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THE Shale Gas Thread Pt 2 (merged)

General discussions of the systemic, societal and civilisational effects of depletion.

Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Tue 17 Jun 2014, 23:08:57

And - while it's always wise to take long-term projections with a big grain of salt - here are the latest EIA production projections:

Image
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Abundance aplenty. :)
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Mon 23 Jun 2014, 15:27:19

And despite what they offer below the shale gas reserves in Turkey do not "compare" IMHO with the EIA's estimate of US shale gas reserves of the US. The US has produced more than 35 tcf from our shales. Turkey...zero cf.

Reuters - U.S. oil firm ExxonMobil is in talks with state-run Turkish Petroleum Corporation over a venture to explore for shale gas in the country's southeast and northwest regions, a Turkish energy official said. Exxon held talks with TPAO in 2012 to over a partnership in shale, but the negotiations were inconclusive. Turkish officials say talks have since advanced and are likely to result in an agreement. "ExxonMobil is coming to Turkey to partner up with TPAO," Selami Incedalci, the head of the energy ministry's General Directorate of Petroleum Affairs, said late on Sunday. He said ExxonMobil was interested in onshore opportunities in the southeast and Thrace, in northwestern Turkey. Turkey wants to reduce its annual energy bill of around $60 billion and is developing domestic resources including nuclear, coal, solar and wind energy. With domestic gas consumption rising, and its location well-placed to supply international markets, major exploitable reserves could be a game changer for Turkey's economy and highly lucrative for whoever finds them. Investors from the United States, Europe and Canada are also interested in Turkey's shale gas and oil, Incedalci said, adding that the Ministry was planning to hold talks with potential investors in October. Royal Dutch Shell is also drilling for shale gas in the region around the southeastern city of Diyarbakir, while Canadian firm TransAtlantic Petroleum is also active in the region. Estimates of how big Turkey's shale gas reserves are vary wildly. One energy official said data from some international bodies suggested Turkey could have a massive 20 trillion cubic metres (cbm) of total reserves. Another industry expert said proven reserves so far stood at just 6-7 billion cbm. That compares with EIA assessment of 7,300 trillion cubic feet of estimated shale gas reserves in the United States, among the world's top producers of the commodity.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Outsailing » Thu 26 Jun 2014, 09:58:34

Subjectivist wrote:Other than Europe and North America where do shales with hydrocarcon reservoirs exist?


All over the place by the looks of it.

http://www.eia.gov/todayinenergy/detail.cfm?id=14431
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Thu 26 Jun 2014, 15:45:11

O - Shales make up the largest portion of sedimentary rocks on the plant by a very wide margin. Present in huge volumes on every continent including Antarctica. Just as shales constitute the vast majority of sedimentary rocks in the US. And the vast majority of shale formations in the US have been proven to have little or no commercial hydrocarbon potential even with current high prices. Dozens of different shale formations have been tested by hundreds of recent wells. and yet even now 80%+ of the US oil production from shales comes from just two formations: the Bakken (which actually isn't a purely shale play) and the Eagle Ford. And even at that most of the production comes from just several dozen counties. Did you know that there are several other shale formations sitting immediately above and below the EFS with no drilling boom going on in any of them? The EFS formation and its stratigraphic equivalent covers a swath across the Gulf Coast that's almost 10X as large as the area currently being drilled. When was the last time you heard the EFS boom in Mississippi? LOL.

All shales don't produce commercial hydrocarbons just as the vast majority of sandstone and limestone formations in the world don't produce commercial hydrocarbons. Just the presence of thick shale formations in any country has no bearing on thy country's unconventional resource potential. Shales don't produce oil/NG...only productive shales produce oil/NG.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Outsailing » Thu 26 Jun 2014, 20:55:53

ROCKMAN wrote:All shales don't produce commercial hydrocarbons just as the vast majority of sandstone and limestone formations in the world don't produce commercial hydrocarbons. Just the presence of thick shale formations in any country has no bearing on thy country's unconventional resource potential. Shales don't produce oil/NG...only productive shales produce oil/NG.


Quite true. And the EIA seems to know this as well, because in addition to providing maps and short articles for the citizens that pay their salaries, they have also spent some money rounding up the ones that might be deemed worthy of potential.

