The dynamic evolution of methane technologies

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The GeoJournal Library Series Editor: WOLF TIETZE

Editorial Board:

John E. Bardach, USA Pierre Biays, France Asit Biswas, UK

El-Sayed El-Bushra, Sudan Cesar N. Caviedes, USA J. Demek, CSSR

Reinhold Furrer, Germany Yehuda Gradus, Israel Arild Holt-Jensen, Norway Huang Pin-wei, China P. M. Kelly, UK C. Kergomard, France C. Gregory Knight, USA Vladimir Kotlyakov, USSR

W. Lauer, FR Germany Richard F. Logan, USA

Wallher Manshard, FR Germany German Miiller, FR Germany Hirshi Sasaki, Japan

Akira Suwa, Japan Jorn Thiede, FR Germany Mostafa K. Tolba, UNEP H. Th. Verstappen, Netherlands Wu Chuan-jun, China

E. M. Yates, UK M. M. Yoshino, Japan Alexander Zaporozec. USA

The Methane Age

Edited by

T. H.

Lee,

H.

R. Linden,

D. A.

D r e y f u s

and T.

Vasko

KLUWER

A C A D E M I C P U B L I S H E R S

DORDRECHT I BOSTON I LONDON

INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS

LAXENBURG. AUSTRIA

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viii

methane-related technologies n o t e d above. T h e (possible) s h i f t from a petroleum-dominated global fuel s y s t e m to a methane-dominated s y s t e m would s u r e l y h a v e profound worldwide geopolitical, balance-of-payments, d e f e n s e a n d s e c u r i t y r e l a t e d , a n d i n d u s t r i a l - s t r u c t u r a l impacts. W e have not y e t e v e n identified some p r i m a r y a n d many s e c o n d a r y e f f e c t s .

T h e s e preliminary r e s u l t s of IIASA analyses, a n d t h e I n s t i t u t e ' s con- tinuing r e s e a r c h I n t e r e s t s in e n e r g y , technology. a n d environmental policy issues, culminated in a workshop, held in Sopron, Hungary. involving invited s p e c i a l i s t s from b o t h E a s t a n d West. in May 1986. T h e p r i m a r y p u r p o s e of t h i s high-level, b u t informal, meeting was t o question, c r i t i c i z e , e x p a n d , a n d t e s t IIASA's background h y p o t h e s e s a n d o t h e r promising r e s e a r c h t o d a t e . A s e c o n d a r y objective was t o i d e n t i f y potentially rewarding issues f o r f u r t h e r analysis. To what e x t e n t we managed t o achieve o u r objectives t h e r e a d e r may judge from t h i s book, b a s e d in l a r g e p a r t on t h e s e l e c t e d and e d i t e d workshop proceedings.

T.H. Lee H. R. L i n d e n D.A. Dre y f u s T. Vasko Laxenburg, Austria

August 1907

?n?

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CHAPTER 2

The Dynamic Evolution of Methane Technologies

A. Criibler a n d N. N a k i c e n o v i c

2.1. Introduction

The u s e of n a t u r a l gas h a s been increasing in many p a r t s of t h e world, e s p e - cially in most industrialized countries. A s a r e s u l t , natural gas has emerged as o n e of t h e t h r e e most important s o u r c e s of energy. ranking t h i r d in t h e world a f t e r oil a n d coal, while in t h e USA i t is s e c o n d only t o oil. Despite enormous i n c r e a s e s in natural gas consumption a n d r e l a t e d improvements i r ~ production, t r a n s p o r t , conversion, distribution, a n d end-use technologies, natural gas is still considered t h e "stepchild" of t h e oil i n d u s t r y

-

a by- p r o d u c t of oil production.

This is t h e more s u r p r i s i n g considering t h e promising p r o s p e c t s for t h e widespread u s e of natural gas in t h e f u t u r e . Natural gas is c l e a n e r than a n y o t h e r fossil e n e r g y s o u r c e , a n d unlike o t h e r fossil e n e r g y forms. pro- d u c e s limited p a r t i c u l a t e a n d s u l f u r emissions t h a t c a n b e even further- r e d u c e d b y relatively simple measures. In t h e p a s t , most natural gas discoveries were incidental t o oil prospecting. Today, t h e r e is i n c r e a s i r y evidence t h a t methane may b e more abundant a n d d i s t r i b u t e d more evenly t h r o r ~ g h o u t t h e world t h a n o t h e r fossil e n e r g y s o u r c e s . In f a c t , estimates o l n a t r ~ r a l gas r e s o u r c e s have increased substantially during t h e last d e c a d e . However, d e s p i t e decisive environmental advantages a n d a potentially abun- d a n t s u p p l y , t h e u s e of natural gas s t a g n a t e d during r e c e n t y e a r s . The gas bubble still p e r s i s t s because acquiring new m a r k e t s t u r n e d out t o b e more difficult t h a n h a d been a n t i c i p a t e d by t h e promoters of natural gas during t h e p h a s e of r a p i d growth t h a t lasted until a few y e a r s ago.

Our contention is t h a t most of t h e difficulties e n c o u n t e r e d in a t t e m p t s t o i n c r e a s e t h e u s e of n a t u r a l gas could b e resolved if s p e c i f i c technologies were t o b e developed t h a t a r e tailored t o natural gas and a r e not mere

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14 T h e M e t h a n e Age A. C r i i b l e r a n d N. N a k i c e n o v i c

derivatives of oil technologies. In o t h e r words, a p r e r e q u i s i t e f o r t h e widespread u s e of n a t u r a l gas in t h e f u t u r e is t h e increasing decoupling of methane technologies from oil technologies. As a consequence, t h e oil and gas i n d u s t r y would eventually split i n t o two s e p a r a t e e n t i t i e s . Before embarking on t h e justification of o u r contention, we f l r s t d e s c r i b e t h e evolution of t h e e n e r g y s y s t e m a n d t h e dynamics of n a t u r a l gas. With t h i s historical p e r s p e c t i v e , we t h e n outline t h e f u t u r e developments llkely t o lead t o t h e s e p a r a t i o n of t h e oil and gas i n d u s t r y , a n d of oil a n d methane t e c h - nologies.

2.2. Primary Energy Consumption

A t t h e beginning of t h e n i n e t e e n t h c e n t u r y , t h e primary e n e r g y i n p u t s were fuel wood, agricultural wastes, and mechanical wind and water power, in addition t o animal a n d human muscle power. Poor a s t h i s may b e , b y p r e s e n t s t a n d a r d s . It r e p r e s e n t s a s o p h i s t i c a t e d s y s t e m compared t o e a r l i e r p r a c - t i c e s . A c o n s i d e r a b l e i n f r a s t r u c t u r e of canals a n d roads was already in place f o r t i m b e r t r a n s p o r t : mining a n d manufacturing were usually associ- a t e d with e l a b o r a t e systems of dams and water-wheels: t h u s , motive and s h a f t power came from d r a f t animals a n d hydraulic s y s t e m s , and h e a t from biomass. In p r i m a r y e n e r g y terms, fuel wood r e p r e s e n t e d most of t h e e n e r g y inputs.

