Recently in Energy Policy Category

December 12, 2013

Three Experts on the Future of the Shale Boom

In November, Texas Monthly hosted a panel discussion at Rice University's Baker Institute for public policy about the boom in shale oil development in the US. The panel members: Arthur E. Berman, a Sugar Land-based geologist; Scott W. Tinker, the director of the Bureau of Economic Geology at the University of Texas at Austin; and Kenneth Medlock III, an energy fellow at the Baker Institute. You can watch the panel discussion on Texas Monthly's website, here. It's worth an hour of your time. 

These guys know a lot about energy in general and oil and gas in particular. I have previously written about Arthur Berman, a "shale skeptic," who has never believed that the shale boom would last. Scott Tinker is the narrator of the documentary "Switch," an examination of the modern world's thirst for and sources of energy.  In addition to the film, Dr. Tinker has created a website, http://www.switchenergyproject.com/, that provides additional short videos and other resources to further explore questions surrounding energy, including carbon capture, global warming, hydraulic fracturing, and alternative energy technologies. He interviews many world experts on global energy issues.  He is to my mind one of the most even-handed and level-headed thinkers and explainers of the complex issues surrounding energy issues.

October 14, 2013

Texas PACs Giving in Energy Sector

Texans for Public Justice, www.tpj.org, issued its report on 2012 Election Cycle Spending by Texas political action committees.  You can see it here. Some highlights:

Of the $70 million spent by Texas business PACs in 2011-12, $11.9 million, or 9%, was spent by PACs devoted to energy and natural resources issues/candidates. Here are the top spenders:

Energy PACs.JPG

The above figures represent spending by these PACs both in-state and out-of-state.

Energy Future Holdings is the successor to TXU Corp., acquired by EFH in a $45 billion leveraged buyout. EFH, now threatened with bankruptcy, is one of the state's largest electricity generators. The five EFH PACs spent more than $750,000. 

Valero Energy's PAC spent $729,000 of its $2 million in Texas and was a larger supporter of Senator Ted Cruz. ConocoPhillips' PAC spent $221,000 in Texas and gave large sums to Texas Railroad Commissioners.

Lawyer and lobbyist PACs were also big spenders:

Lawyer PACs.JPG

In 2010, Public Citizen issued a report on political contributions to Texas Railroad Commissioners. It found that total funds raised by commissioners increased from $511,000 in 2000 to $3.5 million in 2007-2008. Industry donors increased from $230,000 in 2000 to more than $2.1 million in 2008:

RRC contributions.JPG

Contributions to sitting commissioners increased substantially in 2006 and 2008 election cycles:

contributions to sitting commissioners.JPG

Public Citizens' conclusions:

  • Most of the increase in funding of commission races is driven by industry and those who have an economic interest in the decisions made by the commission.
  • Increased spending by large donors is likely putting pressure on smaller, independent operators to contribute.
  • Fundraising rarely ceases, except just after an election.

The Railroad Commission has been up for review by the Texas Sunset Commission in the last two sessions of the Texas Legislature, and both times the legislature failed to enact any of the recommendations of the Sunset Commission --- save one. In 2012, the legislature passed a bill requiring commissioners to resign if they decide to run for another elective office.  Governor Rick Perry vetoed that bill.  Among the Sunset Commission's recommendations was that the commission should levy more fines for violation of commission rules.  In the first quarter of 2013, the commission issued almost 14,000 notices of violations; it collected less than $200,000 in fines.

September 30, 2013

New UT Study Continues Methane Green House Gas Debate

A report recently released by the University of Texas' Cockrell School of Engineering, "Measurements of methane emissions at natural gas production sites in the United States," has re-energized the debate between industry and environmental groups over whether natural gas is good for the environment.

UT's report is a peer-reviewed paper reporting on the results of measurements of methane emissions at 190 onshore natural gas sites in the US. It was sponsored by the Environmental Defense Fund, Anadarko Petroleum, BG Group, Chevron, Encana, Pioneer Natural Resources, Shell, Southwestern Energy, Talisman Energy USA, and Exxon. The study is part of a larger series of studies being sponsored by EDF to determine how much methane is emitted by natural gas exploration, production and transportion in the US. The issue is important because, on the one hand, burning of methane releases less carbon dioxide into the atmosphere than coal or oil, and on the other hand, methane is itself a powerful greenhouse gas that contributes to global warming. Over the first 20 years after it is released, methane is 72 times more potent than carbon dioxide as a greenhouse gas.

