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Page added on November 19, 2012
Fracking: A new dawn for misplaced optimism
You would think we were swimming in oil. The International Energy Agency’s (IEA) latest World Energy Outlook forecasts that the United States will outstrip Saudi Arabia as the world’s largest producer by 2017, becoming “all but self-sufficient in net terms” in energy production. While the “peak oil” pessimists are clearly wrong, so is a simplistic picture of fossil fuel abundance.
When the IEA predicts an increase in “oil production” from 84 million barrels a day in 2011 to 97 in 2035, it is talking about “natural gas liquids and unconventional sources”, which includes a big reliance on “fracking” for shale gas. Conventional oil output will stay largely flat, or fall.
The IEA has been exposed before as having, under US pressure, artificially inflated official reserve figures. And now US energy consultants Ruud Weijermars and Crispian McCredie say there is strong “basis for reasonable doubts about the reliability and durability of US shale gas reserves”. The New York Times found that state geologists, industry lawyers and market analysts privately questioned “whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves.” And former UK chief government scientist Sir David King has concluded that the industry had overstated world oil reserves by about a third. In Nature, he dismissed notions that a shale gas boom would avert an energy crisis, noting that production at wells drops by as much as 90 per cent within the first year.
The rapid decline rates make shale gas distinctly unprofitable. Arthur Berman, a former Amoco petroleum geologist, cites the Eagle Ford shale, Texas, where the decline rate is so high that simply to keep production flat, they will have to drill “almost 1,000 wells” a year, requiring “about $10bn or $12bn a year just to replace supply”. In all, “it starts to approach the amount of money needed to bail out the banking industry. Where is that money to come from?”
In September, the leader of the US shale gas revolution, Chesapeake Energy, sold $6.9bn of gas fields and pipelines to stave off collapse. Four months ago Exxon’s CEO, Rex Tillerson, told a private meeting: “We’re making no money. It’s all in the red.” The worst-case scenario is that several large oil companies at once face financial distress. Then, says Berman, “you may have a couple of big bankruptcies or takeovers and everybody pulls back, all the money evaporates, all the capital goes away.”
Far from fuelling prosperity, the gas glut will generate an unsustainable debt bubble whose bursting precipitates a supply collapse and price spike. The New Economics Foundation estimates the arrival of “economic peak oil” – when the costs of supply exceeds the price economies can pay without significantly disrupting economic activity – in around 2014/15. Black gold is not the answer.
21 Comments on "Fracking: A new dawn for misplaced optimism"
Beery on Mon, 19th Nov 2012 1:20 am
“While the “peak oil” pessimists are clearly wrong,”
Clearly wrong? How?
Just because there’s been an increase in oil supply caused by fracking does not mean the doomsayers are wrong. All it means is that we’re not yet in full freefall mode. It doesn’t mean freefall is not going to happen. Heck, it could begin tomorrow.
Others on Mon, 19th Nov 2012 2:56 am
Exxon’s oil production went down 7.5% this year.
Gale Whitaker on Mon, 19th Nov 2012 3:25 am
Energy independence is a silly joke anyway because the oil produced in the US is owned by the oil companies who sell the oil on the world market. Even if they could produce more oil in the US they would sell it to folks in other countries who are willing to pay higher prices, China for instance.
BillT on Mon, 19th Nov 2012 5:36 am
Bingo Gale! Oil goes to the highest bidder, unless it is nationalized, and the oil from the Us and Canada is NOT, so it will likely go to China or maybe Japan. The Keystone Pipeline was to get it to ports in the Gulf, where it could be shipped anywhere. It was NOT meant to keep the oil in the Us.
Arthur on Mon, 19th Nov 2012 7:48 am
Here a feelgood story from the US… Always thought that Denmark and Germany were far ahead of the US with the applcation of renewables, here a story from a Dutch source about the stunning success of solar on Hawaii:
http://www.joop.nl/groen/detail/artikel/17135_zon_revolutie_op_hawaii/
44%!
In fact engineers on Hawaii are afraid too much solar energy is produced to the extent that the grid cannot handle it.
Hawaii has 1.4 million people.
Arthur on Mon, 19th Nov 2012 7:54 am
…could be 100% by 2020.
BillT on Mon, 19th Nov 2012 8:33 am
Just keep in mind that all ‘alternates’ require oil to exist and when oil goes, all the ‘alternates’ all fade into the sunset with it. There is a reason that ALL growth in the last 200 years was from fossil fuels. It’s because that growth was built on those fuels and will end with them. No other reason. Tech exists because fossil fuels made it possible. It to will die with the end of petroleum.
Arthur on Mon, 19th Nov 2012 9:35 am
“Just keep in mind that all ‘alternates’ require oil to exist and when oil goes, all the ‘alternates’ all fade into the sunset with it.”
