RE: Natural gas: The fracking fallacy

Fri, 02 Jan 2015 15:48:24 -0800 

 

 

From: [email protected] 
[mailto:[email protected]] 
Sent: Friday, January 02, 2015 1:20 PM
To: [email protected]
Subject: Re: Natural gas: The fracking fallacy

 

Not to beat a dead aardvark, but the oil dudes knocked it out of the park with 
shale gas and bakken oil. 

 

That depends on what you mean by “knocked it out of the park”. Given the vast 
amounts of sunk capital that the tight oil sector has required in order to 
produce the yield it has produced I would hardly choose that term. Many of 
these wells are never ever going to pay back the significant capital 
expenditures that were required in order to horizontally drill, frack and then 
produce. 

Why do you think there is a massive capital flight OUT of this sector… a 
capital flight that I might add preceded the current collapse in global oil 
prices and that will only get worse given the recent price collapse. 

You need to look at opportunity cost. Investing on the order of a trillion 
dollars into tight oil (and gas) extraction comes at the opportunity cost of 
lost investment potential into other energy yielding infrastructures. If a 
trillion dollars had been invested in solarizing America I think we would be in 
better shape. One can argue this point, but the fact remains that the shale 
tight oil boom required hundreds and hundreds of billions of dollars of capital 
expenditure in order to manifest this very temporary increase in supply.

Anybody who believes the hype has not looked closely enough at the very steep 
decline rates of tight oil and shale gas. 

For example – as historic data from the Barnett formation (which is the oldest 
produced tight shale gas deposit and thus has the most complete data set) shows 
 the depletion rate is exceptionally rapid. From a peak of production in 2011 
of 6.3 Bcf/day it dropped IN JUST TWO YEARS – to the 4.8 Bcf/day in 2013 – a 
decline of 24% in just two years.

Shale tight oil – and even more so the gas that is being produced by fracking 
shale deposits – is a treadmill of hyper-active drilling just to stay in place. 
Just to keep the current production plateaus (not increasing output yield by a 
single barrel, but just to prevent a collapse in output driven by the super 
high depletion rates) an unsustainable level of new wells need to be drilled 
each and every year. 

This is not going to happen – already the sector has shown that it is 
exhausting its ability to attract new capital. 

 

I do not see how this soon to be imploding tight oil & gas boom – only 
developed at a massive capital cost that has left the capital markets exhausted 
– is “hitting it out of the park”. More like a foul ball or maybe a fly ball 
that will soon result in the end of the inning.

 

See graph:



 

I was completely unexpected by myself, who is normally a pessimist and a 
Libertarian as well. I wish solar of microbial biomass was leading the parade 
in 2014-15, but it hasn't. 

 

And how could it – everything else besides tight oil & gas was capital starved. 
The opportunity cost of the shale tight oil boom is all the lost investments 
and unrealized R&D in other energy sectors that got sidetracked by the couple 
years of mania that got spun up by this bubble.

 

To quote Bill Clinton "We play the hand we're dealt." So we must play this 
hand. BHO did not want this at all, but the capitalists (crony?) went around 
the democrats and their prez. I am the sort of Libertarian who likes creative 
ideas that are not necessarily, the first thing we choose to solve economic and 
social problems. 

 

I hate to think of the coming hangover as these wells enter into very steep 
rapid depletion – as they ARE doing. New wells  cannot be drilled fast enough 
to keep the bubble going.

 

 

If you are a progressive, its the first thing to choose. If libertarianism 
doesn't work, let us say in reducing employment, for example, then fine, back 
to Keynesianism and regulations. We can always to Regulations and Gov control, 
if Freedom fails and we have nothing to relieve the pain.  I am all for being 
practical-minded and would use anything that works best.  

 

My guess is that solar will Boom, and I mean really, Boom, as soon as 
electricity storage and transmission gets the right boost, technically<---   
Similar innovations that sparked up shale gas, could believable spark up solar 
storage.  

