Peak gas

Peak gas is the point in time when the maximum global natural gas (fossil gas) production rate will be reached, after which the rate of production will enter its terminal decline. Although demand is peaking in the United States and Europe, it continues to rise globally due to consumers in Asia, especially China. Natural gas is a fossil fuel formed from plant matter over the course of millions of years. Natural gas derived from fossil fuels is a non-renewable energy source; however, methane can be renewable in other forms such as biogas. Peak coal was in 2013, and peak oil is forecast to occur before peak gas. One forecast is for natural gas demand to peak in 2035.

The concept of peak gas follows from Hubbert peak theory, which is most commonly associated with peak oil. Hubbert saw gas, coal and oil as natural resources, each of which would peak in production and eventually run out for a region, a country, or the world.

Gas demand


The world gets almost one quarter of its energy from natural gas. The largest increments in future gas demand are expected to come from developing countries.

Gas supply


Hubbert's original peak theory predicts that natural gas will experience three equally spaced events: first, the rate of discoveries will peak, then X years later reserves will peak, and finally X years after peak reserves, gas production will peak at the same rate as the previous peak of discoveries. For the United States, for instance, Hubbert projected that the natural gas discovery rate was peaking in 1962 at about 20 e12ft3 per year. From his curves, he predicted that proved reserves would peak eight years later, in 1970, and that production would peak after another eight years, in 1978, at 20 e12ft3 per year, about equal to the rate of peak discoveries.

Of the three peaks, Hubbert found the peak in discoveries most difficult to define, because of large year-to-year scatter, and the phenomenon of “reserve growth.” Initial estimates of a discovery are usually much lower than ultimate recovery, especially if the conservative estimate of proven reserves is the measure. As the discovery is drilled out, estimates rise. Sometimes estimates of recoverable oil and gas in a discovery continue to rise for many years after the discovery. To find the peak in discoveries, Hubbert backdated reserve growth to the date of field discovery.

New gas discoveries


According to David L. Goodstein, the worldwide rate of discovery peaked around 1960 and has been declining ever since. Exxon Mobil Vice President, Harry J. Longwell places the peak of global gas discovery around 1970 and has observed a sharp decline in natural gas discovery rates since then. The rate of discovery has fallen below the rate of consumption in 1980. The gap has been widening ever since. Declining gas discovery rates foreshadow future production decline rates because gas production can only follow gas discoveries.

Despite the reported fall in new-field discoveries, world proved reserves of natural gas have continued to grow, from 19 billion cubic meters (bcm) in 1960, 45 bcm in 1970 and 84 bcm in 1980, to a record high 200 bcm in 2012. A researcher for the US Energy Information Administration pointed out that after the first wave of discoveries in an area, most oil and natural gas reserve growth comes not from discoveries of new fields, but from extensions and additional gas found within existing fields.

Dr. Anthony Hayward CCMI, chief executive of BP stated in October 2009 that proven natural gas reserves around the world have risen to 1.2 e12oilbbl of oil equivalent, enough for 60 years' supply if consumption is non-increasing, and that gas reserves are trending upward. A similar situation exists with oil reserves in that they have increased despite the actual declines of worldwide discoveries for decades and despite increases in consumption. BP's former Chief Petroleum Engineer Jeremy Gilbert stated in 2007 that the growth in oil reserves "results largely from distortions created by the..reporting rules of the US Securities and Exchange Commission" that force companies to be overly conservative in their calculation of reserves, but that "even this illusory growth is unlikely to last," because fewer oil reserves are coming under the control of SEC-regulated companies. However, since Gilbert's statement, proven reserves of both oil and gas have continued to rise, proven oil reserves increasing 23%, from 1.20 trillion barrels in 2007, to 1.48 trillion barrels in 2012.

Italy
Italy's gas consumption is presently third-highest in Europe, behind only Germany and the United Kingdom. Gas consumption is growing at a steady rate, and gas consumption in 2001 was 50% greater than it was in 1990.

Italy's major oil and gas company is Eni. Formerly state-owned, it was privatized during the 1990s, but the government still retains around one-third of the shares. Natural gas reserves in Italy were 164 billion m3 at the beginning of 2007. Natural gas production in 2005 was 11.5 billion m3, while consumption was 82.6 billion m3. The difference was imported. The primary sources of imported gas are Algeria, Russia and the Netherlands.

Netherlands


The Netherlands government has stated that peak gas occurred in 2007–2008 and the country will have become a net importer of natural gas by 2025.

Romania


Natural gas in Romania was discovered in 1909 in the Sărmăşel area. In 1917, Turda became the first European town lit up with natural gas. Maximum production of 29.8 billion m3 was achieved in 1976. Today, gas provides about 40% of the country's energy needs.

Russia


Gazprom, Russia's state-controlled gas monopoly, is a firm which holds 25% of the world's gas reserves. Gazprom produces the bulk of Russia's gas.

United Kingdom
UK gets its natural gas almost entirely from the North Sea. The North Sea gas field peaked in 2000 and has been falling quickly since. Production in 2004 was 12% down from the peak.

Steidle, 1952
In 1952, Dr. Edward Steidle, Dean of the School of Mineral Industries at Pennsylvania State College, predicted that gas production would soon decline significantly from 1952 rates, so that gas would cease to be a significant energy source by 2002, and possibly as early as 1975.