F i g u r e 2.1 (Nakicenovic, 1984) shows primary e n e r g y consr~mption in t h e world s i n c e 1860. The d a t a a r e p l o t t e d on a logarithmic s c a l e and show e x p o n e n t i a l growth p h a s e s in consumption of t h e most important sorlrces of primary e n e r g y during t h e last 1 3 0 y e a r s in piecewise linear s e c u l a r t r e n d s . Consumption of fuel wood, o n c e t h e most important s o u r c e of e n e r g y . has declined s i n c e t h e beginning of t h e c e n t u r y , although i t s u s e is still widespread, especially in t h e developing p a r t s of t h e world. With t h e expansion of railroads a n d t h e s t e e l i n d u s t r y a n d t h e application of steam in general. coal u s e i n c r e a s e d exponentially until t h e 1910s a n d h a s oscil- l a t e d e v e r s i n c e with a n overall lower average growth r a t e . Both oil and n a t u r a l g a s were introduced during t h e 1870s, a n d t h e i r consumptlon has i n c r e a s e d , with e v e n more r a p i d exponential growth r a t e s evet- since. In f a c t , t h e oil a n d natural gas c u r v e s have t h e same s h a p e and almost identical growth r a t e s : t h e y a r e just s h i f t e d in time b y about 1 0 t o 15 y e a r s . Oil a n d n a t u r a l gas u s e grew in parallel with t h e petrochemical industry. t h e e l e c t r i c i t y a n d electr-ical i n d u s t r y , i n t e r n a l combustion and e l e c t r i c prime movers. Nuclear e n e r g y is still in i t s e a r l y p h a s e of development; t h e r e f o r e t h e s t e e p growth r a t e s prevailing o v e r t h e l a s t d e c a d e may not b e indicative of i t s f u t u r e role. During r e c e n t y e a r s , t h e growth of nuclear e n e r g y has declined worldwide to more moderate r a t e s .

Thus, during this 130-year p e r i o d , e n e r g y consumption did not draw equally from all s o u r c e s , n o r did t h e u s e of all e n e r g y s o u r c e s i n c r e a s e equally. Yet, global primary e n e r g y consumption (including fuel wood) grew exponentially a t a n a v e r a g e r a t e of 2.3% p e r y e a r . It is evident t h a t t h e

I : : : ,

^-

,

^I

; : ; : : : : : I

F i g u r e 2.1. World primary energy consumption.

Fraction ( f )

Coal /--\A

Natural gas

0

F i g u r e 2.2. World fractional s h a r e s of major primary energy sources.

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16 The Methane Age

A . GrGblet a n d N. NakCcenovCc

o l d e r forms of e n e r g y h a v e b e e n r e p l a c e d b y new ones. Thus, t h e d e c l i n e of t h e o l d e r e n e r g y s o u r c e s was compensated b y t h e more r a p i d growth of t h e new ones. T h e s e dynamic c h a n g e s a r e c l e a r l y s e e n in F i g u r e 2.2 (Nakiceno- vic. 1984). which shows t h e fractional m a r k e t s h a r e s of t h e five most impor- t a n t p r i m a r y e n e r g y s o u r c e s t a k e n from F i g u r e 2.1. In t e r m s of fractional m a r k e t s h a r e s , coal h a d a l r e a d y r e p l a c e d fuel wood d u r i n g t h e l a s t half of t h e n l n e t e e n t h c e n t u r y . In 1860, fuel wood supplied a b o u t 70% of consumed e n e r g y , b u t b y t h e 1900s Its s h a r e h a d dwindled t o l i t t l e more t h a n 20%.

Owing to t h e insignificant u s e of c r u d e oil a n d n a t u r a l g a s during t h e l a s t c e n t u r y , most of t h e m a r k e t s h a r e losses i n c u r r e d b y fuel wood were c a u s e d b y t h e r a p i d i n c r e a s e s of coal's s h a r e of p r i m a r y e n e r g y

-

from 30% in 1860 t o almost 80% b y t h e 1900s. By 1910. t h e r a p i d i n c r e a s e in coal u s e h a d c e a s e d , a n d d u r i n g t h e 1920s, a p h a s e of d e c l i n e set in. This d e c l i n e in t h e r e l a t i v e s h a r e of c o a l u s e r e s e m b l e s t h e m a r k e t losses of fuel wood 5 0 y e a r s e a r l i e r . T h e replication of t h i s p a t t e r n is almost symmetrical b e c a u s e , a f t e r t h e 1920s, b o t h fuel wood a n d coal were r e p l a c e d b y s t i l l newer s o u r c e s of e n e r g y

-

c r u d e oil a n d n a t u r a l gas.

2.3.

N a t u r a l G a s in

the

Global C o n t e x t

T h e evolution of p r i m a r y e n e r g y u s e , viewed a s a technological s u b s t i t u t i o n p r o c e s s . is shown in F i g u r e 2.3 (Nakicenovic. 1984) on a logarithmic plot of t h e f r a c t i o n a l m a r k e t s h a r e s of t h e five p r i m a r y e n e r g y s o u r c e s (from Fig- u r e 2.2). T h e f r a c t i o n a l s h a r e s (n a r e n o t p l o t t e d d i r e c t l y , b u t r a t h e r a s t h e q u a n t i t y j/(l-j') t h a t t r a n s f o r m s t h e logistic c u r v e i n t o a s t r a i g h t line (i.e.. a s t h e l i n e a r transformation of t h e logistic function). T h e q u a n t i t y is t h e r a t i o of t h e m a r k e t s h a r e t a k e n b y a given e n e r g y s o u r c e o v e r t h e sum of t h e m a r k e t s h a r e s of all o t h e r competing e n e r g y s o u r c e s . This form of p r e s e n t a t i o n r e v e a l s t h e logistic s u b s t i t u t i o n p a t h a s a n almost l i n e a r secu- l a r t r e n d wlth small annual p e r t u r b a t i o n s . Thus, t h e p r e s e n c e of l i n e a r t r e n d s in F i g u r e 2.3 i n d i c a t e s w h e r e t h e fractional s u b s t i t u t i o n of e n e r g y s o u r c e s follows a logistic c u r v e .

T h e model e s t i m a t e s of t h e s u b s t i t u t i o n p r o c e s s a r e e x t e n d e d beyond t h e historical p e r i o d u p t h e t h e y e a r 2050 [I]. For s u c h a n e x p l o r a t i v e

"look" i n t o t h e f u t u r e , additional assumptions a r e r e q u i r e d because potential new c o m p e t i t o r s , s u c h as n u c l e a r a n d s o l a r e n e r g y , have not c a p t u r e d s u f f i c i e n t m a r k e t s h a r e s in t h e p a s t t o allow estimation of t h e i r p e n e t r a t i o n r a t e s . W e have assumed a more modest n u c l e a r p e n e t r a t i o n r a t e t h a t resem- bles t h e historical growth r a t e s of t h e introduction of coal, c r u d e oil, a n d n a t u r a l g a s i n t o t h e e n e r g y system. The n u c l e a r scenario, t h e r e f o r e , p r e s c r i b e s a 1% s h a r e in 1965, a n d a 3% s h a r e 25 y e a r s l a t e r in 1990 (in 1982, t h e n u c l e a r s h a r e in global p r i m a r y e n e r g y consumption was 3.5%).

F o r t h e n e x t e n e r g y s o u r c e , which we symbolically call "solfrrs" t o indicate t h e potential u s e of b o t h s o l a r a n d fusion e n e r g y , we have p o s t u l a t e d a n equivalent s c e n a r i o with a 1% s h a r e in t h e y e a r 2025. rising t o 3% in 2050.

f/(l

-

f) Fraction ( f

figure 2.3. World primary energy substitution (wlth projections).

These two assumptions, t o g e t h e r with t h e dynamics of e n e r g y substitution p r e s c r i b e d by p a s t e v e n t s , d e s c r i b e t h e resulting evolution of t h e global e n e r g y s y s t e m throughout t h e f i r s t half of t h e n e x t c e n t u r y .

