Peak gas

According to M. King Hubbert's Hubbert peak theory, peak gas is the point in time at which the maximum global natural gas (fossil gas) production rate will be reached, after which the rate of production will enter its terminal decline. Natural gas is a fossil fuel formed from plant matter over the course of millions of years. It is a finite resource and thus considered to be a non-renewable energy source. 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. Since Hubbert's initial predictions in 1956, 'the proper application of ever more powerful statistical techniques has reduced much of the uncertainty about the supply of oil and natural gas'. One view in 1997 was that Hubbert's use of an exponential decline model was statistically adequate in explaining real world data. However, longer-term experience has shown the predictions to be incorrect. The world gets almost one quarter of its energy from natural gas. The consumption of natural gas has nearly doubled in the last 30 years. The most important energy agencies in the world are forecasting increases in natural gas demand in the next 20 years. The largest increments in future gas demand are expected to come from developing countries. 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 trillion cubic feet (TCF) 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 trillion cubic feet 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. 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 trillion barrels (190 km3) 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.