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Peak Oil: “Show-Stoppers” – Peak Oil Matters
Peak Oil: “Show-Stoppers” – Peak Oil Matters.
Freshly fracked wells sent U.S. oil production soaring 39 percent since 2011. That’s the steepest climb in history, and if production continues apace, the U.S. would become the world’s biggest source of oil by 2015, according to the U.S. Energy Information Administration.
Rapid well declines threaten to spoil that promise. The average flow from a shale gas well drops by about 50 percent to 75 percent in the first year, and up to 78 percent for oil, said Pete Stark, senior research director at IHS Inc.
‘The decline rate is a potential show stopper after a while,’ said Stark, a geologist with almost six decades in the oil patch. ‘You just can’t keep up with it.’ [1]
That’s an interesting comment, given that the company Mr. Stark works for is more commonly known for its sunny optimism about our future fossil fuel supply.
FRACKING ISN’T FREE OR EASY
The reality is that rapid decline rates are a common feature of fracked wells. Drilling faster, more, and at higher costs just to keep pace with current production is not exactly a winning strategy. Higher costs for them are supported by the higher costs we pay. At some point, consumers balk, and when they do, there goes a lot of investable funds for more production. Then what?
The article from which that quote was sourced describes some of the admittedly-fascinating overview of the artificial intelligence systems now being considered—and it some cases already deployed—to improve the drill results from fracking (the hydraulic fracturing of shale in order to facilitate the flow of “tight” oil trapped in those rocks.) The article notes that “four out of every 10 clusters of fractures in an average horizontal well are duds.” Given that each well can cost millions of dollars, much more than wells drilled in conventional crude oil fields, that can be a problem.
AN UNSPOKEN CHALLENGE OR TWO
The use of fiber-optics and 3D seismic imaging are among the technological advances now being used to aid scientists “scientists see and hear what’s going on two miles underground.”
An executive of Schlumberger Ltd is quoted in this same article announcing that the combination of their own scientists’ expertise with the “U-ROC” software program “has led to an almost 30 percent increase in production in some wells in the Eagle Ford [TX].”
An official from another petroleum company that after collaborating with Halliburton and using a “science-based approach,” his company’s “shares doubled in the five months after” a conference call with investors.
If that’s not enough good news, by last summer the company enjoyed its “best-ever results” in the shale formations of western Texas’ Permian Basis, “and that it was‘among the best’ among its competitors at that location. The improvements were attributed in part, as a spokesman noted, to the company’s “own internal efforts to pump more time and money into the science of drilling and production.”
A LOOK AT THE UNSPOKEN
Improved performance is improved performance. But for those of us interested in how depleting and finite fossil fuel resources—with a healthy concern that technology and economics will continue to make extraction and production feasible to begin with—will keep up with demand in the years ahead, the doubling of a company’s shares, “an almost 30 percent increase in production in some wells,” being “among the best,” and pumping “more time and money into the science of drilling and production” suggests that all is not well in Oil Production Land.
That’s precisely what those of us concerned about peak oil continue to stress to listeners and readers.
It’s probably safe to assume that none of those efforts or the technologies employed are inexpensive. It’s also a certainty that whatever costs are associated with developing, testing, supplying, and using those impressive advances get passed on to consumers.
The impressive technologies now in play, with their higher costs, to locate and produce a product harder-to-come-by and not of the same quality as the conventional crude oil we’ve used to power our civilization for more than a century all point to the fact that we clearly can no longer rely on Business As Usual in oil production itself and fossil fuel usage by all of us.
Taking a bit of a detour in the headlong pursuit of ever more expensive technologies in order to plan for what happens in years to come when that resource just doesn’t do what we all need it to do; or devote more resources to the alternatives which will be needed when it makes little sense to continue the fossil fuel chase; or even provide more information to the public now so that they can get into the game doesn’t seem all that unreasonable, does it?
~ My Photo: Corona del Mar, CA – 02.16.18
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Revisiting the IEA's World Energy Outlook 2013 » Peak Oil BarrelPeak Oil Barrel
Revisiting the IEA’s World Energy Outlook 2013 » Peak Oil BarrelPeak Oil Barrel.
I was going over the IEA’s World Energy Outlook 2013 and noticed a few things you might find interesting. Exactly what is their opinion on Peak Oil? Here, cut and pasted from the report.
