Contrary to convention wisdom, energy production in the US is increasing. Coal production exceeded 90 million tons in March, which was the highest production figure since the 1990s. Oil and gas production has reversed its long-term decline, and is expected to exceed "peak oil" of the early 70s sometime in the 2020s. All of this is based on analyses by Rystad Energy and reported in the Wall Street Journal.
It is easy to see the results of the increasing supply in the natural gas market. Prices are hovering around $4 per thousand cubic feet (MCF), compared to $8 per MCF four years ago.Less obvious are the gains in oil output, which are being dwarfed by growth in global demand. Oil is more easily transported and therefore US production is more exposed to global pricing factors. For the most part, natural gas is confined to the domestic market, where the sluggish economy has retarded natural gas demand.
These improvement in the energy sector, especially oil and gas, are attributable primarily to development and application of technology. 3-D seismic has improved the accuracy of finding and estimating hydrocarbon deposits. Horizontal drilling allows for better penetration of a productive zone. Hydraulic fracturing promotes more complete production of the oil and gas reservoir. Steam and CO2 injection techniques are responsible for extending the lives of wells that would have been uneconomical to produce at in the late 70s.
With the exception of natural gas, the increased supply is not keeping up with demand. Oil prices are just off their highs, and are still near the highs of three years ago. Coal prices are firming after a decline from 2008 price spike.
Domestic natural gas is developing a number of new markets. Operators of liquid pressurized gas (LPG) import terminals are considering building export terminals. The chemicals industry is revving up production, taking advantage of the cost advantage in products using natural gas as a feedstock. And the conversion of coal-fired electricity generation plants to gas-fired to improve environmental impact is aided by the economics.
The US is still a major energy producer. New fields are being discovered, and old fields are being revitalized by technologies developed since the last "peak oil." Oil pricing is still firm, and while new markets are being developed for natural gas.
While for some an ideal world would see no reliance on thermal coal (steam coal) to produce electricity, coal statistics would suggest the commodity isn't going anywhere. Coal reports show if we have to live with it, we may as well reduce the impact of coal and CCS seems to be the best solution found to date. Angie www.coalportal.com
ReplyDeleteThe call to reduce the use of coals is valid for western countries but unfortunately, coal statistics show developing economies are more likely to increase their use of coal in coming years because of its affordability and to meet increasing demands for electricity and steel for the coal industry. www.coalportal.com
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