Fossil Energy

Introduction

U.S. energy use is dominated1,2 by the fossil energy from petroleum, coal and natural gas. Prior to the 1973-74 oil embargo, these fossil fuels supplied 92% of U.S. energy needs. In 1994, two decades later, fossil fuels continue to dominate, supplying 84% of U.S. energy needs. Total annual energy consumption rose by 12 quads (1 quad = 1015 BTU) from 76.6 quads to 88.5 quads, during this period. Table II.1.1 below shows that petroleum and natural gas use has been relatively constant in the two decades since the oil embargo while nuclear power and coal have each grown by 6 quads/year. Had it not been for considerable savings from a doubling of the fuel economy in automobiles, the petroleum situation would be much bleaker today.

oil ngas coal TotFossil
nuc hyd bio TotE % fossil
1973 34.8 22.5 13.0 70.3
0.9 3.0 2.3 76.6 92%
1995 34.6 21.2 19.6 76.5
7.2 3.5 2.9 90.6 84%
Table II.1.1. U.S. fossil energy consumption before the oil embargo (1973) and two decades later (1995). The data are in quads (1015 BTU) per year. The total energy consumed in 1973 has been increased from the EIA value by 2.3 quads to take into account the 1990 change in book-keeping for biofuels. Data from Annual Energy Review, Energy Information Administration (EIA), 1995, p. 9.

U.S. domestic petroleum supplies are limited.

  • U.S. proven reserves of crude oil have declined for 7 consecutive years. Low oil prices and a lack of good petroleum prospects are major factors in the downturn in domestic drilling and success rates. U.S. proven oil reserves dropped from 32 Bb (billion barrels) to 22.5 Bb between 1977 and 1994. According to U.S. Geological Survey estimates, the amount of remaining recoverable oil, both discovered and anticipated, is considerably less than the amount of oil already produced. More petroleum would be available at considerably higher prices from unconventional sources, such as newer enhanced recovery methods.
  • In spite of new Alaskan production, U.S. oil production dropped from 9.6 million barrels per day (Mb/d) in 1970 to 6.5 Mb/d in 1995. (2.2 Mb/d = 1 quad/year.) Alaskan production dropped from 2.0 Mb/d in 1988 to 1.5 Mb/d in 1995. Production from the lower-48 states dropped from 9.4 Mb/d in 1970 to 5.0 Mb/d in 1995. According to the Department of Interior (1991), the Arctic National Wildlife Refuge (ANWR) has a 50% probability of producing some 3.6 Bb that could deliver several hundred thousand barrels of crude oil per day to the lower 48 States. Thus, ANWR's production would be much less than the current Alaskan production.

  • The rate of discoveries of large fields in the U.S. has greatly decreased and it seems unlikely that many new large fields of oil and gas will be found in the U.S. Since 1980 no discovered field has had more resources (estimated ultimate recovery) than the top previously discovered oil or gas fields.
  • The rate of discoveries of large fields in the U.S. has greatly decreased and it seems unlikely that many new large fields of oil and gas will be found in the U.S. Since 1980 no discovered field has had more resources (estimated ultimate recovery) than the top previously discovered oil or gas fields.
Figure
Figure II.1.1. Petroleum (left, Mb/d)) and natural gas (right, TCF/y) production, consumption and imports, 1970-2010 (million barrels per day). Data from Annual Energy Outlook, EIA 1995, p. 37. See section IV.2 on "pedagogical modeling" for U.S. production from the lower-48 states between 1860 to 1995. A simple pedagogical model is used to describe the shape of the production curve.


Figure
Figure II.1.2. The 100 largest oil and 100 largest gas discoveries as a function of the time of discovery.
Data from "Largest Oil and Gas Fields," EIA, 1993, p. 3.

Reliance on oil imports creates problems for the U.S. and other nations.

  • The U.S. trade deficit on net petroleum imports was $48 billion in 1995, which was about 30% of the total trade deficit and 7% of total imports.
  • U.S. net petroleum imports have risen 31% since the oil embargo (6.0 Mb/d in 1973 to 7.9 Mb/d in 1995). The fraction of U.S. oil from imports (in quad/y) is about 50% in 1995 and is projected to rise to about 60% in 2010.
  • The OPEC fraction of the world oil market is projected to rise from 40% in 1990 to 53% in 2010 and 57% in 2015, as a result of the fact that OPEC countries have a large fraction of remaining oil resources.
  • Growth in energy use by the lesser-developed countries (LDCs) will complicate petroleum imports. Energy-use growth rates in the LDCs are much larger (130% increase at 4.2%/y) compared to the OECD nations (40% increase at 1.6%/y) during 1970-90. The non-OECD nations are projected to exceed energy use of the OECD nations in about 2010-2020.

