THE Fracking Thread (merged)

[lper100km]

Rockdoc: So if these factors were known before the event, why would it be thought attractive enough to go to the expense and potential eco damage for a disappointing return? Desperation?

[Pops]

Thanks doc. This is what I've been concerned with in the whole gold rush atmosphere promoted by Chesapeake and others, basically the rush was central to the actual "play" which was buying up leases and flipping them off to the majors.

n the Energy Information Administration's recently released "Review of Emerging Resources," the federal agency pegs the Monterey play at 15.42 billion barrels of technically recoverable oil, compared to the Bakken's 3.59 billion and the Eagle Ford's 3.35 billion.

This quote from some stock hawker last year seems prophetic albeit not in the manner he intended:

"It takes time for the mainstream to realize what's going on,"

Platts: A big shale play in California could boost the Golden State's oil patch

[rockdoc123]

Rockdoc: So if these factors were known before the event, why would it be thought attractive enough to go to the expense and potential eco damage for a disappointing return? Desperation?

My understanding is there are a couple of companies active in the play, Chevron and some other small start up whose name alludes me right now. Obviously they thought they could do better. There has been attempts of innovative new tech (using acid) to try and improve recovery and I suspect they have tried to direct their fracs away from identified open pre-existing fractures. As well we don't actually know what the companies economics are related to this play. They might actually be doing very well with the current recovery.
As with anything in this industry there are risks. Generally you try to limit your downside which means if you get disastrous results you have a get out of jail card where you can limit your loses. The fact they seem to be ploughing ahead suggests to me the results aren't as good as they hoped but they are still good enough to make a decent return on investment.

[sparky]

.
The ladder of sucess is made of the rungs of failures
in the oil game , dispointment is nothing new

Fracking is looking for its limits of aplication ,
a lot of tries at the margins will evolve into a solid grasp of what can be done
the big question is the depletion curve and the extraction rate for various crudes
the tech still have some learnig to do , they are doing it now

[Plantagenet]

Chevron considers California to be its territory. It's not surprising
That Chevron would be aggressive in trying to frak there. When I worked for
Chevron years ago there was an offshore lease sale off Santa Barbara. Chevron bid more than twice the next highest bids for the blocks they wanted just so they could be certain to win on their home turf

[Pops]

Did this get mentioned? From the same guy:

Bob Brackett, an analyst with Bernstein Research, studied a dozen years of shale oil drilling data for this mountainous state [Montana] bordering Canada. What he found was a steep oil production increase through 2006 -- surpassing 100,000 barrels a day -- followed by a fast, 40 percent decline to about 60,000 barrels a day today. The plummet is counterintuitive because the time frame coincides with a capital spending binge by the industry -- tens of billions of dollars poured into the new innovations and technology that have opened up the Bakken and other shale plays. So why has Montana's production dropped? "Resource plays," Brackett writes in a note to clients today, "have limited/finite drilling locations. The best locations get drilled early, the less economic ones later, and once they are drilled, operators move on." In other words, Brackett told me in a followup email, "industry drilled the low hanging fruit first, and now can't find the same quality of opportunity."

But surely this is just Montana, right Bob? You don't mean to suggest that the entire Bakken formation, including North Dakota -- on which so many North American projections centrally rely -- is in trouble, too? Sadly, that is precisely what Brackett means. In fact, he has quantified the Bakken's production trajectory. The key number is six - that is the longevity of a Bakken well before it turns into a "stripper," industry argot for a worn-out nag producing just 10 or 15 barrels a day, from 400 barrels a day at its peak. Right now, just 200 modern Bakken wells are strippers. But in roughly six years, there will be 4,000 of them, Brackett says. "All good things in the oil patch come to an end," Brackett told me. "In the case of North Dakota, that is a long time -- years -- off, but even that too will suffer the same fate" as Montana.

More at FP

[rockdoc123]

Pops
here is a good article from service industry folks that addresses the statistics. They mention the problems the "advisors" such as Berman and his team have inasmuch as they do not have access to the detailed data and have to guess from production data. This paper illustrates pretty much what I have said before about type curves. Each shale lithology has its own type production curve but they all follow the same pattern high rates followed by quick decline and then usually a long flat piece which is a function of length of well and number of open fractures. Note that the average EUR's are pretty much in line as well. What's significant about this is the shale developments tend to be much more predictable than conventional oil and gas. If you remove the risk element then you feel better about large investment.

http://www.slb.com/resources/publications/industry_articles/dcs/201105_aogr_shale_decline_rates.aspx

[socrates1fan]

http://www.examiner.com/article/ge-frac ... to-justify

GE has significant investments in nuclear, so this is a pretty big deal. Germany, one of the richest countries in the world is shutting down all of its nuclear power plants. If that doesn't tell you something, then I don't know what will.

