Natural gas is commonly found associated with and is produced with crude oil deposits. It also occurs as deposits not associated with oil and is the second most abundant energy resource after coal. It supplies 24 percent of America's energy needs. The rule of thumb is that in terms of energy yield a barrel of oil is equivalent to about 5,500 cubic feet of gas. Prices for gas are quoted in units of 1,000 cubic feet and the unit price in April 2003 was about $5.50, up from $3.65 a year earlier and $2 four years earlier. Residential gas prices increased 40 percent between 1995 and 2002.8 Russia has by far the largest reserves (table 5.6). It is the Saudi Arabia of natural gas. As it comes out of the ground the gas is usually 90-95 percent methane, the same gas that seeps out of landfills (chapter 3). Natural gas is abundant. At present rates of consumption, North America's reserves are sufficient for the next hundred years. However, the use of natural gas is increasing rapidly and the reserve estimate of 100 years may prove overly optimistic. We cannot be sure because new deposits of natural gas will probably be found between now and then. Exploration continues.

The United States uses 27 percent of the world's production. Natural gas is cheaper than petroleum for the same amount of energy obtained, and burning it produces 30-60 percent less carbon dioxide than the same amount of energy derived from oil. For these reasons 80 percent of new power plants are gas-fired. Gas currently generates 18 percent of our electricity. The Energy Information Administration predicts that the use of natural gas in the United States will grow by 54 percent by 2025, while production will rise only 35 percent. Imports are expected to supply 22

Table 5.6

Where the world's proven reserves of natural gas are located, 2001. All other nations have less than 2 percent.

Country Percent

1. Russia 30.7

4. Saudi Arabia 4.0

5. United Arab Emirates 3.9

6. United States 3.2

7. Algeria 2.9

8. Venezuela 2.7

9. Nigeria 2.3

Source: British Petroleum, 2002.

percent of our needs in 2025. At present about 20 percent of our natural gas is imported, 95 percent of it from Canada.

As we saw earlier, increased oil imports will have to come from the politically unstable Middle East. Where will the projected increase in imports of natural gas come from? Our geographic neighbors Canada and Mexico are not in the top ten in terms of world gas reserves (table 5.6) and Canada, like the United States, is increasing its domestic use. The apparent choices are Russia and the ever-volatile Middle East. But this poses an expensive transportation problem. For economic reasons, natural gas is cooled to a liquid to be transported in ships—as liquefied natural gas or LNG. (This process frees up cargo space; liquefying the gas is like shrinking a gallon to a teaspoon.) Natural gas (methane) liquefies at -258°F. It must be cooled at the shipping terminal, pumped into heavily insulated cargo holds, and then heated as it is discharged at the receiving terminal. America's imports of LNG have risen from 20 billion cubic feet in 1995 to 85 billion cubic feet in 1998 to 230 billion cubic feet in 2002.9 New shipping terminals for receiving LNG are now being built on our coasts as fast as construction materials can be trucked there.

Motor vehicles can be run on compressed natural gas (CNG). Converting a car to CNG is easy because, like gasoline, it burns well in spark-ignition engines. Within the past 10 years some cities have converted their municipal vehicles from gasoline to CNG. The vehicles are refueled at central municipal locations. Very few service stations for the general public provide CNG, however. One disadvantage of using CNG in cars is that the fuel tank is heavy and bulky. For Americans, who live in a large country and drive longer distances than people in other nations, this is a distinct disadvantage.

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