The Race For BTU Has Begun

Tyler Durden's picture

Submitted by Chris Martenson contributing editor Gregor Macdonald

The Race for BTU

The world's major central banks -- including the Bank of Japan (BOJ), the European Central Bank (ECB), and the Federal Reserve -- appear to have finally won a major battle in the deflationary war that broke out five years ago in 2007. While the ultimate victor is yet to be determined, it now seems likely that a period of nominal growth could ensue for another two years, perhaps even longer.

This will not be high-quality growth. And little of the growth will be real.

Commodity prices will surely eat away at most, if not all, of any gains that may occur in global GDP. Additionally, while non-OECD growth actually has a chance of achieving some GDP gains in real terms, the prospects for the OECD are not as encouraging.

The Race for BTU Has Begun

It’s important to put yourself in the minds of OECD policy makers. They are largely managing a retirement class that is moving out of the workforce and looking to draw upon its savings -- savings that are (mostly) in real estate, bonds, and equities. Given this demographic reality, growth in nominal terms is undoubtedly the new policy of the West.

While a 'nominal GDP targeting' approach has been officially rejected (so far), don't believe it. Reflationary policy aimed at sustaining asset prices at high levels will continue to be the policy going forward. 

While it’s unclear how long a post-credit bubble world can sustain such period of forced growth, what is perfectly clear is that oil is no longer available to fund such growth. For the seventh year since 2005, global oil production in 2011 failed to surpass 74 mbpd (million barrels per day) on an annual basis. But while the West is set to dote upon its retirement class for many years to come, the five billion people in the developing world are ready to undertake the next leg of their industrial growth. They are already using oil at the margin as their populations urbanize. But as the developing world comes on board as new users of petroleum, they still need growing resources of other energy to fund the new growth which now lies ahead of them.

This unchangeable fact sets the world on an inexorable path: a competitive race for BTU.

When Oil Can't Take You There

It was not supposed to be this way.

Less than ten years ago, the universal assumption was that liquid BTU would ferry the world through its next phase of growth. The central thesis underpinning these forecasts, of course, was a belief in the large size of the world's total resource base. Because this view was so widely shared by geologists, its soundness was not questioned. It’s critical to understand that within the industry itself, there was a nearly universal assumption that higher prices would make the next tranche of oil resources commercially economic -- and easily so.

For example, when ExxonMobil declared in early 2004 that they could bury the market in oil should prices ever move above $40 a barrel, they believed that forecast very strongly.

Let’s consider that the role of the petroleum geologist in this regard, whose task is to locate and make recoverable these resources. It was not then, nor would it be now, a very appealing prospect for that professional to consider that the next set of resources might be so expensive to develop that many economies and regions might not be able to afford them. You can see such perspectives in books that appeared 4-5 years ago, such as The Myth of the Oil Crisis, which correctly identified the vast oil resources still to be extracted, but missed the slow rate at which these resources would be developed. Indeed, if there is a single concept that trips up experts and laymen alike, it is the changing rate at which many natural resources have started to come to market in the past decade.

And because of this, we've seen a number of forecasts for significantly higher oil production coming from the media and the financial sector during the past few years.

Last autumn, for example, I chronicled the flurry of exuberant calls for US oil independence and showed that a 2 mbpd decrease in US oil consumption had been completely marginalized in favor of a 0.5 mbpd increase in order to deliver a positive headline that the US was becoming less dependent on foreign oil because of increased supply. In Selling the Oil Illusion, American Style, I noted that such an uptick in US triumphalism was likely to accompany high oil and gasoline prices, as a way for the US to tell itself a reassuring story while the pressure increases on politicians and policy makers.

Indeed, Dan Yergin’s There Will Be Oil in last year’s Wall Street Journal was the start, I think, of a campaign to pressure the government to open more lands for drilling in the United States. Since then, high gasoline prices have been all the rage on every blog, talk show, public news radio station, and in the media at large. However, not since those naive days of 2004-2005, when oil first crossed the $40 mark, have I seen such an outlier supply call than the one that came through Citigroup in just the past few weeks.

