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Natural Gas - the future of fuel ?
Posted by Big Gav on April 30, 2008 - 8:00pm in The Oil Drum: Australia/New Zealand
The ABC's "7:30 Report" last night had a look at the large amount of optimism that many people have regarding Australia's natural gas reserves - "As world oil prices skyrocket, experts warn Australia must find an alternative source of fuel. Some argue a cheaper, greener solution is right under the nation's nose: natural gas."
Both the APPEA and new Energy Minister Martin Ferguson have been arguing this for some time - though its far from clear how long we can continue to expand LNG exports, expand gas fired power generation (as part of the APPEA's "transition to lower carbon emissions" strategy), contemplate building GTL plants and use CNG for most or all of our transport as suggested in this report (not to mention supplying the usual industrial and domestic uses of gas) especially when one major potential source of supply (from PNG via the now abandoned pipeline project) has been removed from the equation.
KERRY O'BRIEN: The recent prediction by the head of Caltex Australia that the price of oil may very well double the already record highs for crude, have only heightened concerns about the security of Australia's future fuel supplies. The Federal Government, for instance, has launched a national energy security assessment.
As oil production in Australian fields declines, the Government has also sought and won approval under the United Nations Convention on the law of the sea, to expand its search for oil offshore by an area equivalent to five times the size of France.
But Federal Resources Minister Martin Ferguson agrees that unless there is soon a "eureka oil strike", Australia must find a new fuel alternative with sufficient reserves to power a vast and vital national car and transport fleet. But there are those who say there's an obvious solution to the fuel crisis right under our collective nose, a solution that could cut fuel bills by up to 60 per cent. ...
NOEL CHILD, TRANSPORT CONSULTANT: At the moment we're a bit like a bus heading towards the edge of the cliff. Crude oil is going to become short in supply and it's going to become progressively expensive.
MARTIN FERGUSON, FEDERAL ENERGY & RESOURCES MINISTER: Time is not on our side.
JOHN MIKOLAJUNAS, OES NATURAL GAS: The Government and governments all around the world are scrambling to find alternatives to petroleum products.
GREG HOY: They're selling off Australian gas by the ship load. Sixteen million tonnes this year, gas ships loaded with liquid natural gas, gas chilled to liquid minus 161 degrees Celsius to reduce its volume to one 600th of its original 84 billion litres in bulk. 2,200 gas ships have already left our shores in long-term, wholesale supply contracts with China, Japan, South Korea, Italy, Spain and the United States, nations scrambling to secure their energy supplies for decades to come.
BELINDA ROBINSON, AUSTRALIAN PATROLEUM PRODUCTION & EXPLORATION ASSOCIATION: It provides an energy source for a world screaming out for energy. There's no doubt there's a tightness in the supply of energy, particularly to meet the tigers of India and China. But secondly there's also an enormous appetite for cleaner energy, so natural gas has around half the greenhouse gas emissions of coal fired electricity.
GREG HOY: But with global demand for natural gas expected to double in the next five years, some are left wondering if Australia is missing its own boat.
OLLIE CLARK, NATURAL GAS VEHICLE ASSOCIATION: The thing that strikes me as being rather quaint, to put it mildly, is that we pay anywhere from about $8 billion to $25 billion to import the oil and we get a paltry $4 billion for the gas that we sell to overseas countries. It seems odd to me, especially given gas is a superior fuel for many, many purposes including the use in motor vehicles.
JOHN MIKOLAJUNAS: There's massive reserves of natural gas that are not being used and that's why we're selling them off to China at such low prices. We should be making use of this fuel ourselves locally because if we don't, we're going to be paying for petroleum products. Natural gas can represent a saving of up to about 60 per cent on what you're paying for petrol and that includes diesel and LPG as well. ...
NOEL CHILD: Governments need to look at the issue of where our future transport energy is coming from and take the step, which is a little unpopular in terms of modern economics particularly, of setting some targets and perhaps some mandates otherwise the default position I think is just to continue on the same pathway until the bus does hit the wall.
GREG HOY: The Australian Government is about to embark on an energy security assessment.
MARTIN FERGUSON: With only about a decade of known oil resources remaining at today's production rates, Australia's looking down the barrel of a $25 billion trade deficit in petroleum products by 2015.
GREG HOY: There are other strong reasons, supporters say, Australia should go for gas, not just for generating power with greenhouse efficiency, but to fuel the vast motor vehicle fleet of a sprawling nation, using compressed natural gas, half the price and less polluting than LPG, liquid petroleum gas, a by product of the oil industry.