Got that? The URR is great enough to delay any peak until after 2035. Here is one of their graphs that indicate how much they think is left, coal, gas and oil.
Okay 54 years of proven reserves. That puts the peak out to well past mid century. Likely well past 2100 if you count those remaining recoverable resources. And just who has all this oil?
2.2 trillion barrels of conventional crude oil resources. However only 1.7 trillion barrels of that has a 90% probability of being recoverable. Of this the Middle East has the lions share, 971 billion barrels of resources with a 90% probability of recovering 813 billion barrels of that.
The Middle East, of course, mostly OPEC. And if you count the four OPEC countries of Africa and the two in South America, the vast majority of the world’s oil reserves are in OPEC nations. In fact OPEC claims 81% of all the proven reserves in the world.
So with 81% of the world’s proven reserves what is the IEA expecting from OPEC in the future?
A word of explanation is needed here. New Policies Scenario: A scenario in the World Energy Outlook that takes account of broad policy commitments and plans that have been announced by countries, including national pledges to reduce greenhouse-gas emissions and plans to phase out fossil-energy subsidies, even if the measures to implement these commitments have yet to be identified or announced.
450 Scenario: A scenario presented in the World Energy Outlook that sets out an energy pathway consistent with the goal of limiting the global increase in temperature to 2°C by limiting concentration of greenhouse gases in the atmosphere to around 450 parts per million of CO2.
Current Policies is business as usual. Or, basically, we will keep on doing what we are doing. Which is of course exactly what will happen. However what the IEA sees as happening, above, is not exactly what will happen, far from it.
So, looking at Conventional Crude Oil Production in 2012, 2020 and 2035 we find this. All data on all charts below are in million barrels per day:
Well hell, OPEC production will be lower in 2020 than it is today. And non OPEC production will be lower in 2035 than it is today. But not to worry, total conventional crude production will be up 2.9 percent in the 23 years between 2012 and 2035.
But they are expecting Natural Gas Liquids to increase by almost 57 percent.
And let us not forget about Unconventionals. What are Unconventionals?
Unconventionals, Light Tight Oil and Oil Sands increase from 5 mb/d to 10.6 mb/d in 2020 to 17.1 mb/d in 2035. That is an increase of 242 percent in 23 years.
Note: If you would like to be added to my email notification list when a new post is posted please email me at DarwinianOne at Gmail.com.
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Climate Change and Human Extinction – A Personal Perspective | Peak Oil News and Message Boards
Climate Change and Human Extinction – A Personal Perspective | Peak Oil News and Message Boards.
“Just one source, methane from the arctic…leads us [by 2030] to…a temperature beyond which humans have never existed on the planet.” Guy McPherson, professor emeritus of University of Arizona in Environmental Studies, shares highlights from his compilation of recent reports on climate change effects. Their number and extent have grown exponentially since he began five years ago. In this interview, he shares his personal journey through despair and deep grief to recent acceptance. “I suspect we get to see the end of this movie… Nobody else in human history [has]… We get to see how humans act in the face of their own demise.” Episode 262. [guymcpherson.com] Watch Guy’s Climate Change presentation February 2014
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Climate Change and Human Extinction – A Personal Perspective | Peak Oil News and Message Boards
Climate Change and Human Extinction – A Personal Perspective | Peak Oil News and Message Boards.
“Just one source, methane from the arctic…leads us [by 2030] to…a temperature beyond which humans have never existed on the planet.” Guy McPherson, professor emeritus of University of Arizona in Environmental Studies, shares highlights from his compilation of recent reports on climate change effects. Their number and extent have grown exponentially since he began five years ago. In this interview, he shares his personal journey through despair and deep grief to recent acceptance. “I suspect we get to see the end of this movie… Nobody else in human history [has]… We get to see how humans act in the face of their own demise.” Episode 262. [guymcpherson.com] Watch Guy’s Climate Change presentation February 2014
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Major oil spill after million-gallon barge collides with ship in Texas | wwltv.com New Orleans
Major oil spill after million-gallon barge collides with ship in Texas | wwltv.com New Orleans.
wwltv.com
Posted on March 23, 2014 at 5:57 PM
Updated yesterday at 6:01 PM
McALLEN, Texas — A barge carrying nearly a million gallons of especially thick, sticky oil collided with a ship in Galveston Bay on Saturday, leaking an unknown amount of the fuel into the popular bird habitat as the peak of the migratory shorebird season was approaching.
