Shell cuts and runs from shale, but there are still believers.
Friday 14 March 2014
From: Dave
Subject: Shell cuts investment in US shale as “fracking takes its toll”
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From: Hugh
I agree. It seems that only Wall Street, realtors and other fairly useless middlemen are really making serious money at dry shale gas production. The little guys at the serious end all appear to be spending more than they are earning (like Shell). Wait for the bust because I cannot see Henry Hub reaching the $6 – 8/mmBtu (more?) needed for the drillers to make a profit. It is not yet even totally clear that shale oil is a clear winner; many of those drillers’s outlays are greater than income!
Very confusing!
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From: Dave
One conspiracy theory going around is that the shale thing has been funded by the US govt money printing to banks, and as soon as they start tapering the whole thing will collapse.
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From: Chris
Money printing provides liquidity – not capital.
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From: Dave
Yes but the banks can invest that liquidity by lending to fracking shysters????
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From: Dave
Chris, the penny has just dropped. Never really understood what “liquidity” was, but clearly I see it is non-money that has been conjured out of the air by some sort of dodgy promise to pay in future based on a gamble / speculation, most of which at some point will collapse into nothingness or am I being too too cynical?
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From: Jo
Hi Hugh,
For me there are two key points :-
1. The exploitation of shale resources in Northern America are part of the US trying to build a narrative of energy independence. The notion that the US could ever be free from OPEC is laughable.
2. However, the official agencies, such as the EIA, do not project strong growth in shale gas, and anticipate a break point in shale oil growth.
It is a pure propaganda exercise, this “Saudi America” narrative. It too will soon burst. Without sales of hydraulic fracturing to China etc.
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From: John
Jo,
Whatever you do, do not look at the graphs on page 12 from the EUIA!!
https://www.eia.gov/forecasts/aeo/er/pdf/0383er(2014).pdf
It will break your heart, it’s a shale gas denier’s worst nightmare.
15 March 2014
From: Nick Grealy, nohotair.co.uk
John thanks for reminding me why I don’t bother with this group anymore.
I thought they were scientists, not conspiracy theorists. David Icke seems same next to some of this.
Heres more science to reject https://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf
John Gummer ( I don’t go in for that Lord cr@p), recently said that if environmentalists deny the science behind shale, they can’t expect the public to accept the science on climate either.
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From: Jo
Hi John,
The projections in Figure 11 of that chart, showing numbers for growth in Natural Gas out to 2040 are based on very conservative growth figures in shale gas, and the large upwards growth is based mostly on a spurt in coalbed methane production sometime in the 2030s, and a spurt in Arctic production in the 2020s.
The shale gas and tight gas growth could in reality be even less underwhelming, if you consider economic recovery issues.
You need to get the underlying dataset and check, or look at other peoples’ attempts to chart it, such as mine :-
https://www.joabbess.com/2013/10/23/bursting-shale-gas-bubbles/
Don’t believe the growth hype !
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From: John
Jo,
Take Nick’s advice and drop the David Icke nonsense.
https://www.eia.gov/petroleum/drilling/pdf/marcellus.pdf
All the data is on the EIA website up to Feb 2014
You write this on your blog, you’re not really trying are you!
I was trying to ascertain current American shale gas production data, and I kept finding myself at this webpage on the Energy Information Administration (EIA) website, and this one, too, which only have shale gas production data up until 2011 (just checked it again – still true).
Chill out about it, embrace gas and renewables like Texas is doing.
Golden age of gas can fund and back up golden age of renewables, there is no other alternative, UK incredibly lucky country.
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From: Jo
Hi John,
I embrace gas – in fact, I’m in bed with gas. I just think that we should not be doing unconventional gas.
First, because geology offers strong possibilities of early exhaustion and patchy production. And second of all, because this delays proper solutions in the field of manufactured Renewable Gas.
Gas and power are perfectly complementary, and I think we should have growth in Renewable Gas to complement the growth in Renewable Electricity.
Regards,
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From: John
Gas demand is 730 TWh
Max possible renewable gas is around 20 TWh
So, the 710 TWh?
By 2030, Qatar or Russia or Lancashire?
We cannot afford to import it, we have to produce our own, there is no alternative
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From: Jo
Hi John,
On what do you base your figures ? I would dare to suggest your green gas figure is not optimistic enough.
I think everything depends on what you think Renewable Gas is. It’s certainly not limited to biogas, or even hydrotreated biogas (to make biomethane through the addition of hydrogen in some way to biogas). Besides all the biological routes to gas, there are a range of other ways of putting Renewable Hydrogen in the company of Renewable Carbon and coming up with much bigger Renewable Gas production figures. Several important ones are being researched and developed. There are also a number of ways of producing Renewable Hydrogen – all in research and development.
This country used to manufacture a large quantity of gas, and I am quite sure it will do so again in the not too distant future. This time round, however, it will be Renewable Gas, and not just made from gasified coal with all those net carbon dioxide emissions to air. Yes, there will be some EfW – gas Energy from Waste, but that will not be the endpoint. Yes, there will be advanced biological treatments of biological feedstocks, but even that won’t be the end of it. Yes, it will include some high temperature gasification (such as plasma gasification) of carbonaecous material, but even that will not be the end of the story. It will even include some coal and some Carbon Capture and Storage, although I prefer Carbon Recycling to reduce the initial fuel input.
I think it is important to think in terms of a transition. For now we take the Natural Gas from the -stans, the Russian Federation, the South Stream, North Stream, east-west pipelines, the LNG tankers. But we plan to start Renewable Gas production to ramp up so that in 15 to 20 years time it can be a major substitution option. Swapping coal burning for gas burning will give us some space and time in our Carbon Budgets to develop the Renewable Gas to eventually displace Natural Gas (from all sources).