OLLIE CLARK: Globally there are about 800 million vehicles on the roads of the world and there's about 8 million natural gas vehicles that you pull up at a garage as if you were refuelling with petrol or diesel or LPG and you plug into your car into the natural gas supply and it's full in a couple of minutes just like it is with the other fuels.
GREG HOY: Australia has abundant reserves of gas, enough to last around a century and a half but there is one far greater attraction for motorists who have grown tired of being battered by rising fuel prices.
JOHN MIKOLAJUNAS: You'd be looking at around 40 cents per litre covering all costs including compression of the gas.
Of course, even if you can produce CNG for 40 cents per litre, in the absence of any government regulation you'll still end up paying a price that is driven by global oil and gas prices.
Also at the ABC, an opinion column that has a cynical view of the 2020 summit and its recommendations regarding energy - Solar? Wind? Forget it, we're goin' to gas!.
If what the Government believes to be appropriate policies can be blessed with the appearance of popular legitimacy then the risk of not being re-elected is minimised. A disturbing account by Anna Rose, one well-motivated young participant who was plonked into the sustainability and climate change sector, certainly supports that impression.
But even though Australia is the world's largest coal exporter, I'm not sure that the clean coal lobby is the Government's favourite child. Federal Resources Minister Martin Ferguson was interviewed by Kerry O'Brien about renewable energy two weeks ago. After several repetitions of an exasperatingly formularised answer about carbon trading schemes, he let slip, "I might also say, you shouldn't forget a relatively clean source of energy, that is gas." A pointer towards the real agenda?
I went "sniffing for gas" and turned up Mr Ferguson telling a recent Australian Petroleum Production and Exploration Association conference that the Government wants to encourage more domestic gas projects like the Reindeer development off the WA coast, that the Government is pushing ahead with its review of gas retention leases to encourage companies to exploit their existing reserves, that Australia is facing a $25 billion trade deficit in petroleum products within seven years and that the Government has announced 35 new areas for petroleum exploration in Commonwealth waters this year, most of them in Australia's north west. We are already the world's fifth largest gas exporter, but the thrust of that seems to be "Find more, pump it out and get it sold, ASAP!" So what if it kills the planet, and us along with it?
Mr Ferguson's focus on the trade deficit in petroleum products (his seven-year estimate may have to be revised now that oil hits a "record high" nearly every day) seems a little odd when we have countervailing trade surpluses in coal and gas, and when the trade deficit in petroleum products is a drop in the bucket compared to what has happened to our net foreign debt.
But not if you're pumping for gas. ...
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Must mean globally.
Why ? (are you joking ?)
Surely he means Australia ?
Given that Oz production rate is declining it can't be said that it's being maintained (ie remaining at current levels)... therefore I read this statement as being his appraisal of the global oil supply rate... currently at "plateau".
Is that wrong?
My conclusion is that Marty probably knows about peak oil ... and his solution is gas ...
Gav/Sp,
No, Martin Ferguson is picking up on evidence given to the Senate Inquiry into Australia's future oil supplies in 2006/07- at present consumption levels, Aust has 10 years only of oil + condensate. Arose in a question from National Party Senator at a public hearing in Canberra:
Senator NASH—I am interested in the nature of oil as a finite resource, and I know that there is a lot of talk about possible finds. Hypothetically, in Australia in terms of our oil reserves, if no more was found in Australia how long would what we have last?
Mr Wright (Geoscience Aust)—If you just look at crude oil and condensate, because essentially they are close
enough to being the same commodity, the supply of total economic demonstrated resources— which is what we think can be commercially produced in the foreseeable short-term future—is about 14 years. If you just take crude oil economic demonstrated resources, there is about seven years of supply. Adding in the condensate doubles the number of years.
It is a kind of artificial answer because the number of years supply you have left depends on your production and, as production declines and reserves decline, the number of years production left stays the same. It is probably more relevant to ask: ‘How does consumption compare with the number of years
production left?’ That will get down to probably about 10 years of crude oil and condensate economic demonstrated resources. That is why we are importing a lot of oil.
page 18- http://www.aph.gov.au/hansard/senate/commttee/S9266.pdf
This hearing also had famous quote from head of ABARE, Dr Fisher, about price leading 'roosters to laying eggs'.
Thanks for that.
There are some interesting exchanges leading up to that... particularly those which show Dr Fischer (of ABARE) to be at the very least, smug.
In the section cited above, whereas Mr Wright explains the nuances of reserves to the Senator the dear Dr is rather more blase...
Dr Fisher — That sounds like a calculation for my colleagues on my left — to tell us the reserves. Then it is a fairly simple calculation to do the division.