The Latest Big Call: North America as Oil Giant

Ed Morse leads an energy research team at Citigroup and is well known for accurately calling oil’s price in 2008. But Citigroup's recent call for a potential doubling of North America's liquid petroleum production over the next ten years seems little more than a dream-wish.

Once again, we turn to the Wall Street Journal, which has now shown a definite habit for providing free space to those who call for North American energy abundance and independence. Speaking of Canada, the United States, and Mexico, Mr. Morse writes:

….theoretically total oil production from the three countries could rise by 11.2 million barrels per day by 2020, or to 26.6 million barrels per day from around 15.4 million per day at the end of 2011.     


What Mr. Morse fails to mention in his op-ed is that the rate at which Canada, US, and Mexico would have to produce this new oil to meet his prediction would require new oil development and production at a rate of growth seen in the boom-days decades ago, a rate that is simply no longer possible.

Yes, the United States doubled its production of crude oil in 30 years between 1940 and 1970. Yes, from 1970 to 2000, Mexico nearly quadrupled its production of oil. Yes, Canada doubled production from 1980 to 2010. But let’s consider the time span of those periods: They were all 30-year timeframes, not 10-year timeframes.

More important is that for the US and Mexico, the peak of oil production is now in the past. The US peaked in the early 1970’s, and Mexico peaked in the last decade as its singular giant, Cantarell, entered decline. Only Canada has been able to inch up production, but there, too, lies an overlooked barrier: Again, the rate at which Alberta Tar Sands oil is developed and then produced is much slower than conventional oil.

Mr. Morse and the team at Citigroup have made the same mistake that was more prevalent a decade ago. They have mistaken the size of the resource base for the actual flows that are now economically, and geologically, possible.

Rate-Limiting Realities

Have you tired yet of the word rate?

Enrolled members of read my discussion of the two below charts earlier this year. The charts show two different forecasts, five years apart, of future oil production from Canada -- much of which has depended on growth from the Alberta Tar Sands. However, I am using them again in the face of the Citigroup claims so that a wider audience can see how limited the rate of the growth can be, as we face the next set of oil resources.

Recall too that it’s not just Citigroup; many Americans and US politicians believe that Canada is a petro-giant who will easily be able to increase oil production quickly to feed future US demand.

Moreover, lest the implication go unnoticed, Ed Morse’s team did indeed (rather foolishly in my opinion) not only call for a potential doubling of liquid petroleum production by 2020, but went on to claim this would be enough supply to actually move the price of oil downwards, to $85 a barrel by that time:

Excess Canadian crude oil produced from oil sands is expanding at a rate of one million barrels a day every five years. The more that's produced, the less of a market there will be for oil from Venezuela and some other OPEC member countries with similar-quality oil, requiring them to either curtail production or lower prices. Even if oil prices rise in the medium term, we expect 2020 prices to be no more than $85 per barrel, compared with today's prevailing global price of $125.

It is quite incomprehensible that CITI could make such a call. I must be blunt: this is not serious forecasting, and there is no support in current trends -- or those of the past 5-8 years -- that would support such a price call.

Even CERA, Cambridge Energy Research Associates, has logged the explosion in the costs to bring on the marginal barrel of global supply, as has IEA Paris, and other energy teams such as Barclays.

Essentially, the CITI team is calling for a price of oil 8-10 years from now of $85 dollars a barrel, which is essentially the price already needed today to bring on a marginal barrel of supply.

From Africa to Brazil, and from Russia to Canada, there is precisely nothing in the trends of the past 10 years that indicates finding and exploration costs for new oil are either set to fall or even level out. Geology and the cost of energy itself preclude such a possibility.

But as I mentioned, it is not just economists who mistakenly project fast rates of development from the domain of stubborn, slow, physical reality of the world’s resources. The following two charts show the forecast of future production from CAPP--The Canadian Association of Petroleum Producers. The first chart is from 2006, and projects production through 2020:

Basically, in 2006 (which significantly raised the forecast from the year prior), the industry expected Canada to be producing 3.5 mbpd of oil by 2010; 3.75 mbpd by 2011; and 4 mbpd by 2012!

Now here is the second chart, from 2011, forecasting production out to 2025.

However, 2010 saw only 2.7 mbpd of annual production.

