If you listen to the commercials by the natural gas industry or segments by various mass media sources, you would be strongly inclined to believe that natural gas is amazingly cheap and always will be due to the process of hydraulic fracturing or fracking.
Few people have probably noticed that the price of natural gas has doubled in the last year and is poised to increase substantially in the next few years.
In April 2012 the wellhead price of natural gas was $1.89/mmBtu and in May 2012 it was $1.94/mmBtu. Today (May 10, 2013) it’s approximately $4/mmBtu. It appears likely that the price will rise to $8/mmBtu, or higher, in the next few years for obvious reasons.
When the price of natural gas rose to > $10/mmBtu, in 2008, the natural gas industry went on a drilling frenzy, mainly drilling fracking wells. That led to an oversupply of natural gas which led to the price of natural gas falling below $2/mmBtu.
The problem with < $2/mmBtu natural gas is that for fracking wells, it costs approximately $8/mmBtu to produce the gas. Natural gas producers have been losing a substantial amount of money producing natural gas in the last few years.
In the last year or so, natural gas producers have significantly cut back on drilling. The number of rigs drilling for natural gas slipped to near a 14-year low last month and the current gas rig count is about a fourth of what it was at its September 2008 peak.
Because fracked natural gas wells decline so rapidly, a continuously high rate of well drilling is required just to maintain production. As an example, fracking wells in the Haynesville and Barnett shale plays declined at 68% and 61% respectively in their first year of operation according to a recent report by geologist David Hughes.
Because the rate of drilling has declined, year-on-year production of natural gas in the U.S. has declined in the last two months of data reported. I expect that to continue over the next few years.
There are several issues that will limit U.S. natural gas production in the future even if the price of natural gas rises above $8/mmBtu.
First, with the industry’s financial problems associated with the drilling boom of recent years, I expect natural gas producers to be wary of going overboard on drilling in the future.
Second, several of the most productive shale gas plays are in decline including Haynesville and Fayetteville. Barnett appears to be at peak production. Those are 3 of the 4 most productive shale plays for fracking.
You may make the argument that there are 30 shale gas plays in the U.S. and the plays mentioned in the last paragraph are only 3 of the 30. The problem with the argument is that 88% of all shale gas production in the U.S. comes from just 6 shale gas plays.
Not all shale gas plays are equivalent. Some are highly productive, some will not be productive. The industry is producing the most productive plays first.
Petroleum geologist Art Berman made the case several years ago that there is 20-25 years worth of natural gas in the U.S. at current rates of production, not the +100 years that is often stated by media sources.
If NPR is an independent and objective source of news, why don’t NPR listeners hear about this aspect of natural gas production?
Most people, whether they agree with the science associated with global warming or not, have little knowledge of the scientific history associated with global warming.
The science started in the early 1800s with a scientist by the name of Jean Bapiste Fourier (the same Fourier associated with the mathematical operation called the Fourier Transform which is used in FT-NMRs and FT-IRs). He hypothesized that gases in the atmosphere can trap heat. He later demonstrated that atmospheric gases can indeed trap heat.
A simple observation illustrating that atmospheric gases trap heat can be seen, particularly in the winter, when there is a clear night followed by a cloudy night. The cloudy night can easily be 10oF or warmer than the clear night because water molecules prevent the infrared radiation of the warmed earth from radiating out into space. That keeps the heat trapped in the atmosphere, warming the atmosphere.
Because Venus has an atmosphere that is 96-98% CO2, a greenhouse gas, the average temperature on Venus is ~890oF.
In the 1850s, the British scientist John Tyndall made quantitative measurements of how much heat various gases trap. Based upon that work and the work of others, Nobel-prize winning chemist Svante Arrhenius published a scientific paper in 1896 in which he calculated that a doubling of the atmospheric CO2 concentration would cause a 5-6oC (9-11oF) increase in atmospheric temperature.
In the 1930s, a British steam engineer by the name of Guy Callendar promoted the idea that a rising atmospheric CO2 concentration would cause a warming of the atmosphere. His idea became known as the Callendar effect.
In the 1950s, a Canadian physicist by the name of Gilbert Plass reached the same conclusion as Svante Arrhenius although with a lower temperature increase.
In the 1970s, the American scientist Jule Charney, worked on the CO2 issue for the National Academy of Sciences and concluded that a doubling of atmospheric CO2 concentration would cause a 1.5-4.50C increase in atmospheric temperature based upon fundamental physics.
Based upon multiple lines of evidence, scientists now put the temperature increase per doubling of CO2 concentration at approximately 3oC. The expected warming is greatest at higher latitudes, called Arctic amplification, because ice and snow decline which changes the earth’s albedo, reflectivity. Changes in albedo are expected to cause another ~3oC increase in the earth’s atmospheric temperature.