Before this are some exchanges with Senator Milne who asks directly about peak oil, and about ABAREs dismal oil price prediction record.
[edited - addition]
Having read a bit further.
There is also this from a later session p42-44
Senator MILNE — A lot has been said this morning about coal to liquids as the next big transport solution. We do not have to worry too much, according to some evidence we have had, because we can go to coal to liquids. From your submission, you do not regard this as a very viable option for Australia’s transport fleet. Would you like to go into that some more?
Mr Kaspura — I am not sure that we necessarily addressed it in quite those terms but I think the general position the organisation would take is that there are a wide variety of options and each of those options will assume relevance as the price of oil rises.
[snip]
I guess really what I am saying in a longwinded way is: let us look at the easy options first. We are going to eventually need to deal with the hard options. All of the technologists and researchers are telling us that there are a lot of unresolved questions and they need time. Let us give them the time. Let us pick the easy options like natural gas. It is an inexpensive fuel. It is consistent with the government’s policy on keeping fuel prices manageable. We have abundant supplies in Australia, so it is consistent with the policy of security of access. It is not that hard.
This exchange includes a discussion on home fuelling of cars using town supplied gas.
Some thoughts
1) deep or distant gas fields eg Gorgon.
Developers will need cash flow from Asian buyers but then Australia ends up with less. On the other hand some fields may never get developed without outside money.
2) gas is too good for baseload generation.
Priority uses should be combined cycle peaking power and Haber processes for nitrogen chemicals and fertiliser.
3) CNG and cars
The 200 bar tanks are too heavy to install in minis or hybrids that already have a large battery. If spun carbon fibre tanks remain too expensive then buses, trucks and interstate trains should be fuelled ahead of cars. Feds must promise there will be no excise hikes for a decade.
4) GTL
Making a start on Fischer Tropsch technology could help with biomass-to-liquids maybe even some CTL provided a strict carbon cap is in place.
Here in NZ we once had a thriving CNG industry. Low oil prices and poor installations killed it off and most of the equipment went to Sth America and Pakistan. I have done dozens of conversions and offer the following observations.
Heavy cylinders are a drawback, as is the room they take up. Filling stations would need to be spaced about every 150 kms on major highways. The energy required to compress the gas is usually electric, and we can expect those bills to continue going up. Small vehicles are not suitable for conversion (space,payback and power loss). There is a loss of power. CNG delivers approx 70-80% of petrol power. This is overcome slightly with technical add ons. Maintenance of ignition systems (plugs leads etc) is critical. Far less crap comes out the exhaust pipe. Exhaust systems last longer.
From my POV the most effective way to use CNG is to power public transport like buses with it. Many local councils in NZ used CNG to power their bus fleets. They had their own refilling stations until the "free" market ideology took over and forced the councils to become competitive business units, or whatever the buzzwords of the day were.
When you are ready to start installing CNG send the SOS to NZ as most of the installers here are now in our fifties and apprentices can do the heavy lifting. A team of two could do two cars a day on average, if they were common vehicles. Most of the horror stories came from crap installations done by cowboys. Common problems were starting difficulties, Stalling in windy conditions, Backfiring when starting, poor placement of regulators, problems with icing-up of regulators, did I mention poor starting? All were the result of poor installations and put many people off.
CNG performed best in the old big Six Holdens Fords and Valiants. It was also very good in trucks and buses, but in all cases there was the range issue.
Cheers
We've had CNG fueled cars here for many years - they are quite common in WA (at one point I think all taxis were gas fueled) and refuelling is available at many service stations.
The only complaints I've heard of are about the additional space required for the tank.
Just so we're crystal clear for our audience.. can you confirm that it is CNG used for taxis in WA and not LPG, which is what powers most of the taxis in Melbourne?
I agree that we should be using CNG for large vehicles (buses, trucks etc) - I wasn't aware that we already had widescale application in small vehicles.
Sorry - I'm confusing the 2 - I meant LPG - please ignore my earlier comment...
I agree with the concept of CNG being an ideal transitional fuel for Australia.
I recently checked on the production/availability of CNG vehicles here. Recently Ford (or Holden, I cannot remember) anounced that they were going to make a production run of 1000 CNG powered vehicles here for sale into the taxi industry.
Toyota are producing a standard model CNG vehicle. However at the moment this vehicle is only being sold in Japan and USA.
It seems that India, Pakistan, Argentina and Brazil are leading the way in this area :
http://envirofuel.com.au/2007/04/21/cnglpg-vehicles-and-conversions-set-...