Those environmental groups who oppose further development of hydrocarbon resources argue that, because of methane emissions, natural gas is not a good alternative to other fossil fuels. They have argued, based in part on estimates of methane emissions from completion operations on wells using hydraulic fracturing, that the increased development of natural gas resources made possible by fracing is bad for the environment. The industry, and some environmental groups, see natural gas as a plus, a "bridge fuel" to development of renewable energy.

The debate over the greenhouse effect of methane was triggered by the release of a study by two Cornell University professors, Robert Howarth and Anthony Ingraffea, contending that EPA estimates of methane emissions were low, and that because of those emissions natural gas was a worse greenhouse gas than carbon dioxide and other emissions from burning coal. Howarth's study has been widely criticized for using old data and vastly inflating methane emission estimates by the US Energy Department, the University of Maryland, MIT, Carengie Mellon Universty and the Worldwatch Institute. 

Howarth has issued a press release criticizing the UT study, saying it relied on data from the nine companies who helped sponsor the study. He pointed to a study published last month by the National Oceanic and Atmospheric Administration (NOAA) as more representative of a worst-case scenario. It studied air emissions in an entire basin in Utah. "They're finding methane emissions that are 10 to 20 times higher than this new study," Howarth says, "and I think [that's] probably more representative of at least those western gas fields, when industry does not realize it's being watched."

UT was criticized last year over possible bias in a study published by UT Austin's Energy Institute, "Fact-Based Regulation for Environmental Protection in Shale Gas Development." After review by an independent commission appointed by the University, UT withdrew the study.  Its author had failed to reveal that he sits on the board of Plains Exploration and received substantial compensation from the company. The review panel concluded that the report was not "fact-based" or subject to serious peer review and that a summary press release of the report was misleading and "seemed to suggest that public concerns were without scientific basis and largely resulted from media bias." (See my report on the controversy here.)

So what does the new UT study really tell us?  Its measurements of methane released from completion and fracing operations are substantially lower than EPA's estimates. But its measurements of gas released from pneumatic pumps and controllers and equipment leaks were either comparable to or higher than EPA estimates. Overall, the study's estimates of methane emissions were in line with EPA's most recent estimates. Lower measurements of emissions from well completions may be a result of better completion techniques that capture more methane, either for sale or flaring.  UT's study also attempted to measure methane emissions from "well unloadings"; while it found emissions from those events to be substantial, it concluded that its sample size was not sufficient to extrapolate emissions from that source and more sampling would be necessary. For a good explanation of emissions from "well unloadings" and well completions, you can watch the video on UT's website explaining its study. EDF's website explaining its efforts to better measure methane emissions is also instructive.

The debate continues.

August 6, 2013

George Mitchell, R.I.P.

A memorial service, open to the public, will be held today for wildcatter and philanthropist George P. Mitchell - actually, three memorial services, as befits one of the great Texans of the 20th century.  The Houston Chronicle in fact named him Houstonian of the Century. By all accounts, he was not only an entreprenurial genius, but a kind and generous man, a family man, and a man who gave back to his communities in many ways.

In one of his last public interviews, Mr. Mitchell addressed the issue of the safety and environmental risks of hydraulic fracturing and horizontal drilling.  I wrote about that interview.  He said that he supports tough regulation of independent operators. "I've had too much experience running independents," Mitchell said. "They're wild people. You just can't control them. And if it doesn't do it right, penalize the oil and gas people. Get tough with them."

Last year, Mr. Mitchell and Mayor Michael Bloomberg published an op ed piece in the New York Times supporting tighter regulation of the industry. What they said bears repeating. They pledged that their foundations

will support organizations that seek to work with states and industries to develop common-sense regulations that will protect the environment -- and ensure that the industry can thrive.

We will encourage better state regulation of fracking around five key principles:

Disclosing all chemicals used in the hydraulic fracturing process;

Optimizing rules for well construction and operation;

Minimizing water consumption, protecting groundwater and ensuring proper disposal of wastewater;

Improving air pollution controls, including capturing leaking methane, a potent greenhouse gas; and

Reducing the impact on roads, ecosystems and communities.

