Energy Returned on Energy Invested Thread pt 2 (EROEI) (merg

[Daniel_Plainview]

This estimate is based on my interpretations of analyses by the Environmental Defense Fund[11] and the New York Department of Environmental Conservation (NYDEC)[12] which focused on the carbon dioxide (CO2) emissions from shale gas drilling and compressing operations. CO2 emissions are directly related to fossil fuel combustion, so these studies in effect provide estimates of the energy used to extract shale gas and get it to market. Other studies provide estimates of the ultimate production of gas from an average well[13] and on the portion of the gas that must be used to process and compress it and send it through pipelines.[14] Also included were approximate estimates of the energy it took to make the steel used for well casings and a portion of the necessary pipelines, and the concrete used in the casing process, which were apportioned based on assumptions.

Hmmm ... an environmental scientist basing his EROEI calculations on environmental data (namely, CO2 emissions) rather than on energy data. What could possibly be the flaw in that approach?

I'm on board! ... Sign me up! ... This EROEI is even better than E-Cat!

[OilFinder2]

^
Oops! Conveniently forgot this part!

Another, quite different approach is to estimate the total cost of a shale gas well and then use the average amount of energy associated with a dollar of gross domestic product (GDP) to translate this cost to an energy value. In 2010, U.S. GDP was about $14.5 trillion, and the nation used about 100 quadrillion Btu. This translates to about 7000 Btu of energy expended per dollar. Assuming that the energy expended in drilling and hydrofracking a shale gas well bears the same relative relationship to the dollar, the approximately five million dollar estimated cost of a well and associated infrastructure translates to an energy cost of 35 billion Btu.

Which, two paragraphs later, goes on to conclude ...

The estimated total energy cost of shale gas extraction is thus in the approximate range of 30 to 35 billion Btu while the estimated ultimate energy produced is in the range of 2.6 trillion to nearly 5 trillion Btu. The ratio of energy produced to energy expended for shale gas based on the approaches outlined above is thus at least 70 and perhaps well over 100. This is extremely good relative to the probable EROI values for other current energy sources.

In other words, the CO2 method wasn't even where he got his 70:1 figure.

It's really funny a bunch of environmentalists here are criticizing some numbers devised by the Environmental Defense Fund!

[Daniel_Plainview]

^

Another, quite different approach is to estimate the total cost of a shale gas well and then use the average amount of energy associated with a dollar of gross domestic product (GDP) to translate this cost to an energy value. In 2010, U.S. GDP was about $14.5 trillion, and the nation used about 100 quadrillion Btu. This translates to about 7000 Btu of energy expended per dollar. Assuming that the energy expended in drilling and hydrofracking a shale gas well bears the same relative relationship to the dollar, the approximately five million dollar estimated cost of a well and associated infrastructure translates to an energy cost of 35 billion Btu.

Which, two paragraphs later, goes on to conclude ...

The estimated total energy cost of shale gas extraction is thus in the approximate range of 30 to 35 billion Btu while the estimated ultimate energy produced is in the range of 2.6 trillion to nearly 5 trillion Btu. The ratio of energy produced to energy expended for shale gas based on the approaches outlined above is thus at least 70 and perhaps well over 100. This is extremely good relative to the probable EROI values for other current energy sources.

LOL!

Not even Shorty was this desperate ... Oh, how we miss Shorty ...

[pstarr]

For those who care: EROEI (Energy Return On Energy Input) is shorthand for net-energy analysis, a calculus that measures the difference between the energy/work expended during the acquisition of a primary stored energy source (input from geologic or solar processes), and the energy available for use in the final energy product, a fungible transferable consumer product. The measurement process depends on an essential component; recursive life-cycle analysis of all industrial inputs (labor materials transport conversion etc.) to the final consumable energy product. Historical iterations are bounded by meaningful contribution of such inputs.

[peripato]

Frack Off Oily, they barely have an EROEI of 1; it's all just another HUGE PONZI SCHEME according to inside revelations. The US is poisoning its air and water and ravaging the countryside, just so that a few sheisters can make off with the loot before the whole scam explodes.

"In these shale gas plays no well is really economic right now," the geologist said in a previous e-mail to the same official on March 16. "They are all losing a little money or only making a little bit of money."

The revelations contained in the New York Times article from which the above quote is taken probably deserve their own topic, but I just couldn't be bothered, it's all so depressing and unsurprising. The US; one gigantic Enron play - from coast to coast. Perhaps Pstarr, or Daniel Plainview could kick it off?

[John_A]

The problem is economic contraction won’t be able to support the energy input expense for more exploration, drilling and conversion to uses of shale gas.

Oilfinders signature seems to cover the concept that the same thing was said about peak oil. And then it happened and we kept doing all the same things anyway. Seems like there is a gap in our theoretical knowledge somewhere.