Booms were brought in to try to contain the spill, which the Coast Guard said was reported at around 12:30 p.m. by the captain of the 585-foot ship, Summer Wind. Coast Guard Lt. j.g. Kristopher Kidd said the spill hadn’t been contained as of 10 p.m., and that the collision was still being investigated.
The ship collided with a barge carrying 924,000 gallons of marine fuel oil, also known as special bunker, that was being towed by the vessel Miss Susan, the Coast Guard said. It didn’t give an estimate of how much fuel had spilled into the bay, but there was a visible sheen of oil at the scene.
Officials believe only one of the barge’s tanks was breached, but that tank had a capacity of 168,000 gallons.
“A large amount of that has been discharged,” Kidd said. He said a plan was being developed to remove the remaining oil from the barge, but the removal had not begun.
The barge was resting on the bottom of the channel, with part of it submerged. He said boom was being set up in the water to protect environmentally-sensitive areas and that people would be working through the night with infrared cameras to locate and skim the oil.
The barge was being towed from Texas City to Bolivar at the time. The Coast Guard said that Kirby Inland Marine, which owns the tow vessel and barge, was working with it and the Texas General Land Office at the scene.
The Coast Guard said six crew members from the tow vessel were in stable condition, but it offered no details about their injuries.
Jim Suydam, spokesman for the General Land Office, described the type of oil the barge was carrying as “sticky, gooey, thick, tarry stuff.”
“That stuff is terrible to have to clean up,” he said.
Mild weather and calm water seemed to help containment efforts, but stormy weather was forecast for the area on Sunday. Suydam said almost every private cleanup outfit in the area was out there helping out under the coordination of the Coast Guard and General Land Office.
Bruce Clawson, the director of the Texas City Homeland Security, told The Daily News in Galveston that the barge sank, but that there is no danger to the community, which is about 40 miles southeast of downtown Houston. Suydam said he could not confirm whether the barge sank.
Tara Kilgore, an operations coordinator with Kirby Inland Marine, declined to comment Saturday.
On its Facebook page, Texas City Emergency Management said the dike and all parks on the water are closed until further notice. And the Coast Guard said that part of the Houston ship channel was closed to traffic.
Richard Gibbons, the conservation director of the Houston Audubon Society, said there is very important shorebird habitat on both sides of the Houston ship channel.
Audubon has the internationally-recognized Bolivar Flats Shorebird Sanctuary just to the east, which Gibbons said attracts 50,000 to 70,000 shorebirds to shallow mud flats that are perfect foraging habitat. He did not know how much oil had been spilled, but said authorities were aware of the sanctuaries and had practiced using containment booms in the past.
“The timing really couldn’t be much worse since we’re approaching the peak shorebird migration season,” Gibbons said. He added that tens of thousands of wintering birds remain in the area.
Monday marks the 25th anniversary of the Exxon Valdez spill off the coast of Alaska. Suydam said that spill spurred the creation of the General Land Office’s Oil Spill and Prevention Division, which is funded by a tax on imported oil that the state legislature passed after the Valdez spill. The division does extensive response planning including pre-positioned equipment along the Texas coast.
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Major oil spill after million-gallon barge collides with ship in Texas | wwltv.com New Orleans
Major oil spill after million-gallon barge collides with ship in Texas | wwltv.com New Orleans.
wwltv.com
Posted on March 23, 2014 at 5:57 PM
Updated yesterday at 6:01 PM
McALLEN, Texas — A barge carrying nearly a million gallons of especially thick, sticky oil collided with a ship in Galveston Bay on Saturday, leaking an unknown amount of the fuel into the popular bird habitat as the peak of the migratory shorebird season was approaching.
Booms were brought in to try to contain the spill, which the Coast Guard said was reported at around 12:30 p.m. by the captain of the 585-foot ship, Summer Wind. Coast Guard Lt. j.g. Kristopher Kidd said the spill hadn’t been contained as of 10 p.m., and that the collision was still being investigated.
The ship collided with a barge carrying 924,000 gallons of marine fuel oil, also known as special bunker, that was being towed by the vessel Miss Susan, the Coast Guard said. It didn’t give an estimate of how much fuel had spilled into the bay, but there was a visible sheen of oil at the scene.