The latest research, including peer-reviewed studies out of Carnegie Mellon University and Argonne National Laboratory, suggests that if properly extracted and distributed, the impact of natural gas on the climate is significantly less than that of coal. Safely fracking natural gas can mean healthier communities, a cleaner environment and a reliable domestic energy supply right now.

We can frack safely if we frack sensibly. That may not make for a great bumper sticker. It does make for good environmental and economic policy.

Not words from a stereotypical Texas wildcatter. The industry would to well to follow his advice.

July 29, 2013

Sources and Uses of Energy in U.S.

 

 Those who visit my blog regularly know that I love charts and graphs. Below is a Sankey diagram produced by Lawrence Livermore Labs for the Department of Energy.  Sankey diagrams are named after Irish Captain Matthew Henry Phineas Riall Sankey, who used this type of diagram in 1898 in a publication on the energy efficiency of a steam engine.  The diagram below may also be viewed here.   

In the diagram, sources of energy are on the left, uses of energy are on the right. The first remarkable thing that struck me is how much energy is "rejected." Most of the petroleum used in transportation, and most of the fuel used to generate electricity, is rejected. A huge loss by inefficiency. Avoiding even a small amount of this inefficiency would in effect create a new source of energy.

Note also the small contributions of renewable energy sources -- biomass, solar, hydro and wind -- to the total. And the as-yet very small contribution of natural gas to the consumption of energy for transportation.

Livermore Sankey Diagram.JPG

May 13, 2013

Shale Reserves - Revolution or Ponzi Scheme?

A study written by J. David Hughes and published in February by the Post Carbon Institute claims that shale gas reserves are vastly overstated. "Drill Baby Drill - Can Unconventional Fuels Usher In a New Era of Energy Abundance?"  A companion article by Deborah Rogers claims that the shale "frenzy" is a Wall-Street-created bubble, that "U.S. shale gas and shale oil reserves have been overestimated by a minimum of 100% and by as much as 400-500% by operators according to actual well production data filed in various states," and that "shale oil wells are following the same steep decline rates and poor recovery efficiency observed in shale gas wells." "Shale and Wall Street: Was the Decline in Natural Gas Prices Orchestrated?" Both are published on a website called shalebubble.org.  These nay-sayers are continuing a tradition that has followed the oil and gas industry for decades - the debate between the peak-oil advocates and those who believe we will never run out of fossil fuels.

David Hughes' study is worth reading. He studied more than 60,000 shale wells in the US and their rates of decline, costs and reserves. Hughes concludes that more than 1,542 wells will have to be drilled each year in the Bakken and Eagle Ford plays just to maintain current production, at a cost of $14 billion per year. He estimates that it will take $42 billion and more than 7,000 wells per year to maintain current levels of production of shale gas, whereas the value of the gas produced in 2012 was only $32.5 billion. Some examples from Hughes' study:

On overly optimistic predictions by the Energy Information Administration:

Hughes Figure 25.JPG

Hughes' decline curve for Eagle Ford wells:

Hughes Figure 72.JPG

Hughes' prediction of future production from the Eagle Ford and Bakken plays:

Hughes Figure 80.JPG

And on the world's insatiable appetite for fossil fuels:

Hughes Figure 109.JPG

 Hughes' study is mentioned in "What If We Never Run Out of Oil," by Charles C. Mann, in the May edition of The Atlantic magazine. Mann gives a broad historical perspective to the debate over the ubiquity of fossil fuels. Mann begins by recounting his visit to the Kern River oil field in California many years ago.  One of the first and biggest oil fields discovered in the US, Kern River was discovered in 1899. In 1949, after 50 years of production, analysts estimated that 47 million barrels of recoverable reserves remained. In the next 40 years, the field produced 945 million barrels, and in 1989 analysts estimated the field's remaining reserves at 697 million barrels. By 2009, the field had produced more than 1.3 billion barrels and remaining reserves were estimated to be almost 600 million barrels.