T h e prominent f e a t u r e in t h i s projection of primary e n e r g y s u b s t i t u - tion dynamics i n t o t h e f u t u r e is t h e emergence of n a t u r a l gas a s t h e dom- inant e n e r g y s o u r c e during t h e n e x t d e c a d e s . According t o F i g u r e 2.3, more t h a n half of all t h e primary e n e r g y consumed globally will b e natural gas a f t e r t h e e n d of t h i s c e n t u r y . This r e s u l t i l l u s t r a t e s t h a t not only would t h e natural gas b u b b l e b e a b s o r b e d in a few y e a r s , b u t t h a t methane t e c h - nologies would develop in t h e f u t u r e , c r e a t i n g new growth s e c t o r s . Although this r e s u l t is u n e x p e c t e d in terms of t h e numerous e n e r g y d e b a t e s of t h e last 1 0 t o 15 y e a r s , i t is p e r h a p s reassuring t h a t we may not, a f t e r all, have to r e l y on n u c l e a r o r a l t e r n a t i v e e n e r g y s o u r c e s f o r a n o t h e r 5 0 y e a r s o r so.

Instead, t h e possible f u t u r e t h a t emerges would r e q u i r e less radical changes, b u t we still f a c e a challenging t a s k t o develop new technologies and t o improve t h e performance of t h o s e a l r e a d y employed, s u c h a s d e e p drilling, pipelines, and methane conversion i n t o o t h e r e n e r g y c a r r i e r s (e.g..

e l e c t r i c i t y a n d methanol). Despite t h e c u r r e n t difficulties involved i t 1

expanding t h e u s e of natural gas in a time of worldwide economic slowdowr~

and low enet-gy (i.e.. c r u d e oil) p r i c e s , o u r scenar-io paints a d i f f e r e n t pic- t u r e , a l b e i t only in t h e long r u n .

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18 T h e M e t h a n e Age A . G r i r b l e r a n d N. N a k f c e n o v f c 19

To gain a b e t t e r understanding of how s u c h changes may come about.

we will f i r s t investigate t h e h i s t o r y of n a t u r a l gas in g r e a t e r d e p t h . T h e r e a f t e r , we r e t u r n t o t h e b r o a d e r p i c t u r e of primary e n e r g y and t h e c r e a t i o n of t h e new growth s e c t o r s t h a t could emerge from expanding m e t h a n e technologles a n d t h e i r use.

F i g u r e 2.4 shows t h e h i s t o r y of n a t u r a l gas production f o r t h e world.

T h e s h a r e s of t h e f o u r most important producing regions a r e p l o t t e d s i n c e 1 9 0 0 . N o r t h America ( t h e USA a n d Canada) was t h e dominant p r o d u c e r of n a t u r a l gas until 1983, being s u p e r s e d e d b y t h e Soviet Union during t h e s u b s e q u e n t t h r e e y e a r s . In f a c t . t h e USA h a s produced most of t h e natural gas e v e r e x t r a c t e d globally, a n d s t i l l continued t o produce more t h a n half until t h e mid-1970s. T h e h i s t o r y of natural gas is. t h e r e f o r e . closely linked

t o t h e USA.

F i g u r e 2.4 a l s o shows t h e model estimates of t h e actual market s h a r e s of t h e f o u r major producing regions. b u t t h e y a r e Included f o r illustrative p u r p o s e s only a n d a r e not i n t e n d e d t o indicate llkely f u t u r e development.

R a t h e r , t h e y indicate t h a t t h e actual market s h a r e s of t h e four producing regions fluctuated widely away from t h e model estimates, especially from World War I1 through t h e 1960s. However, t h e historical t r e n d away from N o r t h American dominance a n d toward a more widely d i s t r i b u t e d n a t u r a l gas production throughout t h e world should continue, and t h i s is o n e of t h e

f l ( 1

-

f ) Fraction I f )

crucial issues associated with t h e f u t u r e use of natural gas t o which we will r e t u r n . iiowever. we will n e x t analyze t h e evolution of t h e natural gas industry in t h e USA, s i n c e It has been t h e dominant p r o d u c e r and still is t h e l a r g e s t consumer of n a t u r a l gas, a n d because U S d a t a a r e readily avail- able.

2.4. Natural Gas in the USA

The lJSA has a longer r e c o r d e d h i s t o r y of primary e n e r g y u s e than any- where e l s e in t h e world. F i g u r e 2.5 gives i t s annual consumption of all fossil e n e r g y sources. fuel wood, d i r e c t uses of mechanical water power, and h y d r o e l e c t r i c power s t a r t i n g in 1000. whlle F i g u r e 2.6 (Nakicenovic, 1904 and 1906) shows t h e substitution among t h e s e e n e r g y s w r c e s . Mechanical power (mostly water and some windmills) and hydropower cannot b e s e e n in t h e f i g u r e due t o t h e i r low contributlon t o t h e total e n e r g y supply. They

I I

10' -USA, Canada

\

---

^0.90

1

^0.50

;

^0.30

t

USSR. Eastern Eurooe

& t

Figure 2.4. World natural gas production b y major regions. (Note Lhat lhe resid- ual t o l o b 1 world production was no1 plotted. Therefore, market s h a r e s do no1

add t o 1001.) f i g u r e 2.5. US primary energy consumptlon.

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T h e M e t h a n e Age A. C r i r b l e r a n d N. Nakicenovic 21

Fraction ( f )

Wood

1

o1

/ L ? ~ z L I ~ - I ~

4

T ~ ~ ~ z :

F ' i g u r e 2.8. U S primary energy substitution.

b a r e l y e x c e e d t h e 1% level f o r v e r y s h o r t p e r i o d s a n d otherwise fall u n d e r t h a t c r i t i c a l level. Thus, b e f o r e t h e 1820s, fuel wood provided virtually all t h e e n e r g y n e e d s of t h e USA. Coal e n t e r e d t h e competition p r o c e s s in 1817 a t t h e 1% level, a n d u p t o t h e 1880s t h e m a r k e t was essentialIy based on t h e s e two technologies - whatever gains coal made were t r a n s l a t e d i n t o losses f o r fuel wood. W o o d , however, remained an important s o u r c e of h e a t a n d power f o r industrial p u r p o s e s well i n t o t h e s e c o n d half of t h e n i n e t e e n t h c e n t u r y .

In t h e USA, t h e s t e a m a g e began in t h e fuel wood-based economy. The f l r s t s t e a m b o a t s a n d locomotives w e r e f i r e d with wood, which remained t h e principal fuel used b y railroads until about 1870 ( S c h n r r a n d N e t s c h e r t . 1960). T h e iron i n d u s t r y was a n o t h e r l a r g e wood consumer. Around 1850.

more t h a n half of all t h e iron p r o d u c e d was still smelted with charcoal.

N e v e r t h e l e s s , d u r i n g t h i s e a r l y p e r i o d of industrialization. t h e U S A was still basically a r u r a l s o c i e t y , s o t h a t t h e t o t a l amount of fuel wood consumed in manufacturing a n d t r a n s p o r t a t i o n was small compared t o t h e huge quantities used in households. In 1880, t h e domestic u s e of fuel wood still a c c o u n t e d f o r more t h a n 96% of fuel wood consumed ( S c h u r r a n d N e t s c h e r t , 1960). A t t h e same time, however, coal was a l r e a d y supplying almost half of all e n e r g y n e e d s , m o s t of i t being used b y emerging industries. 111 1880, coal supplied almost 90% of t h e fuel used f o r smelting iron. The e n d of t h e last c e n t u r y t h e r e f o r e marks t h e beginning of t h e industrial development period in t h e I J S A .

