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View Diary: Shale Gas Bubble About to Burst: Art Berman, Bill Powers (89 comments)

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  •  I suppose that they (4+ / 0-)
    Recommended by:
    blueoasis, phonegery, Rei, chimene

    falsified the working gas in underground storage volume data as well?

    •  I don't see much of an increase in this data (4+ / 0-)
      •  Do The Math (0+ / 0-)

        The storage and supply data may tweak the parameters around the edges, but the math works out the same.

        #3: ensure network neutrality; #2: ensure electoral integrity; #1: ensure ecosystemic sustainability.

        by ivote2004 on Fri Nov 23, 2012 at 01:06:41 AM PST

        [ Parent ]

        •  It's worse than that... (1+ / 0-)
          Recommended by:
          PrometheusUnbound

          because on average, reserves figures rise every year.

          Most people have a horrible misunderstanding of reserves.  The reality is that there's hydrocarbons almost everywhere on the planet, and all that changes is the extraction cost.  So what is declared as "reserves" is a tiny fraction of the planet thats been explored (and just ignoring the huge amount of "across" that's not been explored, there's a practically limitless amount of "down"), which has oil that's economical to produce at today's prices, with today's technology.    But of course all elements of that picture are constantly changing.  The oceans and arctic are just starting to get explored, "deep" keeps getting cheaper, production from less viable reserves in general keeps getting cheaper, and any increase in prices raises the "reserves" figure by orders of magnitude.  Hence reserves tend to grow faster they're consumed.

          •  To put it another way... (1+ / 0-)
            Recommended by:
            Happy Days

            Picture that you're mining for gold, and there's rare loose surface nuggets, then an order of magnitude more gold dust in river sediments, then an order of magnitude more shallowly buried veins in rock, then an order of magnitude more that's deeper and more scattered, then another order of magnitude, then another, etc.

            You start mining by simply picking up nuggets with you bare hands.  Oh no, you're exhausting the easy to get gold.  But that's why you switch to panning.  Oh, but you're exhausting the gold dust!  So you switch to shallow mining of rich veins.  Oh, but you're exhausting them!  So you go deeper and sparser.  Etc.

            And what happens in reality?  Production doesn't decline - it increases.  Reserves don't decline - they increase.  Production cost doesn't increase - in the long term, compared to the cost of people walking around hand-picking nuggets, production cost decreases.

            Now this is perhaps a bad example because we're at the moment in the middle of a gold spike due to the economic crisis and gold markets are often distorted by other factors, but let it suffice to say that compared to preindustrial man's harvesting of gold when it was nice and convenient in surface nuggets, far less of the world economy's resources are dedicated to collecting it while many orders of magnitude more are collected.

          •  Peak CHEAP Oil, those extraction costs matter (4+ / 0-)

            We will NEVER run out of oil, because it will become so expensive that solar and wind will be far cheaper.  But if we don't subsidize solar and wind NOW, we may not have the cheap oil/gas resources to make the transition without huge economic contractions that will make 2008 look like a picnic.

            Fracking technology just digs that fossil fuel needle deeper into our economic arm and makes the coming cheap oil shock even more dangerous.

            •   (1+ / 0-)
              Recommended by:
              Happy Days

              That's the point, there will not be "huge contractions".  The oil markets will always fluctuate because they're based on gambling (to be quite honest!).  The companies bet on what oil prices are going to be in the 10 years or so it takes to start a new project and pick which projects to begin based on that.  But you increase the projection price $20 and you double the reserves.  Increase it another $20 and you double the reserves again. Etc.  And the overall prices drop with time as tech advances.  Sometimes tech advances faster than reserve recovery challenge and demand growth and prices overall drop.  Sometimes reserve recovery challenge and demand growth rises faster than tech advances and prices rise.  As a whole, oil prices are pretty similar to what they were at the start of the 20th century, in inflation-adjusted dollars, back when oil abundant in near-surface gusher wells in convenient locations.

              Wind and solar have nothing to do with oil, try again.  

              •  Your discussion is missing something important. (3+ / 0-)
                Recommended by:
                TKO333, opinionated, pollwatcher

                EROEI. Energy Returned on Energy Invested.

                Back when the commodities reports still used the phrase "Pennsylvania light sweet crude", EROI could be as much as 100:1.