The thing that needs to happen is that the major oil and gas companies need to show their hand on their plans for developing Renewable Gas. I’m pretty sure they have them, or if not, they need to start writing them now, because industrial scale start-ups in Renewable Gas are going to pump them out of business otherwise – shale or no shale.
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From: John
My figs based on an EU project Green Gas Grids.
Power to Gas is just gas industry green PR, it’s not credible.
Reason is first one of efficiency or lack of it.
Next is a killer – no reliable CO2 source…..P2G works to make H2 when it’s windy, but when windy no ccgt so no CO2.
Costs are horrendous to match co2 with H2 from wind, complete non starter for the next 100 years!
Shale gas is long term low carbon option.
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From: Jo
Hi John,
Other people have other figures. I would suggest it’s probably best not to accept just one report.
It’s interesting that you claim that “Power to Gas” is gas industry public relations greenwash. From my viewpoint the agenda is being driven by organisations like the German Government, and non-majors such as ITM Power. As for the technology research and development, that is mostly academia, with or without energy sector investment.
It may not be credible to you, but a lot of people are doing R&D into it. Unless you want to claim that they are just intelligent people being kept busy so they don’t get Bolshy, why would they be spending time on Renewable Gas if they didn’t think there was progress to be made in it ?
Yes, it’s true that efficiency questions are important and limiting, but increasing the efficiency of various processing steps is exactly what most of the research is about. This is what will bring the costs down. Remember when people claimed that solar photovoltaics and wind power could never be cheap enough to be widely deployed ?
There are many ways to source carbon dioxide reliably, such as through Carbon Recycling, which would lower original feedstock input requirements.
If you just look at energy, then shale gas might make some sense, but it’s not just about energy. Shale gas development has implications on geological stability, geographical development, local risks of emissions to air, water and soil, and continued infrastructure maintenance costs dragging on for decades.
Shale gas growth might well be short-term, with field depletion offsetting new drilling in a short timeframe. Who can guarantee more than a few sweet spots in any one field ?
Why does National Grid only model around 10% of future production from shale gas, and no more ? Why does it model biogas on a par with shale gas ? They’re not particularly confident in either, it would seem.
To my mind, shale gas is a theatrical diversion from the real business of substituting fossil gas with Renewable Gas and energy-use efficiency. There are more unfounded claims about shale gas than there were about nuclear power, sadly.
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From: John
We all follow the subsidies.
Offshore wind, solar, ITM h2 projects, biomethane, all receive huge subsidies….none are remotely economic….
One partial well apart we have had no drilling and fracking in UK shale and so we don’t know how much shale gas we don’t know how much gas we will have.
If it’s like Marcellus then by 2025 all the LNG importation terminals in UK will be mothballed and CO2 will be down 20% for gas, how fantastic!
Instead if paying £50 billion a year for all and gas with zero tax, we may have £30 billion tax! Can fund more biomethane etc.
Shale gas is our only hope.
Germany withdrawing renewable subsidies now because costs too high….this already happening in UK with Ed Milliband opposition to higher energy bills.
Shale gas and shale gas tax is out only hope.
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From: Jo
Hi John,
“If it’s like Marcellus”. That’s a very big if. Drilling for shale gas in the UK cannot be like the Marcellus, for several reasons – for example :-
a. Population density – political tendency
There are large numbers of people who don’t want to see fracking in their heavily populated areas in the UK. A significant proportion of these I would class as having reactionary tendencies :-
https://sedac.ciesin.columbia.edu/downloads/maps/gpw-v3/gpw-v3-population-density/gbrdens.pdf
https://sedac.ciesin.columbia.edu/downloads/maps/gpw-v3/gpw-v3-population-density/usadens.pdf
b. Geology – this is an apples and oranges situation, surely ?
https://www.publications.parliament.uk/pa/cm201012/cmselect/cmenergy/795/79506.htm
No two shale layers are the same – the stuff in the UK is just not the same kind of stuff as in the USA – for example, complare Bowland Shale to Marcellus Shale :-
https://static.guim.co.uk/sys-images/Business/Pix/pictures/2013/7/16/1373979376644/Bowland-Shale-008.jpg
https://i.telegraph.co.uk/multimedia/archive/02428/frackingguz_2428741b.jpg
https://2.bp.blogspot.com/_14SUjHlDtMA/TOApeP2WK4I/AAAAAAAAACw/Jqzf8KoZCQ8/s1600/Marcellus_Shale_5.jpg
https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcTsWDl7lnk6GWzkpm_73mpbzcEg8AeotNh2fzRHv_2lSKpzLrrHLw
“One partial well apart we have had no drilling and fracking in UK shale and so we don’t know how much shale gas we don’t know how much gas we will have” : there are doubts climbing all over your uncertainty mountains, and yet you still say “shale gas is our only hope”. How can you justify saying this ?
What kind of impossible economics do you believe in that could convince you that the growth in shale gas production would compensate for the depletion in North Sea production ?
All new deployments of new (and old) technology require support. Then after a while, the support can “degress”, as it is doing in Germany and the UK as the renewables begin to be able to stand alone. It would be a pretty poor business model to totally depend on subsidies for continued operation. Imagine if the tax and financial breaks for the oil and gas industry were removed…
On the subject of a shale gas tax – do you seriously believe that any kind of revenue generated on the back of a subsidised energy industry would be hypothecated to the green energy sector ? There’s all that military budget to support, still. Can anybody tell me if any of the “green levy” money is ever put into renewables or energy efficiency ?
The LNG terminals may well close – due to the beefed up gas pipeline network across Europe and the “harmonised” gas market.
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From: John
Let’s pick up this conversation in 2020!