T h e f i r s t u s e of c r u d e oil a n d n a t u r a l gas In t h e USA d a t e s back t o t h e beginning of t h e n i n e t e e n t h c e n t u r y , a n d during t h e 1880s It r e a c h e d t h e 1%

market s h a r e . From t h e n on, t h e u s e of c r u d e oil e x p a n d e d somewhat f a s t e r a s time p r o g r e s s e d , and In 1950 c r u d e 011 consumption s u r p a s s e d t h a t of coal. The u s e of n a t u r a l gas s u r p a s s e d t h a t of coal nine y e a r s l a t e r . It should be noted t h a t , a s l a t e a s t h e 1920s. t h e u s e of c r u d e oil was n o t much l a r g e r t h a n t h e consumption of fuel wood.

I t is r e m a r k a b l e t h a t t h e s t r u c t u r e of e n e r g y consumption changed most during t h e period of oil dominance. T h e 1950s

-

when 011 became t h e dominant s o u r c e of e n e r g y

-

r e p r e s e n t t h e beglnning of more i n t e n s e competition between v a r l w s e n e r g y s o u r c e s both in t h e USA a n d In t h e world.

For over 1 5 0 y e a r s whichever e n e r g y s o u r c e dominated t h e contemporary e n e r g y s u p p l y also c o n t r i b u t e d more t h a n half t o all prlmary e n e r g y consumption

-

from 1800 t o 1880 t h i s was fuel wood, a n d from 1880 t o 1950 i t was coal. During t h e 1970s, c r u d e oil was close t o achieving a 50% s h a r e , but b e f o r e actually surpassing t h i s mark i t s dominance began t o decIine. Thus, during t h e l a s t t h r e e d e c a d e s , t h r e e important s o u r c e s of e n e r g y have s h a r e d t h e market, without a single s o u r c e havlng overall dominance, which d i f f e r s from t h e p a t t e r n o b s e r v e d d u r l n g e a r l i e r periods.

Figure 2.6 Indicates t h a t , a f t e r t h e 1980s. natural gas would become t h e dominant e n e r g y source. although c r u d e oil would still maintain a roughly 30% market s h a r e b y t h e e n d of t h e c e n t u r y . Similarly a t t h e global level. f u t u r e potential competitors of n a t u r a l gas, s u c h a s n u c l e a r o r s o l a r energy, have not y e t c a p t u r e d sufficient m a r k e t s h a r e s t o allow a n estimation of t h e i r f u t u r e p e n e t r a t i o n r a t e s . The s t a r t l n g point f o r market penetration of n u c l e a r e n e r g y c a n b e d a t e d back t o t h e 1960s. when nuclear power acquired slightly less t h a n a 1% s h a r e of primary e n e r g y . Making allowance f o r f u r t h e r cancellations of planned power p l a n t s a n d possible decommissioning of t h o s e In operation a n d construction, we have assumed t h a t nuclear e n e r g y could a t most double i t s c u r r e n t 4% market s h a r e t o about 8% by t h e y e a r 2000. This leaves natural gas with t h e lion's s h a r e of primary e n e r g y , advancing i t s position t o t h e dominant e n e r g y s o u r c e a f t e r this c e n t u r y closes.

2.5. Dynamics of Oil and Natural Gas

The e a r l i e s t historical r e c o r d s of natural gas drilling and u s e a r e r e p o r t e d in a n c i e n t China, where n a t u r a l gas was discovered incidentally during t h e drilling of b r i n e wells (cf. Brantly. 1971; Gaz d e France. 1970 a n d 1971; and Peebles, 1980). T h e s e a n c i e n t wells were completed with percussion drills and bamboo casings. Some of t h e oldest wells were r e p o r t e d b y Confucius in 600 B.C. t o have r e a c h e d 5 0 0 m e t e r s a n d t o have produced natural gas t h a t was t r a n s p o r t e d in bamboo pipes f o r use in evaporating b r i n e t o r e c o v e r salt. By t h e n i n e t e e n t h c e n t u r y , t h i s drilling techrlology improved in p e r - formance by almost an o r d e r of magnitude. Visitors t o China have d e s c r i b e d drilling d e p t h s of u p t o 4.000 m e t e r s , which is comparable t o t h e d e p t h s of

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22 T h e M e t h a n e Age A . C r u b l e r a n d N. NakCcenovCc 23

many commercial wells today. In f a c t , some of t h e f i r s t n a t u r a l gas discoveries in t h e West w e r e also t h e r e s u l t of drilling b r i n e wells. J u s t a s in China, t h e f i r s t significant u s e of n a t u r a l gas was t o d r y s a l t , o n e of t h e l a r g e s t e n e r g y consumers among t h e modest production p r o c e s s e s in t h e pre-industrial age.

2.5.1. Drilling performance and average depth

Modern drilling technology f o r oil a n d gas developed originally in t h e methods u s e d f o r b r i n e a n d w a t e r wells. T h e f i r s t producing oil well was completed in 1745, in t h e F r e n c h Pechelbronn oil field. Drilling technology gradually improved. and b y t h e 1850s. d e p t h s of a b w t 600 m e t e r s were achieved in F r a n c e with d r y r o t a r y rigs. In t h e USA, similar d e p t h s were r e a c h e d during t h e same p e r i o d with c a b l e tool rigs.

T h e significant advances in drilling technology s i n c e t h e 1850s were primarily a r e s u l t of intensive oil drilling, especially in t h e USA. Probably t h e most important single innovation in drilling methods was t h e hydraulic r o t a r y rig, which was i n t r o d u c e d around t h e t u r n of t h e c e n t u r y . The d r a m a t i c improvement in t h e performance of drilling technologies during t h e l a s t 1 0 0 y e a r s is illustrated in F i g u r e 2.7, which shows t h e drilling d e p t h r e c o r d s f o r t h e t h r e e most important technologies: d r y r o t a r y a n d

100000

Rotary rigs

Rgure 2.7. World drilling depth r e c o r d s

rod percussion, c a b l e tool, and hydraulic r o t a r y rigs. The d a t a f o r t h i s fig- u r e a r e t a k e n from Brantly (1971) and Oil a n d G a s J o u r n a l (1977). Two small-diameter c o r e t e s t drillings in Germany were excluded from t h e data.

one reaching 2.000 m e t e r s in 1 8 9 3 and t h e o t h e r 2,240 m e t e r s in 1909.

because t h e y were not e x p l o r a t o r y wells f o r commercial productiori of hydrocarbons. I t can b e seen from F i g u r e 2 . 7 t h a t both of t h e new drilling technologies were inferior t o t h e o l d e r competitor in terms of r e c o r d d e p t h a t t h e time of t h e i r introduction. In time, however, t h e new technology overtook t h e o l d e r o n e t o establish a n d improve t h e d e p t h r e c o r d s .

In terms of petroleum geology, this t r e n d favors natural gas s i n c e t h e probability of finding methane increases with d e p t h , and t h a t of discovering oil d e c r e a s e s . Between d e p t h s of 1.000 m e t e r s t o a few thousand m e t e r s , t h e hydrocarbon deposits a r e mostly in t h e form of c r u d e oil. T h e r e a f t e r , t h e likelihood of oil d e p o s i t s d e c r e a s e s , and below 4.000 meters virtually all hydrocarbon d e p o s i t s a r e methane o r methane with carbon dioxide (see Donat. 1984). Geological evidence and t h e chemical c h a r a c t e r i s t i c s of hydrocarbon compounds indicate a v e r y low probability f o r t h e o c c u r r e n c e of more complex molecules (crude oil) below t h e s e d e p t h s and an increasirtg probability of finding methane a t g r e a t e r d e p t h s d u e t o high p r e s s u r e and t e m p e r a t u r e (see Cold, 1985).