[John_A]

For those who care: EROEI (Energy Return On Energy Input) is shorthand for net-energy analysis, a calculus that measures the difference between the energy/work expended during the acquisition of a primary stored energy source (input from geologic or solar processes), and the energy available for use in the final energy product, a fungible transferable consumer product. The measurement process depends on an essential component; recursive life-cycle analysis of all industrial inputs (labor materials transport conversion etc.) to the final consumable energy product. Historical iterations are bounded by meaningful contribution of such inputs.

Nice summary! According to the original article, we seem to have some good EROEI stuff in shale gas. Can't run my car on it quite yet, but T. Boone thought it would make a great stop gap transportation fuel, so this is certainly a good sign.

[Daniel_Plainview]

According to the original article, we seem to have some good EROEI stuff in shale gas.

John, did you read the opening article? It's the biggest pile of nonsense I've read in ages. Here are some highlights:

This estimate is based on my interpretations of analyses by the Environmental Defense Fund[11] and the New York Department of Environmental Conservation (NYDEC)[12] which focused on the carbon dioxide (CO2) emissions from shale gas drilling and compressing operations. CO2 emissions are directly related to fossil fuel combustion, so these studies in effect provide estimates of the energy used to extract shale gas and get it to market. Other studies provide estimates of the ultimate production of gas from an average well[13] and on the portion of the gas that must be used to process and compress it and send it through pipelines.[14] Also included were approximate estimates of the energy it took to make the steel used for well casings and a portion of the necessary pipelines, and the concrete used in the casing process, which were apportioned based on assumptions.

Another, quite different approach is to estimate the total cost of a shale gas well and then use the average amount of energy associated with a dollar of gross domestic product (GDP) to translate this cost to an energy value. In 2010, U.S. GDP was about $14.5 trillion, and the nation used about 100 quadrillion Btu. This translates to about 7000 Btu of energy expended per dollar. Assuming that the energy expended in drilling and hydrofracking a shale gas well bears the same relative relationship to the dollar, the approximately five million dollar estimated cost of a well and associated infrastructure translates to an energy cost of 35 billion Btu.

The estimated total energy cost of shale gas extraction is thus in the approximate range of 30 to 35 billion Btu while the estimated ultimate energy produced is in the range of 2.6 trillion to nearly 5 trillion Btu. The ratio of energy produced to energy expended for shale gas based on the approaches outlined above is thus at least 70 and perhaps well over 100. This is extremely good relative to the probable EROI values for other current energy sources.

Cornucopians everywhere are put on notice that if you cite to this rubbish, you will be revealing yourself as either (1) not having read the article; (2) not having comprehended the article; or (3) being a raving lunatic.

Yes, it's THAT awful.

When the author of this drivel decides to archive this article, his preferred method of storage is the trash heap.

[Keith_McClary]

News flash: just because someone with a PhD starts an amateur blog and posts a few paragraphs with citations to WIKIPEDIA doesn't mean his drivel is any more authoritative than Shorty's posts at PO.com.

Yeah, academic careers depend on regular publications in peer reviewed journals.

There's nothing wrong with an academic writing a blog or pop articles on stuff that's not in their area of expertise, or that's too speculative for the journals, but these are by nature not authoritative. They are not putting their professional reputation on the line, as with a journal publication.

[GoIllini]

If you have a car that I claim can't run as it was designed by the engineers, but you turn the engine on, I might be able to claim that it's just a recording. If we get into the car and drive 300 miles, I might be able to claim that the road just moved backwards. But if the car is getting produced the same way by GM and hundreds of thousands are getting cranked out and consumers are getting into them and driving, well, it's pretty hard to keep pretending that the car doesn't run and the engineering was flawed. At that point, even I know that I am trying to continue living in my alternate theory rather than dealing with reality.

The fact is that shale gas now makes up 14% of our natural gas supply, or 2.8 quadrillion BTUs of energy, about 3% of US energy consumption:

http://www.eia.gov/energy_in_brief/imag ... _large.jpg

You can do all the analysis and engineering you want, but at the end of the day, we're at the point where millions of "broken" cars are getting produced and being driven around. Obviously there are a lot of very valid uncertainties about the environmental side-effects, but we've really gotten past the EROEI analysis at this point when the economy is getting 3% of its energy from this source. At this point, when the energy expended to pull natural gas out of the ground is probably going to be in the form of (more expensive) oil and electricity and without subsidies on the order of tens of billions of dollars to sell natural gas at ~ $25/boe, It's clear the proof rests on the shoulders of the anti-fracking crowd in the same way that the proof rests on my shoulders when I claim the Ford Focus was engineered by an idiot and it is physically impossible for the car's engine to run.

[pstarr]

Nice summary! According to the original article, we seem to have some good EROEI stuff in shale gas. Can't run my car on it quite yet, but T. Boone thought it would make a great stop gap transportation fuel, so this is certainly a good sign.

