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Stuart Parnell

Stuart Parnell

Stuart Parnell is a managing director in Stormont Energy Advisors In addition to deal origination and M&A transaction management, Stuart focuses on the financial side…

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54 Things You Didn’t Know About Natural Gas

LNG

Every once in a while, I will realize that I have spent way too much time talking about oil, complaining about pipelines, Permania, free money and the impending “End of Big Oil because of Electric Vehicles”. And it’s on those days that my attention turns to oil and coal’s neglected stepsister who we know as natural gas. And in the spirit of American Thanksgiving, I would like to say that I, for one, am thankful for natural gas, the current turkey of the energy sector.

Like oil, natural gas is a prolific fossil fuel with many uses, however I feel that it floats unnoticed under the radar, particularly because it is so much easier to carpet bomb oil and coal into submission (as opposed to cute and cuddly natural gas) in the great anti-fossil fuel war of attrition.

So herewith – 50 (or is it 54?) things to know, love, think and be thankful for about natural gas, in no particular order of importance and apologies if I miss really obvious ones.

1. Natural gas is used to provide heat, hot water and cooktop fuel to almost 80 million homes in North America

2. Natural gas represents almost 25 percent of all primary energy use in North America and globally, rapidly closing the gap on coal

3. It is cleaner burning than all the other combustible fuel alternatives such as whale blubber, wood, peat, coal, rolled-up newspapers and oil.

4. It is so plentiful in North America that supplies are estimated at anywhere from 50 to 100 years at current consumption levels, although this might involve fracking under Philadelphia, so maybe not. Canadian supplies are somewhere in the 300-year range. Because the supplies are so prolific in North America, the prices are quite disconnected from oil and on a heat content basis, significantly undervalued

5. It is cleaner, cheaper and easier to drill for than oil and wells require less maintenance after being brought on stream.

6. It is easier to gather, process and subsequently ship and you never have to worry about spills. Sure, it can blow up but that’s rare.

7. No one has ever compared a gas drilling operation to Mordor.

8. Natural gas pipelines are rarely protested the way oil ones are, unless you live in New York, then you are full on NIMBY about anything that involves digging up your property

9. It can be compressed and liquefied for export.

10. When prices are on, gas is a cash cow for government. Back in the Alberta energy heydays, royalties from natural gas pretty much paid for our health care system.

11. Aside from heating our homes, natural gas is used to make plastic, fertilizer, generate electrical power. It is also used in vinyl, aspirin (not sure how) and pretty much as many products as oil.

12. It also smells like rotten eggs. Actually, it doesn’t – it is odorless, the smell is added – because breathing gas is bad.

13. Natural gas reserves in British Columbia are so vast that more than 20 LNG projects were proposed for the West Coast. Just because government got in the way and all the projects are dying off doesn’t mean the potential isn’t there

14. Gas keeps it real – While “shale gas” is an actual real thing (gas comes from the shale), “shale oil” is just an expression, it’s really “tight oil” – go figure. Just close the loop – oil from shale is an actual thing. Confused yet? Stop smelling the gas.

15. In many cases when you are drilling for oil, associated gas is produced. The reverse isn’t always true.

16. When excess gas is produced, it is often flared because gas isn’t considered as valuable as oil and no one ever knows what to do with it.

17. In the Permian, the amount of gas being produced is overwhelming the take-away capacity and with new rules on venting and flaring, wells are actually being shut in to work off the excess gas

18. The U.S. produces (and consumes) about 77 billion cubic feet of gas a day. That’s a lot of gas.

19. There is close to 4,000 BCF of gas is in storage in the US, which is about 50 days of supply, compared to the oil storage days’ supply of about 27 days.

20. Gas usage is a seasonal business – in winter storage levels are drawn down (for heating) and in summer months (injection season), stocks are rebuilt. Stocks can swing as much as 1,500 Bcf during the year

21. In the last few years, natural gas has supplanted coal as the number one fuel source for electricity in the United States

22. The U.S. is a net exporter of natural gas – sending gas to Mexico, Canada and elsewhere.

23. Pipelines to Mexico provide an ever-increasing source of demand as their power sector shifts from coal and are expected to account for 7 Bcf/day of exports in the next few years

24. Similarly, current LNG export capacity in the US is about 3 Bcf/day and is expected to grow by between 3 and 6 Bcf/day in the next few years.

25. Combined, this new export capacity ultimately represents about 20 percent of US production, so new supplies are going to be needed to keep the system in balance.

26. Since 2010, U.S. production of conventional gas has been in terminal decline. Shale gas from places like the Eagle Ford, the Barnett, the Haynesville and other shale basins have been key to maintaining supply

27. The most prolific region is by far the Marcellus shale in the Pennsylvania Appalachian region which accounts for a whopping 18 Bcf/day of production or just under 25 percent of all US gas

28. In January of 2000, shale gas accounted for 2 Bcf/day of production and by October 2017 that number was 47 Bcf/day or 2/3 of production

29. In the 2000’s, the U.S. was facing a critical shortage of natural gas and started building LNG receiving facilities.

30. The largest (and first to export) LNG facility in the U.S., which exports 3 Bcf/day via four “trains” was originally built to receive imports

31. There are close to 3 million miles of natural gas distribution and transmission pipelines in North America – enough to go to the moon and back, six times

32. Natural gas emits only 50 percent as much CO2 as coal for comparable amounts of electricity generation. What does this mean? Simple, it means that if we could replace all the coal generation in China, India and the United States with gas fired generation, we would be well on our way to meeting our global climate goals and all those annoying conferences and doom and gloomers could end.

