Muhammad bin Cryin'

I personally expect to seeelectric vehicles to go mainstream over the next five years.  However, trucking rail and agro will stillwant their liquid fuels.  This piecemakes clear just how ready the natural gas industry is in order to make up anyshort fall.  Thus our transition to theconsumption of much less oil will be quite orderly as the massive investmenttriggered two years ago begins to bite.

This is an edited investmentpiece that makes clear just how huge our gas reserves may be, using them ispractical and provides a stop gap as we transition out of the oil age whichwill continue for some time even without us.

As I have posted in the past, wewant to stop using oil for all forms of transportation.  I do not think I have to list all thereasons, but the best reason is to not compete with rising economies forit.  The developed world is in theprocess of expanding from a present and plausible two billion people to fourbillion people in one generation and finishing the job in the next.  There is no way we should compete with thatdemand for oil.  Thus we can lead theworld away from it.

Once transportation is out of theequation, North America is endowed with amplereserves for industrial needs and likely will always be so.

Muhammad bin Cryin'

By Nick Hodge | Friday, February 11th, 2011

My man T. Boone appeared on the Daily Show a few nightsago...

But none of the juicy details appeared in the 7-minute segmentappearing on television. To get the good stuff, you had to check out the video on the Web.

I've been covering the Pickens Plan in these pagessince early 2008. His aim is to replace imported OPEC oil with natural gas inthe next ten years.

That's about five million barrels per day (mbd) of the 13 mbd weimport, or 38%. It's gained some attention, but cheaper oil prices during therecession left it lacking momentum.

With oil back up around $90 ($100 for Brent), unrest in the Middle East, rising gas prices, and a nod from Obamain the SOTU, Pickens is out pitching his plan again.

Pickens told Stewart, “We've gone 40 years with no energy plan.You know who else doesn't have an energy plan in the world? Nobody. It'snobody. We're the only one without an energy plan.”

He noted China iseven considering the Pickens Plan. The Wall Street Journal confirms, noting “liquefied natural gas could displaceabout 3% of China'sestimated diesel demand by 2015.”

Even Abu Dhabiis pursuing similar goals. “And guess what?,” Pickens asks. “They'll send theoil to us.”

To prevent that from happening — and actually eliminate U.S. imports ofMiddles Eastern oil entirely — Pickens argues, we need to power our cars andtrucks with natural gas instead of oil.

And it could actually happen, thanks to our shale gas reserves andnew drilling techniques.

Pickens claims there are 4,000 trillion cubic feet of naturalgas.

I didn't fully understand how much that was at first, either...

But it's a lot — the equivalent of 700 billion barrels of oil. That's threetimes what the Saudi's have, maybe more now that we know they've beenlying about their reserves.  Exploiting it would cut the descendents ofMuhammad bin Saud off at the knee.

Is it under common ground?
A lot of that gas is in the Marcellus Shale, which you'veundoubtedly read about in the news. 

The USGS reports the Marcellus “produced 200 million cubic feeta day in July 2008. Two years later, 1.4 billion cubic feet a day were beingpumped out.”

And by 2030: “Gulf Coast shale deposits willgenerate 15 billion cubic feet a day.”

As is important for the success of any energy source, it's alsoreceiving support from both ends of the political spectrum.

Former Halliburton CTO Vikram Rao thinks shale gas “isthe most important energy event in the U.S. since the discovery of Alaskanoil.”

On the other side, Sierra Club president Carl Pope wants to “run therailroads on natural gas, not diesel, [...] run fleet vehicles on natural gas,”and “replace peakers with fuel cells.”

Gas emits between 20% and 25% less carbon dioxide thanoil-based fuels and less nitrogen dioxide and carbon monoxide.

A Barclays Capital report claims trucks could save a dollarper gallon by switching.

But the only way to make it economical is with hydraulic fracturing —or fracking.

Offshore explosions and dwindling reserves in Alaskaand Texas aremaking traditional oil drilling all but obsolete...

Which is good news for America's other oildrillers.

Pickens has been fracking since 1953. He told Stewart he'd fracked3,000 wells in his lifetime, prompting the host to quip he was “The WiltChamberlain of Fracking”.

But we'll have to frack a lot more if we're to make a dent in oilimports...

Another report by Black & Veatch shows natural gas willaccount for 40% of our electricity needs by 2035, up from 21% today.

So it's well advised to take note of this trend now because — whetherfor cars, trucks, or electricity — a lot of natural gas is about to come out ofthe ground.

That means the price of the commodity itself may remain subdued, butthe drillers fracking the wells are going to make a killing.

Call it like you see it,

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