Peak Oil – A Solution for the United States

Peak Oil – A Solution for the United States Image

Whether or not you are aware of Peak Oil it is a reality and its consequences are far reaching and potentially devastating.  The theory of Peak Oil states that as oil is a finite resource, oil reserves will peak at some point in time and begin to decline. Many have stated that the peak of the bell curve has been passed and we are now on an accelerating descent.  Oil will become an increasingly scarce commodity and the price will rise accordingly.

As the largest user of crude oil in the world the United States is in a precarious position with regard to the eventual limits of crude oil supply and current increasing demand worldwide.  In our present fragile economy, $80 crude oil extracts a painful tax from every user for every barrel, at $200, $500 or $1000 this tax would be onerous and destroy any hopes of a sustainable economic recovery.  We must therefore prepare ourselves for that situation and take steps to minimize the negative consequences.  However, rather than a problem this must be seen as a challenge and an opportunity.

There is now a clear solution to Peak oil for the United States and that is Natural Gas.  This is in effect the Pickens Plan.  Technology and innovation have now allowed the liberation of huge reserves of previously untappable gas trapped in shale.

These gas reserves are distributed throughout the US and at current estimates represent over 50 years of supply if all gasoline engines were converted to Compressed Natural Gas.

These are domestic reserves with local investment and employment providing great benefits to the National and State economies.  New technologies would be required to exploit the Natural Gas and skilled technicians to convert current systems for distribution.  Indeed, many thousands of jobs would initially be created in infrastructure building phase with ongoing job creation as the economy recovered and expanded.  The balance of payments will be dramatically improved by the domestic economy that will result and the freeing up of previously large budgets sent overseas to pay for expensive foreign oil.

Natural gas is the cleanest of all the fossil fuels and already burns with significantly less pollutants than both oil and coal which would have great consequential benefits for our environment and air quality.  Furthermore, the use of Natural Gas as the primary energy source in the US would release crude oil and coal to be used as industrial raw materials rather than an energy source.  The demand for crude oil would drop, the price would drop and the life span of the resource would be dramatically increased and Peak Oil delayed.

Natural Gas is currently relatively cheap at less than $4 per million BTU compared to crude oil at $14 per million BTU and gasoline at $20 per BTU.  This would put money in the pocket of every individual.

Here is the outline of a plan which we need to launch now:

The US needs to develop an Energy Policy that encompasses both traditional and alternative energy resources.  For Natural Gas, an industry body needs to be established to oversee the conversion to and utilization of Natural Gas in the most efficient and beneficial manner.

This body would supervise:

1. Training of technicians to convert gas stations, and vehicles to Natural Gas.
2. Conversion of gas stations.
3. Upgrading of the current gas trunk system and installation of a local pipeline system to deliver Natural Gas to individual gas stations and homes.
4. Conversion of vehicles.
5. Conversion of homes to utilize Natural Gas for domestic use.

In summary, the conversion to Natural Gas would result in a cleaner burning energy source for transportation, electric generation and domestic needs. There is a plentiful supply of Natural Gas in North America based on current estimates and further resources would be found as the need dictates.  Natural Gas is easily and safely transportable throughout the country using an updated and expanded pipeline distribution system which would allow Natural Gas to be delivered to every home and vehicle in the country.  The economic benefits would be immense as money previously spent overseas on crude oil would be used domestically to produce, distribute and utilize this new low cost, environmentally friendly energy source.

As always there are negatives.  Pollution of ground water by drilling and fracing of Natural Gas wells has been reported in certain parts of the country.  Strict regulations on the drilling and production of Natural Gas must be implemented.  Oil and gas companies are responsible for these wells and production systems and will be required to ensure that environmental laws are adhered to and the environmental impact minimized.  The public must be comfortable that the production of Natural Gas in their neighborhood will be minimally disruptive, safe and beneficial.
Buried Pipelines along existing energy corridors and hubs would need to be installed throughout the country.  Wellhead clusters should be blended with the environment and landscaped.

There will be a large initial capital cost but this could be borne by the private sector or recouped over time through a gas tax and through the surge in economic activity realized through this energy revolution.  Gas hubs, pipelines and gas tanks in vehicles must be properly designed to minimize any danger to the public and in fact should be no more dangerous than the current gasoline tanks in cars and refineries and oil storage facilities presently seen around the country.

The plan has huge upside with limited downside.  The greatest benefit from this plan will be that the United States would once again be energy independent, in total control of its energy needs, with complete security of supply at much lower cost.  It cannot be stressed enough that with the current economic situation and the US being the largest user of oil in the world today mostly imported at huge cost to our nation, the impact on our balance of payments is unsustainable.  An alternative must be found and that alternative is Natural Gas.

The US is the innovator and leader in the exploitation of gas from shale.  We could also be the leader in the utilization of Natural Gas as an energy source for vehicles and in industry.

Shakespeare wrote:
There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.

The time is here, the tide is rising. Let’s take that current.

About the Author: Alan J. Finlay, has a B.Sc. in Geology and Physics from the University of London U.K.  For the past 35 years, he has been a petroleum geophysicist with exploration experience in U.K., Norway, North & West Africa, Australia and South East Asia.  He and his wife currently reside in Kuala Lumpur, Malaysia where he is Chief Geophysicist for a large independent U.S. Oil and Gas Company exploring for oil and gas offshore Malaysia. He is a keen cyclist.

  • mwysocki

    Mr. Finlay, I hope your ideas find there way to our national leaders. Our nation's future is at stake and we are in critical times.

  • JP McMurphy

    This is not only a good idea but it may be our only hope of getting off foriegn oil and helping our economy at the same time. This is a win – win plan.