Resources, Reserves - the EIA - coal gas and oil for the future.

One of the significant issues that can get folk argumentative, is the role that price plays in determining whether a fuel source still buried in the ground is called a resource or a reserve. For example I have exchanged opinions several times with David Rutledge on his view of the declining reserve base for coal. Most recently he has written in The Oil Drum pointing to the latest paper he has written on the topic, which is available at his website. Part of my rebuttal comment inferred that as the price of the product increased (likely through the lack of other reserves to be able to sustain the energy supply need of countries around the world) so coal will be recognized more and more as a reserve, which will be used, rather than a resource that will not.

The argument is also made that as price goes up the viability of resources that would cost too much to produce would change a significant volume of those resources back into reserves. That holds true for crude oil, in just the same way as for coal, except that with so much of the world’s cheap crude having already been produced, the availability of the resource volume that will convert over as price rises is not necessarily that great. I bring this up because in this week’s TWIP, from the EIA, they address this problem in regard to how much increasing the price of crude in 2009 increased the amount of crude (including condensate). Their answer was 9% for crude and 11% for natural gas.
(And as 1 of 2 UPDATES to the story, Russia has stated - whether because of exploration or increased value is not clear - but that it fully replaced its oil and gas reserves this year (h/t Leanan).)

Gain in Oil reserves (EIA)

Gain in Natural gas reserves (EIA)

The gas gain, as the EIA note, occurred at a time where gas prices were suffering from the additional volumes made available from the shale deposits of the country.

Domestic production of crude has stabilized at around 5.6 mbd, while imports are running at around 8.5 mbd, and refinery input within the US continues to rise. Gasoline production continues to mirror, roughly, last year at this time, while demand is running around 300,000 bd more than last year. This time last year distillate production was reducing, this year it continues to increase, although demand, which dropped precipitately for the last month, is now stabilizing at about last year’s level. And ethanol production continues to creep upward.

Biodiesel production is a little harder number to come by, there is a plot through 2008:

Biodiesel production (National Biodiesel Board)

There are reported to be `173 companies engaged in producing biodiesel (from a number of sources and in a number of ways). If all of them ran at full production it would generate an average of around 175,000 bd, which is not yet much of a significant figure. Additional companies planning to get into production might raise production by 15% but this remains still only a small fraction of what is going to be needed.

UPDATE: I have been pointed to the note earlier this year that the EPA had slashed the cellulosic ethanol mandate for next year:

Cellulosic biofuel was 250 million gallons, now 6.5-25.5 million gallons
Biomass-based diesel was 800 million gallons, and stays there
Advanced biofuel was 1.35 billion gallons, and stays there. . . . . .

“We first considered whether it appears likely that the required biomass-based diesel volume of 0.8 billion gallons can be met with existing biodiesel production capacity in 2011…we believe that the 0.8 billion gallon standard can indeed be met…Of the remaining 0.15 bill gallons, up to 0.026 bill gallons would be met with the proposed volume of cellulosic biofuel. Based on our analysis as described in Section II.C, there may be sufficient volumes of other advanced biofuels, such as imported sugarcane ethanol, additional biodiesel, or renewable diesel, such that the standard for advanced biofuel could remain at the statutory level of 1.35 billion gallons.”

(end of update)

Which brings me back to my original point which is that a change in the perceived selling price of the product (I say that because of the gas situation) has led to significant investment that has raised the reserves of a commodity that is recognized to be getting into short supply.

However, to put this in perspective, the gain in oil reserves was 3.69 billion barrels. The United States uses around (rough number) 20 mbd of oil, or 7.3 billion barrels a year. The gain in reserves will thus provide the equivalent of a 6 months supply, and while production will be spread over a number of years, it really doesn’t change the arithmetic that much. What is forgotten in the discussion, however, is that the equivalent change in reserve size is also occurring in other parts of the world. And while many of these places are, like the United States, in an era where their fields are now depleting, the increased value of the product is likely to slow that decline somewhat.

Coal, which is also where the discussion started, is in an even more robust situation. Coal price is still driven by the cheapest producer to the world market. It is not practical to consider opening a new mine in, for example, Montana, if the power companies around the country are already being adequately served by local deposits and by trains from the Powder River Basin. No-one will put up the investment capital to open new mines without a market, and with the current transient switch to natural gas, that incentive does not exist in the United States.

However the rest of the world is somewhat different. Bear in mind that the prices that oil and gas will reach, in the non-too-distant future, will be significantly above what many nations can pay. If they have indigenous sources of energy – vide coal – and enough of it then they will start building coal-fired power stations. They don’t have to play games with taxing one form of energy to encourage another, they need the cheapest possible source of power. And at the moment we know what that is!

And just to emphasise that, here is the most recent projection for future demand from the EIA.


I will forgo a comment on the assumption at the top of the plot.

T7. On Augering, coal reserves and EROI.