Dependence on Middle Eastern oil entails military and economic risks.

  • The Middle East continues to be a region of potential political instability. The 1991 Persian Gulf War was fought in considerable part to defend the unimpeded flow of oil to OECD nations.
  • Dependence on Persian Gulf oil has motivated U.S. arms shipments to that region and increased military involvement.
  • Even with the rise in price in the U.S. during the spring of 1996, the price of gasoline today ($1.25/gallon, January 1997) is less than that before the oil embargo ($1.35/gallon in 1996 dollars). Europe and Japan have partially prepared themselves for future petroleum shortages by using considerably higher gasoline prices ($4/gallon) to raise revenue and moderate demand. In France, for example, gasoline costs about 6 francs per liter. (At 5.3 francs/$, this is about $4.30/gallon, versus $1.25/gallon in the U.S.) If the 7.1 Mb/d for gasoline was taxed at the additional rate of $4.30-$1.25 = $3/gallon, this would generate $300 billion/year and somewhat reduce gasoline demand.

The combustion of fossil fuels is harmful to the environment.

  • 40 urban areas violate at least one of the U.S. ambient air quality standards, adversely affecting human health. Many foreign cities have considerably worse air quality problems. Automobiles contribute about one-half of the cities' air pollution.
  • Energy use and production generally entail adverse environmental impacts. These can arise from both routine and accidental releases of pollutants, the preemption of land (and rivers), and the accumulation of waste products. More efficient energy use can contribute to reducing these effects.
  • The atmospheric concentration of greenhouse gases has risen 30% since pre-industrial times, resulting in an increased radiative forcing of the climate system. If current trends in fossil fuel use continue, carbon dioxide concentrations will double in the next century.
  • According to the Intergovernmental Panel on Climate Change (IPCC, 1995), changes in weather and temperature patterns, particularly the spatial pattern of temperature changes, all point to "a discernible human influence on global climate."

Natural Gas

See Fig. IV.1.1 for the production, consumption and import of natural gas from 1970 to 2010. Natural gas and coal have often been considered as the "bridging fuel" which will supply additional energy after petroleum becomes expensive and less plentiful. Natural gas consumption dropped 30% after the oil embargo primarily because electricity production from natural gas was reduced. However, now the use of natural gas is expected to increase more than any other fuel. The estimated resource base is large, perhaps 1000 trillion cubic feet (TCF), or some 1000 quads. This resource in principle could take care of all of U.S. energy needs at our present rate of consumption for about 15 years, or it would supply U.S. natural gas at today's natural gas consumption rate for about 50 years. However, it is not clear how much of these natural gas resources can be converted to proven reserves. Some reserves are at depths of 3000 meters and more. Some of the gas resources are located in difficult places. The gas often contains unwanted other gases which must be removed. Because the gas industry is fragmented, it is difficult to coordinate shifts in these resources to proven reserves. U.S. proven natural gas reserves have dropped from 200 to 164 TCF from 1983 to 1994. About 10% of U.S. natural gas is now imported, a fraction that is projected to rise. The use of natural gas may increase because of the relatively low cost of electricity from natural gas and since natural gas is a less polluting automotive fuel.

Coal

Coal is less versatile than petroleum and natural gas as a fuel supply. It is generally agreed that U.S. coal resources are very large, perhaps in the region of 1012 tons. Since the U.S. now mines about a billion tons/year, this supply could in principle last a long time. However, there are severe environmental problems with both the mining and burning of coal. Because of the oil embargo, many electrical power plants were converted from oil and natural gas to coal, and in 1995 coal was responsible for more than four times the electricity generation by oil and gas, together. Since the oil embargo, the coal sector has grown by 50% from 13 to 19.5 quads/year. In more recent years natural gas has become the favorite choice of the electrical utilities for new additions. This expanded use of coal has fulfilled one-half of U.S. additional energy demands since the oil embargo. The sulfur dioxide emissions problems have been greatly lessened by using scrubbers to remove the sulfur and by shifting to lower-sulfur coals, often found in the West. Nevertheless, acid depositions from mine-runoff and air pollution continue to be an environmental problems and carbon dioxide emission from coal combustion continues to rise.