Mbeychok,
The first time I heard the "Peak Oil" discussion was at the Schulmberger annual
State of the Industry presentation in the spring of 1981. I suppose that 25 years is "relatively new" in geologic time, but it doesn't seem like that recently in economic time. It may currently be a "buzz term", but within the industry it is a concept on which people are basing capital-spending decisions.
According to the DOE (
) people have been getting gas from coal since the early 1800's. No news there. The same article states
In the 1970s, interest in coal gasification revived, due largely to concerns that the U.S.'s supply of natural gas was waning. The massive Great Plains Coal Gasification Plant in Beulah, North Dakota, was built with federal government support to use coal gasification to produce methane, the chief constituent of natural gas, that could be fed into nearby commercial gas pipelines. When government price controls on natural gas were lifted, however, large quantities of natural gas became available, and no other coal-to-methane gasification plants have been built to date in the United States.
(emphasis added). The only way the plant is still operating is the capital was subsidized. Another link (
) shows that the original owners of the plant didn't find it to be economic in the 1990's and abandoned it, the current operators purchased it from the Federal Government, the implication is that they purchased it at a substantial discount. The plant lost money in 1999 and only made a small (less than 8% of revenues) profit in 2000 because burner-tip prices went from $8/decatherm to over $20. Today the plant is primarily making money on a fertilizer byproduct.
There are several coal-gasification combined/cycle power plants in operation or under construction in the U.S. today. Typically they tout 40-45% thermal efficiency (as opposed to the low 30's typical in coal plants), and make the argument that a 30% reduction in fuel consumed results in "cheap power". The only way the power can be considered "cheap" is comparing a combined cycle plant to a plant that sends all the waste heat to the atmosphere. If you compare a coal-gasification combined-cycle plant to a coal-fired combined cycle or a methane-fired combined cycle the coal-gasification power is far from inexpensive.
And so-what if there is 10 times as much stored energy in surface-mineable coal in the U.S., Canada, and Mexico as oil reserves in the Middle East? My argument is that it will eventually be consumed, it doesn't matter how much there is. When it runs out, people will freeze in the dark unless someone comes up with an alternative energy source that can be had for a reasonable cost in sufficient quantity.
Ten years ago wholesale prices for natural gas were around $1.50/MCF. Today first of month wholesale prices are hovering between $8-10/MCF with spot prices over $30/MCF. That is more than a 20 fold increase in wholesale prices in a decade. $600/bbl oil would be less than a 10 fold increase from today's price and a 30 fold increase from 1996 prices. In spite of your exclamation point, $600/bbl oil is far from out of the question. Some analysts claim that prices consistently over $100/bbl would be required to cause any new refinery's to be funded. For the next few years the only thing I see that would cause that sort of increase would be a disruption in Middle East oil (maybe a couple of the recent terrorist attacks in Saudi succeeding?), but long term it is inevitable.
David