Today I thought I would digress a little from the more methodical passage through history that I was taking in regard to coal mining to talk a little about coal reserves, coal resources and technology. It is a little focused towards some of the work that we developed some years ago, and so I give you that warning up front. I am going to try and keep it simple, and so those who know about what I write should bear that in mind.

When you find a seam of coal, if it is near the surface then the soil and rock can be removed from over the coal, the coal removed, and then the rock and soil are replaced. This is surface mining and I will cover that in a specific post later. At the same time there is a point where the coal is too deep for that process to be economical, and so underground mining takes place. There are two main methods of mining coal, room and pillar mining and longwall mining, and I’ll talk about them in separate posts also. Today however I want to cover that point where the seam has just become too deep to make it profitable to take any more of the cover from the coal. One method of mining at this point has been to send a small mining machine known as an auger in to mine out the coal, that is exposed at the edge of the mine.

The auger works in the same way as a wood bit that chews into a piece of wood, when you want to drill a large hole through it. There is a cutting head on the front of the machine that cuts into the coal, and then behind the head is a scroll feed that carries the coal out of the hole, to a point where it can be collected and taken away.

Auger cutting head (Cutting head. (Source BryDet Augers Note the head is shown without the picks that would be placed in the sockets on the face of the two perimeters.

Auger scroll

There is a small video of the process here

Typically the auger holes are placed relatively close together, and they are drilled on the order of 100 ft deep.

Auger holes (Source Lukhele )

One of the major reasons for the limitation that the auger will drill into the coal is related to the way in which the auger works. In just the same way as when you drill a hole with a wood auger, you have to push hard to get the bit to cut into the coal. But the push has to be transmitted down the flights of the spiral sections of the auger assembly. These are not very strong, and they rub against the walls of the hole that has been drilled, so that as the drill goes further into the coal, more of the push is used up in the rubbing friction between the scrolls and the wall of the hole. Also, if you push too hard after the auger is in the coal some distance then the scroll shafts can slightly buckle and this can thrust the auger head out of alignment so that it drills into either the roof or the floor.

The auger is thus a tool with a relatively limited role, though in that role it can be quite effective. Now here is the change that we made. If you take two or three small (0.04 inch diameter) nozzles and attach them to the front of the auger head, so that two cut on the outer edge of the hole, and one is on the inner diameter, then the jets of water that come out of the nozzles will cut into the coal. The jets should operate at around 7 – 10,000 psi, depending on what other rock is found to be in the coal. Typically these jets will cut into the coal about 6 – 9 inches ahead of the auger body as the head rotates. This breaks the central core of the coal free from the confinement of the surrounding coal, and when the head contacts the coal, it will break outwards in tension, in handle-able sized pieces. The push now required to move the machine into the coal is much lower (we had a student with one arm in a cast use a come-along to pull a 2-ft diameter machine into the face). Because the coal breaks so easily, and the force is so much lower, the scroll sections do not have to be so large, and without the need for the high thrust a smaller scroll, that does not contact the walls all the way around the hole, can be used. With this combination, since there is now no frictional limitation to the push, and the force required to pull the auger head into the coal is so much lower, the range of the machine can be extended from under a hundred feet, to several hundred feet.

The small blocks across the auger face show where the nozzles are mounted. (The sawdust is because we cut plywood to see the cutting pattern).

However there is an additional advantage to this change in design, and that comes about because the coal is now being cut with a water stream instead of with a mechanical tool. The pressure and cutting pattern of the stream can be adjusted so that the jet cannot continuously cut into the rock that overlies and underlies the coal. When the cutting pattern is controlled in that way, and with the lowered push being applied to move the auger head forward, the head cannot cut into the rock, but is held to follow the coal seam. The machine becomes inherently self-steering, and thus can drill further into the coal than its predecessor.

I have described this machine (which we only tested in the lab before the energy crisis of the 80’s went away) to make a relatively simple point. With very little change in the design of the auger – using existing pumps and other parts, we built a machine that could extend the range of mining from the highwall of the surface mine into coal that would otherwise be uneconomic to mine, for a distance of probably more than half-a-mile. (That is based on other research I’ll talk about another day). The innovation is but one of many that could be made to transition equipment being used today to allow it to mine coal that is only counted today as a resource and which people are quite quick to discount as being un-minable.

The economic need for coal is going to be such, however, remembering that all the solar and wind energy being currently used in the country adds up to the power output of only one medium sized coal mine, that we will be mining for a long time. As we do, and the easily recoverable coal goes, then in exactly the same way as innovation has made more difficult gas and oil resources into reserves, so we will see the same change occur with coal resources. And of those we have enough to see us through until new sources of power come along in the right scale and from that they will replace coal.

Jets on the auger face cutting into artificial coal

(Please note I have originally used photos and sketches from the internet for this piece, as I get more skilled in modeling I will replace them with my own. I will also more jet pictures later).