Jump to content
Join the Unexplained Mysteries community today! It's free and setting up an account only takes a moment.
- Sign In or Create Account -

The fracking bubble is about to burst


Guest Br Cornelius

Recommended Posts

If someone refused to lease their land for a fracking well, wouldn't the oil company just drill on nearby property?

As far as "killing off" the alternative energy businesses, I doubt it, but if it happens then it will be because these businesses couldn't control costs. Eventually even fracked oil will run out, although this now seems like maybe twenty more years. Alternative energy will have its day.

I think it behooves the authorities to protect the groundwater, and I doubt it if Democrats in power will look the other way if this begins to happen in any serious way. These claims strike me as politics, not reality.

They could try, but the Mineral rights below my land are mine alone!! Where is the profit if I charge Royalties of 100 euros per cubic foot extracted? If they were prepared to pay that, then I would increase my royalties to 1000 euros per cubic foot...

Link to comment
Share on other sites

If someone refused to lease their land for a fracking well, wouldn't the oil company just drill on nearby property?

In the US, you have a have the drilling rights to the nearby property or you can't drill it. There are several instances where state parks and, I believe, a national park, leased drilling rights on the condition that the well not be drilled on park land. The oil companies complied and drilled laterals from nearby private land. I sold a non-drilling lease on my place to an oil/gas company. My property was within the draw-down radius (1320 feet) of the well, so they had to have the lease or they couldn't drill. The depth is a little over a mile. In one lateral they drilled beneath my land to reach a neighbor's. We had no problems whatever from fracking, but there was a salt water spill that got into my pond. They just wrote a check for the fish. No questions asked.

Oil companies don't want trouble with their property owners. In western Oklahoma, one man may own 5000 acres and if you make him mad, he leases the other 4960 acres to somebody else. Besides which, the leases are for only five years to begin with and you don't want to be drilling a well for somebody else to profit from. So you take good care of your owners.

As far as "killing off" the alternative energy businesses, I doubt it, but if it happens then it will be because these businesses couldn't control costs. Eventually even fracked oil will run out, although this now seems like maybe twenty more years. Alternative energy will have its day.

Wind is already cheaper than gas. There's a political fight going on in California with the oil-and-gas folks trying to keep wind out. I predict they'll lose. I think wind is the wave of the future.

I think it behooves the authorities to protect the groundwater, and I doubt it if Democrats in power will look the other way if this begins to happen in any serious way. These claims strike me as politics, not reality.

Agreed.

Doug

Link to comment
Share on other sites

I checked out the premise of this thread (That fracking is about to die of natural [economic] causes) with a production geologist. Her reaction: "That's news to me." Her team has just developed a new technique for high-pressure drilling, cutting drilling time (and cost) in half. The technique is an industrial secret, but I guess I just let the high-pressure part of it out of the bag.

Anyway, I'm still having trouble seeing what the danger from fracking is. Drilling mud, especially oil-based mud is more toxic than fracking fluids. I think the public is mislead by the term "mud." Sounds like something you scooped up from the haul road, not a mix of chemicals, clays, sands, etc. etc. But fracking fluid is mostly water and sand. The producing strata are two MILES underground, a long way from ground water, and the casing is sealed. It's made of concrete and bonds to the rock.

So how often does the casing fail? There are a quarter of a million wells in Oklahoma and as far as I know, only one has failed. That one was an abandoned arsenic well that was cleaned up and re-sealed by the Corporation Commission in less than a week from the day it was reported.

Why is there so much trouble in Pennsylvania and Ohio? Oklahoma has had oil and gas drilling for over a hundred years, now. We have put in the rules and regs needed to safeguard the public. Ohio and Pennsylvania have not. That simple.

Most companies are responsible citizens and just tell their drillers to abide by Oklahoma standards. But a few aren't and don't take adequate safeguards. Those few need regulation. So put in the regulations and quit crying about it.

What is the major pollutant coming out of oil/gas wells? Good old table salt. That is a serious problem if you're a plant, or the salt water gets into a stream. Ever tried to clean up a salt spill? Compared to that, oil is a piece of cake: the oil soaks into the duff and soil and stays near the top of the profile where it is easy to get at. Salt, on the other hand, quickly settles to great depths, then travels with the ground water.