More revealing is that back in 2006 (the first chart), the industry expected Canada to be approaching 4 mbpd of production by 2011-2012. However, the latest data shows that the 2011 annual average only reached 2.9 mbpd, with recent months hitting 3 mbpd. In other words, the industry itself, on a five year time-frame, missed its forecast by nearly a million barrels. That is not a small miss for country producing only 3 mbpd.

But given that this is the nature of new oil resources, we should only be surprised that analysts such as the team at Citigroup should have the bravado to call for future production growth at a rate totally unsupported by the nature of these resources. 

The Race for Resources

What the team at Citigroup and other so-inclined geologists and economists are correct about, however, is that human economies will undoubtedly go after the next layer of fossil fuels -- at least until the economics of such a quest beats us back towards some other set of alternatives.

So while North American oil production has virtually no chance to increase, as believed by the cornucopians, there is little doubt that in the quest to gain relief from permanently high oil prices, every possible BTU in North America will be accessed and utilized. More broadly, as the acceptance of the new era of high-priced oil finally (and I do mean finally) broadens out to the wider public, the scramble for solutions will also unfold.

What do I mean by permanently higher oil prices? Well, given that the cost of the marginal barrel has risen so much the past decade and that Asia continues to add to its demand in a relentless fashion, this price forecast from the U.S. Energy Information Administration (EIA) in Washington looks about right to me: (Annual Energy Outlook 2012):

The lower price path offered by EIA is now out of the question. Only a deflationary depression, sustained for more than several years, would allow for such low oil prices.

Because of geology, and because the non-OECD can afford even higher prices, the world faces a price path -- with large oscillations -- between the Reference case and the High Oil Price case. 

Transitioning to Other BTUs

In Part II: Promising Investments as the Race for BTUs Heats Up, I lay out the latest global energy data showing how the world is already trying to transition away from oil and slamming the door shut on the prospect for any new net growth in global oil production and supply.

Are we closer than ever before to a tipping point, a regime change in which acceptance of high oil prices will broaden out in society? Four years of extraordinary, emergency provision of new credit by Central Banks should be sufficient to create a two-to-four-year mini-boom dominated by the world digging up fresh BTUs as the realization finally sets in that no more oil is forthcoming.

Finally, I identify 2-3 areas of investment that will play upon the coming scramble new energy resources.

Click here to read Part II of this report (free executive summary; enrollment required to access).

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
lolmao500's picture

Wind power, solar power, nuclear energy through thorium...

Deadly Bacteria Lurk in Deepwater Horizon Tar Balls in forum

Nearly two years after the Deepwater Horizon disaster gushed millions of barrels of oil into the Gulf of Mexico, tar balls from the spill still turn up on Alabama's shores after storms. Now, one researcher is recommending that people steer clear of these tar balls after studies find them chock-full of potentially deadly bacteria.

In research published online November 2011 in the journal EcoHealth, Auburn University microbiologist Cova Arias and colleagues discovered that Deepwater Horizon tar balls found months after the spill contained high levels of bacteria, including 10 times the level of Vibrio vulnificus as found in the surrounding sand, a finding first reported by the Associated Press. V. vulnificus is the leading cause of seafood-borne disease fatalities nationwide, and it has a fatality rate of 20 to 30 percent when it infects skin wounds.

GreenPlease's picture

I have to ask.... what will wind power, solar power, and nuclear power do to quench our liquid fuel thirst in the short-run? What about in the next 10-15 years? Don't get me wrong, I'm a huge fan of the LFTR design and I believe that it's one of the few silver bullets that we have in an arsenal that is otherwise chock-full of silver bee-bees. However, it does not solve the liquid fuel crunch that the world is facing. 

Citi's projection is a joke. I'd be curious to know what their loan book looks like with regards to the shale industry. If they've put their money where their mouth is, they're in for some serious pain in the next five years.

FWIW, I can see Canadian crude production expanding rather rapidly (1mbpd/5years) as significant advances are being made in in-situ technologies. However, I expect that the U.S. will experience an oil decline shock in 2-3 years as we discover that horizontal drilling merely flattens the curve in the short run and then causes a steeper decline later on.

Gully Foyle's picture

Hey now Binky, what happened to this?