Pique
I was wondering why the CNG dropped off for buses though I don't think you can blame the "free market ideologues" completely. I've recently had a ding dong email conversation with the Auckland (ARTA) transport planner over diesel buses (which in Auckland carry less than 6 pax per k operated, and that is with the system running near max), The problem is than their objectives don't directly even mention energy efficiency, so they can come up with adequate bullshit to justify what they do.
Their objectives are:
* Assist economic development
* Assist safety and personal security
* Improve access and mobility
* Protect and promote public health
* Ensure environmental sustainability
* Support the Auckland Regional Growth Strategy
* Achieve economic efficiency.
Gav, Maybe I could do post on public transport & urban planning in Auckland, its a fascinating tragedy in progress.
Neven
Sure - if you'd like to write a guest post on any relevant topic then just send it in to Phil and I and we'll see what we can do.
That goes for anyone who feels like writing a submission - all are welcome...
In the business section of the ABC Sydney 7pm news Alan Kohler had a graph (I love his graphs) of the lack of oil discoveries since the 1970's. He said that if we don't find more soon the price is sure to 'keep going up and up'. There was this story about gas and on all the bulletins including Lateline there were stories about the food crisis connecting the price of oil. There have even been small blips about energy issues on of all places 9's Today show. Elizabeth Farrelly had an excellent article in the SMH yesterday mentioning Peak Oil and other issues. Are the MSM slowly waking up?
Alan Kohler has always taken a common-sense approach to economic affairs.
However, I'm not sure we can call the ABC "the mainstream media". Them plus ABC get about 20% the tv-watching viewership...
Okay, they're not marginal or extreme commies or anything, but I don't know that you could call them "mainstream". They've always tended to take more thorough and detailed looks at issues that the Today Tonight and A Current Affair channels....
I have to admit I was some what shocked to see that... but ...20% is an exaggeration...
When I mentioned it to my Big Brother addicted in-law... I realised the fringe minority I was in...
So far, in the "lucky country", we can ignore the reality of these reports.
I like Alan's graphs though.
I took the 20% from this week's Green Guide, the TV/radio guide published each Thursday with Melbourne's The Age.
They said,
ABC 15.8% + SBS 5% = 20.8%.
Big Brother gives people something to talk about casually over a beer or at work. Four Corners is more serious stuff, and Spicks and Specks is so light there's nothing to discuss. So with casual conversations, the strength of the commercial stations is over-represented compared to their actual viewership.
Of course, the other way to look at it is that in Australia, 20% is "fringe". A 20% national vote isn't enough to get a single person into the House of Representatives...
I've just put a post together with a video clip of Alan Kohler's Finance wrap-up and 'that graph':
http://anz.theoildrum.com/node/3930
Thanks Phil- a great resource. Hopefully he will show the ASPO oil curve soon? I've sent him regularly stuff about peak oil from STCWA- never replies to emails but hopefully it is getting through?
dave
GTL from Gorgon won't too help much, IMHO.
Gorgon~40 TCF, equivalent to less than 4 billion barrels of GTL at best. Australia uses about 800000 barrels of oil per day. A 5000 day supply-14 years. I think Australia's total natural gas reserves are estimated at 90 TCF.
Stick with solar.
I agree with the "stick with solar" motto, but your numbers are a bit off.
We have 144 tcf of natural gas plus a large but not well researched amount of coal seam methane gas (the nominal government estimate is 5 tcf, but this isn't a credible number because the resource base has never been properly evaluated).
How much extra gas exists in the areas contained within Australia's recent territorial enlargement is also open to debate, but there is very likely to be more adjacent to existing basins off the north west coast.
The number for CSM of 5 TCF cannot be correct. I am unsure of what the number is but it is very..very large. People inside the industry are of the belief that the CSM resource in Queensland alone may rival the size of the NW Shelf.
There are four main players in this industry at present, Origin, Santos, Queensland Gas and Arrow Energy. Each of these are well advanced in the process for the building of LNG export facilities for the gas. This in itself demonstrates the substantial reserves that each of the companies has. Of course it is doubfull that more than one of these facilities will be built.
If the federal government were really aware of, and concerned with Australia's energy security, it would put in place a moritorium on the construction of new gas export facilities. This energy source is essential to our national interest. Now is the time to stop the export, because the cost for the government to stop the trade after the facility is built will be prohibitive.