People who praise nuclear energy as the cure for peak oil don't realize just how much of an investment we would have to make to replace oil with nuclear power. Even new fantastic models are still far from being economical. Not to mention the fact that uranium itself is a finite resource (half of our uranium in the US comes from old nukes) and if we transferred over to nuclear it would run out fairly quickly.

If society collapsed tomorrow, we would all die thanks to nuclear power plants. If the crash comes over the course of a decade or two, and nuclear powers go into shutdown and cooling (takes about 5 years) then we should be okay. Right now the trends look positive for us, but I don't know.

[Graeme]

Fracking floors energy giants

BHP Billiton is about to become the next victim of the latest asset bubble to burst – US shale gas, the rock-based hydrocarbon that is released via the controversial process of fracking.

A fortnight after writing $2.84bn (£1.84bn) off the value of its Fayetteville shale gas business in Arkansas, BHP is poised to reveal on Wednesday that the charge helped push down its profits by a massive 40 per cent – to $14.2bn – in the year to June 30.

The FTSE 100 mining giant was forced into the writedown after a decade-long stampede into the brave new world of US shale gas produced so much of the stuff that its price tumbled to 10-year lows, taking the value of its producers with them.

"Put simply, the surge in shale gas production has caused a massive near-term oversupply which has caused the gas price to plunge," said Glynn Williams, a partner at oil and gas services investment firm Epi-V.

independent

[pstarr]

The problem is not "oversupply." The problem is "undersupply" or even "reasonablesupply"as a cost that is useful to our economy and infrastructure. Sure we can produce natural gas at $7tcf, but we have no use for gas at $7tcf. We have plenty of applications for natural gas at $4tcf (such as electrical generation competitive with coal, feedstock for plastics and fertilizer, etc) but when natural gas gets too abundant and too expensive then we walk away.

[ronwagn]

It is just a matter of finding enough ways to use this cheap, clean, abundant natural resource. http://ronwagnersrants.blogspot.com Natural gas is the future of energy. It is replacing dirty, dangerous, expensive coal and nuclear plants. It is producing the electricity for electric cars. It will directly fuel cars,pickup trucks, vans, buses, long haul trucks, dump trucks, locomotives, aircraft, ships etc. It will keep us out of more useless wars, where we shed our blood and money. It is lowering our carbon emissions. Here are over 800 recent links for you:
https://docs.google.com/document/d/1Nba ... TYFMQ/edit

[pstarr]

It is just a matter of finding enough ways to use this cheap, clean, abundant natural resource. http://ronwagnersrants.blogspot.com Natural gas is the future of energy. It is replacing dirty, dangerous, expensive coal and nuclear plants. It is producing the electricity for electric cars. It will directly fuel cars,pickup trucks, vans, buses, long haul trucks, dump trucks, locomotives, aircraft, ships etc. It will keep us out of more useless wars, where we shed our blood and money. It is lowering our carbon emissions. Here are over 800 recent links for you:
https://docs.google.com/document/d/1Nba ... TYFMQ/edit

Except it doesn't, it's not, and it won't. Any of the above. Yours is a pipedream promulgated by the industry or an overactive and overachieving imagination. I have an idea; visit more often, interact, learn, and gain some humility.

[Plantagenet]

Thanks for the informative post, ron. --- I checked out your blog---the 800 stories about Natural Gas are really cool.

[Pops]

Deborah Rogers has a new site, http://energypolicyforum.com/

Energy in Depth (EID), a public relations entity formed and funded by the oil and gas industry, made the following statement:

“…all one has to do is look at the evidence…where the ultimate recoveries (EUR’s) of wells are increasing each year through better technology and production management[emphasis mine], to see the truth she is intent on denying.”

This statement was in response to my presentations on shale gas economics. Unfortunately, this is yet another of EID’s many prognostications that have no basis in reality or fact. It is mere spin. And the latest numbers on EUR’s (estimated ultimate recoveries) from the U.S. Geological Survey (USGS) confirm this.

A good presentation on gas.
http://www.youtube.com/watch?v=bYzU4bEfJ5U

h/t energy bulletin of course.

[Pops]

Didn't we have a thread about "What is the next bubble"?

http://seekingalpha.com/article/832831- ... nzi-scheme

It is looking highly likely that once again the public will get the short end of the stick in a few years as the supply of gas from these shale formations runs out much faster than estimates, leaving the public with a large glut of natural gas fueled cars and trucks and natural gas fueling stations, all of which were built on the promise of 100+ years of supply at cheap prices and the dream of energy independence. As this surplus demand infrastructure is built out and as supplies run out quicker than expected, prices will naturally rise dramatically.