Toshiba is also working on its own mini nuclear reactor, the "4S", which the company says stands for "super-safe, small, and simple". The 4S is based on a smaller 10 MW design that can last 30-40 years before refueling. The 4S is sodium-cooled, and uses liquid lithium-6 to moderate the reactor, instead of conventional control rods. Like Hyperion's design, the reactor is totally sealed and requires no maintenance or operation.

Toshiba says the reactor will make power available for as little as 5 cents/kWh. A demonstration version of the 4S is planned to be online in 2012, and will be sited in the Alaskan village of Galena. After that, Toshiba plans to offer the 4S for sale throughout North America and Europe.

The Toshiba 4S (Super Safe, Small and Simple) is a micro nuclear reactor design.

The plant design is offered by a partnership that includes Toshiba and the Central Research Institute of Electric Power Industry (CRIEPI) of Japan.[1]

The technical specifications of the 4S reactor are unique in the nuclear industry.[2] The actual reactor would be located in a sealed, cylindrical vault 30 m (98 ft) underground, while the building above ground would be 22×16×11 m (72×52.5×36 ft) in size. This power plant is designed to provide 10 megawatts of electrical power with a 50 MW version available in the future.[3]

The 4S is a fast neutron reactor. It uses neutron reflector panels around the perimeter to maintain neutron density. These reflector panels replace complicated control rods, yet keep the ability to shut down the nuclear reaction in case of an emergency. Additionally, the Toshiba 4S utilizes liquid sodium as a coolant, allowing the reactor to operate 200 degrees hotter than if it used water. Although water would easily boil at these temperatures, sodium remains a liquid; the sodium coolant therefore exerts very low pressure on the reactor vessel even at extremely high temperatures.

The Toshiba 4S Nuclear Battery is being proposed as the power source for the Galena Nuclear Power Plant in Alaska.[4][5]

[edit] Current developments

Currently Toshiba, together with its Westinghouse subsidiary, is in the preliminary design review stage of the Design Certification process before the United States Nuclear Regulatory Commission (USNRC).[6] Application for certification of the design is currently planned for 2012 when the standardized Design Certification application will be filed for the 4S. The most recent meeting with the NRC took place on August 8, 2008, at which time the NRC's staff met with representatives of Toshiba and Westinghouse for a pre-application presentation of a Phenomena Identification and Ranking Table (PIRT) for the Toshiba 4S (Super-Safe, Small and Simple) reactor. Lawrence Livermore National Laboratory recently released an interesting study on the Toshiba 4S design, which provides an overview of the 4S design and suggests that certain goals may be easier to meet if lead is used as the coolant rather than sodium, due to lead's high transparency to neutrons and low transparency to gamma radiation, though lead has a higher melting point than sodium does.[7]

The NRC received the latest version of the letter of intent from the designers of the reactor as of March 13, 2009. The approval process is on track for official submission to the USNRC in October 2010 of a standard application for Design Certification. During the week of October 16, 2009, persons or organizations unknown submitted a Freedom of Information Act request to the USNRC requesting that "documents related to the Super-Safe, Small and Simple (4s) Nuclear Reactor from Toshiba Corporation particularly related to possible placement in Galena, Alaska, including tech info on reactor, safety assessments, nuclear material security, etc." be released to the requestors.[8]

A problem of small nuclear reactor design seem to be that insurance and legal requirements are the same for power plants of any size. The NRC is aware of this barrier, and has held a number of public reviews to devise a new scheme that would make it financially feasible to build and operate small reactors, while at the same time maintaining appropriate level of protection at large LWR installations, [9] the latest of which took place in December 2010, setting January 2011 as the time frame for preparation of official white paper proposal.[10]

Bill Gates, Toshiba, Traveling Wave Reactors, Small Reactors

There is certainly some truth to what you might have been reading about the Toshiba-Gates discussions. Gates and TerraPower are definitely interested in developing reactors that can burn depleted uranium and used nuclear fuel for a very long time before they need to be refueled. Toshiba definitely is interesting in designing and building reactors of all sizes - from their 1358 MWe ABWR's to their 1154 MWe Westinghouse AP1000's (Toshiba owns 70% of Westinghouse), to their 10 MWe sodium cooled 4S reactors that might end up powering small villages in Alaska.

