One source for this post is Forbes Magazine article, ” U.S. Dependence on Foreign Oil Hits 30-Year Low”, by Mr. Mike Patton.  Other sources were obviously used.

The United States is at this point in time “energy independent”—for the most part.   Do you remember the ‘70s and how, at times, it was extremely difficult to buy gasoline?  If you were driving during the 1970s, you certainly must remember waiting in line for an hour or more just to put gas in the ol’ car? Thanks to the OPEC oil embargo, petroleum was in short supply. At that time, America’s need for crude oil was soaring while U.S. production was falling. As a result, the U.S. was becoming increasingly dependent on foreign suppliers. Things have changed a great deal since then. Beginning in the mid-2000s, America’s dependence on foreign oil began to decline.  One of the reasons for this decline is the abundance of natural gas or methane existent in the US.

“At the rate of U.S. dry natural gas consumption in 2015 of about 27.3 Tcf (trillion cubic feet) per year, the United States has enough natural gas to last about 86 years. The actual number of years will depend on the amount of natural gas consumed each year, natural gas imports and exports, and additions to natural gas reserves. Jul 25, 2017”

For most of the one hundred and fifty (150) years of U.S. oil and gas production, natural gas has played second fiddle to oil. That appeared to change in the mid-2000s, when natural gas became the star of the shale revolution, and eight of every 10 rigs were chasing gas targets.

But natural gas turned out to be a shooting star. Thanks to the industry’s incredible success in leveraging game-changing technology to commercialize ultralow-permeability reservoirs, the market was looking at a supply glut by 2010, with prices below producer break-even values in many dry gas shale plays.

Everyone knows what happened next. The shale revolution quickly transitioned to crude oil production, and eight of every ten (10) rigs suddenly were drilling liquids. What many in the industry did not realize initially, however, is that tight oil and natural gas liquids plays would yield substantial associated gas volumes. With ongoing, dramatic per-well productivity increases in shale plays, and associated dry gas flowing from liquids resource plays, the beat just keeps going with respect to growth in oil, NGL and natural gas supplies in the United States.

Today’s market conditions certainly are not what had once been envisioned for clean, affordable and reliable natural gas. But producers can rest assured that vision of a vibrant, growing and stable market will become a reality; it just will take more time to materialize. There is no doubt that significant demand growth is coming, driven by increased consumption in industrial plants and natural gas-fired power generation, as well as exports, including growing pipeline exports to Mexico and overseas shipments of liquefied natural gas.

Just over the horizon, the natural gas star is poised to again shine brightly. But in the interim, what happens to the supply/demand equation? This is a critically important question for natural gas producers, midstream companies and end-users alike.

Natural gas production in the lower-48 states has increased from less than fifty (50) billion cubic feet a day (Bcf/d) in 2005 to about 70 Bcf/d today. This is an increase of forty (40%) percent over nine years, or a compound annual growth rate of about four (4%) percent. There is no indication that this rate of increase is slowing. In fact, with continuing improvements in drilling efficiency and effectiveness, natural gas production is forecast to reach almost ninety (90) Bcf/d by 2020, representing another twenty-nine (29%) percent increase over 2014 output.

Most of this production growth is concentrated in a few extremely prolific producing regions. Four of these are in a fairway that runs from the Texas Gulf Coast to North Dakota through the middle section of the country, and encompasses the Eagle Ford, the Permian Basin, the Granite Wash, the SouthCentral Oklahoma Oil Play and other basins in Oklahoma, and the Williston Basin. The other major producing region is the Marcellus and Utica shales in the Northeast. Almost all the natural gas supply growth is coming from these regions.

We are at the point where this abundance can allow US companies to export LNG or liquified natural gas.   To move this cleaner-burning fuel across oceans, natural gas must be converted into liquefied natural gas (LNG), a process called liquefaction. LNG is natural gas that has been cooled to –260° F (–162° C), changing it from a gas into a liquid that is 1/600th of its original volume.  This would be the same requirement for Dayton.  The methane gas captured would need to be liquified and stored.  This is accomplished by transporting in a vessel similar to the one shown below:

As you might expect, a vessel such as this requires very specific designs relative to the containment area.  A cut-a-way is given below to indicate just how exacting that design must be to accomplish, without mishap, the transportation of LNG to other areas of the world.

Loading LNG from storage to the vessel is no easy manner either and requires another significant expenditure of capital.

For this reason, LNG facilities over the world are somewhat limited in number.  The map below will indicate their location.

A typical LNG station, both process and loading may be seen below.  This one is in Darwin.