Mann then tells the story of M. King Hubbert, a prominent geophysicist at Shell oil in the 1950's. In 1956, Hubbert predicted that crude oil production in the US would peak between 1965 and 1970. In 1964 Hubbert went to work for the US Geological Survey. The head of the USGS at the time, Vincent E. McKelvey, was an optimist about US oil and gas reserves, and his agency issued optimistic assessments of US oil industry's future.  McKelvey denigrated Hubbert's pessimistic projections and eventually forced Hubbert to resign from USGS.  Although McKelvey derided Hubbert's theories, they proved to be correct, and the decline in US production led to the oil embargo and gas lines of the 1970's. Jimmy Carter adopted Hubbert's views in declaring that the planet's proven oil reserves could be consumed by the end of the next decade. The Carter administration imposed energy-efficiency measures including gas-mileage regulation, home-appliance energy standards, conservation tax credits and subsidies for weatherization.

Mann says that the debate continues today between pessimists and optimists, Hubbertians and McKelveyans, "hammering at each other like Montagues and Capulets." The difference between the Hubbertians and the McKelveyans is in their conception of what is a "reserve." The Hubbertians think of reserves as a physical entity - oil in the ground. The McKelveyans think of reserves as an economic judgment: how much petroleum can be harvested from a given area at an affordable price. In fact, reserve estimates are a mixture of the two - at least if you are wanting to know "recoverable" reserves. What is "recoverable" depends on the price of the commodity and the cost of extracting it. As prices rise, recoverable reserves increase. As technology improves and costs drop, recoverable reserves increase. And vice versa.  Because there will always be some oil in the ground that is too expensive to recover at any point in time, McKeleyans say that the world's supply of oil will never be exhausted. Thus the idea behind Mann's article: "Will we ever run out of oil?"

And now the shale boom, and predictions that the US will soon be energy-independent. If the past is any judge, any prediction is sure to be wrong.

Mann's article goes well beyond the peak oil debate. He explores the possibility of commercial production of methane hydrate as the next breakthrough in unconventional hydrocarbon resources. Methane hydrate is gas trapped in frozen water crystals beneath the sea bed.

Methane Hydrate.JPG

Mann says that "Estimates of the global supply of methane hydrate range from the equivalent of 100 times more than  America's current annual energy consumption to 3 million times more." A core sample of methane hydrate was found to contain 99.4% methane. The ice crystals in which the methane is trapped can be lit afire - burning ice.

Ice on fire.JPG

Japan has spent $700 million on methane hydrate research over the past decade. Its ship, the Chikyu, is the world's most sophisticated research vessel. It recently tested a method of recovery of methane from methane hydrate that produced about 4 million cubic feet of gas.

Chikyu.JPG

Mann speculates on the global geopolitical consequences of a shift to unconventional hydrocarbon resources like shales and methane hydrate. Although it would be a relief not to rely on Middle East reserves for US energy supply, such a shift could have destabilizing results in the economies and politics of nations who even now are in the middle of unsettling developments. Mann quotes Daron Acemoglu, an MIT economist and co-author of Why Nations Fail: "Think of Saudi Arabia.  How will the royal family contain both the mullahs and the unemployed youth without a slush fund?"

The US is unique among the 62 petroleum-producing nations in allowing private entities to control most oil and gas resources. In most nations, these assets are owned or controlled by the government. Michael Ross, a UCLA political scientist and author of The Oil Curse: How Petroleum Wealth Shapes the Development of Nations (2012), says that this naturally leads to corruption. Such oil-based economies become unstable when shortfalls in oil revenues eliminate the sole, unsteady support of the ruling elite.

The world has become totally dependent on fossil fuels for its economy and well-being. As Mann says:

[E]conomic growth and energy use have marched in lockstep for generations. Between 1900 and 2000, global energy consumption rose roughly 17-fold, ... while economic output rose 16-fold - as close a link as one may find in the unruly realm of economic affairs.

We depend on hydrocarbons for everything from lighting our homes to providing energy to build our computers to running our cars. Modern life would be impossible without hydrocarbons. Humankind's appetite for energy is insatiable, and is sure to grow as developing countries continue to increase their standard of living. We need to understand and be aware of the consequences. Mann's article is a good place to start.

