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Energy

With the exception of coal, Alabama will quickly consume its non-renewable energy resources and will be completely dependent on out-of-state oil and gas.  It is important to note that there are many assumptions built into the Reserve Life Index calculation (see below), many of which will are not supported by present data.  For example, the calculation assumes that energy production and consumption will not change in the future, but it is increasing at 3% per year. On the other hand, the assumption that no new major deposits will be discovered can be argued.  Thus, the Reserve Life Index listed for each energy source in Table E1 should be  considered a "Ball Park" estimate. 

Table E1.  Estimated 2004 Reserves, Production and Reserve Life Index* of Alabama's Non-renewable Energy Resources

  Reserves

Production

Reserve Life Index
Coal (million short tons) 2,806 22.0 128
Oil (million barrels) 53 7.3 7
Natural Gas (billion cubic feet) 2,259 209.0 11
Coalbed Methane (billion cubic feet) 1,900 121.0 16

Source: US Energy Information Administration.

*Reserves (often also called proven reserves, measured reserves) is the amount of a resource that can be economically extracted at the time of determination.

Reserves is an economic definition which has as much to do with the selling price of the resource and the technology available to extract it as the amount of that resource is the ground.  It is not the same as the total amount of a resource in the ground (that's called the Resource Base).  The amount of a reserve can change because of such things as market conditions, war, and climate change, as well as new discoveries, better technology to extract the resource and even extensive recycling of the resource.  Thus, its important that the date (usually year) an estimate is made is known.

The Reserve Life Index (RLI) is an estimate of the length of time (usually measured in years) that a non-renewable resource will last.  It is determined by the following relationship:

                    RLI  = Reserves at the end of a year/Annual production or that year.

 The most recent energy data are for the year 2004, so:

                    RLI (2004) = Reserves at the end of 2004/Production in 2004.

Some assumptions inherent in the RLI calculation are:

  • demand for the resource will not change future production
  • all economic deposits have been discovered
  • technology will not improve
  • production = consumption

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