Officials believe only one of the barge’s tanks was breached, but that tank had a capacity of 168,000 gallons.
“A large amount of that has been discharged,” Kidd said. He said a plan was being developed to remove the remaining oil from the barge, but the removal had not begun.
The barge was resting on the bottom of the channel, with part of it submerged. He said boom was being set up in the water to protect environmentally-sensitive areas and that people would be working through the night with infrared cameras to locate and skim the oil.
The barge was being towed from Texas City to Bolivar at the time. The Coast Guard said that Kirby Inland Marine, which owns the tow vessel and barge, was working with it and the Texas General Land Office at the scene.
The Coast Guard said six crew members from the tow vessel were in stable condition, but it offered no details about their injuries.
Jim Suydam, spokesman for the General Land Office, described the type of oil the barge was carrying as “sticky, gooey, thick, tarry stuff.”
“That stuff is terrible to have to clean up,” he said.
Mild weather and calm water seemed to help containment efforts, but stormy weather was forecast for the area on Sunday. Suydam said almost every private cleanup outfit in the area was out there helping out under the coordination of the Coast Guard and General Land Office.
Bruce Clawson, the director of the Texas City Homeland Security, told The Daily News in Galveston that the barge sank, but that there is no danger to the community, which is about 40 miles southeast of downtown Houston. Suydam said he could not confirm whether the barge sank.
Tara Kilgore, an operations coordinator with Kirby Inland Marine, declined to comment Saturday.
On its Facebook page, Texas City Emergency Management said the dike and all parks on the water are closed until further notice. And the Coast Guard said that part of the Houston ship channel was closed to traffic.
Richard Gibbons, the conservation director of the Houston Audubon Society, said there is very important shorebird habitat on both sides of the Houston ship channel.
Audubon has the internationally-recognized Bolivar Flats Shorebird Sanctuary just to the east, which Gibbons said attracts 50,000 to 70,000 shorebirds to shallow mud flats that are perfect foraging habitat. He did not know how much oil had been spilled, but said authorities were aware of the sanctuaries and had practiced using containment booms in the past.
“The timing really couldn’t be much worse since we’re approaching the peak shorebird migration season,” Gibbons said. He added that tens of thousands of wintering birds remain in the area.
Monday marks the 25th anniversary of the Exxon Valdez spill off the coast of Alaska. Suydam said that spill spurred the creation of the General Land Office’s Oil Spill and Prevention Division, which is funded by a tax on imported oil that the state legislature passed after the Valdez spill. The division does extensive response planning including pre-positioned equipment along the Texas coast.
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Probably The Most Important Chart In The World | Zero Hedge
Probably The Most Important Chart In The World | Zero Hedge.
Having discussed the links between economic growth and energy resource constraints, and with the current geo-political fireworks as much about energy (costs, supply, and demand) as they are human rights, it would appear the following chart may well become the most-important indicator of future tensions…
Source: Goldman Sachs
This is not the first time we have discussed “self-sufficiency” – As none other than Bridgewater’s Ray Dalio noted in a slightly different context:
“self-sufficiency encourages productivity by tying the ability to spend to the need to produce,”“Societies in which individuals are more responsible for themselves grow more than those in which they are less responsible for themselves.” The nine-factor gauge of self-sufficiency provides some interesting insights into those nations most likely to experience above-average growth going-forward and those that are not; as European countries, notably Italy, France, Spain, and Belgium, all ranking at the very bottom on self-sufficiency.
And here we discussed, What If Nations Were Less Dependent On One Another?
The ability to survive without trade or aid from other nations, for example, is not the same as the ability to reap enormous profits or grow one’s economy without trade with other nations. In other words, ‘self-sufficiency’ in terms of survival does not necessarily imply prosperity, but it does imply freedom of action without dependency on foreign approval, capital, resources, and expertise.Freedom of action provided by independence/autarky also implies a pivotal reduction in vulnerability to foreign control of the cost and/or availability of essentials such as food and energy, and the resulting power of providers to blackmail or influence national priorities and policies.