CONCLUSIONS:

With natural gas being in great supply, there will follow increasing demand over the world for this precious commodity.  We already see automobiles using LNG instead of gasoline as primary fuel.  Also, the cost of LNG is significantly less than gasoline even with average prices over the US being around $2.00 +++ dollars per gallon.  According to AAA, the national average for regular, unleaded gasoline has fallen for thirty-five (35) out of thirty-six (36) days to $2.21 per gallon and sits at the lowest mark for this time of year since 2004. Gas prices continue to drop in most parts of the country due to abundant fuel supplies and declining crude oil costs. Average prices are about fifty-five (55) cents less than a year ago, which is motivating millions of Americans to take advantage of cheap gas by taking long road trips this summer.

I think the bottom line is: natural gas is here to stay.

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In preparation for this post, I asked my fifteen-year old grandson to define product logistics and product supply chain.  He looked at me as though I had just fallen off a turnip truck.  I said you know, how does a manufacturer or producer of products get those products to the customer—the eventual user of the device or commodity.  How does that happen? I really need to go do my homework.  Can I think about this and give you an answer tomorrow?

SUPPLY CHAIN LOGISTICS:

Let’s take a look at Logistics and Supply Chain Management:

“Logistics typically refers to activities that occur within the boundaries of a single organization and Supply Chain refers to networks of companies that work together and coordinate their actions to deliver a product to market. Also, traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management. Supply Chain Management (SCM) acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service” – from Essential of Supply Chain Management by Michael Hugos.

“Logistics is about getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost (the seven Rs of Logistics)” – from Supply Chain Management: A Logistics Perspective By John J. Coyle et al

Now, that wasn’t so difficult, was it?  A good way to look at is as follows:

MOBILITY AND THE SUPPLY CHAIN:

There have been remarkable advancements in supply chain logistics over the past decade.  Most of those advancements have resulted from companies bringing digital technologies into the front office, the warehouse, and transportation to the eventual customer.   Mobile technologies are certainly changing how products are tracked outside the four walls of the warehouse and the distribution center.  Realtime logistics management is within the grasp of many very savvy shippers.  To be clear:

Mobile networking refers to technology that can support voice and/or data network connectivity using wireless, via a radio transmission solution. The most familiar application of mobile networking is the mobile phone or tablet or i-pad.  From real-time goods tracking to routing assistance to the Internet of Things (IoT) “cutting wires” in the area that lies between the warehouse and the customer’s front door is gaining ground as shippers grapple with fast order fulfillment, smaller order sizes, and ever-evolving customer expectations.

In return for their tech investments, shippers and logistics managers are gaining benefits such as short-ended lead times, improved supply chain visibility, error reductions, optimized transportation networks and better inventory management.  If we combine these advantages we see that “wireless” communications are helping companies work smarter and more efficiently in today’s very fast-paced business world.

MOBILITY TRENDS:

Let’s look now at six (6) mobility trends.

  1. Increasingly Sophisticated Vehicle Communications—There was a time when the only contact a driver had with home base was after an action, such as load drop-off, took place or when there was an in-route problem. Today, as you might expect, truck drivers, pilots and others responsible for getting product to the customer can communicate real-time.  Cell phones have revolutionized and made possible real-time communication.
  2. Trucking Apps—By 2015, Frost & Sullivan indicated the size of the mobile trucking app market hit $35.4 billion dollars. Mobile apps are being launched, targeting logistics almost constantly. With the launch of UBER Freight, the competition in the trucking app space has heated up considerably, pressing incumbents to innovate and move much faster than ever before.
  3. Its’ Not Just for the Big Guys Anymore: At one time, fleet mobility solutions were reserved for larger companies that could afford them.  As technology has advanced and become more mainstream and affordable, so have fleet mobility solution.
  4. Mobility Helps Pinpoint Performance and Productivity Gaps: Knowing where everything is at any one given time is “golden”. It is the Holy Grail for every logistics manager.  Mobility is putting that goal within their reach.
  5. More Data Means More Mobile Technology to Generate and Support Logistics: One great problem that is now being solved, is how to handle perishable goods and refrigerated consumer items.  Shippers who handle these commodities are now using sensors to detect trailer temperatures, dead batteries, and other problems that would impact their cargos.  Using sensors, and the data they generate, shippers can hopefully make much better business decisions and head off problems before they occur.  Sensors, if monitored properly, can indicate trends and predict eventual problems.
  6. Customers Want More Information and Data—They Want It Now: Customer’s expectations for real-time shipment data is now available at their fingertips without having to pick up a telephone or send an e-mail.  Right now, that information is available quickly online or with a smartphone.

CONCLUSIONS: 

The world is changing at light speed, and mobility communications is one technology making this possible.  I have no idea as to where we will be in ten years, but it just might be exciting.

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