December 26, 2012

Two Good Energy Websites

Here are two good websites that provide interesting and balanced views about energy production and consumption:  The Rational Middle, and Think Progress. The Rational Middle is a series of films by the people that produced the movie Haynesville - A Nation's Hunt for an Energy Future. Its goal is to encourage rational thinking about our energy future and establishing achievable goals toward sustainable energy. The films about unconventional resources and the risks of hydraulic fracturing are worth looking at.

 

Think Progress's climate page introduces thought-provoking statistics about our nation's energy sources and uses. For example:

56.2% of the nation's energy is wasted each year - from the Lawrence Livermore National Laboratory:

Estimated US Energy Use 2011.JPG

 Check them out.

 

December 4, 2012

Switch - Documentary on Energy

I recently had the opportunity to view a documentary, "Switch," produced by Dr. Scott Tinker, Director of the Bureau of Economic Geology at the University of Texas and the State Geologist of Texas, and Harry Lynch, documentary filmmaker. Dr. Tinker uses as the premise for his film the question - When will the world ultimately switch from fossil fuels to cleaner, alternative energy sources? In the process, he examines the sources and uses of energy worldwide, their costs and benefits, in an engaging film that takes him from the huge open-pit coal mines in Wyoming to offshore oil rigs to a hydraulic energy plant in the Netherlands, from the top of a wind turban to solar energy farms, and from driving Tesla to installing more efficient heating and lighting systems in the home. In the process, he does what no film I have seen does -- provide a balanced, informed view of the role of energy in our modern world and where we are heading.

In addition to the film, Dr. Tinker has created a website, http://www.switchenergyproject.com/ , that provides additional short videos and other resources to further explore questions surrounding energy, including carbon capture, global warming, hydraulic fracturing, and alternative energy technologies. He interviews many world experts on global energy issues. The five energy issues you need to know, according to Dr. Tinker:

1. Energy drives the modern world and underpins every other issue.

2. We choose our energy based on four qualities: affordable, available, reliable and clean.

3. But clean is complicated. All energies have environmental impacts, which need to be managed effectively and affordably.

4. Even so, the biggest challenge of energy is scale - the enormous amount of energy we demand.

5. And the only way to counter scale, is with efficiency.

The website provides a calendar of screenings of the movie across the country and the world. I highly recommend that you look for it in your area, and see it. Finally, a balanced view of the large, long-range picture of our energy future.

October 29, 2012

"Energy Independence"?

We're in the crazy election season once again, and once again all candidates have promised "energy independence." Newt Gingrich promised to lower gasoline prices. President Obama takes credit for low natural gas prices. Governor Romney says we can eliminate imports of crude oil. Presidential candidates have promised energy independence ever since the oil embargo in Jimmy Carter's administration. The candidates know that, in fact, government policies have little to do with energy prices, and there is little they can do to influence those prices. It might be good to look at a little history.

First, natural gas prices are still essentially a domestic phenomenon. Although transportation of liquefied natural gas is beginning, it is still very expensive in comparison to domestic prices. And natural gas prices are still essentially a matter of domestic supply and demand. Consider these graphs:

U.S. Gas Production Graph.jpg

NG Wellhead Price Graph.jpg

 

Prices for natural gas spiked in the last decade; production increased; and prices declined. Supply and demand.

Unlike natural gas, crude oil is a world market, governed by world supply and demand.

U.S. Crude Production Graph.jpg

U.C. Crude Imports.jpg

World Crude Price Graph.jpg

 

World oil prices climbed over the last decade to reach $100/bbl at the beginning of this decade, and have remained high; U.S. production of oil increased, and U.S. imports declined. Yet prices remain high, due to global demand.

Texas has prospered as a result, increasing its crude production for the first time in decades, largely as a result of unconventional plays, principally the Eagle Ford:

Texas Crude Production Graph.jpg 

Let's hope that some sanity will return to politics and energy policy after the crazy season.

 

July 26, 2012

New Energy Documentary by Scott Tinker

A new documentary by Scott Tinker and Harry Lynch is now being rolled out at select screenings. http://www.switchenergyproject.com/aboutfilm.php#about Dr. Tinker was Director of the Bureau of Economic Geology, a joint organization of the University of Texas and the State of Texas, and a professor at UT's Jackson School of Geology, as well as the State Geologist of Texas. Their film has won the award as best film at the Colorado Environmental Film Festival, and other film recognition. It is now being screened at selected cities across the country, and in Canada and Australia. I have heard Dr. Tinker speak, and he has a wide knowledge of energy issues. The film took three years to make. There are other good films at the Switch Energy Project website: http://www.switchenergyproject.com/topics/alltopics

Be sure to see the film if you get a chance.