Colonel Drake

r \ a i

i

^{A t}⁼⁸³^years ^Lone

h

^Star¹^Rogers

Figure 2.8. U S maximum depth of exploratory drilling. Data sources: API (1971) and IPE (1978 and 1983).

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24 The Methane Age A. CrQbler a n d N. NakCcenovCc

Technological progress in drilling, e x p r e s s e d in terms of maximum d e p t h , indicates that new record wells, if successful, can be e x p e c t e d t o find methane, not crude oil. In f a c t , virtually all r e c e n t record wells o r d e e p wells were drilled for natural gas exploration. Thus, it is equally interesting to look a t t h e evolution of record d e p t h s drilled during t h e last 100 years f o r all technologies from F i g u r e 2.7 taken together. F i g u r e 2.8 shows t h e exploratory drilling d e p t h records in t h e USA. culminating with t h e J,one S t a r 1. Rogers, completed during t h e 1970s. a s t h e deepest exploratory well drllled. This record will most likely be exceeded in t h e future. F i g u r e 2.8 shows t h a t t h e logistic t r e n d in d e e p drilling would t-each an asymptotic d e p t h record exceeding 12.000 meters.

Thus, while t h e decoupling of oil and natural gas technologies is not r e f l e c t e d in drilling technologies, since t h e s e a r e still basically identical whether t h e well is drilled for oil o r gas, most of t h e record wells reaching d e p t h s below a few thousand meters were primarily natural gas wells in t h e Anadarko Basin. This tendency toward d e e p e r exploratory wells should favor additional gas discoveries since t h e probability of finding oil below 10 km is virtually zero. In f a c t , most of t h e r e c e n t technical improvements in rigs and drillbits a r e designed f o r d e e p wells. both scientific research wells (such as t h e Soviet effort on t h e Kola Peninsula) and natural gas prospecting efforts. A t t h e same time, ther-e is some indication t h a t , a t g r e a t e r d e p t h s , potentially large unconventional and abiogenic methane deposits may b e found (see Gold. 1985). The long-term evolution of drilling technologies t o d e e p e r horizons may indeed lead t o t h e overwhelming dominance of natural gas in successful wells, especially a s t h e more readily available oil deposits become exhausted.

1r1 this context, it is interesting t o note t h a t these saturation trends in drilling d e p t h records cannot be observed for offshore drillings. F i g u r e 2.9 shows t h e worldwide offshore d e p t h records for commercial exploratory drilling (API, 1986; IPE. 1983: and Ocean Oil Weekly R e p o r t , 1986). The progress achieved since t h e first so-called oil shock of 1973 is especially noteworthy. F i g u r e 2.9 indicates t h a t a considerable potential exists for a f u r t h e r increase i r ~ t h e s h a r e of offshore gas production, which c r ~ r r e n t l y accounts for about 20% of global gas production. I t has. in fact. been estimated t h a t up t o 40% of t h e undiscovered oil and gas reserves may be found offshore (Klemme. 1977).

The evolutior~ of exploratory drilling indicates t h a t a long-term trend toward a higher natural gas-to-oil well ratio can be observed for t h e USA.

Although t h e conventional exploratory drilling technology reached r a t h e r shallow d e p t h s during t h e last century (compared with eight or- more kilome- t e r s today), nevertheless t h e e f f e c t of gradually decoupline methane from oil technologies can be observed. The USA has been chosen for study primarily because of t h e availability nf almost complete historical time s e r i e s for drilling activities and because of 1JS technological leader-ship in this field since t h e beginning of t h e industry.

Total exploration

Mediterranean

' ¹

F i g u r e 2.9. World waLer depLh records in exploralory drilling. DaLa sources:

API (1986) and IPE (1983).

F i g u r e 2.10 shows t h e total number of exploratory wells drilled in t h e USA since 1900, subdivided into oil. gas. and d r y wells (API, 1971 and 1986).

Alternative drilling statistics have been compiled by t h e USGS and pub- lished in t h e yearly issues of Mineral Resources of t h e USA. These statis- tics indicate a much g r e a t e r number of gas wells drilled, especially in t h e early period. For instance, t h e cumulative number of gas wells drilled up to 1908 is reported by t h e USGS as being 21.300. whereas t h e API statistics give a cumulative total of 3.185 to t h e same year. Clarification of such differences would require f u r t h e r historical analysis. Service wells a r e excluded from t h e drilling statistics used in t h e examples. Equally, when dealing with these statistics, it is important t o note t h a t , during t h e aarly period (i.e., b e f o r e t h e 1920s), many natural gas finds, discovered in t h e course of oil exploration, may have been classified as d r y holes, due to t h e lack of a commercial value of a great part of t h e deposits discovered.

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7 h e M e t h a n e Age

Wells

f i g u r e 2.10. USA: number of wells drllled.

f l ( 1

-

f ) Fraction ( f )

l o 2 --.- --- - . - - , 0.99

Gas

I

F Y g u r e 2.11. US s h a r e of oil, gas, and dry w e l l s i n total drillines

A . C r i i b l e r a n d N. NakCcenovCc 27

Despite t h e s e possible shortcoming of t h e official API drilllng s t a t i s - tics, however. F i g u r e 2.10 indicates a large Increase In t h e total number of wells drilled s i n c e 1900, a n d also large fluctuations, with particularly s t r o n g dips in drilling activity during t h e 1930s and 1960s. F i g u r e 2.22 shows t h a t t h e s e fluctuations d i s a p p e a r , a n d s t r o n g s e c u l a r t r e n d s emerge. when t h e total drilllng e f f o r t is viewed a s a "market nlche" f o r oil. gas, and d r y wells.

Defined in t h i s way, t h e s h a r e s of gas a n d d r y wells a r e increasing and t h e s h a r e of oil wells is declining. Thus, t h e decoupling of oil a n d gas technology is manifested implicitly in drilling s t a t i s t i c s . Although oil wells still r e p r e s e n t t h e majority of welis drilled, t h e number of gas wells is on t h e increase. Unfortunately. t h i s development h a s been paralleled by a n i n c r e a s e of d r y wells; b u t s i n c e t h e l a t e 1960s. t h e r e a r e signs of a r e v e r - sal, p e r h a p s indicating t h e u s e of improved exploration methods s u c h a s geophysical surveying.

F i g u r e 2.12 shows t h e s h a r e s of oil a n d gas discoveries in productive wells b y excluding d r y wells. This transformation of t h e substitution process emphasizes t h e d i f f e r e n t historical t r e n d s in successful oil and gas wells. The "market penetration" of gas wells does not e x c e e d t h e 10%

market s h a r e until t h e 1950s, and t h e r e a f t e r shows a s t e a d y increase. I t is cur-ious. if p e r h a p s only coincidental. t h a t t h e beginning of t h i s period of more significant increases in t h e s h a r e s of successful gas wells s t a r t s d u r - ing t h e 1950s, t h e period when t h e largest improvements in drilling d e p t h s

f l l l - f ) Fraction ( f )

1

o2 -

^0.99

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 F i g u r e 2 2 2 . US s h a r e of s u c c e s s f u l oil and gas w e l l s .

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28 The M e l h a n e Age

were achieved, as was illustrated in Figure 2.8 (the inflection point occurred in 1951). Based on an extrapolation of the long-term historic trend, one might expect for t h e year- 2000 that slightly over 30% of all successful wells drilled in t h e USA will yield gas and less than 70% will yield oil, compared to a 10: 90% relationship between gas-to-oil finds characteristic of t h e earller period.

There is no doubt that t h e historical trends indicate success ratio impt-ovements in methane exploration and decreases in oil exploration.