BTW: Day before yesterday we had a derrickman fall from a rig and get killed. Nobody knows why his safety harness wasn't hooked in. That's the only drilling-related fatality I know of in the last couple years. We had a rig blow up about two years ago, but nobody was hurt. So how many fracking fatalities do you know of during that same time span?

Now that I've said all that: natural gas contains carbon. It's 75% carbon by weight. Burning it pollutes the atmosphere, whether the oil and gas folks like to think so, or not. It is not as clean as the commercials would like you to think. We have to phase it out for the health and safety of ourselves and our planet. Switching to gas as an intermediate step makes no sense when we have the technology to switch directly to wind and do it cheaper than using oil and at a rate competitive with gas.

So while the anti-fracking thing seems to me to be mostly hype, we still have to phase out gas drilling and that will include fracking.

Doug

Please vist the link. It is far from sand and water: http://www.endocrinedisruption.com/files/Multistatesummary1-27-11Final.pdf

A very brief web search will also show that 2kms underground is deeper than most fracking wells, and that even then the pollution of aquifers above this level (some more than 2kms underground) is also compromised.

Link to comment
Share on other sites

Please vist the link. It is far from sand and water: http://www.endocrine...-27-11Final.pdf

A very brief web search will also show that 2kms underground is deeper than most fracking wells, and that even then the pollution of aquifers above this level (some more than 2kms underground) is also compromised.

I know that there are chemicals other than just sand and water used in fracking. A fracking company's only claim to being better than its competition is the content of its fracking fluid. If it gets out that they're fluid isn't really any different (or better) than anybody else's, they could lose a lot of business. And that's the reason for the secrecy.

For some reason, my computer doesn't want to download pdf files. But I'll try to see what else I can find.

Oil companies don't want to frack a well if it isn't needed. Fracking is expensive. Better not to spend the money if you don't need it.

Drilling and fracking are done by different companies. If one of them screws up, they both get sued. A fracking company doesn't want to get caught breaking the law, so it doesn't frack wells that aren't drilled according to plan. And the drilling company doesn't want to get sued for stealing somebody else's oil/gas, so they try to keep the well bore where it belongs. But, a two-mile-long drill string is a bit like trying to hit a golf ball from the next tee by pushing a noodle at it. Drill strings have gotten lost before. The well logs may be in the possession of five or six different companies and can be subpoenaed if there is ever a question. And juries tend to award large settlements if an oil company is the defendant. So everybody tries to play by the rules (usually).

Doug

  • Like 1
Link to comment
Share on other sites

Industry information shows that over the typical lifetime of a gas/oil well ALL well casings fail. Thats right, ALL WELL CASINGS FAIL.

In a fracked well this has got to be a much more serious issue since the stress on the well casing is much more and the well is fracked on multiple occasions - each placing the well casing under great stress.

In Ireland they are proposing to frack in shales at about 1km depth (in a carstified geology) which places the local aquifer firmly in the local extraction zone and fairly much guarantees both pollution of the aquifer and release of methane to the atmosphere. American studies by the EPA have shown that similar shallow fracks do pollute aquifers.

Br Cornelius

Link to comment
Share on other sites

Industry information shows that over the typical lifetime of a gas/oil well ALL well casings fail. Thats right, ALL WELL CASINGS FAIL.

In a fracked well this has got to be a much more serious issue since the stress on the well casing is much more and the well is fracked on multiple occasions - each placing the well casing under great stress.

In Ireland they are proposing to frack in shales at about 1km depth (in a carstified geology) which places the local aquifer firmly in the local extraction zone and fairly much guarantees both pollution of the aquifer and release of methane to the atmosphere. American studies by the EPA have shown that similar shallow fracks do pollute aquifers.

Br Cornelius

So don't do them. Problem solved.

Link to comment
Share on other sites

in related news:

A Protest in U.S. Oil Country Spells Trouble

for Fracking Abroad

Gardendale, Texas, sits on the Permian Basin, the largest oil province in the United States. That makes it an unlikely site of anti-fracking protests and an even more unlikely bellwether for shale gas drilling activity in Europe and Asia. And yet it is.

About 15 residents in the town, population 1,574, are waging an anti-drilling crusade against Berry Petroleum. They have tried to turn Gardendale into an official municipality, which would give them more control over gas exploration and production near their homes. They launched a website to chronicle Berry's alleged misdeeds, and a YouTube channel with short "Berry Tales" videos. They have, if nothing else, painted a drilling trailer which they playfully call the “Gardenhell scar" and dumped it near a group of oil storage tanks (see above).