Ghordius's picture

I've never been fond of Bill Gates, but since he is supporting the Toshiba 4S I am willing to call him a friend. +1T

GreenPlease's picture

I've been told by many in the industry that the 4S reactor won't make it for two reasons:

1. It doesn't close the fuel cycle

2. It's innovative enough that it would be a huge PITA to license in either the U.S. or Europe. It's a (very) safe design but Europe and the U.S. are essentially set up to exclusively license LWR designs. 

blu's picture

I'll believe the Toshiba 4S is safe when the Japanese allow them to be built in a ring around Tokyo.

Seer's picture

And when Bill Gates himself moves into that ring!  Easy enough to promote a lab experiment far away from oneself.

dumbfounded's picture

I’ll believe it’s safe when 50 years from now the guy who has just bought a dilapidated industrial property is not scratching his head and saying: “Well what’s this weird contraption here? Ah looks useless, we'll just knock it down and sell it for scrap with the rest”.

SheepDog-One's picture

'The US is now ready to dote upon its 'retirement class' for many years to come'...

'Dote' obviously meaning 'shit', I guess?

blu's picture

Yeah I thought that was pretty funny. Who does he think we are, the Japanese?

The US powers-that-be don't give a flying fuck with a back-flip about the retirement class, having got their money.

No wait, I'm wrong. They still need the retirement class to provide a means to fund the for-profit "health care" system via their childrens' tax dollars.

NotApplicable's picture

Dote = consume (think healthcare)


Seer's picture

Not to despair, this will be applied to younger generations as well, though for them the word would be capitalized.

Byte Me's picture

I know! Let's build shedloads of BWRs, run 'em on MOX with a once-through fuel cycle.

Yeah -- that'll work for the next century..

DosZap's picture

Just find an old Duece and a Half, they run on old motor oil,gas,diesel,jet fuel..............and you can MAKE a hole whenever you need to get thru traffic.Huge Mutha's.

Doubles as a survival retreat on wheels.( GE Mini Gun extra),circa Vietnam era, no Horn REQUIRED!!!......

LawsofPhysics's picture

Ah yes, big difference between available energy sources and the current burn rate avaibale to increase real productivity and GDP.  Opportunities will abound once all the bad debt and bad ideas are allowed to fail.  Until then, the sheep are busy buying the dip, so don't confuse them.

CrashisOptimistic's picture

"Even if oil prices rise in the medium term, we expect 2020 prices to be no more than $85 per barrel, compared with today's prevailing global price of $125.

It is quite incomprehensible that CITI could make such a call. I must be blunt: this is not serious forecasting, and there is no support in current trends -- or those of the past 5-8 years -- that would support such a price call."


I will disagree.  A price for oil of $85 and likely lower is in the cards for that time frame.  It's not at all absurd.

Oil's relentless crushing of the windpipe of society will destroy activity and thus consumption AND demand, both (in the world to come, they are not the same thing).

With low societal activity, oil price could be low.  If there is ever an attempt to increase societal activity, and reduce rate of population avalanche, oil price will spike again -- probably several times between now and 2020.  

But a called for price of $85 is not absurd for that reason.  If oil is in the process of starving hundreds of millions of oil consuming people in 2020, the price might very well be only $85.

CrazyCooter's picture

While no one can see the future, I understand the author's arguement like this:

The developing countries, who use very little oil per capita, use it in very productive ways. Consider a farmer who might have the choice between human labor, animal labor, and a tractor to achieve farm work. A gallon of diesel to this farmer is *very* valuable.

In developed nations, a gallon of diesel might be part of the cost of taking kids to soccer practice.

Because the oil supply can not expand rapidly enough to meet new demand, prices will stay high. I think this is why he focuses on rate so much, oil supply just isn't going to grow very much from these newer types of developments (e.g. oil sands).

Someone will buy the oil; increasingly that someone will want to do produtive things with it and consequently they will be willing to pay more.

But, that was my take on the article, which I liked by the way.



Seer's picture


Folks in "developing" countries might appear to benefit from having access to more oil, but I'm not thinking that the equation supports it, not without it being some sort of State control that ensures (props up) pricing internally.  The export markets just aren't going to hold up any more.  Any "increased" productivity that such people might enjoy only would be experienced through exports, exports which would require: 1) Oil/energy for transportation; 2) Someone to export to (see all those debt-ridden countries out there?).