These long-term trends a r e strengthened by t h e fact that the best performance in exploration wells indicates a further advance of drilling technology to reach depths where only methane can be expected, due to t h e high temperature and pressure conditions. Thus, the best performance in drilling technology suggests an increasing decoupling of natural gas finds from those of oil. An important question is whether similar developments can be observed f o r t h e performance of the exploratory drilling in terms of the natural gas reserve additions p e r well or per footage of actual successful gas wells completed.

F i g u r e 2.13 shows a very pronounced change in the secular trend of natrlral gas reserve additions after t h e discovery of the Prudhoe Bay field

. -

per well

--

per foot drilled

Least squares trend

.

line

.

F i g u r e 2.1.7. U S natural gas reserve additions a n d d r i l l i n g depth

A . Crirbler a n d N. NakCcenovCc ZR

i n 1969 (the actual reserve additions are backdated to year of discovery).

For the figure, the net natural gas reserve additions (from discoveries i n new fields and pools as well as the extensions and revisions from known reservoirs) are compared to the number of successful exploratory gas wells (i.e., excluding development wells). Sources of data a r e A G A (1972.

1975-1979. and 1984) and API (1906). Ever since 1969. the yield per well or per footage drilled has been considerably lower than during the 1950s and 1960s. as shown in the figure. Thus, although the total reserve additions started increasing again after 1969, the additions per well or footage drilled have been rather constant during the last decade despite increases in the share of successful gas wells in the total number of wells drilled (from Fig- u r e 2.5).

I t is perhaps not coincidental that this decrease or lack of improvement in exploratory natural gas drilling in the USA is accompanled by a secular trend change in the average depth drilled (see the least squares trend lines in Figure 3.5). The average depth drilled per well increased from about 5,000 feet in the early 1950s to about 8,000 feet by 1970. Thereafter.

it has been decreasing, and currently it is slightly deeper than 6,000 feet.

Considering the fact that the number of operating rigs has also decreased from about 8.000 to less than 2.000. it is not very likely that another trend reversal will occur in the near future.

Although it is generally danger-ous to attempt an explanation based on rather sparse information, it is possible that the decrease in the yield of exploratory natural gas drilling may simply be the result of the fact that wells are tending to become shallower or that the statistics on discovery rates a r e inaccurate, since it is often a problem of definition as to whether a certain well is successful and what its potential yield might be. Thus, we can speculate on tvro possible explanations for this change in the yield of exploratory drilling. The first one would simply imply that the wells were not deep enough (as reflected in the decrease of the average drilling depth of some 1.500 feet in the period from 1970 to 1905) to discover large deposits. Consequently, although the share of successful gas wells was increasing with respect to oil wells, only comparatively small fields were discovered, resulting in lower yield rates per well or foot drilled. An alternative (perhaps more plausibte) explanation would be that the drilling statistics a r e distorted by specific conditions of the tax system, resulting in an important number of "tax write-off" drillings not aimed at discovery and subsequent production. If this were the case, such wells would distort the data by introducing a bias into the drilling statistics, e.g., wells would be reported as srlccessful even if only insignificant amounts of gas were discovered, thus decreasing the resulting yield ratios. Nevertheless. Fig- u r e 2.13 suggests that the drilling depth is an impot-tant variable to be considered for the potential success and yield ratios of a gas well. This is consistent with the indications that the success t-atios (in terms of resorrt.ce discovery) of deep wells (below 16,000 feet) have been extremely high i r ~ the USA. In terms of resource recovery. however. not ail of these wells are

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30 T h e M e t h a n e Age

r e p o r t e d a s successful d u e t o t e c h n i c a l o r economic infeasibility of production (Whitmore. 1986).

This brief account of technological improvements in drilling technology a n d h i s t o r i c a l r e c o r d s of US n a t u r a l g a s finding r a t e s indicate t h a t t h e r e is a n increasing decoupling of oil a n d methane technologies, although t h e t r a d - itional driIling technologies were practically identical, w h e t h e r t h e well was e x p l o r e d f o r oil o r gas. This decoupling is suggested by e v e r d e e p e r e x p l o r a t o r y wells t h a t e x c e e d e d t h e d e p t h s a t which o n e could reasonably e x p e c t t o find oil d u r i n g t h e 1950s. Thus, t h e d e e p e s t wells drrring t h e last t h r e e d e c a d e s w e r e all drilled f o r methane exploration. At t h e same time.

t h e r a t i o of successful n a t u r a l gas wells has i n c r e a s e d s i n c e 1900, while t h e r a t i o of successful oil wells h a s d e c r e a s e d . T h e r e f o r e , w e find s t r o n g evi- d e n c e t h a t f u t u r e improvements in drilling technologies will favor natural g a s discoveries a n d improve yields, d e s p i t e t h e f a c t t h a t oil is still t h e dominant form of e n e r g y . However, t h e f u t u r e improvements in drilling t e c h - nologies wlll also have t o r e s u l t in l a r g e c o s t reductions in o r d e r f o r d e e p gas d e p o s i t s t o become competitive with o t h e r fossil r e s o u r c e s .

2.5.2. Oil and natural gae production

Already t h e g e n e r i c name "oil and gas" indicates t h a t , during most of i t s century-old h i s t o r y , natural gas o r methane was known a s a b y - p t - d u c t not only of oil exploration, b u t also of oil production. During t h e e a r l y days.

n a t u r a l gas was essential. b u t o f t e n a nuisance t o t h e oil p r o d u c e r . Methane p r e s s u r e in a n oil a n d gas deposit s e r v e d t o pump t h e oil t o t h e s u r f a c e . but it was a nuisance b e c a u s e t h e gas t h a t actually r e a c h e d t h e s u r f a c e had t o b e f l a r e d in o r d e r t o avoid t h e d a n g e r of explosion. Thus, n a t u r a l gas was in f a c t e x t r a c t e d t o g e t h e r with oil, b u t was usually wasted. At t h e same time, c i t y gas (mostly methane) was being produced from coal and oil t o supply premium fuel, especiaIly f o r lighting a n d domestic uses. It is not surprising.

t h e n , t h a t some associated gas was soon u s e d f o r consumption.

According t o S c h u r r et al. (1960). t h e e a r l i e s t r e c o r d e d commercial u s e of natural gas in t h e New World d a t e s back t o 1 8 2 1 (at t h e time when coal was supplying just 1% of primary e n e r g y , and fuel wood a n d d r a f t animals t h e r e s t ) . when i t was used a s lighting fuel in Fredonia, New York.

Natural gas continued t o b e used sporadically throughout t h e n i n e t e e n t h c e n t u r y . T h e f i r s t pipeline was c o n s t r u c t e d from Murrysville t o Pittsburgh (Pennsylvania) in 1883, a f t e r t h e discovery of a large well in 1878. Despite s u c h pioneering p r o j e c t s by t h e emerging oil and gas i n d u s t r y , methane was generally c o n s i d e r e d t o b e a waste p r o d u c t . Ry 1878, both c r u d e oil and n a t u r a l gas p a s s e d t h e 1% s h a r e in primary e n e r g y consumption, but most of t h e n a t u r a l gas consumed in t h e following d e c a d e s was used in t h e vicinity of t h e oil fields.

Although s t a t i s t i c s about natural gas disposal a r e available only s i n c e 1935, t h e y indicate t h a t , a t t h a t time, only 75% of t h e gross natural gas pro- ri~rctinn was marketed and around 25X vented o r flared. Natural g a s waste

A. C r i i b l e r a n d N . N r z k i c e n o v i c ₃₁

was probably considerably higher, s i n c e not all venting operations in t h e c o u r s e of oil drilling may have been r e c o r d e d . Natural gas waste decreased.

particularly in t h e period a f t e r 1940. through increasing uses of natural gas for repressrrring. Still, it is interesting t o n o t e t h a t i t took until 1971 hefore natural gas wastes were virtually eliminated, being reduced l o account f o r less than 1% of total gross production. a s indicated in F i g r ~ r e 2.14 (data from S c h u r t et al., 1960, and AGA, 1972,1975, 1979, and 1984).

