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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsFracking - is the boom about to go bust?
There is pressure in any number of states to start drilling and/or expand drilling, but I thought I saw something to the effect that the market is saturated. I was distracted at the time and didn't get the details. It may be that there is no way to get all the gas to market.
Buzz Clik
(38,437 posts)We have about 10 years at this pace and ten years of tapering off.
Why are we so eager to get back to coal and oil?
JPZenger
(6,819 posts)The boom in the construction of new gas wells has certainly slowed because the increased production caused a glut in the market, which dropped prices. The existing wells are still producing.
The industry is now trying to do everything it can to export the fracked gas overseas, where they can get much more money. They need permission from the Obama administration to export gas to countries that do not have a free trade agreement with the US.
Exporting involves liquifying it, which has its own hazards. Dominion Energy is building a big expanded facility south of Baltimore for exports, and there also are some export ports being built on the west coast.
hedgehog
(36,286 posts)JohnyCanuck
(9,922 posts)From John Michael Greer's blog, The Archdruid Report.
The obvious response to this problem is to drill more wells, and this accordingly happened. That isnt a panacea, however. Oil and gas exploration is a highly sophisticated science, and oil and gas drilling companies can normally figure out the best sites for wells long before the drill bit hits the ground. Since they are in business to make money, they normally drill the best sites first. When that sensible habit intersects with the rapid production decline rates found in fracked wells, the result is a brutal form of economic arithmetic: as the best sites are drilled and the largest reserves drained, drilling companies have to drill more and more wells to keep the same amount of oil or gas flowing. Costs go up without increasing production, and unless prices rise, profits get hammered and companies start to go broke.
snip
A recent report from financial analyst Deborah Rogers, Shale and Wall Street (you can download a copy in PDF format here), offers a helpful glimpse into the three-ring speculative circus that sprang up around shale oil and shale gas during the last three years or so. Those of my readers who suffer from the delusion that Wall Street might have learned something from the disastrous end of the housing bubble are in for a disappointment: the same antics, executed with the same blissful disregard for basic honesty and probity, got trotted out again, with results that will be coming down hard on whats left of the US economy in the months immediately ahead of us.
If you remember the housing bubble, you know what happened. Leases on undrilled shale fields were bundled and flipped on the basis of grotesquely inflated claims of their income potential; newly minted investment vehicles of more than Byzantine complexityVPPs, "volumetric production payments," are an example youll be hearing about quite a bit in a few months, once the court cases beginwere pushed on poorly informed investors and promptly began to crash and burn; as the price of natural gas dropped and fracking operations became more and more unprofitable, "pump and dump" operations talked up the prospects of next to worthless properties, which could then be unloaded on chumps before the bottom fell out. Its an old story, if a tawdry one, and all the evidence suggests that its likely to finish running its usual course in the months immediately ahead.
http://thearchdruidreport.blogspot.com/2013/02/the-end-of-shale-bubble.html
See also this article from Slate:
Straight talk from geologists about our new era of oil abundance.
By Raymond T. Pierrehumbert
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There are certainly huge amounts of oil locked up in shale formations worldwide. In the United States alone, the Bakken and Eagle Ford shales contain up to 700 billion barrels, and the Green River shale under Colorado, Wyoming, and Utah has a whopping 2 trillion barrels. However, only a tiny fraction of this total is recoverable. For Bakken (in Montana and North Dakota) and Eagle Ford (in Texas), which account for most of the current surge in U.S. oil production, the estimated recoverable fraction ranges from 1 to 2 percent. Though all of these deposits are loosely referred to as shale oil, Bakken and Eagle Ford oil is more precisely called tight oil, because it is actual, fluid oil that is trapped in the pores of shale, and it can be liberated by fracturing the rock to allow the oil to flow. In contrast, the hydrocarbon in the Green River shale is not really oil at all but a waxy substance that must be cooked at around 500 degrees Celsius to turn it into flowing oil. The technology for extracting oil from deposits like the Green River shale is far more challenging than what is required to tap into tight oil, and it has never been profitably implemented at any significant scale. There is thus no credible estimate of how much oil can be recovered from the Green River formation.
At the high end of the estimates, predicted production from Bakken and Eagle Ford together amounts to perhaps a two-year oil supply for the United States at 2011 consumption rates. That's significant but not a game-changer. Even if it were to prove possible to achieve production rates comparable to those of Saudi Arabia, that would only mean that we would deplete the resource faster and bring on an oil crash sooner.
What would it take to ramp up production to such high levels? Technological developments have made it possible to tap into tight oil, but these are not the same kinds of technological developments that have given us ever more powerful computers and cellphones at ever declining prices. Oil production technology is giving us ever more expensive oil with ever diminishing returns for the ever increasing effort that needs to be invested. According to the statistics presented by J. David Hughes at the AGU session, we are now drilling 25,000 wells per year just to bring production back to the levels of the year 2000, when we were drilling only 5,000 wells per year. Worse, the days are long gone when you could stick a pitchfork in the ground and get a gusher that would produce for years. The new wells are expensive (on the order of $10 million each in the Bakken) but give out rapidly, as shown in the following figure from Hughes' talk illustrating the typical production curve.
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The flaws in the abundance narrative for fracked natural gas are much the same as for tight oil, so I won't belabor the point. Certainly, the current natural gas glut has played a welcome role in the reduced growth rate of U.S. carbon dioxide emissions, and the climate benefits of switching from coal to natural gas are abundantly clear. But gas, too, is in a Red Queen's race, and it can't be counted on to last out the next few decades, let alone the century of abundance predicted by some boosters. Temporarily cheap and abundant gas buys us some respitewhich we should be using to put decarbonized energy systems in place. It will only do us good if we use this transitional period wisely. We won't be much better off in the long run if cheap gas only succeeds in killing off the nascent renewables industry and the development of next-generation nuclear power.
http://www.slate.com/articles/health_and_science/science/2013/02/u_s_shale_oil_are_we_headed_to_a_new_era_of_oil_abundance.single.html
JohnyCanuck
(9,922 posts)This is a snip from the Deborah Rogers report "Shale and Wall Street" mentioned in "The End of the Shale Bubble?" in my earlier post above.
In an environment of declining crude reserves and a now-necessary reliance on low-EROI
conventional hydrocarbons {EROI = Energy Returned on (energy) Invested /JC} , the oil and gas industry launched a public relations campaign with shale gas and oil of disproportionate scale to the actual performance of the wells. From a business perspective, of course, this made perfect sense.
The financial markets are intricately married to large multinational corporations. Without such markets, companies would be small and local rather than the transnational behemoths of today. Therefore, the growth of companies and the growth of economies relies heavily on the global capital markets.
In order for a publicly traded oil and gas company to grow extensively, it must manage not only its core business but also the relationship it enjoys with its investment bankers. Thus, publicly traded oil and gas companies have essentially two sets of economics. There is what may be called field economics, which addresses the basic day to day operations of the company and what is actually occurring out in the field with regard to well costs, production history, etc.; the other set is Wall Street or Street economics. This entails keeping a company attractive to financial analysts and investors so that the share price moves up and access to the capital markets is assured.
Street economics has more to do with the frenzy we have seen in shales than does actual well performance in the field.
http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf
(FYI, I found I had to download the PDF file first before attempting to open the document. Could not get it to open over the web.)
yes the market for fracking is definitely saturated around these parts. don't know how it could remain stable this way