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Location: Pantego, Texas, United States

Friday, August 08, 2008

T. Boone Pickens has a great plan for getting the government to subsidize him as he makes another fortune. Part of his plan involves using natural gas as transportation fuel. The US currently uses about 390 million gallons of gasoline per day for transportation. Assuming the same efficiency, it would take about 48billion cubic feet per day (17.5 trillion cf/year) of natural gas to replace the gasoline. (At $4 per gallon, the gasoline would cost $1.56 billion daily while the natural gas at $10 per thousand cf would cost $480 million, a nice savings.)The US currently uses an average of about 63 billion cf of natural gas per day (that is 23 trillion cf/year), so an increase of supply of 76% would be necessary if we switched from gasoline to natural gas for transportation fuel. That would be a bit difficult to do. The Barnett shale contains perhaps 60 trillion cf EUR, and the Haynesville shale is thought to contain perhaps 245 trillion cf recoverable for a total of just over 300 trillion cf. But, it is expected that it will take 50 years to produce all of that natural gas, so the rate would be an average of 6 trillion cf per year. So, we need some additional sources of natural gas if we want to convert entirely from gasoline to natural gas for transportation. I suspect the cost of natural gas would go up with this increase in demand.

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