Read more

Link to comment
Share on other sites

Please vist the link. It is far from sand and water: http://www.endocrine...-27-11Final.pdf

I ran an anti-viral program and now my Adobe Reader is working fine.

Good post. Lot of good info in there. I took the liberty of showing your post to a petroleum geologist. Here's the reply:

I would say this raises more questions than it answers (damn you, science!!).

I'm not one to say all oilfield chemicals should be allowed to remain trade secrets, as the health concerns associated with those chemicals are very important. That said, when a company spends a bunch of time and money developing their own special mix that works well in a given reservoir I don't necessarily think they should have to disclose it to their competitors (right, blah blah tax breaks. OK, end the tax breaks, but I think there's actually a stronger case for making companies disclose the chemicals if we're footing the bill. If we're paying for it we have a greater right to know. Just my opinion. I digress). I think both sides have legitimate points there. And while it's popular to say that human life trumps all other factors, right or wrong,in the real world it doesn't and it never has. I don't see anyone giving up their car over the on-the-job death of a roughneck or advocating the use a whale oil when a lineman gets electrocuted. But John Q. Neighbor gets headaches that might possibly be from the chemicals used on wells near his home and we should stop all fracing everywhere. I'm not making light of their suffering, but there's a disconnect there. And on occasion I wonder if the real problem is their neighbors are making money and they aren't (oh yes, I went there).

What "natural gas operations" are we talking about? It's not a very specific term. They seem to be focusing on drilling and fracing, maybe, but transportation, refining, etc. have significant differences in the chemicals used, the concentrations of those chemicals, and the ability of people to avoid them (ie some of them could conceivably be found in your well water or worse in a municiple water supply, some of them might never be a problem unless you're next door to a refinery, etc.). They should probably clarify what they mean.

I couldn't really tell if the concentration of these chemicals in the environment was consideredf here. Yes, lots of those chemicals are dangerous when they are concentrated down for efficient shipping-- those MSDSs are terrifying, but so is the one for concentrated HCL (I work with dilute HCL without wearing gloves pretty frequently, I spill it on my hands regularly, and I'm still ticking. It did, after about a week, wear a hole in my jeans though). How dangerous are they when mixed with 95% water and sand, add some other chemicals to the remaining 5%, then circulated down and back up hole (we recover as much frac water as possible. It's expensive)? How much of it is left in the formation? How much of it is later returned to surface while the well is flowing? How much of what is left works its way into the air or water? Now... are those exposure levels dangerous, short- or long-term? As always I have to conclude with: looks like we need more studies.

And for the last time, "fracture" does not have a K. :P

B.

A very brief web search will also show that 2kms underground is deeper than most fracking wells, and that even then the pollution of aquifers above this level (some more than 2kms underground) is also compromised.

I grant that my knowledge of this subject is limited as I have not made a serious examination of it. I'm hoping to begin doing that as part of an energy study I hope to begin in the fall. In the meantime, I don't want to jump to conclusions and there is so much just-plain-hype on the part of frac(k)ing opponents and such a lack of information from the petro-chemical people, that an informed decision is difficult to achieve.

Doug

  • Like 1
Link to comment
Share on other sites

Remember that many of these chemicals are known carcinogens at levels of parts per billion. A blow out into a shallow aquifer which causes visible changes in the water is certainly in excedance of these levels.

Things like this will only emerge as spikes of cancer many years after the event - almost impossible to trace, especially with the general levels of secrecy associated with the industry.

Br Cornelius

Link to comment
Share on other sites

I wouldn't be surprised if some company somewhere is caught using a known carcinogen, and they get their ass handed to them. I don't know, though, that this is reason to stop fracting.

Link to comment
Share on other sites

Remember that many of these chemicals are known carcinogens at levels of parts per billion. A blow out into a shallow aquifer which causes visible changes in the water is certainly in excedance of these levels.

Things like this will only emerge as spikes of cancer many years after the event - almost impossible to trace, especially with the general levels of secrecy associated with the industry.

Br Cornelius

Perhaps it is time to require disclosure of any drilling/fracking chemicals for which a company claims a tax benefit. If we, as taxpayers, are going to subsidize them, then we have a right to know. And if they don't want to disclose what they're using, they don't have to take the tax break. Personally, I think we should end all such tax breaks to coal, oil, and gas.