                Now that the easy oil is gone and we're drilling in 5000' of Ocean water (killing 11 men and almost ruining the GOM in the process) and pressure washing sand in Alberta to get the oil off of it, EROEI can be as low as 8:1.

                This is dirty expensive oil and we burn more and more fossil fuels as we try to extract what is left. I fear that we won't stop until EROEI reaches 1:1. By that time the human race is likely to be in a world of hurt not only from energy shortages but also global warming.

                Reaganomics noun pl: belief that unregulated capitalism can produce unlimited goods for unlimited people on a planet with finite resources and we the people can increase revenue by decreasing revenue.

                by FrY10cK on Fri Nov 23, 2012 at 07:32:52 AM PST

                [ Parent ]

                •  EROEI is irrelevant concerning a single form of (0+ / 0-)

                  energy.  It's like saying that if it takes more energy to make alkaline batteries than they contain that there's no purpose to making alkaline batteries.

                  See elsewhere in the thread where I go into more detail on this.

                  •  Batteries are a storage mediium not a source (2+ / 0-)
                    Recommended by:
                    pollwatcher, zenyata

                    of energy.

                    What is your source that will provide an EROEI equivalent to easy 100:1 oil?

                    You're right that there are huge fossil fuel reserves left. They're difficult, dirty, and expensive to extract. Likewise to refine. That's why the EROEI goes down every year.

                    http://www.theoildrum.com Educate yourself.

                    Reaganomics noun pl: belief that unregulated capitalism can produce unlimited goods for unlimited people on a planet with finite resources and we the people can increase revenue by decreasing revenue.

                    by FrY10cK on Fri Nov 23, 2012 at 03:04:30 PM PST

                    [ Parent ]

                    •  Oil can likewise be an energy storage medium. (0+ / 0-)

                      There's no requirement that it has to be a net energy source.  THis equation makes no sense:

                      2 MJ oil -> 1 MJ oil

                      But the following do:

                      2 MJ coal -> 1 MJ oil
                      2 MJ nuclear -> 1 MJ oil
                      2 MJ solar -> 1 MJ oil
                      2 MJ geothermal -> 1 MJ oil
                      2 MJ wind -> 1 MJ oil

                      ... because you can't put any of the abundant things on the left hand side in your car.

                      They're difficult, dirty, and expensive to extract.
                      Dirty only matters for the environment not for economics.  And you double reserves figures every $20 or so you raise the base price of oil.  Every extra degree of "difficulty" puts orders of magnitude more oil on the market and the cost is hardly apocalyptic.
                      •  Umm ... (0+ / 0-)
                        ... the cost is hardly apocalyptic.
                        Burning 1 MJ to retrieve 8 MJ when our industrial economy (especially agriculture) is predicated on 100:1 easy fossil fuels? Do you really think we'd be drilling in 5000' of ocean water (an amazing technological feat -- also dirty, dangerous and expensive) if there was an abundance of fossil fuels? Speaking of dirty, how much hot water do you think it takes to pressure wash Alberta tar sands to get the oil off of it? Where do you thing the dirty water goes?

                        Decreasing EROEI is a change the human race has not prepared for. Wind and solar are great except all of the equipment is manufactured using massive amounts of fossil fuels. Geothermal is great. In Wyoming and Iceland.

                        And when are all those new nuclear plants coming online? And what do you propose we do with all the spent fuel currently sitting in grid-dependent cooling ponds? You know what happens to spent fuel cooling ponds when the power goes out right? They catch fire.

                        The worst though is this: All your equations show an EROEI of 1:2.  How in the hell does that make any sense? We liquefy 2 MJ of coal to make 1 MJ of fuel for driving to Walmart and Dairy Queen? Now we add the greenhouse gasses from our Humvee fuel production to the emissions from the Humvees themselves?

                        Please start reading what the petroleum engineers and geologists have to say at www.theoildrum.com

                        Reaganomics noun pl: belief that unregulated capitalism can produce unlimited goods for unlimited people on a planet with finite resources and we the people can increase revenue by decreasing revenue.

                        by FrY10cK on Sun Nov 25, 2012 at 11:40:02 AM PST

                        [ Parent ]

                        •  You're not even reading my posts (0+ / 0-)

                          Keep this up and I'll stop responding altogether.  