This is my fear exactly.

[pstarr]

I don't expect the cornucopian deniers and tight-gas/oil scammers to respond intelligently to this. They have a habit of attacking folks like Houston geologist Art Berman for pointing out that individual well production decline is exponential (that is, it approaches zero, is not a weak to moderate hyperbolic trend that would prolong cash flow) because the broken structures close up quickly. So fields need constant reworking, fracturing and additional drilling over the long term. Early investors are already out of the bidness. See pioneer tight-gas company Chesapeake valuation for a look at the future.

[Plantagenet]

Didn't we have a thread about "What is the next bubble"?

http://seekingalpha.com/article/832831- ... nzi-scheme

It is looking highly likely that once again the public will get the short end of the stick in a few years as the supply of gas from these shale formations runs out much faster than estimates, leaving the public with a large glut of natural gas fueled cars and trucks and natural gas fueling stations, all of which were built on the promise of 100+ years of supply at cheap prices and the dream of energy independence. As this surplus demand infrastructure is built out and as supplies run out quicker than expected, prices will naturally rise dramatically.

This is my fear exactly.

The claim that there is a 100 year supply for NG can be attributed to President Obama ---he said we had a 100 year supply of NG in his SOTU speech. I'm surprised there is a question about this given Obama's clear statement in his SOTU speech and his subsequent support for NG in the ongoing campaign----do you have any evidence to support your claim that Obama was misrepresenting the facts when he claimed there was 100 years worth of domestic NG supplies in his SOTU speech?

[pstarr]

Didn't we have a thread about "What is the next bubble"?

http://seekingalpha.com/article/832831- ... nzi-scheme

It is looking highly likely that once again the public will get the short end of the stick in a few years as the supply of gas from these shale formations runs out much faster than estimates, leaving the public with a large glut of natural gas fueled cars and trucks and natural gas fueling stations, all of which were built on the promise of 100+ years of supply at cheap prices and the dream of energy independence. As this surplus demand infrastructure is built out and as supplies run out quicker than expected, prices will naturally rise dramatically.

This is my fear exactly.

thank god few average American consumers fell for the natural gas scam. Even our own Plantedagent and Shorty/Seems apparently had the good sense (or timidity) not to act on their convictions

[pstarr]

Didn't we have a thread about "What is the next bubble"?

http://seekingalpha.com/article/832831- ... nzi-scheme

It is looking highly likely that once again the public will get the short end of the stick in a few years as the supply of gas from these shale formations runs out much faster than estimates, leaving the public with a large glut of natural gas fueled cars and trucks and natural gas fueling stations, all of which were built on the promise of 100+ years of supply at cheap prices and the dream of energy independence. As this surplus demand infrastructure is built out and as supplies run out quicker than expected, prices will naturally rise dramatically.

This is my fear exactly.

Obama said we had a 100 year supply of NG in his SOTU speech. I'm surprised there is a question about this given Obama's clear statement in his SOTU speech and his subsequent support for NG----do you have any evidence to support your claim that Obama is wrong about there being 100 years worth of NG supplies?

no pride? You have been proven wrong in countless debates on this issue. You remain unable to support your claims for natural gas vehicles. You have cavalierly dismissed the issues; high-compression costs and safety concerns, limited (by geography and cost) of distribution pipeline systems, unavailability of either filling stations or vehicles, and ultimately natural-gas availability and price.

Come on. Own-up time, Plant. You will not always have Obama to kick around and divert attention from your own rhetoric shortcomings.

[Plantagenet]

Obama said we had a 100 year supply of NG in his SOTU speech. I'm surprised there is a question about this given Obama's clear statement in his SOTU speech and his subsequent support for NG----do you have any evidence to support your claim that Obama is wrong about there being 100 years worth of NG supplies?

Own-up time, Plant. You will not always have Obama to kick

Own-up time, Pst. You are the one kicking Obama around.

Obama says there is a 100 year supply of NG. Its not just in his SOTU speech---in a recent campaign speech Obama said "We’re taking every possible action to develop a near 100-year supply of natural gas, which releases fewer carbons." Obama shows his scientific illiteracy when he talks about "carbons", but the message about NG abundance is clear-----Obama's promise is for 100 years (SOTU speech) and near 100 year supply (campaign speech).

Why do you claim that Obama is wrong and there isn't 100 years worth of domestic NG supplies?