Also, it may be time to require disclosure for any chemical with an LD50 > 2ppb. I really don't care if they want to pack shredded cedar into their drilling mud, but there are other things being used that are more deadly.

BTW, regarding drilling in karst topography: a drill string in Kentucky suddenly dropped 30 feet. Apparently, they hit a void. I didn't think much of it at the time, but it would be nearly impossible to run enough grout into that well to stop the leak. And all that grout is going somewhere, very likely into the ground water.

Doug

  • Like 1
Link to comment
Share on other sites

Despite accounting for nearly 40 per cent of US natural gas production, shale gas production has "been on a plateau since December 2011 - 80 per cent of shale gas production comes from five plays", some of which are already in decline.

"The very high decline rates of shale gas wells require continuous inputs of capital - estimated at $42 billion per year to drill more than 7,000 wells - in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32.5 billion."

The report thus concludes:

"Notwithstanding the fact that in theory some of these resources have very large in situ volumes, the likely rate at which they can be converted to supply and their cost of acquisition will not allow them to quell higher energy costs and potential supply shortfalls."

Report author Hughes said that the main problem was the exclusion of price and rate of supply: "Price is critically important but not considered in these estimates." He added: "Only a small portion [of total estimated resources], likely less than 5-10 per cent will be recoverable at a low price...

"Shale gas can continue to grow but only at higher prices and that growth will require an ever escalating drilling treadmill with associated collateral financial and environmental costs – and its long term sustainability is highly questionable."

...........

Another report was put out by the Energy Policy Forum, and authored by former Wall Street analyst Deborah Rogers - now an adviser to the US Department of the Interior's Extractive Industries Transparency Initiative. Rogers warns that the interplay of geological constraints and financial exuberance are creating an unsustainable bubble. Her report shows that shale oil and gas reserves have been:

"... overestimated by a minimum of 100% and by as much as 400-500% by operators according to actual well production data filed in various states... Shale oil wells are following the same steep decline rates and poor recovery efficiency observed in shale gas wells."

Deliberate overproduction drove gas prices down so that Wall Street could maximise profits "from mergers & acquisitions and other transactional fees", as well as from share prices. Meanwhile, the industry must still service high levels of debt due to excessive borrowing justified by overinflated projections:

"... leases were bundled and flipped on unproved shale fields in much the same way as mortgage-backed securities had been bundled and sold on questionable underlying mortgage assets prior to the economic downturn of 2007."

Seeking to prevent outright collapse, the report argues, the US is ramping up gas exports so it can exploit the difference between low domestic and high international prices "to shore up ailing balance sheets invested in shale assets."

..........

"What is most troubling to me is that there appears to be a complacency setting in about transitioning to a more sustainable energy economy. Shales should be used as a bridge. But we are hearing far too much euphoric talk about 100-200 years of natural gas. Therefore no need to worry, it can be business as usual. This is highly problematic in my opinion. We must globally transition away from hydrocarbons.

http://www.guardian.co.uk/environment/earth-insight/2013/jun/21/shale-gas-peak-oil-economic-crisis

I sincerely hope no one here has got good money sunk into this pig.

Br Cornelius

Link to comment
Share on other sites

One of these days we are going to wake up to water that is polluted more than it is now and oil prices at a all time high which will cause another recession {depression}. I wonder how long it will take, we haven't recovered from the last recession. If the fracking industry employ's almost 2 million people when it collapses there will be unemployment rates higher than we ever seen. When they lose their job so will many others in different occupations.

We might be able to survive without oil but we won't survive with out clean water. That's one thing that needs protecting from fracking as if it were an endangered species. So yes I think we should know what is in those chemicals. We can afford not to know.

Link to comment
Share on other sites

I sincerely hope no one here has got good money sunk into this pig.

Boom-and-bust cycles are part of the oil and gas industry. Always have been. Drilling/fracking may get shelved temporarily, but they will be back as soon as there is an upturn.

Chesapeake is in trouble because they invested too heavily in gas. That was several years ago when we had some cold winters when gas usage was up. Then we got some warm winters and the market tanked. Chespeake still owns an entire gas field that is fully developed and ready to go as soon as the market comes back. All they have to do is open the valves. So there is some elasticity in the markets. Drilling can be shut down temporarily while the market absorbs the surplus. But as soon as the surplus is gone, drilling (and fracking) resume.