 

March 11, 2012

Rolling Stone Picks Fight with Aubrey McClendon

Rolling Stone magazine's Jeff Goodell has weighed in on the debate over natural gas reserves, the safety of hydraulic fracturing, global warming, methane groundwater contamination, and Chesapeake Energy's controversial finances, in an article titled "The Big Fracking Bubble: The Scam Behind the Gas Boom." Goodell pulled no punches. He calls Aubrey McClendon, Chesapeake's CEO, "an influential right-wing power broker." He says that "Fracking, it turns out, is about producing cheap energy the same way the mortgage crisis was about helping realize the dreams of middle-class homeowners." He claims that "for Chesapeake, the primary profit in fracking comes not from selling the gas itself, but from buying and flipping the land that contains the gas," and that Chesapeake "has more in common with Enron than ExxonMobil."

Goodell's article covers ground that is not new in the debate over the safety, ecology and economics of hydraulic fracturing. He touches on the study by Anthony Engraffea at Cornell University on whether natural gas has less global-warming effect than coal. He discusses the Duke University study of methane in water wells in Pennsylvania. He quotes Arthur Berman (Berman says miss-quoted), a long-time critic of the industry's estimates of shale gas reserves.

McClendon says he agreed to talk to Goodell after he was told that the magazine would publish an article on Chesapeake whether it cooperated or not. Chesapeake has issued a rebuttal to the article ("Although our expectations for honesty and fairness were quite low, the writer failed to reach even that low bar."), and Goodell has responded to Chesapeake's rebuttal ("The company entirely dodges the article's central point: that Chesapeake is a highly-leveraged firm operated by a corporate gambler who engaged in complex scheme to profit off the illusion that America has a virtually unlimited supply of cheap natural gas."). (Isn't the internet amazing?) 

Last Thursday I went to a showing of spOILed, a documentary about the oil and gas industry by journalist turned media analyst Mark Mathis. I recommend the movie as a good effort by a non-expert journalist to understand and analyze the place, importance and future of hydrocarbons in the world today. Unlike Goodell, Mathis comes down on the side of industry. He concludes that, like it or not, the world is dependent on hydrocarbons, which have made our 21st century economy and lifestyle possible; and that the world will not soon develop alternate sources of energy that could wean us from dependence on hydrocarbons, and so must continue to develop available reserves to prevent a catastrophic rise in energy prices if demand exceeds supply.

Whether you agree with Mathis or Goodell, the debate over energy and its future is one that should continue, and good journalists making real efforts to understand and explain the issues in ways that the general public can understand should be encouraged. Remarkably, there is very little debate over these issues in the political sphere, despite the recent environmental disasters -- the Gulf oil spill and the near-meltdown of nuclear reactors following the tsunami in Japan. I would encourage Mathis to read Goodell, and I would recommend Mathis' movie to Goodell. Each could learn something to learn from the other.

 

January 27, 2012

NASA on Global Warming

NASA has prepared a report on the rise of global temperatures that contains a great time-lapse view of global temperatures over time. You can view it here:

http://www.giss.nasa.gov/research/news/20120119/

 

 

June 16, 2011

New MIT Study, "The Future of Natural Gas," Touts the Future of Natural Gas Shale Development

A study group sponsored by the Massachusetts Institute of Technology has issued a report, The Future of Natural Gas, the fourth in a series of MIT multidisciplinary reports examinging the role of various energy sources and the effects of carbon dioxide emissions restraints.  The full 170-page report can be found here. The report analyzes the relative carbon footprint of natural gas compared to other fuels and the environmental impact of the development of shale gas reserves, among other topics. Here are some excerpts:

Major conclusions of the report:

  • "There are abundant supplies of natural gas in the world, and many of these supplies can be developed and produced at relatively low cost."
  • "The role of natural gas in the world is likely to continue to expand under almost all circumstances, as a result of its availability, its utility and its comparatively low cost."
  • Natural gas is "one of the most cost-effective means by which to maintain energy supplies while reducing CO2 emissions."