Do not agree here. Electricity is the highest form of energy and I do not see why an economy based on solar electric energy cannot sustain itself. Why can’t a new solar cell be produced with electricity from the grid, fed by solar power, and hydro storage capacity to even out intermittent supply?
Besides electricity can be used to produce hydrogen or even carbon based fuel if for some mysterious reason these commodities should be essential to produce solar cells. But they are not.
Arthur on Mon, 19th Nov 2012 9:44 am
Here is the original story:
http://www.latimes.com/news/nationworld/nation/la-na-hawaii-solar-20121118,0,595680.story
“The state has set a goal of obtaining 40% of its power from locally generated renewable sources by 2030. Already, the Big Island has jumped ahead and is producing 44% of its power from renewable sources, and it could hit 100% by the end of the decade.”
Playing the devils advocate here… maybe this fracking business could provide precisely the necessary (poisoned) breathing space to set up a new energy base. There is no reason why the sunny US southwest could not generate 100% of it’s electricity by 2020. The UK IKEA soon will sell cheap solar panels. A solar installation costs as much as an Apple laptop and remember how fast PC’s entered the homes. The difference is this time these panels actually save money for 20-30 years to come.
BillT on Mon, 19th Nov 2012 12:43 pm
Arthur, what will mine the minerals/ores to make panels or replace them when they wear out?
Solar will NOT do it.
Wind will NOT do it.
Nuclear will be gone long before then.
So, who/what will do all this work/energy to keep a PV grid the size of France working?
Solar is a nice option for someone who wants to get off the grid or live in a place not near commercial electric. But for a permanent replacement for carbon, nope, never. Not wind, waves or any other pipe dream of the techies.
BillT on Mon, 19th Nov 2012 12:52 pm
BTW: A PV system to provide 5 KWh per day, would cost about $3,000.to $5,000. at today’s prices. Then there is the battery replacement somewhere down the road at who knows what cost. Certainly they will NOT get cheaper. That junk ou can by at IKEA is NOT the quality you need for 20-30 year systems. They have them here in the building supply stores also. The price is equivalent to $5 per watt. This (80w.) panel would provide an average of 0.5 KWh of electricity PER DAY. Then you need the converter, batteries, etc. So the cost is more like $7-$10 per watt installed. That will power your 32″ TV for about 3 hours. Period!! NO, PV is an extender at best, not an answer.
Arthur on Mon, 19th Nov 2012 1:37 pm
“Arthur, what will mine the minerals/ores to make panels or replace them when they wear out? ”
Recycle the panel. Minerals can’t be destroyed.
“So, who/what will do all this work/energy to keep a PV grid the size of France working? ”
Is indeed not going to happen. That amount would replace ALL energy including cars and aviation + plus industry to create and maintain it. But if Hawaii can cover 100% private electricity needs (44% now) by 2020, everybody (in the west) can do it. PC’s under every roof (like now) and almost equally expensive panels on every roof.
A plug and play solution for industrial life as we know it, does indeed not exist indeed. But we do not need to fall back to the middle ages either. Homes can be relatively comfortable for the rest of the centuries with lights, tv (if necessary on your 3 watt ipad 😉 as I can have now), a well isolated fridge, audio, mobile phones, if necessary thermo wired clothings (30 Watt) in unheated homes… that sort of thing will be (easily) accomplished. I remain very sceptical about the future of the car.
” PV is an extender at best, not an answer.”
Dutch example:
http://www.hetkanwel.net/2010/03/22/hoeveel-zonnepanelen-heb-ik-nodig/
Average family uses 3000 kwh/year. Wants 2100 kwh from solar and extra measures to save the rest. –> 17.5 m2 in grey Dutch circumstances. That’s almost complete coverage of a roof. Can be done. Not sure about price tag but if you have no choice, you must.
No panels will not get cheaper anymore, but prices of electricity are certainly going up in the coming years. It probably pays best to do it now and not wait until everyone wants panels (monkey see, monkey do).
Brent on Mon, 19th Nov 2012 2:57 pm
Arthur what about those who simply cannot afford to buy solar panels? The United States is broke we are talking fiscal cliff and debt ceiling. How are those people who are poorest in this country going to be able to afford this? Now if we would have started converting 30 years ago when we were rich I could see it happening, but not now.
actioncjackson on Mon, 19th Nov 2012 3:30 pm
I agree with Bill. And at worst case it’s possible to survive with nothing but you’r bare hands and what you find in the woods, especially if you have a few like minded friends. It won’t be easy or pretty (and in all probability relatively short lived), but the challenge of that kind of lifestyle can be rewarding in it’s own merits. There are NO substitutes for the amount of energy derived from oil, none. If we continue down this road we’ll either collapse due to the multitude of effects of a diminishing oil supply, or climate change will make the earth not worth living in.