One thought about disintegrating well casings: after their productive life ends, wells can be decommissioned. All you have to do is fill them with concrete. A four-inch bore two miles long does not hold all that much concrete. Oklahoma has the Corporation Commission (government) and the Oklahoma Resources Board (oil company cooperative) that decommission and cap abandoned wells. Anybody who drills a well is responsible for decommissioning it when production ends. But it is not always clear who owns an abandoned well, so we have these two organizations that take over in that case. If the owner does not decommission the well, the Corporation Commission will do it and sue the owner for the costs - cheaper to do it yourself.

Pennsylvania and other states now having all the problems with drilling and fracking have failed to set up the regulatory systems needed. Then they try to blame the entire industry for a few unscrupulous operators and their own lack of supervision.

Doug

Link to comment
Share on other sites

  • 3 weeks later...

More evidence of what I have been saying.

http://www.erec.org/..._Gas_on_RES.pdf

It also highlights that a Shale boom represents a real and serious threat to renewables take up and thus cannot be considered a transition fuel - rather a displacing fuel with a very short window of availability. A dash for shale gas would store up huge strategic crisis for the future.

Fracking represents the madness of an oil dependent society in its end times.

Br Cornelius

Edited by Guest
Link to comment
Share on other sites

I think frackting may well be hugely over-hyped and still, regardless, be the bridge we need. As far as anyone getting heavily into it, I would be that person, and I see no effective instrument wherein the interest isn't either private or heavily diluted.

Supply and demand are in good force here, as price drops supply drops and demand goes up, and vice-versa. Absent some unseen third source, the future seems transparent. The only third source that seems likely is substantial more supply than expected from the middle east, and they are better off, if they have such supplies, keeping their mouths shut and keeping prices high. Otherwise they just increase political pressure to develop non-polluting alternatives faster.

Link to comment
Share on other sites

Industry information shows that over the typical lifetime of a gas/oil well ALL well casings fail. Thats right, ALL WELL CASINGS FAIL.

An old, non-producing well can be sealed by filling it with concrete. Even if there is a bad casing where the bond between the casing and the rock has failed, the rest of the seal will hold, keeping gas and anything else out of the aquifers.

The difficult part is not the technology, but the politics. In Ohio and Pennsylvania they whine about the dangers of fracking, but refuse to pass the legislation needed to control the situation. On the Alleghany National Forest are several wells that spew a steady stream of gas into the air. These can and should be sealed. The owner of the mineral rights is the responsible party. If the company that drilled the well no longer exists, then an orphan fund pays the costs and charges it to an orphan account, into which all oil and gas companies must pay. There's no secret here. All it takes is having huevos to get the job done.

Doug

  • Like 1
Link to comment
Share on other sites

You may possibly be able to cement seal a redundant well - but it will have been p***ing gas into the atmosphere for at least a decade at that point. I also doubt that filling the well casing with cement will stop gas migration around the edge of the whole casing at the join with the environment - this isd a pathway which will connect the deep fracked zone to the surface regardless of what you do with the casing.

The fracking industry was exempted from the superfund act which means there is no orphan fund to deal with abandoned wells. You can thank Dick Cheney for that.

Br Cornelius

Edited by Guest
Link to comment
Share on other sites

You may possibly be able to cement seal a redundant well - but it will have been p***ing gas into the atmosphere for at least a decade at that point. I also doubt that filling the well casing with cement will stop gas migration around the edge of the whole casing at the join with the environment - this isd a pathway which will connect the deep fracked zone to the surface regardless of what you do with the casing.

The fracking industry was exempted from the superfund act which means there is no orphan fund to deal with abandoned wells. You can thank Dick Cheney for that.

Br Cornelius

If just a few feet of casing remains bonded to the rock, the seal will hold. Pressure monitors can be installed at several points along the well bore to monitor for gas leakage (The machine that "sniffs" for gas is called "the bloodhound.").

Oklahoma has two funds for sealing orphan wells. One is handled by the Corporation Commission and has the authority to seal the well, reclaim the sight and reimburse landowners for damages and charge the costs to the lease holder if it still exists. If it doesn't exist anymore, then the orphan fund pays for the cleanup and oil and gas producers have to reimburse the state.