M. King Hubbert
In 1956, Hubbert used an estimated ultimate recovery (EUR) of 850 e12cuft (an amount postulated by geologist Wallace Pratt) to predict a US production peak of about 14 e12cuft per year to occur "approximately 1970". Pratt, in his EUR estimate (p. 96), explicitly included what he called the "phenomenal discovery rate" that the industry was then experiencing in the offshore Gulf of Mexico.

In 1962, Hubbert pushed his predicted peak back a few years based on a more optimistic estimation of 1,000 trillion cubic feet of total original reserves. His new peak gas curve predicted a peak in 1978 at slightly more than 20 tcf per year.

US gas production reached a peak in 1973 at about 24.1 e12cuft, and declined overall for the next decade. But even greater new discoveries in the offshore Gulf of Mexico than anticipated, and development of "unconventional reserves", proved Pratt's EUR estimate to be too low as US gas production rose again.

In 1971, Hubbert revised his peak gas estimate based on updated reserve information. He revised his estimated ultimate recovery upward to 1,075 e12cuft for the lower 48 states only, and predicted: "For natural gas, the peak of production will probably be reached between 1975 and 1980." Gas production for the lower 48 states did peak in 1979, and declined for several years, but rose again, and once more Hubbert's assumed EUR of 1,075 e12cuft proved to be too low, as actual lower 48 state production from 1936 through 2012 has already exceeded 1,265 e12cuft, 18% higher than the estimated EUR of 1,075.

Recent US peak predictions
Economist Doug Reynolds predicted in 2005 that the North American gas peak would occur in 2007 Reynolds revised his forecast in 2009 to include Southern Canada; he predicted that the combined US Lower 48-Southern Canadian gas production would peak in 2013.

Although Hubbert had acknowledged multiple peaks in oil production in Illinois, he used single peak models for oil and gas production in the US as a whole. In 2008, Tad Patzek of the University of California rejected the single-peak model, and showed the multiple peaks of past US gas production as the sum of five different Hubbert curves. He concluded that new technology has more than doubled gas reserves. His figure 15 shows gas production declining steeply after a probable peak in known cycles in 2008. However, he refrained from predicting a date after which gas production would begin terminal decline, but noted: "The actual future of US natural gas production will be the sum of known Hubbert cycles, shown in this paper, and future Hubbert cycles." and warned: "The current drilling effort in the US cannot be sustained without major new advances to increase the productivity of tight formations."

In 2005 Exxon's CEO Lee Raymond said to Reuters that "Gas production has peaked in North America." The Reuters article continues to say "While the number of U.S. rigs drilling for natural gas has climbed about 20 percent over the last year and prices are at record highs, producers have been struggling to raise output." North American natural gas production indeed peaked in 2001 at 27.5 e12cuft per year, and declined to 26.1 e12cuft by 2005, but then rose again in 2006 and 2007 to a new high of 27.9 e12cuftin 2007 This would make the 2007 figure 1.45% higher than the 2001 figure, for an average annual increase of 0.24% per year during 2001–2007.

In December 2009 the US Energy Information Administration (EIA) projected US marketed gas production will have reached a first peak at 20.60 e12cuft in 2009, decline to 18.90 e12cuft in 2013, then rise again to 23.27 e12cuft in 2035, the final year of their projection, for an average annual rate of increase of 0.47% per year during 2009–2035 In its Annual Energy Outlook 2010  released in May 2010, EIA projected growth from 20.6 e12cuft in 2008 (same amount as 2009) to 23.3 e12cuft in 2035 in the Reference case, with Alternative case estimates ranging 17.4 to 25.9 e12cuft in 2035. These represent productions of average annual growth rates between −0.63% (net decline) and 0.85% in the alternate cases, and 0.46% in the reference case.

North American natural gas crisis, 2000–2008


The natural gas crisis is typically described by upward price spikes of natural gas in North America from 2000 to 2008, due to the decline in production and the increase in demand for electricity generation. Gas production in the U.S. fell from 20,570,295 e6cuft in 2001 to 18,950,734 e6cuft in 2005, before rising again in 2006 and 2007.

The anticipated gas shortage in North America led some, such as former Federal Reserve Chairman Alan Greenspan, to advocate increased imports of liquefied natural gas (LNG). However, record high natural gas production rates and proved reserves in the US have put LNG imports on hold, and even spawned projects for LNG exports from North America. As of April 2015, ten LNG export terminals had been approved and six are under construction in the US and Canada.

Estimates of total reserve base
The Potential Gas Committee, a non-profit group at the Colorado School of Mines, estimated US natural gas resources to be 1,525 e12cuft in 2007 (86 times current annual consumption) and in 2009 raised their estimate again to 2,247 e12cuft (almost 100 times current annual consumption). The large increase over previous years' estimates was attributed to a surge in natural gas drilling and exploration spurred by a rise in prices and new technology allowing production from once uneconomic formations, such as shale and coal seams.

World peak gas
In 2002, R.W. Bentley (p. 189) predicted a global "decline in conventional gas production from about 2020."

One forecast is for natural gas demand to peak in 2035.

In their March 2013 report, "Fossil and Nuclear Fuels – The Supply Outlook", the Energy Watch Group predicted that global natural gas production "will peak around or even before the year 2020". However, the same report (page 75) postulated that US natural gas production had peaked in 2012, and predicted that it would decline steeply after 2015. Instead, US gas production has continued to rise through 2017.

Resource peaks

 * Peak coal
 * Peak copper
 * Peak food
 * Peak oil
 * Peak soil
 * Peak uranium
 * Peak water
 * Peak wheat