Arthur on Mon, 19th Nov 2012 3:51 pm
“There are NO substitutes for the amount of energy derived from oil, none. ”
There were great civilizations before the rise of the carbon age in 18xx, like the Roman empire. They did not live in the woods but had five story buildings (without elevator). Western European Nations even had global empires based on a few hundred sailing vessels.
The difference is now in the 21st century we have a vast body of knowledge of how to do things. Maybe a couple of billion will die prematurely, but we do not have to begin from scratch again. But the longer we wait, the deeper the fall will be.
Wind and solar have EROEI of 10 or higher, which is as good as oil of 100.
The difference is that of 100 potatoes start capital, you have to reserve 10 and eat 90, instead of reserve 1 and eat 99. Big deal. The essence of solving the problem is, is getting these hundreds of thousands of steel wind turbine towers erected NOW with the carbon capital we still have. Once they are in place they will function for two or more centuries (like the Eiffel tower).
actioncjackson on Mon, 19th Nov 2012 4:24 pm
Yes but those empires existed by having a somewhat stable currency, the petrodollar is soon to be finished, and if you start up the whole currency thing again you’re back where you started. True release and peace of mind is knowing we can give up electricity, fossil fuels, and above all money (or at least it’s current configuration), and life can still exist. Come to think of it, the point of creation of money abstract from a practical purpose (something not able to be bartered), seems to me where we doomed ourselves to failure.
GregT on Mon, 19th Nov 2012 10:33 pm
Conservative estimates see the height of the Roman Empire as having around 65 million people. They had between a half a million and 10 million slaves, and 70 percent of the remainder of the population were considered to be tenant farmers. Hardly civilized by todays standards, and unless you were in the fortunate minority, I doubt that life was very long or easy. By the mid 600s, wars, disease and emigration decimated the population to a mere 30- 100 thousand people.
The world has been subjected to plagues throughout history, and it wasn’t until this century that we have gotten a handle on most of them. Influenza alone killed as many as 100 million people between 1917 and 1919. Pharmaceuticals are heavily dependant on fossil fuels in their chemical make-up, production, and distribution. As oil supplies dwindle, so will the drugs and vaccines that we need to fight the plagues and diseases of the future.
Food production is another main reason that our population has grown so rapidly. Plotting food production and fossil fuel usage side by side on the time scale of the last 150 years, clearly shows the correlation. Electricity will never replace fossil fuels in modern agricultural production, as it is heavily reliant on chemical fertilizers, herbicides, pesticides, machinery and transportation. As oil supplies dwindle, so will our food.
If we were to stop all fossil fuel usage right now, and use the remainder to build out renewable energy infrastructure, we would run out of key resources far before we would run out of oil. Even if we could continue to mine deeper and deeper, all of this infrastructure will require fossil fuels for maintenance.
We do have a vast amount of knowledge, but unfortunately most of what we have done in the past 150 years is directly attributed to fossil fuel usage. When the oil is gone, those technologies will also be gone.
Arthur on Mon, 19th Nov 2012 11:44 pm
I find it difficult to believe that the average American today is poor. An array of solar panels is like buying a second hand car, but with the life span of 20-30 years, resulting in strongly reduced electricity bills. Now here is a debt worth stepping into.
GregT on Tue, 20th Nov 2012 1:10 am
Arthur,
The main problem with solar is not the panels themselves, it is the fact that solar is intermittent and requires a storage bank. Batteries do not last that long, we change out our UPS batteries at work every 5 years.
I personally have looked into a system for my home, and was quoted 38,000 dollars. I currently pay less than 2000 dollars per year on hydro electric, so at that rate it would take 19 years to pay for itself. The panels are guaranteed to lose less than 10 percent efficiency over 20 years, but the batteries will need to be replaced around the 10 year mark.
I am currently putting together a system for use in an emergency for refrigeration, minimalist lighting and the blower on my gas furnace. By doing it myself, it will cost just less than 6000 dollars. This system also has the advantage of portability for when I move. While it may serve me for the rest of my time on this earth, I highly doubt that there will be billions of batteries available in twenty years time for everyone to maintain their systems.
Arthur on Tue, 20th Nov 2012 9:00 am
Solar panels make sense, even without batteries, as long as you live in a country with high feed-in tarifs, like Germany. Then you can use mountain bassins as your battery pack. They last for decades, if not centuries. Not five years. No filthy battery acids, just clean water and pipes.
GregT on Tue, 27th Nov 2012 7:12 pm
Arthur,
I am in Hawaii right now. Speaking with the locals, they tell me that around 12 percent of their power generation comes from renewables. Hydro, solar, biofuels, and wind combined. HECO (Hawaiian Electrc Company) has mandated that by 2015, 15 percent of electricity generation should be produced by renewables.
88 percent of electricity produced on the islands comes from oil. 4 percent from the US mainland and 96 percent from overseas.
There are some homes with PV systems on their roofs, but they are the exception, not the norm.