with the market and adopt to the new fuel systems. Station and fuel providers will be hiring and building in large numbers. We have skilled professionals that can shift from oil exploration, refining and transporting to natural gas exploration, refining and transporting as oil refineries are retired. Exxon, Chevron, Conoco-Philips and most other oil companies have massive investments in natural gas E&P. We haven’t built a new refinery in decades. What a perfect time to start a massive shift to domestic natural gas fuel!

Exploration, Production, Transmission & Distribution

Natural gas is “mined” in several different ways.

Below are the “conventional” gas fields, caverns below the earth’s surface that contain methane from decaying plant and animal matter over millions of years.

Exploration, Production, Transmission & Distribution

Exploration, Production, Transmission & Distribution
*Source: U.S. Energy Information Administration

Natural gas is stored in depleted aquifers, salt caverns along pipeline routes.

Exploration, Production, Transmission & Distribution
*Source: U.S. Energy Information Administration

Natural gas is pipelined across the country, many times following our major transportation routes.

Exploration, Production, Transmission & Distribution 12
*Source: U.S. Energy Information Administration

Right now, infrastructure build-out is taking place to align shipping corridors with natural gas supply pipelines attached to CNG stations throughout major cities and along all interstates, highways and major roads. Pipelines will replace fuel tankers along our roads. The future fuel is here today with natural gas.