Thanks! I penned it to highlight the complete vapidity of your source.

[GoIllini]

Thanks! I penned it to highlight the complete vapidity of your source.

Pstarr, we're really past the EROEI doubts when we're producing shale gas on an industrial scale. Obviously, it has some level of positive EROEI when our inputs (electricity, gasoline) are more expensive than our output (natgas) and it's being produced on such a wide, commercial scale. In fact, it made up 14% of US natgas production in 2010. To get to that level, there would have to be a conspiracy involving hundreds of thousands of people to hide the consumption of 3% of the US's energy producing natgas from shale. FDR couldn't even pull that off at Oak Ridge during WWII secrecy. Imagine trying to pull that off now with twitter, facebook, dozens of E&P companies involved, and likely thousands of engineers doing analyses on rock formations and drilling.

Ooops, there goes another Ford Taurus. Must be getting pulled by an invisible dogsled team.

[Daniel_Plainview]

Pstarr, we're really past the EROEI doubts when we're producing shale gas on an industrial scale. Obviously, it has some level of positive EROEI when our inputs (electricity, gasoline) are more expensive than our output (natgas) and it's being produced on such a wide, commercial scale.

What's driving this production of shale gas "on an industrial scale" is investment money, not positive EROEI. As long as billions of investor dollars are blindly pouring into a money-losing project, the "ponzi" can continue indefinitely. Consider these statements from the NYT / Boston Globe:

“Money is pouring in” from investors even though shale gas is “inherently unprofitable,” an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February email. “Reminds you of dot-coms.” “The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work,” an analyst from IHS Drilling Data, an energy research company, wrote in an email on Aug. 28, 2009. Company data for more than 10,000 wells in three major shale gas formations raise further questions about the industry’s prospects. ...

There are four forces driving this shale gas euphoria: (1) the desperate need for oil substitutes; (2) the endless supply of hot money yearning to find a home somewhere; (3) the ignorance of investors; and (4) the greed of shale gas companies. As long as the shale gas producers are not committing securities fraud, there's nothing to prevent them from painting an overly-optimistic picture for current and future investors.

[Lore]

I smell an ethanol bubble for shale gas.

[GoIllini]

LOL, these comments are from two years ago. Meanwhile, shale production has grown and major integrated oil companies that don't have a bread-and-butter vested interest in it have also gotten in on the game.

Again, in order for your negative EROEI assertion to be true, the US economy needs to be expending about 3% of its energy on shale. We're simply not doing that. This "gigantic conspiracy" has gotten well beyond dot-com levels to the point where it's producing net cash flows (hard to fake without the help of several well-respected accounting firms) on financial statements and providing 15% of the country's natural gas.

Ooops, there goes another Ford Taurus. I think I see a very fast-running midget carrying it. That must be how it's moving. Does anyone know if he's associated with those flat earth guardians trying to keep people from reaching the secret ice wall in Antarctica?

There are four forces driving this shale gas euphoria: (1) the desperate need for oil substitutes; (2) the endless supply of hot money yearning to find a home somewhere; (3) the ignorance of investors; and (4) the greed of shale gas companies. As long as the shale gas producers are not committing securities fraud, there's nothing to prevent them from painting an overly-optimistic picture for current and future investors.

Seriously? Natural gas stands at $4-5/mcf, or $25-30/boe, down from $10 a few years ago. These days I am ignoring natural gas reserves and boe numbers on my oil company reserve statements and trying to find the liquids reserve numbers.

Even the natural gas market thinks you're crazy to believe we've got less natural gas production than we did a few years ago. Look, I would be thrilled if shale gas was all a conspiracy and natural gas went back up to $12/mcf- I'd get a huge dividend hike from my oil stocks that still produce about 90% of their natural gas from traditional sources, but it's probably not. The real question is how environmentally safe it is and whether the EPA steps in and puts the kibosh on fracking, which is a real possibility in the next ten years.

[kublikhan]

Again, in order for your negative EROEI assertion to be true, the US economy needs to be expending about 3% of its energy on shale.

I wasn't thinking it was energy negative, but I have my doubts the EROEI is in the 70:1-100:1 range, or that it is "low hanging fruit" as some have called it. Shale gas production costs are higher than conventional gas, so I would hardly call it low hanging fruit. It is just one more fruit in our basket of unconventional fuels that will become more economical as conventional fuel supplies dwindle and we are forced to look at more expensive and more environmentally destructive alternatives.

Keep in mind that shale gas EROEI at the wellhead, though impaired by the nonstop drilling and rapid declines, can still be quite high. But the EROEI of all gas production plummets once we factor in the energy costs of compressing and distributing gas to end users. The bottom line is that serious homework needs to be done on the EROEI of shale gas before one buys into the hype concerning its economic viability.

