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Friday, March 19, 2010

Finally, A Replacement For Big Oil?

From our friend Madhava Ghosh's blog "View From A New Vrindaban Ridge"

Posted Dec 22nd 2009 5:00PM by Joseph LazzaroJoseph Lazzaro RSS   Feed

Can any fuel form make a serious run at oil use in the U.S. in the decade ahead? Natural gas might — largely as a result of natural gas’ abundant domestic supply, if new drilling techniques are deemed environmentally safe.

Briefly, the new techniques — including one called ‘hydraulic fracturing’ — enables natural gas suppliers to profitably access more gas than before. As a result, the Potential Gas Committee says the United States now has a more than a 100-year supply of natural gas.

However, issues regarding possible well water and ground water contamination at sites that used the new drilling techniques are currently under investigation by several U.S. environmental regulatory bodies, including the U.S. Environmental Protection Agency, The New York Times reported. If proven to be unsafe, that would, most likely, decrease the U.S.’s natural gas reserves from current estimates.

But assuming most of the high tech-accessed new natural gas is safe and added to the nation’s supply, could natural gas play a larger role in the nation’s energy picture? At first review, it appears it can.

Up Ahead: Big Natural Gas?

Utilities who operator electric power generation plants are already turning to natural gas as a cleaner fuel than coal. Coal, remarkably cheap but also enormously damaging to the environment, has an uncertain future. If natural gas’ price remains low — and bountiful supplies would help achieve that goal — natural gas can continue to make major gains in electric power generation and in industrial use — substantially reducing the air-polluting particulates that coal-fired plants spew in to the atmosphere daily.

Likewise with home/commercial heating: assuming natural gas remains cheap, the energy form will likely see increased use in the decade ahead for heating. Natural gas already is the dominant form of home heat in the Midwest; in the Northeast, oil heat has been pervasive, but has seen its market share fall since the first oil shock in 1973-74.

However, use as a fuel for vehicle transportation may present the biggest hurdle for natural gas. The ease of use and wide availability of gasoline give it a decided edge over natural gas in the U.S. Further, although fleets of buses and vans have converted to natural gas, an entirely new infrastructure of natural gas filling stations would have to be built to enable universal use of natural gas for civilian vehicles. Still, natural gas does have one trump card in this struggle: price. If oil, which closed Tuesday up 21 cents to $73.93 per barrel, again trends toward the $100 level and beyond, natural gas’ price advantage over oil will widen: at some point — perhaps at $5 per gallon or $6 per gallon for gasoline, a major auto manufacturer will begin large-scale production of a natural gas vehicle, and those Americans concerned about fuel prices will be drawn to it.

Energy Analysis: The view from here argues that the energy form is not as important as the fact the American drivers need a domestic-based auto fuel competitor to gasoline. I don’t count the problematic ethanol from corn. And so far, no other alternative fuels (biodiesel, 100% electric cars etc.) present affordable, universal options. But natural gas, if the new supplies can be accessed without contaminating wells and ground water, could offer a serious challenge to gasoline in the next decade.

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