BP Statistical Review 2011 helps reveal truths about natural gas supplies

Unlike the builders of the Maximus LNG shown here, governments for some strange reason remain hesitant about committing to natural gas vehicles (NGV) on a large scale, often citing cost as a major impediment. Yet, those same governments are quick to buy-in to automotive electrification, where infrastructure and battery costs are astronomical by comparison. Question is, why?

According to sources quoted by NGV America, an organization which functions as a watchdog, the cost of an NGV (natural gas vehicle) program is small compared to the cost of propping up the oil economy with ‘emergency reserves’.

Now put that in context with a quote from the BP Statistical Review 2011: World primary energy consumption – which this year includes for the first time a time series for commercial renewable energy – grew by 5.6% in 2010, the largest increase (in percentage terms) since 1973.

Fact is, energy consumption is going up in China. And, according to the IEA, natural gas can address the oil displacement dilemma on a scale and capacity that no other fuel can match. It’s no longer theory either; it’s now proven.

That is why the IEA is using the terms “age of natural gas” in concert with “the twilight of oil.”

Citing another NGV America article, the US Strategic Petroleum Reserve (SPR) for example, has been created at a cost of more than $22 billion and currently has a ‘market value’ of more than $85 billion. Due to increased demand, there is now a legal commitment to increase the reserve by another 1/3 in the coming years, which would come at a cost of at least another $15 billion.

That is unsustainable!

This is why, this reporter prefers to cite all sources, like the IEA, NGV America and BP’s Statistical Review of World Energy 2011 to get a clear picture. For the record, this year’s BP report is the 60th anniversary edition of the BP Statistical Review of World Energy.

BP, one of the world’s largest oil and gas companies, serves millions of customers in more than 90 countries across six continents. You may dislike their care in the Gulf of Mexico, but their reach in the world for energy is great, and not to be ignored.

Their business segments, for example, are Exploration and Production, and Refining and Marketing. Through these business segments, the company provides fuel for transportation, retail brands and energy for heat and light.

Still, the intervention by the IEA and the nations which comprise it, including America, is a dangerous game relying solely on strategic reserves of oil to balance world energy needs. Fact is, the world is going the other way; proving figures don't lie; there are just a lot of liars interpretting the figures.

While world natural gas proved reserves in 2010 were noted to be sufficient to meet 58.6 years of global production, reserves to production or R/P ratios declined for each region, driven by rising production. Point is, the trend is clear: the world is going towards natural gas. It’s cleaner and it’s cheaper.

The BP report also says the Middle East and Former Soviet Union regions jointly hold 72% of the world’s gas reserves. Even North America has 26% of the total, enough to act independently of both the Soviet Union and the Middle East, but North America has the least R/P ratio at the moment; meaning capacity is super high.

Conclusion

North America having the least R/P ratio at first might seem disturbing. Good news is, it really means we have greater production capability to handle our present reserves and anything else we can find. Furthermore, with the advent of our new ability to garner nat-gas from shale, North America is indeed ready to process all the gas we need; and without any help from foreign entities.

Still, oil remains the world’s leading fuel at the moment, at 33.6% of global energy consumption, but oil continued to lose market share for the 11th consecutive year. China, on the other hand, increased energy consumption by 11.2%, displacing the United States as the largest energy consumer; a serious omen to the supply-demand equation.

Something has got to give. Oil will simply cost too much for our economy to support; and our dollar will not be able to sustain the competing buying power of China.

So, I’m with T. Boone Pickens on this one. Go natural gas, and do it fast. We already have the capacity, the know-how. All America needs is leadership, enough to spark the national will to use the one, clean natural resource we’ve been blessed to have.

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About the Reporter: After 39 years in the auto industry as a design engineer, Frank Sherosky now trades stocks, futures and writes articles, books and ebooks like, "Perfecting Corporate Character," "Awaken Your Speculator Mind", and "Millennial World Order" via authorfrank.com. He may be contacted here by email: [email protected]

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