Solar PV unit costs continues to go down and global production capacity 
continues to rise. The grids can absorb 25% - 35% of renewable energy without 
needing major investments in order to adapt. When you speak of the need for 
storage – this only becomes a driving factor after the degree of penetration of 
renewables has grown larger than this amount. There is plenty of headroom for 
solar/wind sectors to grow before these kinds of levels of penetration are 
achieved. Incremental improvements in the cost to produce utility scale battery 
are driving down the marginal cost of storage and by the time it becomes 
necessary in order to accommodate even higher levels of renewable produced 
electricity (and smooth out the variability spikes and troughs) the unit cost 
for adding utility scale storage will have dropped to economic values.

-Chris





-----Original Message-----
From: John Clark <[email protected]>
To: everything-list <[email protected]>
Sent: Fri, Jan 2, 2015 2:25 pm
Subject: Re: Natural gas: The fracking fallacy

On Fri, Jan 2, 2015  'Chris de Morsella' via Everything List 
<[email protected]> wrote:

> The big gusher oil wells in Texas, Saudi Arabia, Kuwait, Mexico had EROI of 
> better than 100:1.

The EROI most certainly was not 100, not if you include the internal energy of 
the crude oil as part of the cost of investment, it would ALWAYS be less than 
one; of course only a fool or a liar would include the internal energy of the 
crude oil as part of the cost of the investment, but you and your environmental 
buddies do it for Kerogen so why not do it for crude oil too? There are only 2 
reasons I can think of for not doing that, integrity and brains. 
 

> you libertarian moron.

 

Opinions differ on the moron part but I am certainly a libertarian. Do you have 
a problem with that?  

 

>> And there is also something called the second  law of thermodynamics and if 
>> you use that too you can ensure that the EROI never even gets as high as 1, 
>> it's always less, and so nothing, absolutely positively nothing, is worth 
>> doing. That's all you need to come up with EROI numbers that are always as 
>> low as you want them to be. Well.., you need one other thing, a desire to 
>> deceive. 

 

 > Show me an actual commercially producing shale oil operation?

I will just as soon as you show me a place where oil can be sold for more than 
$120 a barrel. I don't dispute that with oil selling as cheaply as it is today 
it's not economical with existing technology, but to say as you do that it will 
never be economical no matter how high oil sells for flies in the face of 
reality.

 > Screw those BS numbers.

 

Yes screw Wikipedia and everybody else,  believe in Chris de Morsella's 
prejudices.   

> In 1982 Exxon threw in the towel after dumping some $5 billion down the shale 
> oil money pit.

In 1837 Charles Babbage used 1837 technology to try to make the first fully 
programmable digital computer, but after dumping the equivalent of many 
millions of dollars into that money pit he threw in the towel. In 2015 people 
use 2015 technology and can make computers successfully. In 1982 Exxon was 
using 1982 technology, today they use 2015 technology.   

 > John I don’t think you understand how EROI numbers are produced

 

I understand it one hell of a lot better than you do. First you say the true 
EROI numbers are 2.5:1 but that was inconsistent with everything you were 
saying, when I pointed this out you correct that to 1:2.5, but nobody familiar 
with EROI would state it that way, they'd say .4:1. Never mind that even your 
room temperature IQ environmental buddies would say it's 2 not .4, my point is 
that even your erroneous information is stated in a ignorant manner.  

> or what they seek to measure.

 

When you or environmental morons generate EROI numbers they don't measure 
anything at all except the magnitude of the desire to deceive, the lower the 
number the greater the deception. 

> I suggest you read Charles Hall’s seminal work on EROI to get a more in depth 
> understanding.

 

Why on earth would I follow a recommendation of yours about EROI when you've 
demonstrated not just ignorance but dishonesty on this subject? By now we both 
know that a EROI figure of .4 for Kerogen is bullshit, and yet you continue to 
try to convince people of it. 

 

>> ive seconds is all it takes to prove that you're dead wrong. I was wrong a 
>> while back and when it became clear to me that I had made a mistake I 
>> admitted it, do you have the intellectual courage to do the same thing?

> Yeah right LOL -- Mr. Wikipedia. You have not proved anything.

 

Well I've certainly proved one thing, I've proved that Mr. Chris de Morsella is 
a intellectual coward incapable of admitting he's wrong even when it's clear as 
a bell that he is. 

  John K Clark


 

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