33. By replacing coal with gas and renewables, the UK was able to reduce emissions to Victorian era levels.

34. The U.S. has the 4th highest proven reserves of natural gas in the world, behind Russia, Iran and Qatar. Canada ranks 17th, but this doesn’t include vast reserves in the northern part of British Columbia. Interestingly, Australia, which has about half the reserves as Canada and ranks a paltry 26th has a thriving LNG industry.

35. More than 15 million vehicles worldwide run on natural gas – both compressed and liquefied. Take that Tesla.

36. Gas was first discovered in the Middle East when seepages were ignited by lightning strikes.

37. Natural gas was used in 500 BC China, gas was moved via bamboo pipeline and used to make evaporated salt brine from sea water

38. The first lamp to be lit by natural gas was in 1792 in the UK

39. Natural gas is referred to as “dry” or “wet”. Dry gas is almost entirely methane. Wet gas is less than 85 percent methane and contains other gases such as ethane, butane, propane and naphtha.

40. 90 percent of chefs prefer to cook with natural gas. It evenly distributes heat which means evenly cooked food.

41. The Temple of Apollo, known as the Oracle of Delphi, was built over a flaming gas vent

42. Home use of natural gas premiered in the first century AD in Persia, when ground seepage was ignited next to the royal kitchen

43. Eclipse Resources, a Marcellus/Utica pure play driller broke its own record for drilling the longest land-based lateral well in the world by drilling a Utica well with a lateral that’s 19,300 feet long (3.7 miles)

44. Remember in the movie Gasland, when someone lit their tap water on fire and blamed fracking? Apparently, this is common in areas where shallow gas and underground aquifers co-exist and isn’t caused by fracking. Go figure.

Related: Maduro Tightens Grip On PDVSA As Production Plunges

45. As recently as 2008, the Alberta government received close to $5 billion in royalties from natural gas. By 2014 that number had been reduced by 90 percent

46. Cooling natural gas to -162 Celsius converts it to a liquid that can then be shipped worldwide

47. Because natural gas markets tend to be continental instead of global (like oil), prices vary considerably around the globe, hence the push for the big reserve holders to LNG for export

48. The flaring of gas from oilfields in the Middle East is visible from space

49. The first natural gas well drilled in Alberta was in 1883 in Medicine Hat, otherwise known as “Gas City”. The first gas well in Canada was in New Brunswick in 1859.

50. 68 percent of Canada’s natural gas production comes from Alberta

51. The now abandoned Energy East pipeline project was to have been built by repurposing a TransCanada owned natural gas pipeline. If demand or price was to pick up, perhaps we can convince TransCanada to repurpose the repurposing

52. Coalbed methane is natural gas found in coal seams. There may be up to 500 trillion cubic feet of coalbed methane in Alberta which is an absurdly massive amount, although not all of this will be recoverable

53. Based on current consumption and comparative inventory, natural gas prices should be approaching $3.50/Mcf (a 20 percent premium to today’s closing price). It may be time to load up on some natural gas stocks after all – but you didn’t hear that from me!

54. Bonus Item – there is a book about natural gas called “The Prize”. No, actually there isn’t. That one’s about oil. But one of the top sellers on Amazon about natural gas is called the “Handbook of Natural Gas Transmission and Processing: Principles and Practices. I hear it’s a real page turner.

So that’s it, it’s a gas, gas, gas.

 

By Stuart Parnell via Stormont Energy Advisors

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Leave a comment
  • Madan Rajan on November 27 2017 said:
    And this natural gas can also be used to power vehicles. China has 5 million NGV (Natural Gas Vehicles) followed by Iran (4 million) and India (3.1 million).

    Natgas can also be converted to olefins to make plastics.
  • ChrisH on November 28 2017 said:
    Nice article.

    Odorant is added to help detect leaks in your home/business faster, not because nat gas is bad to breathe (its considered non-toxic, but can displace oxygen).

    Also, how about the fact than 10’s of thousands (conservatively) of new, real, family-sustaining jobs have been created by Nat Gas companies is the US and Canada in the last decade or so, with more on the horizon...
  • Former Nat Gas Car Owner on November 28 2017 said:
    Yes, natural gas can be used in lieu of gasoline, but it isn't economically justified for vehicles that travel less than 20,000 miles per year. For 6 years I drove a nice, basic 2009 Honda Civic GX and it worked very well, but the 8 gallon-equivalent fuel tank was inconvenient, and it consumed almost the entire trunk. I imagine that the smallest practical vehicle would be a pick-up truck.
  • Lee James on November 29 2017 said:
    The virtues of NG are many -- what the article is all about. Makes it sound like NG never goes boom. And methane leakage and on-purpose venting is not worth mentioning? Article is a bit one-sided, IMHO.

    But if you must burn a fuel resource, NG is the fuel of choice ... IF, ALL piping is secure and tight!
  • Bill Simpson on November 29 2017 said:
    You forgot to mention the vast hydro power potential of the Canadian Rockies. That is why Russian aluminum is so cheap.

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