Especially with farming, the margins are hideous, even negative in most all cases (anything above subsistence level unless there's price "support" [read "subsidies"]).

I think that only countries with energy to export (they're internally sustainable [for now]) will be exporting to countries with food to export.*  Most other exchanges will be of less fundamental importance.  One could do some paring-up here, but off the top of my head I'm just not seeing India, which can't even feed itself, dealing food to the Saudis for oil: how robust will Saudi exports be once US military support collapses?

* How funny it is that Adam Smith stated that nations should only trade dissimilar goods (none of this country A selling autos to country B and country B selling autos to country A!).

Make no mistake about it, food WILL become more costly.  I'm just not thinking that the oil export model is going to hold up as you might suggest (or as your scenario would likely demand).  Good news for all the cornucopians is that there WILL be LOTS of oil left; the bad news is that they won't be seeing it (of likely benefiting in any way).

lincolnsteffens's picture

No one seems to be factoring in the possibility of the on going weakness of the western nations populations to afford to buy stuff. If a major collapse does happen energy usage in the west will drop much further. If the west is in collapse and can't buy much cheap stuff from the east, the east will use less energy too at least in the medium term.  Prices could drop considerably in nominal terms until a genuine recovery gets rolling or inflation picks up.

Marginal Call's picture

In that situation the can is just kicked down the road ala 2008.  Economy tanks, oil plummets.  Oil skyrockets back with minor recovery.


Most everyone has factored in a collapse one way or the other.  Either supply kills us, or the economy.  It's a death spiral either way.

DosZap's picture

 If the west is in collapse and can't buy much cheap stuff from the east, the east will use less energy too at least in the medium term.

You checked the SO CALLED cheap stuff from the East lately?, well it damn sure isn't cheap.

I can wear out a pair of Tennis shoes in like 3-4mos,doesn't pay to pay a C Note for a good pair.

PayLess used to have Chinese tennis /walking shoes all day,every day for around $16/$17.00, 2pr for $ a single pair from the East is over $34.00

SheepDog-One's picture

Anyone saying we just run along smoothly for years on $130 avg oil is hitting the crack pipe hard.

palmereldritch's picture

Well, that's one way to keep it out of reach of the 'developing' world....

blu's picture

Executive summary: Pumping oil is so last century. Get ready to dig everywhere all the time for your next tranche of BTUs. Oh and you better get there before the Chicoms and the Indians because they are in no mood to share.

hedgeless_horseman's picture



Executive Summary Summary: Resource Wars, bitchezzz!!!

Ghordius's picture

? All wars are about resouces.
about mine, not yours...

blu's picture

Some wars are about God. And many others are about abstract profits or gain.

Going forward though, wars will be about resources. Period. We may as well call these The Eating Wars.

Seer's picture

"Some wars are about God."

Not in defense of religions with said "God," or "God" himself/herself (sorry, you're really not That important!), wars ARE fundamentally about resources.  I don't think that anyone cares, really, about someone else's "God" as long as one is capable of expanding.  Given enough resources it doesn't matter.  Only when there are insufficient resources does "God" get sucked into supporting wars: "God" then becomes the "moral" support for inflicting the necessary damage on the "other" in order to obtain resources.

TheGardener's picture

Well said. Nietzsche "spoke" about when people became in need of religion. Davila pointed out that all the major ones evolved about the same time (disregarding muslim heresies).

If you are pointing towards resources, take a quick lesson
of Hebrew grammar . Heche comes to mind.

disabledvet's picture

Anne Heche? I mean she's hot and all but when speaking of Nietzhe (sp?) she's not the first person i think of actually...

CrashisOptimistic's picture

Pretty close to dead on.  Every gallon of gasoline you conserve in the US is making life nicer for a Chinese military family.

ALPO's picture

There are almost seven billion people on the planet. Most of those people are neither American nor useful to Americans.

Isn't there some way those excess people can be killed and their bodies rendered into a clean-burning environmentally-friendly fuel? That's the kind of bold solution our scientists should be working on!