U.S. shale plays have been over-sold and are unlikely to deliver the results that investors now expect. In fact, shareholders have already lost most of their investment. The shale gas resource is huge but the commercial portion is likely to be much smaller than what has been claimed or hoped for. At higher gas prices, more of the resource makes economic sense but that depends for the near term on production discipline that seems to be absent in the U.S. E&P companies. It also assumes that attendant service costs do not escalate at similar multiples to gas prices[Law of Receding Horizons].

Our evaluation suggests that there is limited commercial value from these plays despite public enthusiasm and operator claims. E&P company shareholders have subsidized low natural gas prices and have little hope of recovering their investment in the near term. The underlying problem is a failure to grasp the concept of discounting. Reserves that are produced in small volumes over decades have little future value and are, therefore, not reserves. The shale plays are called resource plays for a reason: they are all about resources but not profit or the shareholder.

Shale Gas—Abundance or Mirage?

[GoIllini]

I wasn't thinking it was energy negative, but I have my doubts the EROEI is in the 70:1-100:1 range, or that it is "low hanging fruit" as some have called it. Shale gas production costs are higher than conventional gas, so I would hardly call it low hanging fruit. It is just one more fruit in out basket of unconventional fuels that will become more economical as conventional fuel supplies dwindle and we are forced to look at more expensive and more environmentally destructive alternatives.

I think I agree with you here. The days of $1/mcf natural gas of the '90s are probably permanently over. Still, I'm thrilled that we have this extra opportunity- especially with much of the drilling occuring in less environmentally-sensitive areas of Texas, though I wish it was more like $7/mcf instead of $4 extraction costs. This gives us more time to develop fusion and/or transition to alternatives, and even now, high gasoline but low eletricity prices are pushing us towards a more electricity-driven world, either via trains or via electric tracks on major roadways or via battery-powered cars or some combination of the three.

A few comments:

Keep in mind that shale gas EROEI at the wellhead, though impaired by the nonstop drilling and rapid declines, can still be quite high. But the EROEI of all gas production plummets once we factor in the energy costs of compressing and distributing gas to end users. The bottom line is that serious homework needs to be done on the EROEI of shale gas before one buys into the hype concerning its economic viability.

If that is the case, we should have the same issue with traditional natural gas. And (moderate assumption) if we can assume that the energy to pump the natural gas out of the ground is generated from natural gas at the wellhead, we're really looking at this equation setting a rough minimum on EROEI for shale gas:

EROEI(Transported Shale Gas)~=(1- 1/EROEI(traditional gas ex pumping costs))*(EROEI(Wellhead Shale-1))+1.

This basically tells us that while shale EROEI may not be huge net EROEI, it's still positive if the wellhead EROEI is positive and the EROEI for traditional natural gas is positive.

[pstarr]

You do go on Gollini. What is your point? There are several issues here you seem to be talking around. Above, below and anywhere but on point.

A) the title of this thread is just wrong and meaningless. No one suggested a negative EROEI for natural gas--shale or free. The point of us skeptics is the method the analysts used to come up with 70 EROEI is garbage. CO2 emmission levels is no way to figure EROEI.

B) The other point you so cavalierly dismiss is that tight shale gas is much more expensive than free-flowing gas. So much so, that in an open free market, no one would buy $6 gas when $4 gas available. But it is not an open market. Shale gas is subsidized by clueless investors. When the pyramid money runs out, then the shale gas game expires.

[GoIllini]

A) the title of this thread is just wrong and meaningless. No one suggested a negative EROEI for natural gas--shale or free. The point of us skeptics is the method the analysts used to come up with 70 EROEI is garbage. CO2 emmission levels is no way to figure EROEI.

Well, given that 85% of our energy comes from CO2 emitting sources and natural gas is the most carbon-efficient of those sources and CO2 sequestration is not that common, it doesn't seem like a particularly biased analysis. You may disagree with it and there are some holes in it that I can't defend to the same extent that I can claim that shale gas is economical, but the analysis seems no less sensible than anything on TOD.

B) The other point you so cavalierly dismiss is that tight shale gas is much more expensive than free-flowing gas. So much so, that in an open free market, no one would buy $6 gas when $4 gas available. But it is not an open market. Shale gas is subsidized by clueless investors. When the pyramid money runs out, then the shale gas game expires.

Again, this is invalidated by three years of market experience. These natural gas formations are generating positive cash flows, which means that unless the natural gas companies are getting some sort of discount on the energy they're using to drill these wells, the production costs are less than $4/mcf.

[Daniel_Plainview]

Shale gas is subsidized by clueless investors. When the pyramid money runs out, then the shale gas game expires.

A Ponzi scheme like this will go on for years: as crude oil becomes more scarce, resources like shale gas will appear more alluring to clueless investors ... so more investors will come on board, thereby assuring the perpetuation of the pyramid scheme.