…
Consider petroleum/fossil fuels as an example. Nations blessed with large reserves of fossil fuels are self-sufficient in terms of their own consumption, but the value of their resources on the international market generally leads to dependence on exports of oil/gas to fund the government, political elites, and general welfare. This dependence on the revenues derived from exporting oil/gas leads to what is known as the resource curse: The rest of the oil-exporting nation’s economy withers as capital and political favoritism concentrate on the revenues of exporting oil, and this distortion of the political order leads to cronyism, corruption, and misallocation of national wealth on a scale so vast that nations suffering from an abundance of marketable resources often decline into poverty and instability.
The other path to autarky is selecting and funding policies designed to directly increase self-sufficiency. One example might be Germany’s pursuit of alternative energy via state policies such as subsidies.
That policy-driven autarky requires trade-offs is apparent in Germany’s relative success in growing alternative energy production; the subsidies that have incentivized alternative energy production are now seen as costing more than the presumed gain in self-sufficiency, as fossil-fueled power generation is still needed as backup for fluctuating alt-energy production.
Though dependence on foreign energy has been lowered, Germany remains entirely dependent on its foreign energy suppliers, and as costs of that energy rise, Germany’s position as a competitive industrial powerhouse is being threatened: Industrial production is moving out of Germany to locales with lower energy costs, including the U.S.
The increase in domestic energy production was intended to reduce the vulnerability implicit in dependence on foreign energy providers, yet the increase in domestic energy production has not yet reached the critical threshold where vulnerability to price shocks has been significantly reduced.
…
America’s ability to project power and maintain its freedom of action both presume a network of diplomatic, military, and economic alliances and trading relationships which have (not coincidentally) fueled American corporation’s unprecedented profits.
The recent past has created an assumption that the U.S. can only prosper if it imports oil, goods, and services on a vast scale.
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Probably The Most Important Chart In The World | Zero Hedge
Probably The Most Important Chart In The World | Zero Hedge.
Having discussed the links between economic growth and energy resource constraints, and with the current geo-political fireworks as much about energy (costs, supply, and demand) as they are human rights, it would appear the following chart may well become the most-important indicator of future tensions…
Source: Goldman Sachs
This is not the first time we have discussed “self-sufficiency” – As none other than Bridgewater’s Ray Dalio noted in a slightly different context:
“self-sufficiency encourages productivity by tying the ability to spend to the need to produce,”“Societies in which individuals are more responsible for themselves grow more than those in which they are less responsible for themselves.” The nine-factor gauge of self-sufficiency provides some interesting insights into those nations most likely to experience above-average growth going-forward and those that are not; as European countries, notably Italy, France, Spain, and Belgium, all ranking at the very bottom on self-sufficiency.
And here we discussed, What If Nations Were Less Dependent On One Another?
The ability to survive without trade or aid from other nations, for example, is not the same as the ability to reap enormous profits or grow one’s economy without trade with other nations. In other words, ‘self-sufficiency’ in terms of survival does not necessarily imply prosperity, but it does imply freedom of action without dependency on foreign approval, capital, resources, and expertise.Freedom of action provided by independence/autarky also implies a pivotal reduction in vulnerability to foreign control of the cost and/or availability of essentials such as food and energy, and the resulting power of providers to blackmail or influence national priorities and policies.
…
Consider petroleum/fossil fuels as an example. Nations blessed with large reserves of fossil fuels are self-sufficient in terms of their own consumption, but the value of their resources on the international market generally leads to dependence on exports of oil/gas to fund the government, political elites, and general welfare. This dependence on the revenues derived from exporting oil/gas leads to what is known as the resource curse: The rest of the oil-exporting nation’s economy withers as capital and political favoritism concentrate on the revenues of exporting oil, and this distortion of the political order leads to cronyism, corruption, and misallocation of national wealth on a scale so vast that nations suffering from an abundance of marketable resources often decline into poverty and instability.
The other path to autarky is selecting and funding policies designed to directly increase self-sufficiency. One example might be Germany’s pursuit of alternative energy via state policies such as subsidies.
That policy-driven autarky requires trade-offs is apparent in Germany’s relative success in growing alternative energy production; the subsidies that have incentivized alternative energy production are now seen as costing more than the presumed gain in self-sufficiency, as fossil-fueled power generation is still needed as backup for fluctuating alt-energy production.
Though dependence on foreign energy has been lowered, Germany remains entirely dependent on its foreign energy suppliers, and as costs of that energy rise, Germany’s position as a competitive industrial powerhouse is being threatened: Industrial production is moving out of Germany to locales with lower energy costs, including the U.S.