Fraction ( f ) 0.99

F t g u r e 2-14. U S natural gas deposilion.

Natural gas production s i n c e t h e tut-ti of t h e c e n t u r y has grown rapidly, but because, until t h e last decades, most methane discoveries were related t o t h e s e a r c h f o r oil, natural gas e x t r a c t i o n was mainly associated with oil production. Accllrate s t a t i s t i c s of natural gas production from oil and gas wells (associated a n d nonassociated gas. respectively) a r e not available f o r t h e period b e f o r e 1935. Hefner (1985) has suggested decoupling associated from nonassociated natural gas pt-oduction in o r d e r t o a s s e s s t h e difference, if a n y , between methane production from oil and gas technologies. Figure 2.15 shows t h e s t e a d y increase in natural gas production from

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T h e M e t h a n e Age A. GriibLer a n d N. N a k i c e n o v i c

2.5.3. Oil and gas transport

Fraction ( f ) 0.99

figure 2.15. U S natural g a s producLlon from oil and g a s wells.

from oil wells (oil technology). b u t i t also shows t h a t b y t h e e n d of t h e cen- t u r y 90% of production should b e from nonassociated d e p o s i t s . T h e d e c r e a s - ing s h a r e s of associated gas in t o t a l production i l l u s t r a t e t h e f a c t t h a t t h e n a t u r a l gas i n d u s t r y is in t h e p r o c e s s of decoupling itself from oil. Thus.

t h e closely r e l a t e d e x t r a c t i o n , t r a n s p o r t , conversion. and end-use technologies f o r oil a n d methane may b e slowly diverging toward incr-easingly i n d e p e n d e n t p a t h s .

This is encouraging, s i n c e i t indicates a possible n e x t s t e p in t h e analysis of t h e evolution of m e t h a n e technologies. The division of natur-a1 gas i n t o oil a n d gas technologies indicates t h a t i t is conceivable t h a t t h e oil a n d n a t u r a l gas i n d u s t r i e s may also decouple downstream, going p e r h a p s all t h e way t o t h e final e n e r g y consumer. To investigate t h i s possibility, we will n e x t c o n s i d e r t h e evolution of d i f f e r e n t e n e r g y t r a n s p o r t technologies a n d especially t h e development of liquid a n d gaseous e n e r g y t r a n s p o r t .

During t h e l a s t few decades, e n e r g y became t r u l y a globally t r a d e d commodity. Especially c r u d e oil a n d i t s p r o d u c t s , b u t t o a l e s s e r e x t e n t also LNG (liquefied n a t u r a l gas) a n d some high-grade coals, a r e t r a n s p o r t e d around t h e wor-Id. A t t h e s e global d i s t a n c e s , t a n k e r s a n d o t h e r vessels a r e , a t least f o r t h e time being, t h e most e f f i c i e n t mode of e n e r g y t r a n s p o r t . Over con- tinental d i s t a n c e s , however, t h e r e is a vigorous competition between many a l t e r n a t i v e t r a n s p o r t modes, some of them dedicated t o t r a n s p o r t of a p a r - ticular e n e r g y form, s i ~ c h a s e l e c t r i c i t y . C r u d e oil, oil p r o d u c t s . a n d natural gas especially a r e t r a n s p o r t e d b y a number of d i f f e r e n t t r a n s p o r t modes including barges, vessels, t r u c k s . t r a i n s . a n d pipelines.

In c o n t r a s t to long-distance oil a n d gas t r a n s p o r t t o t h e consumer.

wood was primarily consumed locally, close t o t h e s o u r c e . Some fuel wood was t r a n s p o r t e d o v e r longer d i s t a n c e s , mostly b y r i v e r flotation. a n d d i s t r i - b u t e d by waterways o r roads. Coal, on t h e o t h e r hand, r e p r e s e n t s a more c o n c e n t r a t e d form of e n e r g y t h a n fuel wood, a n d coal mines a r e a more con- c e n t r a t e d s o u r c e t h a n f o r e s t s (since coal h a s a h i g h e r h e a t c o n t e n t p e r unit weight t h a n wood) s o t h a t coal was generally t r a n s p o r t e d o v e r longer d i s t a r ~ c e s th a n fuel wood. An e x t r e m e c a s e is t h e modest overseas coal t r a n s p o r t (for instance. t h e coal e x p o r t s from England t o t h e continent);

but more usually coal was t r a n s p o r t e d nationwide b y b a r g e s , t r a i n s , or- t r u c k s ( e a r l i e r b y h o r s e wagons). Thus, t h e s h i f t from a wood- t o coal-based economy was accompanied b y t h e expansion of e n e r g y t r a n s p o r t o v e r longer distances and b y an increasing number of t r a n s p o r t modes.

The widespread u s e of c r u d e oil brought a n o t h e r t r a n s p o r t mode in addition t o t a n k e r s . t r a i n s , a n d t r u c k s

-

oil pipelines. Pipelines a r e becoming a n important f r e i g h t t r a n s p o r t mode with market s h a r e s in total ton-kilometers p e r y e a r comparable t o t h o s e of t r a i n a n d t r u c k t r a n s p o r t . They a r e also comparable t o railways in t e r m s of t h e total length of t h e i n f r a s t r u c t u r e o r grid: today t h e total length of main t r a c k in t h e USA is about 200.000 miles, slightly s h o r t e r t h a n c r u d e oil pipelines, which total about 230,000 miles. I t is i n t e r e s t i n g t o n o t e t h a t in terms of ton- kilometers, c a r loads. a n d revenue, coal t r a n s p o r t r e p r e s e n t s by f a r thc:

largest commodity group in rail t r a n s p o r t . Thus, although t h e total length of t h e rail a n d oil pipeline g r i d s is equivalent, t h e big d i f f e r e n c e between t h e two i n f r a s t r u c t r l r e s is t h a t , s i n c e t h e 1920s. t h e railroad system has beet) declining while oil pipelines have been expanding (see Nakicenovic.

1986). Figure 2.16 shows t h e rapid i n c r e a s e in pipeline length f o r c r u d e oil and petroleum p r o d u c t s in t h e USA.

The expansion of t h e oil pipeline grid parallels t h e i n c r e a s e of t h e c r u d e oil s h a r e in t o t a l primary e n e r g y consumption. Oil r e a c h e d a 1% s h a r e in e n e r g y during t h e 1880s. a n d a t t h e same time t h e r a p i d i n c r e a s e i r ~ oil pipeline mileage s t a r t e d a n d followed exponential t r e n d s until t h e 1930s ( t h e inflection point o c c u r r e d in 1937). A s if b y coincidence, oil's l a r g e s t competitor, coal, r e a c h e d i t s maximum s h a r e in primary e n e r g y d u r i n g t h e same d e c a d e . Thus. b y 1937. about half of t h e c u r r e n t length of t h e oil

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The Methane Age A. C r i i b l e t a n d N. Nakicenovic

f i g u r e 2.H. US crude and product oll pipeline length

pipeline network was a l r e a d y in place, a n d t h e growth r a t e s declined slowly.

