Peak Oil – maybe; Peak Gas – no way

Shales Changed Conversation

Along with the near-unbearable summertime heat in northwest Louisiana, the region’s Haynesville shale gas play is sizzling hot.

Given early estimates of perhaps 250 Tcf of recoverable gas, the play truly is a big deal.

What may surprise you is that some folks consider the Haynesville to have a potential role to play in the mitigation of Peak Oil.

“Many oil supply analysts, myself included, believe the worldwide rate of liquid fuels (crude-plus-condensate-plus-NGL) production has passed a level that will never again be exceeded,” said Martin Payne, general manager of Anvil Energy LLC in Austin, Texas. “This condition is sometimes referred to as Peak Oil.”

Payne emphasized the current temporary decline in liquid fuel demand worldwide is masking global production declines. Many analysts believe the current relatively slim excess supply will last no more than a couple of years, resulting in a liquid fuels shortage.

“Those of us in the Peak Oil community are concerned because there’s not a ready substitute for what we’ve built our country around, which is cheap gasoline and cheap diesel,” Payne said. “It doesn’t look like any of the renewables or biofuels are going to be able to replace that to any great extent.

“When you believe the maximum rate of oil production is near or occurred in 2008, as many of us do believe, then pretty quickly we’ll have a liquid fuels problem,” he said. “This is without bringing up geopolitical and economic issues that might accelerate that.”

Step On the (Natural) Gas

Payne is convinced that clean, low-carbon natural gas can play a key role in mitigating the anticipated shortfall given that natural gas offers the only current alternative to gasoline and diesel as a transportation fuel.

Another huge plus is that the manufacture of new natural gas vehicles, the conversion of existing vehicles (using existing technology) and the creation of a natural gas fueling infrastructure would provide immediate, badly needed jobs.

“The shame of it is the policy makers are concerned there’s not enough natural gas,” Payne lamented. “The challenge to producers is to try to make policy makers and the public aware that shale gas, unconventional gas is a wonderful transition fuel at the very least.

“The Haynesville is a very good example of this,” he noted. “If you look at gas reserves as of 2007 (determined by the EIA), there are no reserves for the Haynesville – or the Marcellus – because they didn’t really exist then.

“Some believe they could contain over 1,800 Tcf (reserves), which is incremental on top of existing gas reserves of just two years ago,” Payne emphasized. “With a 50 percent recovery factor, these reserves could triple the proved U.S. gas reserves calculated through the end of 2007.”

Payne noted the Haynesville alone stands to potentially dwarf the remaining reserves for the rest of the “lower 48,” perhaps even including Alaska.

“It’s huge, and it’s all new and incremental,” Payne said. “So if we had a sufficient amount of gas in ’07, this is all new since then – and you can toss the Marcellus in on top of that.

“Our big picture goal,” he added, “is to convince the policy makers that plentiful, abundant American natural gas is a viable option.”

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Emphasis: Gulf Coast