Regarding gas's carbon footprint, the report concludes that "Among the fossil fuels, it has the lowest carbon intensity, emitting less CO2 per unit of energy generated than other fossil fuels. It burns cleanly and efficiently, with very few non-carbon emissions. Unlike oil, natural gas generally requires limited processing to prepare it for end use."

Regarding potential natural gas supply:

  • "The mean projection of [worldwide] remaining recoverable resource [of natural gas] in this report is 16,200 Tcf, 150 times current annual global natural gas consumption .... Of the mean projection, approximately 9,000 Tcf could be developed economically with a natural gas price at or below $4/Million British Thermal units (MMBtu) at the export point."
  • "The mean projection of recoverable shale gas resource in this report is approximately 640 Tcf, with low and high projections of 420 Tcf and 870 Tcf, respectively. Of the mean projection, approximately 400 Tcf could be economically developed with a natural gas price at or below $6/MMBtu at the wellhead."

Continue reading "New MIT Study, "The Future of Natural Gas," Touts the Future of Natural Gas Shale Development" »

December 28, 2010

Brownlow Article on Eagle Ford Shale Play and the Carrizo Aquifer

Darell T. Brownlow, Ph.D, has published an article giving his analysis and opinion of the ability of the Carrizo Aquifer to supply water demands caused by fracing of wells in the Eagle Ford play.  The article was published in the newsletter of the Texas Ground Water Association, Fountainhead, and can be found here: Brownlow Article.pdf

Dr. Brownlow, a hydrologist, concludes that there is plenty of water in the Carrizo, in most places, to meet the demands for frac water. His estimates:

  • There are about 6 million acres in the Eagle Ford play, and a possible 20,000 oil and gas wells (one well per 300 acres).
  • An average frac job uses 15 acre-feet of water (4,887,765 gallons, or 115,375.5 42-gallon barrels).
  • So, the frac jobs on those 20,000 wells would use about 300,000 acre-feet of water over the life of the play.
  • Current withdrawals from the Carrizo Aquifer are about 275,000 acre-feet per year; so the entire demand for frac water from Eagle Ford wells would equal about one year's withdrawal of water from the aquifer.  At a rate of withdrawal of 275,000 acre-feet per year, groundwater management studies estimate that the Carrizo water table will drop an average of 30 to 35 feet by 2060.

Dr. Brownlow says that, if a successful Eagle Ford well makes 300,000 to 400,000 barrels of oil at $80/bbl, the return to the landowner would be $520,000 per acre-foot ($1.60 per gallon). In contrast, the return to a farmer using  the same acre-foot of water to irrigate corn, peanuts or coastal hay would be $500 to $1,000 per acre, or about $250 per acre-foot of irrigation water. "The point here is that using groundwater from the Carrizo for hydraulic fracturing in the Eagle Ford Shale has enormous economic potential for landowners, oil production companies and the entire region. Moreover, from a geologic and water planning perspective, additional impact on the aquifer appears minimal."

Dr. Brownlow is a resident of Wilson County, a cattle rancher in LaSalle County, serves on the South Central Texas Regional Water Planning Group (Region L), and was the governor's appointee to the Evergreen Underground Water Conservation District from 2000-2010.

December 10, 2010

James Fallows on the Future of Coal

James Fallows is a national correspondent for Atlantic Monthly. ( jamesfallows.theatlantic.com )  In the last few years he has lived in and written about China. He has written the cover article for Atlantic's December issue, "Dirty Coal, Clean Future." I am a big fan of James Fallows; he writes clearly about big-picture issues, is a deep thinker, and does not talk down to his readers. Mr. Fallows' article is about the future of coal as a source of energy in the world, and how China is developing "clean coal" technology.

Much has been made recently of new discoveries of natural gas in the U.S.; it has been touted as a solution to our dependence on foreign oil and as a way to reduce emission of greenhouse gases, by replacing coal-powered electric generating plants. Mr. Fallows does not write about new gas discoveries, but his discussion of the future of coal puts our domestic natural gas discoveries in perspective. Below are some excerpts from and summaries of Mr. Fallows' discussion. I recommend that you read his article in full.

Continue reading "James Fallows on the Future of Coal" »