During t h e 1980s. t h e length should r e a c h t h e asymptotic level a t a b o u t t h e same time a s c r u d e oil s h a r e s in t o t a l primary e n e r g y r e a c h s a t u r a t i o u . The time c o n s t a n t ( A t ) of t h e expansion of oil pipelines is 6 2 y e a r s o r halfway between t h e time c o n s t a n t s f o r t h e expansion of rail t r a c k s and s u r f a c e d r o a d s of about 5 0 a n d 74 y e a r s . r e s p e c t i v e l y (see Nakicenovic. 1986).

Although oil is still t h e m m t important e n e r g y s o u r c e , in t e r m s of pr-i- mary e n e r g y consumption i t is slowly being r e p l a c e d by n a t u r a l gas. Figure 2.25 h a s shown t h a t t h e amount of associated n a t u r a l gas is d e c r e a s i n g in total n a t u r a l gas production and, t h e r e f o r e , t h a t h i g h e r n a t u r a l gas t r a n s - p o r t a n d end-use a r e based more on gas a n d l e s s on oil technologies. This p r o c e s s is also r e f l e c t e d in t h e i n c r e a s e of n a t u r a l gas t r a n s p o r t a n d distri- bution pipelines when compared with oil pipelines, shown in F i g u r e 2.16. A s mentioned above, t h e f i r s t n a t u r a l gas pipeline in t h e USA d a t e s b a c k t o t h e 1880s. The r a p i d expansion of t h e n a t u r a l gas pipeline network. however.

s t a r t e d d u r i n g t h e 1890s. o r a b o u t 2 0 y e a r s a f t e r t h e growth of oil pipelines was initiated. F i g u r e 2.17 shows t h a t t h i s 20-year s h i f t in time p e r s i s t s t h r o u g h most of t h e growth c y c l e of t h e n a t u r a l gas t r a n s p o r t s y s t e m a n d d i s t r i b u t i o n i n f r a s t r u c t u r e .

F i g u r e 2.17. US natural gas pipeline length.

T h e inflection point, with about half t h e eventual s a t u r a t i o n level achieved, o c c u r r e d in 1962, o r 2 5 y e a r s a f t e r t h e inflection in t h e growth of oil pipelines. S i n c e t h e time c o n s t a n t is about 55 y e a r s , a n d t h e r e f o r e comparable t o t h a t of oil pipelines (62 years), s a t u r a t i o n should also o c c u r more than 2 0 y e a r s l a t e r . during t h e 2020s. Again, t h i s is symmetrical with t h e relationship between t h e growth p h a s e s of oil pipelines a n d oil p e n e t r a t i o n in primary e n e r g y . The growth pulse s t a r t e d when oil achieved a I.% s h a r e of primary e n e r g y , inflection o c c u r r e d during t h e time when oil became t h e second l a r g e s t e n e r g y s o u r c e (bypassing fuel wood), a n d s a t u r a t i o n of pipeline length was synchronous with t h e s a t u r a t i o n of m a r k e t s h a r e s . Exactly t h e same p a t t e r n c a n b e observed during t h e growth pulse of gas pipelines by comparing F i g u r e s 2.17 a n d 2.5'. The growth s t a r t e d toward t h e e n d of t h e l a s t c e n t u r y when n a t u r a l gas achieved a 1% s h a r e In primary e n e r g y . The inflection point was r e a c h e d in 1962, when n a t u r a l gas became t h e second l a r g e s t e n e r g y s o u r c e (bypassing coal), and s a t u r a t i o n of both natural gas m a r k e t s h a r e s a n d length of pipeline should b e achieved during t h e 2020s.

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36 The Methane Age

A large difference between t h e growth pulses of oil and gas pipelines is in t h e length of t h e respective transport and dist.ributlon networks. Fig- u r e 2.16 gives a saturation level estimate f o r oil pipeline length or about 240.000 miles (or about t h e c u r r e n t length of railroad tracks: s e e Nakiceno- vic, 1986), whereas t h e asymptotic level for t h e length of gas pipelines is estimated a t more than 1.300.000 miles (more than five times higher). For t h e time being, natural gas is transported almost exclusively through t h e pipeline grid. Oil and petroleum products, however, a r e also shipped by tankers. trains, trucks and, f o r some military use. even by aircraft. Aside from some smaller quantities of liquefied natural gas and liquid natural gas products, most natural gas reaches t h e consumer e i t h e r in a gaseous form o r as electricity. The pipeline network for gas transport and distribution is t h e r e f o r e also much longer than t h a t for crude oil and petroleum products.

This poses t h e question of whether w e can e x p e c t natural gas to continue t o be transported almost exclusively by pipelines in t h e future, especially if its projected use expands a s dramatically as illustrated in F i g u r e 2..7. For liquid natural gas products especially, it is likely t h a t other- transport modes will also b e used, conceivably even aircraft. From t h e technical point of view, t h e r e a r e in principle no obstacles t o using this transport mode for energy; t h e only question is whether it would be economical and competitive to do so.

This point cannot be resolved h e r e , but we mention this alternative for t h e f u t u r e because similar solutions have been found in t h e past t o meet t h e ever increasing need to transport more energy over longer distances.

Denser and cleaner ener-gy forms were technological measures needed to improve t h e performance of t h e whole energy system. We can therefore e x p e c t f u r t h e r improvements in t h e near f u t u r e , and these could be ful- filled b y a stronger reliance on natural gas.

2.5.4 Energy substitution and end-use

Natural gas exploration. production, and transport indicate significantly different trends from oil technologies, although natural gas has been associated with t h e oil industry ever since its first commercial use. Nevertheless.

most energy accounts bind natural gas t o oil because of t h e large production of associated natural gas from oil wells. Except a t t h e point of production.

associated natural gas, o r oil-technology gas, is indistinguishable from gas produced from natural gas wells. The fact t h a t this distinction is d i f f i c ~ ~ l t to make, and is consequently ignored in historical data, is t o an e x t e n t misleading since we have shown t h a t oil and gas technology have followed distinctly different trends during t h e last century. In addition, t h e distinction between associated gas and crude oil in terms of primary energy accounting is consistent with adding city gas produced from oil o r coal t o t h e s e primary energy sources r a t h e r than t o natural gas. To investigate t h e hypothesis t h a t natural gas is becoming increasingly decoupled from oil technolopies, we have attempted to reconstruct t h e primary energy

A . C r i i b L e r a n d N. Nakicenovtc 37

balances by adding associated gas t o crude oil and subtracting t h e same amount from natural gas consumption (but leaving net imports with natural gas balances).

F i g u r e 2.3% shows t h e resulting refined version of t h e primary energy substitution dynamics from F i g u r e 2.6 in t h e case of t h e USA. This revised technological substitution process can be characterized by very regular, time corlstants because t h e historical data a r e apparently accurate enough to provide t h e information required for f u r t h e r analytical resoli~tion. This is possible in t h e case of primary energy cotisumption because different energy sources can be measured in common (physical, energy) units and because t h e i r use is relatively well documented in t h e USA for t h e last 190

f l ( 1 - f ) Fraction ( f )

Figure 2.18. U S energy subslltulion and gas technologies.

years. F i g u r e 2.18 represents such a higher resolution because associated natural gas (oil technology from F i g u r e 2.15) is now reallocated to t t ~ c I I S ~ :

of crude oil, leaving only t h e nonassociated gas from gas wells (including natural gas imports) t o "gas technology".

This result shows that. although associated gas has long been available as a by-product of oil, its use does not represent t h e actual evolr~tion of gas technologies. F i g u r e 2.18 shows that this refinement of t h e substitution process improves t h e regularity to t h e e x t e n t that t h e time constants now cluster a t about 70 years for all energy sources arid that t h e saturatiol~

irltervals between coal, oil, and gas technologies a r e all separated by about 50 years. Dur.ing t h e saturation pe~.iods of t h e d o m i n a ~ ~ t energy sources,