From: John Clark <[email protected]>
To: [email protected]
Sent: Monday, December 22, 2014 11:46 AM
Subject: Re: Natural gas: The fracking fallacy
On Sun, Dec 21, 2014 at 11:47 PM, 'Chris de Morsella' via Everything List
<[email protected]> wrote:
> When the research arm of an investment house is leading the booster charge –
> “America the Saudi Arabia of Shale” etc. and is knowingly using these false
> projections
>>What in the world was false about those projections?
Reserve projections project an estimate for the total recoverable oil (or gas)
in a deposit. The EIA reserve numbers for tight oil & gas -- and to an even
much more extreme degree, the stated reserve numbers produced by organizations
(that subsequently profited immensely from the resulting investment boom) --
are highly inflated. You confuse and conflate a few years of increased
production with reserves. They are measuring very different things. Reserves
measure what is ultimately recoverable; production measures the rate at which a
resource is being produced at. Perhaps this will help you understand the
difference between the meaning of these two metrics; I was under the mistaken
impression that you understood what reserves mean, in the context of talking
about oil or gas reserves.
>> In the USA oil production rose by more than half a million barrels per day
>> between 2007 and 2011 to the highest level in 15 years, and in that same
>> year the USA exported more gasoline and diesel than it imported for the
>> first time since 1949. And in 2012 USA oil production increased by another
>> 760,000 barrels a day, the largest yearly increase since records about oil
>> production started in 1859. But incredibly 2013 beat even that record, oil
>> production in the United States rose by another 992,000 barrels a day! And
>> in 2014 the USA overtook Saudi Arabia to become the largest producer of oil
>> on planet Earth, it was already the largest natural gas producer in the
>> world and has been since 2010.
Yes, so what? How long will this rate of production be sustained? Reserves
measure what is in the ground that can be recovered. What you fail to
understand about the tight oil sector is that the current very temporary
production boom cannot be sustained -- just to maintain current levels of
production would require a huge numbers of new wells to be drilled and fracked,
because depletion is so fast. The capital expenditures of drilling then
fracking a deposit cannot be justified by the amount of oil & gas that is
ultimately extracted by expending that capital.You can also make ethanol from
corn, but at what cost? That you can make it does not mean it is worth it to
make it. In the case of corn ethanol it actually takes more energy to produce
it than can be extracted -- as useful work - by burning it; e.g. it has a
negative EROI. For fracked tight gas & oil it is now being painfully discovered
that a huge amount of capital has been sunk in theses fracked wells and in
reality very little return will come from it. Before you go repeat those --
very temporary -- rosy production figures you will no doubt site again;
meditate on how much capital was expended and sunk in order to obtain this
transient few years of increased production.
> The Saudi’s will cash in
>>Explain to me how the Saudi's will make more cash when oil is selling at $60
>>a barrel then it did when it was selling at $130 a barrel. Is this some new
>>form of mathematics?
Are you trying to be ironic or cute? Clearly the Saudi's feel they can endure
the loss now in order to drive a large portion of the higher cost producers out
of business. Once they have achieved this goal they can cut back on their
production and enjoy the much higher prices they will be able to sell their oil
for -- without the plethora of upstart competitors competing for market share
(because they have been driven to bankruptcy in the interim)Perhaps this is too
hard for you to grasp (my turn to be ironic)-Chris
John K Clark
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