                          Burning 1 MJ to retrieve 8 MJ when our industrial economy (especially agriculture) is predicated on 100:1 easy fossil fuels?
                          To repost:
                          There's no requirement that it has to be a net energy source.  THis equation makes no sense:
                          2 MJ oil -> 1 MJ oil
                          But the following do:
                          2 MJ coal -> 1 MJ oil
                           2 MJ nuclear -> 1 MJ oil
                           2 MJ solar -> 1 MJ oil
                           2 MJ geothermal -> 1 MJ oil
                           2 MJ wind -> 1 MJ oil
                          ... because you can't put any of the abundant things on the left hand side in your car.
                          Argue against the points your opponent is actually making.  Otherwise you're hitting a straw man.
                          Do you really think we'd be drilling in 5000' of ocean water (an amazing technological feat -- also dirty, dangerous and expensive) if there was an abundance of fossil fuels?
                          Of course it's a huge technological feat.  It's also a massive freaking payoff.  A single multi-well platform on a good field can produce hundreds of thousand barrels of oil (tens of millions of dollars) per day, billions of dollars per year.  Billions, with a B.  Why should anyone be shocked that oil companies would want to develop them?  The industry will always go wherever the payoff is biggest.
                          Speaking of dirty, how much hot water do you think it takes to pressure wash Alberta tar sands to get the oil off of it? Where do you thing the dirty water goes?
                          Not only grossly misleading, but irrelevant for topics of energy and economics (you have this weird habit of mixing up the two topics), so I'm not even going to address it.
                          Wind and solar are great except all of the equipment is manufactured using massive amounts of fossil fuels.
                          Myth.  Modern wind and solar have energy paybacks in under a year.
                          Geothermal is great. In Wyoming and Iceland.
                          And EGS, anywhere on the planet.  The MIT geothermal study showed that the US has hundreds of thousands of times more geothermal capacity from EGS than it consumes.
                          And when are all those new nuclear plants coming online?
                          Your logic train is not only derailed but sitting at the bottom of a ditch.  "plans to build" != "capability to build".  Just like with oil, people will always produce only what economics dictates is the best option at any given point in time, not everything that is physically possible to produce.
                          And what do you propose we do with all the spent fuel currently sitting in grid-dependent cooling ponds? You know what happens to spent fuel cooling ponds when the power goes out right? They catch fire.
                          All of which has nothing to do with whether the world can power itself so I'm not even going to address it.
                          The worst though is this: All your equations show an EROEI of 1:2.
                          Which is half an order of magnitude worse than the worst oil recovery mechanism in use today.  And is even worse than the EROEI for most pure CO2 + water + energy methods to produce oil, the most energy intensive.
                          How in the hell does that make any sense?
                          Do I really have to quote myself a third time?
                          ... because you can't put any of the abundant things on the left hand side in your car.
                          Please actually Read The Post before you respond.  Heck, even read the title: "Oil can likewise be an energy storage medium."  It's amazing that people like you can often have no problem with the usage of a fuel cell, which wastes 2/3rds of its cycle energy and can't convert its waste product (water) back into fuel on-board the vehicle, requiring industrial recreation of the hydrogen using energy, but you can't even conprehend the concept of lossily burning and industrial recreating creating  (using energy) of hydrocarbons.  What part of "energy storage medium" is difficult for you?  

                          Yes, I've spent time at The Oil Drum before, and it's a magnet for kooks.

          •  You got some math, sources, or any other hard data (0+ / 0-)

            to support this insane reasoning?

            The oceans and arctic are just starting to get explored, "deep" keeps getting cheaper, production from less viable reserves in general keeps getting cheaper, and any increase in prices raises the "reserves" figure by orders of magnitude.  Hence reserves tend to grow faster they're consumed.
            Shell just gave up in the arctic.  "Too unsafe" I believe they said.

            Oh, and by the way, as prices go up, guess what happens to demand.

            Furthermore, once it takes one BTU invested to pull one BTU out of the ground, your so-called "reserves" plummet to zero!  Open a physics book.  Of course, by the time that happens, the gods will be basting us in our own gravy!

            •  Lol (1+ / 0-)
              Recommended by:
              Happy Days
              Shell just gave up in the arctic.
              Indeed, Shell just ended their arctic activities - For The Year.  There's this little thing called "winter" you may have heard of.

              Look, I live in Iceland, don't tell me that the arctic isn't getting heavily explored for oil.  They recently even found some in Icelandic waters, in a region called the Dragon Zone.  It's big news here.