The 5 tcf number (in fact 4.4 tcf) comes from here - but they admit it is wrong - it is just the current Geoscience Australia reserves number - but it reflects the fact that no one has tried to do a comprehensive evaluation of the resource.
http://www.aph.gov.au/library/pubs/rp/2007-08/08rp25.htm
One of the articles in The Australian yesterday (see my post on BG / Origin) also talked about Queensland CSM / CSG reserves being equivalent to WA natural gas reserves - I'm not sure where this number comes from or what the methodology is behind it - if you have a reference I'd love to see it.
A few things about gas
- Current US demand for NG, 23 Trillion Cubic Feet
- Demand is expected to grow like crazy
- Many countries are looking to use NG as 'green' electricity production... (causing demand to sky rocket)
- NG production will also peak (like oil). Although, there is more of it and peaks of NG is generally assumed to be 20 years after oil... (if someone can elaborate on this more..)
- Global NG markets are already very tight.
- 1 gallon of gasoline has 123976 BTU, equal to about 120 cubic feet of NG
- Assuming 1/4 of US demand for transportation is covered by NG, that would add approx. 7.3 trillion cubic feet per year of demand. (assuming 4 million bbl/day replaced or 160 million gallons of gasoline /day)
- It is unlikely that the extra 7.3 Trillion cubic feet will be produce in the USA, and will need to be imported.
Given the above, I don't see how natural gas is any solution. It might just push off the 'effects' of peak for a few years...
Heck even the wife was amazed that morning TV the sludge at the bottom of the media heap, was reporting on food shortages and energy issues with oil..and..get this... They were advocating people go outside an dig up their garden so they could plant food crops. Don Burke actually suggested people plant crops NOW, so they we well prepared when food price doubles at the end of the year.
It looks like the slumbering giant is beginning to awake...
I don't know if its the Credit Crunch, Energy or the tumbling Dollar/Sterling but I too have noticed mainstream media getting more gloomy by the day this year here in the UK. Since I've been banging on about this stuff for 2 years my friends are now starting to say "It's happening..." but there not at the "What do we do know?" stage just yet :o)
Nick.
Don Burke was telling people to start growing food ?
Which show was that on ???
Bugger me. Next Jamie Drurie will be saying, "look, do we really need a water feature? Maybe we could put spuds there instead."
My bets for transportation fuels in oz are:
1. CTL via Underground Coal Gassification
2. Next generation biofuels. There are half dozen good ideas for turning any old bio-stuff to fuels via wrinkles on gasification followed by FT or microbal processing.
The price of gas will ensure it is exported as will the price of easily mined coal.
I'm convinced we'll back looking closely at Nuclear after the first few generation-3+ plants come on line.
In the US the price of NG has doubled. The futures price is double what we pay now and with field depletion supplies are not stable for more than about a 10 year window, even including massive enhanced CBNG work that is being done.
The true multifuel car is the battery electric vehicle. It can use electricity generated from Natural Gas, Coal or renewables. Electricity is reticulated to 99.99% of homes and businesses in Australia and as well can be efficiently generated at the point of consumption.
For the small minority of people that actually use the long range that chemical batteries (petrol tanks) give them a CNG fuelled range extender would be ideal. This way a small 2 stroke diesel or spark ignition motor could charge the batteries if longer range is needed. This way the tanks are smaller and the CNG use lower and when the car is only being used as a commuter then it could charge from the grid. A CHG plug in hybrid electric vehicle could be the ideal car for the future.
Look at your own car use. I only use the range of my car to lessen the times that I go the petrol station for fuel. Even here in Western Australia, which is a pretty extreme example, filling stations are 200km to 300km apart. I can count on my hand the times that I have really used the 400km range that my car has. Even driving to Geraldton, a 4 hour drive from Perth, I fill up half way to make sure. For the vast majority of people a BEV with a 200km range would satisfy 95% of their ACTUAL driving needs.
This however would completely be against the true use of cars - that of status symbols and 'freedom' machines. As you would have to preserve this illusion I guess that CNG PHEVs would be far more popular than BEVs. For people that regard cars as transport a BEV with 200km range would be the go always with the option of hiring a larger PHEV for the rare times that a longer range is needed. Perhaps that is a marketing ploy BEV makers could use. Sell the short range BEV commuter with 4 vouchers per year for a hire car or have exchange cars available that people could use for long trips leaving their BEVs at home.
PHEVs could use a trailer with either/both a larger battery pack and CNG tank. Not suitable for office car parks. Maybe a luggage rack for suitcases. The connectors would have to be identical for all car makes.
I have always thought that the trailer idea is a good one for BEVs. I am thinking along the lines of...
1) Every garage has a 25kW trailer generator for rental.
2) Trailers can be dropped off at different service stations along the route
3) Maybe powered by efficient petrol, diesel, CNG, biogas engine or whatever.