The increase in domestic energy production was intended to reduce the vulnerability implicit in dependence on foreign energy providers, yet the increase in domestic energy production has not yet reached the critical threshold where vulnerability to price shocks has been significantly reduced.
…
America’s ability to project power and maintain its freedom of action both presume a network of diplomatic, military, and economic alliances and trading relationships which have (not coincidentally) fueled American corporation’s unprecedented profits.
The recent past has created an assumption that the U.S. can only prosper if it imports oil, goods, and services on a vast scale.
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Peak Oil: Sobering Realities – Peak Oil Matters
Peak Oil: Sobering Realities – Peak Oil Matters.
Expenditures for finding and developing oil fields have tripled in the last decade and the return from these expenditures has not been enough to justify the costs. Nearly all of the major oil companies have announced major reductions in their exploration and drilling programs and several are selling off assets as they are caught in a trap between steady oil prices and rapidly rising operating costs.
Tom Whipple, a former CIA analyst and highly-respected editor of the daily Peak Oil News and the weekly Peak Oil Review [published by ASPO – the Association for the Study of Peak Oil] offered that observation, [and the other quotations here], in an informative, straightforward, and necessarily sobering assessment of the current state of fossil fuel production.
His efforts won’t gain him rapid admittance into the Happy Talk Misleading Hall of Fame. What his observations will do (coupled with those of other esteemed analysts and commentators on the subject of peak oil) is to interject a much-needed awareness of facts and reality into public discussions about our future and the energy supplies we’ll all be relying upon.
That awareness cannot come too soon, burdened as most citizens are by a steady parade of foggy assertions bearing a reasonable but incomplete relationship to truth. We need more than passing acquaintance with facts that so clearly affect each and every one of us. Few of us appreciate just how much we rely upon inexpensive, readily-available supplies of energy to live our lives.
Taking this for granted shouldn’t come as a surprise to anyone. It’s pretty much all any of us and our immediate prior generations have ever known. Who among us considers the air we breathe thousands of times each day?
The simple fact, however, is that there is one vital aspect to this great body of fossil fuels which has powered us from the time of our Founding Fathers to this extraordinarily complex and awe-inspiring technologically-advanced 21st Century. These are finite resources.
We’ve drawn the cheap and easy supply in ever-more innovative and ingenious ways for nearly two centuries. Our go-to supplies are now harder to extract, more costly, less efficient. An engineering degree is not required to appreciate that this combination does not bode well for societies blindly pursuing more of everything without a pause to consider an alternate plan or two.
The world’s existing fields are depleting at rate of circa 4 million b/d each year so without constant drilling of new wells in new fields global production will quickly wither and prices will climb still more….
To keep the oil flowing, the world’s oil companies have invested some $4 trillion in the last nine years to drill for oil. About $2.5 trillion of this was spent on simply replacing production from existing oil fields. Even this gigantic expenditure was not enough since conventional oil production fell by 1 million b/d during the period.
Pause for a moment to consider that current state of affairs. For all the hype about the marvels of fracking and the energy boom tight oil production unleashed, the investments and returns aren’t adding up as bottom-line admirers hope. We consumers aren’t delighted with paying the higher prices needed to support the more extravagant energy production costs associated with unconventional energy supplies being relied upon more and more. (Worth mentioning again that the decline rates of fracked wells, and thus the need to drill more and more wells, at higher and higher prices, for less efficient products, are facts all conveniently omitted from the cheers offered by the oil industry’s media shills.)
A reckoning on both scores will come soon. Tom Whipple was succinct in that regard:
[I]nvestments in future production are going down, meaning that in a few years depletion likely will overwhelm new production and output of conventional oil will drop.
His inquiry was as good as any:
What is going to happen in the next few years?
Contemplating an answer or two might be a good investment.
~ My Photo: “Know The Risks” – Newport Beach, CA 02.16.14
* I invite you to enjoy my two new books [here and here], and to view my other work atrichardturcotte.com :
A blog examining the liberal vs. conservative conflicts in our society
Thought-provoking inquiries & observations about how (and why) Life does … and does not, work for everyone. [Inspired by my book of the same name]
A column offering a slightly skewed look at life for those of us on the north side of 50.
Looking Left and Right:
Inspiring Different Ideas,
Envisioning Better Tomorrows
Peak Oil Matters is dedicated to informing others about the significance and impact of Peak Oil—while adding observations about politics, ideology, transportation, and smart growth.
