"By 2025, 40 percent of you will be driving vehicles powered by compressed natural gas, according to projections," said Detief Hallermann, Ph.D., associate clinical professor, Texas A&M University.
There has been a huge increase in natural gas finds in the U.S. with the volume of natural gas being discovered in conjunction with new petroleum drilling, the U.S. has gone from a net importer of compressed natural gas to being a big exporter.
As some point, the U.S. will be in a position to use much of that natural gas domestically, and that includes new manufacturing, heating and cooling and vehicles. Hallermann says the domestic natural gas industry is still under construction. There is a transition from oil use to natural gas use that will be progressing rapidly in the next few years, he contends.
"Eighty percent of the natural gas pipelines in the U.S. have been reversed or in the process of being reversed," Hallermann said. In reversed, he explained that natural gas out of the Midwest and Northeast is flowing south instead of coming up from the Gulf Coast and Texas.
In 2008, the U.S. was a net importer of propane/compressed natural gas, but as of 2015, the U.S. was exporting six times what it was importing seven years earlier.
The large volume of natural gas found in conjunction with oil drilling and then captured for piping can provide a second source of income for oil well operators thus offsetting pumping costs. U.S. oil can thus be priced as cheap as anywhere in the world.
But the pumping of oil costs vary from region to region of the U.S. The oil coming out of the Bakken oil fields of the Dakotas and Montana is more expensive because no pipeline exists to send that gas to Chicago or another terminal high-use area. At present, the natural gas is flared or burnt off. But oil demand and higher oil prices in three or four years will continue to spur additional drilling and production in the Bakken oil fields, Hallermann said.
All these facts and outlooks were presented by Hallermann during the American Society of Farm Managers and Rural Appraisers annual meeting late last fall.
The first compressed natural gas vehicle increases, Hallermann suggests, will come from local delivery truck fleets, taxis and municipal government vehicles. "This is viable because the vehicles go back to a home base every night," he explained. There will only need to be one refueling site rather than an infrastructure of roadside natural gas refueling stations. These fleets will also be viable even though they will initially cost more than a gasoline- or diesel-powered vehicle "because compressed natural gas vehicle engines last longer."
Establishing an interstate supply system for compressed natural gas refueling stations will be slow to be built although more and more will appear leading into 2025, Hallermann contends.
A concern with natural gas supply in the U.S. might be fluctuating supply and pricing based on U.S. oil production because the natural gas in general has been a side product of oil drilling. And the U.S. and Canada are known as "swing producers" of oil. Hallermann explained that as prices of oil go high North America production increases, and vice versa as oil prices go down North America production is pulled back.
There is a six-month swing time to increase oil production and natural gas in the U.S. "What we have is tremendous potential for quick production to come on line," he said. "So, if we see oil prices in the $70 range, six months later we are going to see a response by the U.S. producers. It is not going to take long because of all the efficiencies created within the U.S. system."
That efficiency has come from continuous technology improvements in horizontal drilling and fracking. "It takes one-third the amount of (drilling) rigs to produce the same amount of hydrocarbons," Hallermann said. That means about 40 horizontal drilling rigs are replacing 100 or more old-style vertical drilling rigs.
With today's low prices for oil internationally, U.S. drilling and production has slowed. Hallerman said, "There are wells waiting to come on line when the economics are better. There are wells that have slowed down on production but could be quickly refracked to produce high volumes of oil."