              Oh, and by the way, as prices go up, guess what happens to demand.
              Barely dropped when it hit 150.  But in all regards, why wouldn't a drop in demand be a good thing?  Oh, we'll eventually hit a "peak" alright, but it'll be a demand peak.  Same as the world didn't end when, for lighting, people switched from tallow to whale oil, whale oil to paraffin, paraffin to kerosene, or kerosene to electricity.
              Furthermore, once it takes one BTU invested to pull one BTU out of the ground, your so-called "reserves" plummet to zero!
              Utterly false and a very common misconception.  That only applies to energy in general, not a specific form of energy.  The Nazis powered their air force by using several times more energy in coal than they got out in aviation fuel.  And it let them run one of the most successful air forces in military history (until the allies bombed the refineries flat).  South Africa did the same thing during apartheid.  

              Oil is an expensive form of energy.  One can convert cheaper forms of energy into oil.  At a most basic level, oil can be produced from water, carbon dioxide, and any form of energy.  Of course, carbon dioxide is one of the most expensive ways to make oil.  Cheaper is biomass, cheaper still is coal, cheaper still is bitumen, and on and on.

              Now, you could argue that we're somehow going to hit "peak energy", but that'd be a pretty absurd argument.  The last EGS study in the US showed several hundred thousand times more geothermal potential than the US uses.  More solar energy hits the earth in an hour than the world uses in a year.  Breeder reactors and seawater fuel extraction could power the Earth for hundreds of thousands of years.  Etc.  Peak energy is an absurdity.

    •  care to explain your point? (3+ / 0-)
      Recommended by:
      Mr Robert, sebastianguy99, svboston

      I'd love to hear another side to this.

      America could have chosen to be the worlds doctor, or grocer. We choose instead to be her policeman. pity

      by cacamp on Thu Nov 22, 2012 at 08:32:55 PM PST

      [ Parent ]

      •  the price of natural gas (1+ / 0-)
        Recommended by:
        cacamp

        collapsed this spring because there was real concern that overproduction would max out the potential storage capacity in the u.s. before the winter heating season.

        the reported volumes in storage accumulation each week is defined as the amount of production less consumption.  the fact is that natural gas is way way way oversupplied right now and if the winter heating season is less than normal we will likely exceed our maximum storage capacity.

        in addition, companies are spending billions of dollars in the south coast preparing for eventual exportation of LNG so this CT diary is pretty bogus as far as I can tell.

        http://ir.eia.gov/...

    •  Different (?) researcher, same conclusions Dec '11 (2+ / 0-)
      Recommended by:
      blueoasis, Creosote

      with regard to the hype, though not the asset bubble:

      http://www.slate.com/...

      Hope he is getting some credit--great article!  

      The labor of a human being is not a commodity or article of commerce. Clayton Act, Section 6.

      by Ignacio Magaloni on Thu Nov 22, 2012 at 10:13:24 PM PST

      [ Parent ]

    •  My thoughts exactly. (2+ / 0-)
      Recommended by:
      New Minas, Happy Days

      I remember reading about how the "Shale gas bubble was about to burst" 6 months ago, and a year ago, and a year and a half ago, and two years ago...

      It's just another form of the same sort of peak oil scaremongering that's been going on since oil and natural gas first started to be produced (the first "peakers" were clamouring about how the US's only good oil fields were in Pennsylvania and they were about to be exhausted).  The peak is right around the corner, and just you forget that it's been "right around the corner" every year for the past century and a half.

      1855 ad for Kier's Rock Oil: "Hurry, before this wonderful product is depleted from Nature's laboratory."

      •  US Production Peaked in the 1970's (0+ / 0-)

        Hubbert 's peak oil prediction for the U.S. was at worst a few years off.

        The US response - a massive drilling effort during the 1970's and early 1980's that eventually went bust because cheap Saudi oil flooded the market (coupled with mysterious inflation of their reserve numbers - with, as far as anyone can tell, no basis in reality...)

        The result of our massive drilling campaign ?  Oil production that never came close to getting us back to our peak production numbers...

        Peak oil has nothing to do with running out of oil - it has EVERYTHING to do with running out of cheap oil.  Our economies aren't built on oil - they are built on ready access to cheap oil.  At the peak of a production curve, by definition, somewhere in the neighborhood of 50% of oil remains... far from running out.  Unfortunately it's just that it's the increasingly expensive stuff that remains in that second 50%.

