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Page added on July 1, 2012
America’s Jaw-Dropping Shale Gas Boom Is Starting To Slow Down
Everyone’s raving about the American shale gas revolution, which could make the country the next Saudi Arabia of energy.
Indeed, the growth rate in shale gas production has gone geometric.
However, things are showing signs of slowing down.
Credit Suisse’s Oil & Gas Exploration & Production research team led by Arun Jayaram is out with a note titled 10 Observations About Natural Gas. Here’s their second observation:
2. Production from unconventional plays is starting to soften. Exhibit 1 illustrates the jaw dropping increase in natural gas production from unconventional dry gas plays. After taking many years to reach 5 Bcf/d of production, the industry added 5 Bcf/d in a two year stretch between 2008 and 2010, which took overall production to 10 Bcf/d. In the past two years, the industry has nearly doubled production to ~20 Bcf/d or 27% of supply. Recent data suggests that this trend is finally beginning to ease given sharp reductions in drilling activity in the Barnett, Haynesville, Fayetteville, and Woodford Shale plays, which should mute further gains in the Marcellus Shale.
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Credit Suisse |
…decelerating…
Credit Suisse
…decelerating.
10 Comments on "America’s Jaw-Dropping Shale Gas Boom Is Starting To Slow Down"
BillT on Mon, 2nd Jul 2012 12:02 am
Bubbles come and bubble go, and this one is no exception.
MrEnergyCzar on Mon, 2nd Jul 2012 3:43 am
They have to now drill like 10,000 new wells the next year to maintain production. Good Luck.
MrEnergyCzar
BillT on Mon, 2nd Jul 2012 4:04 am
“… In 2008 the average cost of a natural gas well was $5.3 million. …”
Times 10,000 wells is only $53 billion in drilling costs at 2008 prices. That would require about 35 thousand trillion cf of gas to be produced and sold next year at $1.50 per mcf.
35 quadrillion cf is only 1,500 times last year’s US natural gas consumption. Perhaps the use will jump a bit when many NG “investors” stick their heads in their gas ovens and turn them on…
Anyone want to check my math? ^_^
http://www.eia.gov/dnav/ng/ng_cons_sum_dcu_nus_a.htm
DC on Mon, 2nd Jul 2012 6:44 am
What exactly has all this ‘jaw’ droping frak gas done for amerika exactly? Has it reduced un-employment?, raised the standard of living? cleaned up the enviroment?, anything? The only durable product that seems to have come out of the frak gas ‘boom’, is copious amounts of hot air, and a modest amount of gas no one really wants or can afford, even at deeply dis-counted prices.
KingM on Mon, 2nd Jul 2012 2:00 pm
“Anyone want to check my math? ^_^ ”
Yes, way off. According to your math, at 1/1500 of the 53 billion, we only spent $35 million on natural gas last year.
BillT on Mon, 2nd Jul 2012 3:46 pm
$53 billion for 10,000 wells…
~6 trillion cf produced in 2010…(CIA)
at $3/1,000cf = ~$18B value or 3 years worth of gas needed to pay for 1 years worth of wells. Sounds like a winner! Nope. I did drop a decimal on that original math, but it doesn’t make any difference in the outcome which is, natural gas in the US is a losing adventure…and will crash and burn when the suckers run out.
SOS on Mon, 2nd Jul 2012 3:59 pm
Dont get too excited about the end of the world, at least not yet. Production is falling because all NG storage in the USA is near capacity and prices are very low. We have all the gas we need above ground right now and when we need more the supply under ground in infinate, at least for this generation.
SOS on Mon, 2nd Jul 2012 4:17 pm
First of all the gas supply has kept prices low. the gas boom has kept lots of people working.
The gas is piling up because of politics. The coalition opposing gas production and use has shut down many projects, plans and plants that could be using that gas. The chance to export the gas has also been slowed or stopped.
The problems with benefits to us from the gas produced are all political. The big hope of course is the return of heavy industry/manufacturing that could use the cheap gas to produce products here instead of farming it out to other countrys. That means good paying jobs for Americans.
This has already started as the production of rolled steal and other specialty steel products needed by the oil industry are starting production in the NE USA where the gas is.
Change the politics and change the future. Peak oil is a political restraint not a real physical constraint.
The consequences of peak oil politics are all around us in high energy prices. Its very expensive for everyone to shut down our vast energy supplies. This cost pressure affects everything and it all started with a well intentioned law years ago.
Regulation is needed but regulators need to cooperate and support the industries they regulate to assure cost effective large scale production. The laws/regulations are being used now as weapons to restrict and kill industries in the USA.
SOS on Mon, 2nd Jul 2012 4:22 pm
i doubt 10,000 wells are needed to maintain production. That is false. 10,000 wells are needed to solidify production rights on expiring leases.
SOS on Mon, 2nd Jul 2012 4:25 pm
Ps. economic well models are done on a 15 year basis.