Industry people noted that the Corporation Commission spends money rather lavishly, so they formed a consortium that reclaims well sites (Somewhere around 8000 sites, so far.). There is no cost to the landowner - the consortium covers it all. This way they cut the total costs and get some good PR. One does not have to have a superfund if the state's elected officials have a backbone.

Doug

  • Like 1
Link to comment
Share on other sites

  • 3 weeks later...

When it comes to energy’s fracking revolution, few men have contributed more–or played the trend as profitably–as Mark Papa, the 66-year-old chairman of EOG Resources. So when he lays a chart out on a conference table in his skyscraper aerie in Houston, it’s surprising to hear him say that
the Great American Oil Boom
, which he helped create,
is "not going to be as massive as people think."

"The chances of the U.S. being independent in oil are very slim," he says.

The chart shows how different fields will contribute to future supplies. And it is dominated by two areas: the Bakken shale region of North Dakota and Eagle Ford in South Texas. Those two fields – helped by the revolutionary technologies of hydraulic fracturing and horizontal drilling – have furnished the bulk of the 43% jump in U.S. oil supplies over the last five years. [..]

The rest of America’s big finds? Even the third-biggest new oil play, in the Permian Basin of Texas and New Mexico, won’t measure up, says Papa. "We’ve studied this from the rocks’ point of view," he says, tapping the chart. Despite dozens of shale oil discoveries, he says,
"there’s a whole lot of plays that will have zero significance."

Why listen to Papa? Because under his command EOG shares returned 650% in the past decade, more than any other sizable U.S. oil company. EOG’s market cap is closing in on $40 billion - more than Apache Corp. or Marathon Oil, and nearly triple the value of Chesapeake Energy.

During the land-grab phase of the shale boom
EOG Resources - once a division of Enron - was one of the first companies into the Bakken shale, and it discovered the Eagle Ford (it has massive holdings in the sweet spots of both fields and many others).
Unlike rival Chesapeake Energy, EOG didn’t go deep into debt to gobble up land
. In fact, Papa had the discipline to sell off marginal acreage to greater fools willing to pay top dollar.

Now that the land grab is over, companies are stuck with more turf than they can drill, and prices have collapsed.
Hess Corp. just dumped subpar acreage for an $800 million loss.
"In the game of musical chairs, all of a sudden the music stopped,"
says Carl Tricoli, president of private equity firm Denham Capital. And EOG is sitting pretty. [..]

October 2007 Papa declared that
industry had found so much shale gas that "we had probably ruined the market for 20 years."
So, he said, EOG would shift entirely toward oil.

As natural gas prices climbed to a record $14 per thousand cubic feet in 2008, he stuck to his plan. "We still knew doom was going to hit," recalls Papa. It did. Prices plunged in 2009, bottoming out below $2 in early 2012. [..]

Of the roughly 26 billion barrels of original oil in place
under EOG’s land in the Eagle Ford play, the company figures
it can recover "only" 2.2 billion barrels
.

That recovery rate of 8% is about standard across the shale plays
but pales beside a rate of 30% or more in conventional fields.

Now that the shale land grab is done
, analyst Bob Brackett of Bernstein Research sees the likelihood that cash-rich and growth-hungry super-majors like Chevron will soon look to acquire winners like EOG.

http://theautomatice...h.qIBAwpCb.gbpl

Are you nervous yet ??

More bad news as oil giants shale investments go sour;

U.K.-listed oil and gas company Royal Dutch Shell on Thursday posted a
60% fall in profit for the 2nd quarter
, largely from
a charge of more than $2 billion on the value of its liquids-rich shale assets in North America.

The company warned that its North American exploration and production division was likely to remain at a loss during at least the second half of the year, and announced a strategic review of its North American portfolio with a view to selling some assets.

The write-down on the North American shale assets reflected new information from exploration and appraisal drilling, and production, Shell said.

Shell [..] took a $2.1 billion write-down on its shale-oil exploration in North America, a key focus of company investment; and it abandoned plans to raise production to four million barrels per day by 2017-18.

The shale write-down is something of a mystery
. The move acknowledges some of Shell's spending on shale-oil exploration will not prove economically viable though it wouldn't disclose which of its fields have disappointed. Nor did Shell rule out further write-downs on its $24 billion of capital invested in shale oil and gas.

Shell's decision to speed up the rate at which it disposes of assets is a clue that hitting its cash flow targets could get tougher.

