A quick look at shale gas: 100 years supply or… 7? Plus other energy dreams

Posted: July 28th, 2010 by: h2

If you follow energy matters, you might have heard about the new shale gas extraction methods.

Allegedly the near cornucopia of free energy, the new methods, asides from using extremely toxic liquid materials to fracture the rock formations to let the gas slip out to the well bore, for extraction, have been promoted by people like T. Boone Pickens as the source for future US energy needs in the transport sector. The latter by switching the truck/heavy equipment fleet to natural gas power.

This is supposed to be a good idea because it’s supposedly a 100 year’s supply. As usual, sadly, with such rosy predictions, the real numbers, when re-examined in the light of non-delusional, somewhat sane, thinking, simply do not hold up.

A current theoildrum.com posting highlights this issue.

Arthur Berman talks about Shale Gas

If you investigate the origin of this supposed 100-year supply of natural gas…where does this come from? If you go back to the Potential Gas Committee’s [PGC] report, which is where I believe it comes from, and if you look at the magnitude of the technically recoverable resource they describe and you divide it by annual US consumption, you come up with 90 years, not 100. Some would say that’s splitting hairs, yet 10% is 10%. But if you go on and you actually read the report, they say that the probable number-I think they call it the P-2 number-is closer to 450 Tcf as opposed to roughly 1800 Tcf. What they’re saying is that if you pin this thing down where there have actually been some wells drilled that have actually produced some gas, the technically recoverable resource is closer to 450. And if you divide that by three, which is the component that is shale gas, you get about 150 Tcf and that’s about 7 year’s worth of US supply from shale. I happen to think that that’s a pretty darn realistic estimate. And remember that that’s a resource number, not a reserve number; it has nothing to do with commercial extractability. So the gross resource from shale is probably about 7 years worth of supply.

As with pretty much every other finite energy source, when you apply modern consumption levels plus the realities of extraction, the totals come out much lower than the energy optimists would have you believe.

Coal, and probably uranium, supplies reflect a very similar gulf between predictions from cornucopians and the actual numbers, including predicted consumption growth rates over time.

The group (Energy Watch Group uranium study – PDF)contends that worldwide rankings mean little, then, when one considers that only Canada has a significant amount of ore above 1 percent–up to about 20 percent of the country’s total reserves. In Australia, on the other hand, some 90 percent of uranium has a grade of less than 0.06 percent. Much of Kazakhstan’s ore is less than 0.1 percent.

The world uses 67,000 tons of mined uranium a year. At current usage, this is equal to about seventy years of supply.
Council on Foreign Relations – Global Uranium Supply and Demand – January 14, 2010

Pay very especial attention to the phrase ‘At current usage’. That is the essence of almost all cornucopian predictions. As oil / gas supplies begin their imminent decline globally, the world will reach to existing sources of energy, mainly coal and uranium, for its electrical production. Actually, forget the future tense, that’s happening now, all over. China, India, along with most of the rest of the world.

So make that 70 years drop down to less than 20 or 30. Really people should start to pay attention to the arithmetic of growth (transcript of the Professor Al Bartlett video talk on the problems of all growth based population/resource consumption patterns), it’s not very hard to understand.

And this doesn’t even begin to touch on the question of exactly how clean will an ongoing decline in global energy resources actually be, in terms of production and economic realities. Dmitri Orlov. has been pushing this point consistently, see for example his recent posting, Thinking in Straight Lines.

One particularly significant example of this thinking is the belief in Peak Oil, generally expressed as the idea that global oil production already has or will soon reach an all-time peak, and will then gradually decrease over a time span of several decades. Oil depletion is being modeled as a linear function of oil production: a few percent a year, holding more or less steady from one year to the next.

But that article isn’t good for little quote snippets, read the whole thing is my advice, what he’s saying is fairly serious, and isn’t being discussed nearly as much as it should be.

One Response to “A quick look at shale gas: 100 years supply or… 7? Plus other energy dreams”

  1. h-1 says:

    Quick comment from ROCKMAN on shale gas, it’s concise and to the point.

    ROCKMAN on August 3, 2010 – 8:13am Permalink | Subthread | Parent | Parent subthread | Comments top

    Will – I’m’ sure one of the major goals of the early SG developers in the EU will be to characterize the decline rates of the various SG plays. Some of the apparently more exciting SG wells in the US had decline rates exceeding 70% PER YEAR. So you might see exciting results that Company X tested it’s SG well at 10 million cu ft per day. But when that well declines to less than 0.5 million cf in two years you probably won’t see Company X issuing a big press release highlighting that fact. That’s what really hurt US producers: we’ve always been subject to low pricing periods so we just hang on till prices get better in 3 or 5 years. But at that time those SG wells will be producing very little. So why not choke the wells back and wait for the higher prices? Some companies can afford to do that but most need the cash flow even if it means destroying the ultimate profitability.

    And I’m not retired. I work for a privately owned company. Profit is the goal…not cash flow. So we don’t consider any of the resource plays as viable options. Even more important being private we don’t have to worry about growing our stock price. The desire by public companies in the US to satisfy Wall Street’s demand for ever increasing reserve booking was THE prime motivator for the SG boom IMHO. The SG public companies used unmet price escalations and unrealistic reserve recovery to boost their book value and thus their stock value. Which is exactly why those companies crashed and burned at an unbelievable speed: those values disappeaded in the blink of an eye because they were never real to begin with. There may be a great profit to be made in EU publicly owned SG companies. Just be sure you’re not still holding the stock when the music stops.

    That’s clear enough, I’d say.