        •  That's a completely meaningless figure. (1+ / 0-)
          Recommended by:
          Happy Days

          The US is not an isolated system.  Oil production will always occur where it's cheapest.  If at a given point in time it's cheapest in the US, it'll happen in the US.  If at a given point in time it's cheaper somewhere else, it'll happen somewhere else.

          Hubbert's predictions for the US looked good at first but have increasingly gone awry.  First off, the shape of his curve on the downslope is wrong for the US - it's been far shallower, and it keeps shallowing up.  The shape is in general pretty awful for trying to match with a country's oil production - peakers often show a handful of graphs for different countries that it works well for, like Norway (although now even Norway is going awry), but conveniently omit, for example, Canada   Back in "the day", the peakers were shoving their curve for Canada onto the early 1970s.  Oops.  Sort of like what happened with the Hubbert Curves they used to stick on US natural gas production

          You can try to wedge a shape onto any arbitrary set of data by changing its scale and width.  That doesn't give it any relevance.  And to reiterate the key point, where it's produced is irrelevant.  It'll always be produced wherever it's cheapest, given the current balance of geologic availability, political stability, technology, etc.  For example, the increasing recent return of oil production to the US (despite all of the domestic opposition) is a technological one, from a number of different perspectives.  At the rate shale keeps increasing by orders of magnitude, too, the US could end up another Canada.  But again, it's irrelevant.  The oil companies will put their money wherever it's cheapest.

          You have an entirely backwards view of reserves.  Reserves increase by orders of magnitude as the price rises.  Raise the expected production price by about $20 and global oil reserves double.  Raise it by another $20 and reserves double again.  These aren't apocalyptic price numbers.  And, lest we not forget, technology is always battling against this, moving prices in the opposite direction.  The balance between demand increases and the usage of the rarer, easier stuff, and technology, goes back and forth, but on average has held about even in the past century (oil prices are, in inflation-adjusted dollars, similar to that at around the start of the 1900s when there were Spindletops and Lakeviews everywhere.)

          What you describe as a "massive drilling campaign" is highly deceptive.  Again, oil always follows the economics.  In the 1970s much of the lower-48 economics shifted from large fields to small, easy to access but isolated fields (of which there are countless, most still untapped today).  If you've been driving along a road and see a few oil wells pumping in some farmer's field, that's what's being talked about.  These are little cheap wells, you could drill hundreds for the price of one Deepwater Horizon, but they don't individually produce a lot.  So yes, there were "lots of wells drilled", but that's a meaningless figure.  They produced the amount of oil they were expected to.

          At the end of the 80s, the economics shifted again.  Offshore gulf oil began to exceed the economics of these numerous little fieds (again, primarily due to advancing technology).  Hence the rate of well drilling dropped as the money moved again toward centralization.  But the trend is reversing as now new fields like the Bakken which require a bunch of wells start becoming cheaper.

          •  I like to compare domestic production (0+ / 0-)
          •  You seem to know your O&G a lot better than most (1+ / 0-)
            Recommended by:
            Rei

            who are commenting here.

            Some people fight fire with fire. Professionals use water.

            by Happy Days on Fri Nov 23, 2012 at 12:18:20 PM PST

            [ Parent ]

          •  The only problem (0+ / 0-)

            with saying that the US is not an "isolated" system - is that is EXACTLY what these false proclamations regarding US energy "independence" are trying to give the impression of...  That we can become domestically "independent" producers - which to me implies we are reliant only on what we produce to power our own demands.

            The bottom line is that the worldwide demand for oil is higher than ever before.  The oil fields that matter - the super giants - peak and decline and no matter what technology is thrown at them they NEVER return to production numbers close to what their peak levels were.  North Sea, Prudhoe Bay, Cantarell in Mexico, Ghawar showing increasing water cuts...  all the "unconventional" (i.e. expensive) plays in the world are only allowing us the ability to continue "running to stand still".

            Increasing demand worldwide has made the market much more volatile and allowed for serious swings in prices over the past 5 years or so - there's no good evidence that the precarious national / global economies are robust enough to deal with higher prices that will be inevitable as unconventional sources are forced to pick up more of the slack for the former swing producers.  Reliance on unconventional plays and increasing technology is not something I'd be willing to bet on where demand is capped by a ceiling of ~$120 oil or has a floor of seemingly cheap $75 oil resulting from a stagnant economy.

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