Peak oil is real and happening now, and fracking will fail to plug the hole;

A new Eos report by the American Geophysical Union, "Peak Oil and Energy Independence: Myth and Reality", argues that
global crude output has been stuck on a plateau of around 75m barrels per day (bpd) since 2005 despite enticing returns
. "Global net oil exports from oil-exporting countries have peaked and are in decline."

The output of the big five oil majors - Exxon, BP, Total, Chevron and Shell - has fallen by 26% over the past nine years ...

Theoretical reserves are meaningless. What matters is the break-even cost.

Eos said
flows from the world's existing fields are falling at 5% a year
, and it is questionable whether shale or tar sands can easily step into the breach. "Production from these unconventional sources is difficult and expensive, and has a very low energy return on investment. Simply stated, it takes energy to get energy," it said.

The depletion rate on rigs at the Bakken field
in North Dakota - the biggest US shale field - is precipitous.
Output falls 30% within two years, and a third is leaking into the air
. Shale bears say average declines are nearer 70% in the first year ...

Kevin Norrish from Barclays said US drillers have already tapped the "best plays" for shale, with newer Utica ventures in the north east of the US and Canada coming up short. The biggest productivity leaps may already have happened. "We expect a steep slowdown in the rate of tight oil production growth from the middle of this decade onward," he said.

It seems that the industry will implode before we have to lock them off our lands in Europe. I suppose there's always a silver lining to every cloud.

Br Cornelius

Edited by Guest
Link to comment
Share on other sites

Economic analysis of the British dash for gas from an investment banker;

Here is the letter, via the FT

From Mr Tom Brown.

Sir, Your support for UK shale gas (“Make haste slowly on UK shale gas”, editorial, August 6) based upon “the reduction in energy prices and the improvement in energy security” is unjustified on both grounds. Even if the extraction, transmission and eventual environmental reinstatement costs were lower than those of Norwegian conventional gas, the end user, industrial or residential, will pay the same and the benefit of the presumed (but at this point unproved) higher operating margin for onshore shale gas extraction will accrue entirely to equity and debt investors in the extraction companies and to the exchequer through corporation tax and petroleum revenue tax.

The only way it could be cheaper would be if the government sought to penalise gas imports through higher duties, which would be illegal under EU and World Trade Organisation rules. As for energy security, it is absurd to imply that gas extracted from the Norwegian sector of the North Sea is less secure than from the UK sector, unless you expect FT readers to believe that Norway could be overthrown by a hostile regime.

Import substitution would, of course, benefit the balance of payments (BoP), but you do not mention this and there has been little (if any) economic analysis to suggest that the UK will run into an unmanageable BoP problem because of gas imports alone. Wider issues of competitiveness and whether the UK can continue to attract foreign direct investment if it suicidally exits the EU are far more likely to weigh on the external position over 20 years.

Above all, the pursuit of shale gas is wrong-headed because it distracts from the overriding public policy objective of de-carbonising the economy.

You report today (“A rising power”, Analysis, August 9) how the surge of efficient Chinese production of solar panels has led to an 80 per cent drop in the capital cost of solar photo-voltaic production and how Germany is already producing 22 per cent of its energy from renewable sources, manifestly without any noticeable impact on overall German competitiveness.

Consequently, the suspicion is that the UK government’s support of shale gas is a political sop to its climate-change-denying supporters – led by Lord Lawson – which, however, may yet backfire as it becomes clear that it risks industrialisation of the English countryside.

With a global glut of conventional gas, which has seen the value of Russia’s Gazprom slashed, the sensible course is to continue to work with our excellent Norwegian and Qatari friends to secure plentiful gas imports by pipeline and liquefied natural gas transportation.

Tom Brown, Senior Credit Executive, Norddeutsche Landesbank, London EC2, UK

Br Cornelius

Link to comment
Share on other sites

Frakking crack-ers and in a few years time they will wonder why there are suddenly huge earthquakes.

Link to comment
Share on other sites

Frakking crack-ers and in a few years time they will wonder why there are suddenly huge earthquakes.

Its guaranteed to sink the conservatives boat. Expecting those of the south to accept a drilling pad the size of a football pitch in their back garden is not going to go down well in Somerset.

Br Cornelius

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Recently Browsing   0 members

    • No registered users viewing this page.