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The Peak Oil Crisis: Our Harsh Winter Continues
The Peak Oil Crisis: Our Harsh Winter Continues.
It turned out however that the forecasts were wrong and yet more frigid weather poured down across the U.S., drawing down our stocks of natural gas and heating oil still further and interrupting the drilling and fracking of new shale gas and shale oil wells. New forecasts say that the abnormally cold weather is likely to continue through the rest of March and on into early April.
We won’t have the final figures on how much natural gas was drawn from our stocks this winter for another month, but it is starting to look as if our stocks, which normally range from a high of 3.8 trillion cubic feet to a low of 1.8 trillion, could fall to as low as 750 billion and that the total drawdown this winter will be close to 3 trillion cubic feet as compared to the normal 2 trillion. Since November the U.S. has been consuming an average of 91 billion cubic feet of natural gas each day which is 13 percent higher than the five-year average for this time of year.
The key question is whether this can be replaced in time for the next heating season or the ones after that.
In addition to increasing our consumption, the cold weather has also slowed our domestic production of natural gas. Our natural gas imports from Canada, about 7 billion cubic feet per day, are down about 10 percent from last year. It is even colder in Canada and they need their gas to keep warm before exporting any surplus to the U.S.
You will recall that our shale gas wells, which now supply about 40 percent of our total natural gas consumption, deplete very quickly so that many new wells need to be drilled and fracked each year just to keep production level. There are very few conventional gas wells being drilled these days and production of shale gas other than from the Marcellus shale in the Appalachians is nearly flat. The rapid pace our gas wells are depleting means that the U.S. now needs about 19 billion cubic feet per day of new gas production just to keep up with our annual average consumption of 71 billion cubic feet per day.
As a goodly share of this 19 billion cubic feet per day of new natural gas production must come from the mountains of Pennsylvania and West Virginia, it should be apparent that this location is not conducive to drilling and fracking during the cold and snowy winter months. A recent weekly EIA report shows natural gas production in the eastern U.S down by 30 percent from last year.
Last week the Department of Energy issued a report discussing how we are going to overcome this trillion cubic foot deficit in our natural gas stockpiles before the beginning of next November’s withdrawal season. The Department starts with the assumption that the drawdown is not going to be as bad as it currently seems and then posits that if everything goes right – higher production and lower consumption – we might be able to inject a record 2.5 trillion cubic feet into our storage caverns this summer. Even this will leave us about 500 billion cubic feet below where we would like to be next fall.
Natural gas consumption during the next seven months is problematic. If temperatures are unusually high, a lot of natural gas will go into electric power stations to keep us cool. If it is a cool summer, then we might have considerable surpluses that could be injected into our storage caverns. The relatively low price of natural gas, currently about $4.50 per million BTU’s, is another problem.
Some independent analysts say this is well below what it costs to produce shale gas these days and that producers are solvent only because they are making an effort to produce “wet” gas that contains valuable natural gas liquids such as propane which can be sold for enough to offset the loss on the “dry” gas which is what keeps us warm. Gas coming from the Marcellus shale, mostly in Pennsylvania, is generally dry so that there is a good chance that many producers are simply losing money on their natural gas production while waiting for higher prices that will allow profitability.
Looking ahead for the next few years, questions are starting to arise about the long-term sustainability of our natural gas production. This winter will leave us with a major deficit in our stockpiles which unless the weather cooperates is not likely to be made up in the immediate future. Unusually hot summers or cold winters will make rebuilding of inventories difficult or even impossible.
Thanks to the hype about the 100 years-worth of natural gas we are supposed to have in reserve, everybody seems to have an idea as to how to use this bonanza more quickly. Some want to send LNG to Europe so it can reduce reliance on Russian gas. This of course requires liquefaction facilities to make LNG that can’t become operational for many years. Our imports from Canada are shrinking. Our exports via pipeline to Mexico are increasing. Many want to convert our fleet of 18-wheelers to natural gas. The EPA wants to replace the dirtiest of our coal burning power plants with natural gas and there are those who believe that nuclear power plants are too dangerous to keep around.
If even some of these additional uses come to fruition before the end of the decade, our natural gas could become very expensive and even scarce.
Olduvaiblog: Musings on the coming collapse 