Uber Vandal's picture

I think that the research into the soylent green fuel field came to an end around May, 1945.

Spitzer's picture

All bullshit.

The world is flooded with Nat gas. Whats it worth these days ? Sub $2.00 ? Nat gas will bring down crude demand but crude is just a trendier inflation hedge at the moment.

You can make jet fuel, solvents, and chemicals with Nat gas so I think this whole peak oil thing is way put of proportion.

Marginal Call's picture

Drillers are going under at current prices, so that glut and price won't last long.  And how long do NG plays last if we shift our transportation system over?  We burn it up quick, there is no 200 years of it-that's a joke.




disabledvet's picture

well lets take a look then!
i does appear this behemouth has been struggling for some time. with 91 billion in market cap i'd expect better as well...

Seer's picture

Is that 91 billion in worthless fiat?  When the masses lose faith in that fiat then what?

Comparing Monopoly money is fine as long as the game is going.

disabledvet's picture

alright fine! let's take a look at "worthless fiat" too!
man, that thing's all over the map too!

sangell's picture

Maybe, but burning natural gas to make kilowatts makes no more sense than burning oil for that purpose but that is where the US is heading. We've got coal, nuclear, even wind and sunshine to keep the lights on. Natural gas should be a transport and chemical feed stock fuel same as oil.

Bunga Bunga's picture

"The greatest shortcoming of the human race is our inability to understand the exponential function."

CrashisOptimistic's picture

75+% of crude BTUs go to transportation.

Not solvents.  Not chemicals.  They mostly use NGLs, not crude.

It is not easy at all to get crude level BTUs from natural gas.  A 42 gallon barrel of natural gas at room temperature and room pressure contains a BTU level roughly 1/1000th what is in a 42 gallon barrel of crude.

You have to start talking about LNG to get fuel tank densities that are competitive, and even if you do, all you have is 60% of the BTUs of a barrel of crude -- and it costs rather a lot of natural gas energy to power the refrigerator to freeze nat gas down to LNG temps.

If there were an easy answer, don't you think it would already be in place?

CrazyCooter's picture

Fun fact: natural gas is a major feedstock for the production of ammonia, via the Haber process, for use in fertilizer production.

Another fun fact: those plastic shopping bags they use as the grocery store are made from natural gas.



Seer's picture

Thanks for Fact #2, Coot!  I've been wondering what has been behind the "environmental" push to outlaw plastic shopping bags: I REUSE them for garbage rather than buying NEW "garbage bags" (maybe the "garbage bag" lobby is also behind this?).

Hm... I wonder whether Sptiz-boy is wanting us to subsidize NG more so that his blow-up dolls are cheaper?

Stuck on Zero's picture

Another fun fact.  Natural gas is easily converted to methanol.  Methanol can go straight into most fuel tanks with a little dilution.

rufus13's picture

"It is not easy at all to get crude level BTUs from natural gas."

Not "easy" in the sense that I "simply pay $4.13 per gallon and fill 'er up", but well within the technical and economic capability of a USA that makes it a national priority. Fischer-Tropsch plant on a big NG field could do exactly what SASOL does with remote gas fields: liquify and pipeline to urban area for use. Add an LFTR to the process and you don't burn up so much NG for heat, and you get a bunch of base-load electricity for your urban/industrial use as well as EVEN MORE liquified refinery base-stock. The big money in F-T is making industrial chemicals, not syncrude to make ICE fuel.  The Red Chinese have figured this out and are going full-speed-ahead with our money and our old Oak Ridge National Lab research papers saving them a decade or more of basic research. They KNOW it works, and so like with the A-Bomb, they will make it work. 


Flakmeister's picture

Gas to Liquids is a boondoogle....

earleflorida's picture

one barrel of oil produces 19.6 gal. of gasoline


Ps. Have they figured it out ?  Shell Oil is building a $10bl diesel = LNG, natural gas refinery in the Louisiana gulf as I write. So,... they have figured it out!

CrazyCooter's picture

Start here and get back to me when you are done reading ...

(link goes to a solid opinion about why nat gas companies are going to implode at some point)



Taint Boil's picture



Start here and get back to me when you are done reading ...

Good link - spot on.