Is Gas The New Oil?

If you tell an oil industry professional that oil is running out, they are likely to either dismiss your assertion or cite statistical data indicating that oil production has been increasing since the 1970s, when the topic first gained prominence. However, if you pose the same question to an exploration geologist, it is unlikely that they will respond in the same way. Furthermore, he will not be impressed by the production statistics.

In the 1960s, a total of two and a half dozen giant oil fields were discovered, with total reserves estimated at 56-57 billion tons. In the 1970s, only nine such fields were identified, with estimated reserves of approximately 20 billion tons. Furthermore, the number of large oil sources discovered is decreasing. In the current decade, geologists have not identified any new giant oil fields.

How, then, can we ensure the continued production of oil? The first step is to put small facilities into operation. Secondly, oil workers have developed enhanced techniques for extracting oil from existing fields. They create 3D models and identify potential points for pumping associated gas or water, thereby increasing reservoir pressure. Thirdly, the shale revolution has also made a significant contribution. Furthermore, they have commenced extraction from complex fields, including those in the ocean, at considerable depths, and in the Arctic. Furthermore, they are now pumping extremely viscous oil and oil with aggressive impurities that can damage equipment and pipelines. This represents a new challenge that they would not previously have considered.
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These achievements are a source of pride for oilmen. There is, in fact, much to be proud of. However, in reality, we are discussing a process that is essentially analogous to the technique used to squeeze toothpaste out of a tube. Should you achieve significant success in this endeavour, it may be assumed that the toothpaste will continue to flow from the nozzle indefinitely. However, the reality is that this is not the case. It is inevitable that the supply of toothpaste will eventually run out. Even Saudi Arabia, which has been fortunate enough to have access to high-quality liquid hydrocarbons, recently announced that its production will reach its peak in 2027 and then begin to decline.

There is no universally accepted scientific theory that can fully explain the origin of oil in nature. Nevertheless, even if oil were to spontaneously originate in the depths, the rate at which it is extracted far exceeds its rate of maturation. Once the resource in question is no longer available, technological solutions will no longer be a viable option. Neither 3D modelling nor hydraulic fracturing will be of assistance.

Hydraulic fracturing has enabled the United States and Canada to establish shale production. It would appear that this delays the end of the era of liquid hydrocarbons indefinitely. It would be beneficial to review the "Risks" section of the annual reports of companies engaged in shale operations. It is stated in the reports that hydraulic fracturing results in groundwater contamination, which renders the area uninhabitable. The companies in question purchase real estate from all residents of the area at their own expense, subsequently resettling them. It is also worth noting that the shale reserves are depleted within a five-to-ten-year period, necessitating the relocation of pipelines to a new site. This provides an explanation as to why transnational oil corporations are underrepresented in the shale industry. Furthermore, Poland, where shale is abundant, has not developed this industry. In contrast to Canada, Poland has a much higher population density.

There has been considerable speculation recently about the future availability of oil.  Oil will continue to be extracted for decades, if not centuries to come. At great depths in the Arctic and then in Antarctica. The extraction process will also yield super-heavy oil, which may contain a range of impurities. However, by the 2040s and 2050s, the cost of extraction will reach a point where it will still be cost-effective to fuel cars with oil products. If gasoline were to reach a price of 200 rubles per liter, would you still choose to fuel your car with it? In 15 to 20 years, the reality of Mendeleyev's observation that "burning oil is the same as heating a stove with banknotes" will become apparent. The cost of extraction will remain viable for petrochemical applications. However, this will not be the case for oil refining. The cost of plastic will increase, and it will be used less frequently. Wood and metal will become more prevalent in everyday life. However, polymers will remain a key component of the industry. They are a highly convenient material for many industries.

What impact will the increase in oil production costs have on the industry? Currently, oil accounts for approximately one-third of the global energy balance, which represents a significant portion. It is noteworthy that in developed countries, oil represents a greater proportion of the energy mix than in developing countries. In the United States, oil accounts for 35.9% of all energy, while in the European Union, despite efforts to decarbonise, it still represents 34.2%. Meanwhile, China's energy mix is dominated by coal, with 59% of its energy coming from this source. In Russia, natural gas accounts for 53.7% of the energy mix.
It is therefore evident that the removal of oil from the list of energy sources will have the most significant negative impact on the West. However, eliminating oil products is not a straightforward undertaking for other regions either. It is likely that oil will become a less prominent feature in many locations. However, its significance in the context of transportation is simply unparalleled. By way of illustration, the following statistics relate to the transport sector in the USA for the year 2022. Oil products account for 86% of the total. Biodiesel accounts for 6% of the total. The remaining 5% is accounted for by natural gas. The remaining 3% is accounted for by other fuels, including electricity. It is therefore imperative that the 86% be replaced with an alternative in the coming decades. The question remains: what alternatives are there?

One potential solution is the utilisation of electric trains, a concept that has been previously discussed. The solution is clear. The fewer components that are required for electric cars, the less likely they are to break down. Furthermore, electric vehicles should be more cost-effective for the same reason. However, the main challenge lies in the batteries. Despite the significant investment in electricity storage technology in recent decades, the development of an alternative to lithium-ion cells has yet to materialise. Despite the high level of interest generated by the presentations of new battery technologies, including graphite, these have not yet resulted in any significant developments.
This brings us to  natural gas that is a viable option for transport. I would like to clarify that we are not referring to the conventional autogas, which is derived from the associated gas of oil fields and comprises propane and butane. I am referring specifically to liquefied methane. Technologically, the conversion of cars from internal combustion engines to methane is a straightforward process. Furthermore, the engine thrust is slightly higher than that achieved when running on gasoline or diesel. Furthermore, the exhaust is cleaner. A single gas tank in a mass-produced truck from China can travel 5,200 km. This is a common form of transportation that is widely available. This is already the case. By the end of 2023, it is projected that one-third of all heavy trucks in China will be powered by liquefied natural gas.

It is unlikely that there will be a single solution that is applicable to the entire planet. This is particularly relevant in light of the ongoing trend towards regionalisation. It is conceivable that some small and wealthy countries may transition entirely to electric traction. Some may opt for hydrogen as an alternative. Some will opt for tram and electric train networks. It is unlikely that all humanity will transition to electric vehicles. The rapid growth in data centre consumption is set to create significant challenges for electricity supply in the coming decades.

The advantages of methane are clear, despite the significant investment required in cryogenic infrastructure. Which country has the largest natural gas reserves in the world? In a recent report, OPEC analysts identified the following three factors: Russia accounts for 24.4% of global gas reserves, followed by Iran at 16.5% and Qatar at 11.5%. British Petroleum has slightly different figures. Russia (19%), Iran (16%), Qatar (12.5%), Turkmenistan (10%). Furthermore, Western majors do not produce in any other country except Qatar, and even there their shares do not exceed 30%.

What, then, is the conclusion to be drawn? In the coming decades, countries with large reserves of natural gas will face significant pressure from the West. This is simply the inevitable outcome of the situation. Given that any sudden shifts in the energy landscape will inevitably give rise to a shift in the geopolitical balance of power, it is crucial to anticipate and prepare for such changes.