Quite a nasty, "make your eyes bleed" type report, but there don't appear to be others available to joe sixpack that are so comprehensive in nature.

http://www.eia.gov/analysis/studies/worldshalegas/
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Fri 27 Jun 2014, 05:29:58

Outsailing - Yes...a nice compilation. A rather worthless one IMHO. And that point is highlighted in their own words: "Technically recoverable shale oil and shale gas unproved resources in the context of total world resources". Let's take it word by word. "Technically recoverable" - this would include all the oil/NG in all the shales on the planet that couldn't be produced at a profit. This supports my point that the vast majority of shales on the planet have no commercial potential. "Resources", "reserves" and "economically recoverable reserves"...the EIA definitions: Resources: Naturally occurring concentrations or deposits of coal in the Earth's crust. Reserves: Quantities of unextracted material that comprise the demonstrated base for future production, including both proved and probable reserves. Economically recoverable reserves: that portion of the reserve base that is PROVEN recoverable at a defined price utilizing existing technology.

So take another look at the categories in that impressive list of global shale POTENTIAL: proved and unproved resources as well as proved and unproved reserves. Notice one category not seen in that chart: economically recoverable reserves. Or in their own words: "...it is evident that shale resources that were until recently not included in technically recoverable resources constitute a substantial share of overall global technically recoverable oil and natural gas resources." IOW they've concluded that there is a sh*t load of oil/NG in most of the shales around the globe that have yet to be proved to commercially recoverable. Which includes the intensely evaluated dozens of shale formations in the US (compared to most global shales which have received little or no testing) which so for have yielded only two formations that constitute the great majority of unconventional production.

So despite what many folks think that report says the EIA is essentially pointing out that there is very little proven economically recoverable shale reserves on the planet. Granted they say it thru omission but once you realize the exact nature of the categories they do quantify one can see the entire picture...hopefully. LOL.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Outsailing » Fri 27 Jun 2014, 09:35:24

ROCKMAN wrote:Outsailing - Yes...a nice compilation. A rather worthless one IMHO.


Do you have any recommendations for anything available to the public that is better?

When there is no information, any information is better than none. When there are competing products, we can then compare them.

ROCKMAN wrote:So despite what many folks think that report says the EIA is essentially pointing out that there is very little proven economically recoverable shale reserves on the planet. Granted they say it thru omission but once you realize the exact nature of the categories they do quantify one can see the entire picture...hopefully. LOL.


They didn't calculate economically recoverable, therefore there is no way to figure that out without putting the economic layer on top of the technically recoverable, to figure out the fraction involved. So they are actually saying nothing about economically recoverable at all. Maybe someone like you industry folks can take the big number and sheer it down to establish how much is economically recoverable?

I think it is obvious that once upon a time the Bakken was technically recoverable, without much in the way of economically recoverable. And industry, and prices, turned it into this huge oil field driving the EIA projections to nearly all time country highs.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Fri 27 Jun 2014, 10:34:31

Outsailing - But that's the problem: despite how it seems I'm not saying the EIA or anyone else is incompetent for not coming up with the economically recoverable shale reserves on the planet. It can't be estimated by them because there is insufficient data. Consider the Eagle Ford Shale. There is no shale formation on the planet that is better understood. And I mean understood by the experts developing it and not the folks with the EIA who have access to very little predrill data that the oil patch has. And I don't know how much credit I would give to any oil patch numbers. Once again I'll pick on my cousins at Shell Oil. They have always been known as one the more technically competent operators around. So with access to much more geophysical and geologic data as well as a large dedicated staff compared to what the EIA could bring to the table Shell estimated $X billion in recoverable EFS oil on a big ranch in S Texas. So they paid about $1 BILLION just for the rights to drill and then poked more than 185 wells on the lease. And that drilling probably cost in excess of $2 BILLION. So how did that $3 BILLION investment work out for them? As reported to the Texas Rail Road Commission the AVERAGE INTITIAL PRODUCTION RATE of the wells tested so far was 79 bopd and 900 mcfpd. And that's before the typical high decline rate kicks in. IOW on average Shell lost money on every one of those 185+ wells. And they had a better handle on the potential of that shale lease then the EIA could ever dream to have for any share formation on the planet. So is it any wonder why the EIA isn't offering economically recoverable reserves estimates for shale formations around the world that Shell Oil has much less knowledge of then they have for the EFS? BTW: after the S Texas shale project blew up in their face Shell Oil announced they were abandoning all the shale tends in the US. Trends which they had much greater knowledge of then any other potential shale plays on the planet.

The EIA is simply following the "Dirty Harry" protocol: "A man has to know his limitations". LOL. The EIA is offering what they can estimate. And not what they know they can't: the amount of commercially recoverable oil/NG there is in the global shale formations. What I might fault them for is giving the impression that the numbers they do put out have any relationship to what might eventually be produced. Trust me: they know it as well as I do. They just don't want to openly admit they can't make an estimate of the critical answer. But they have to justify their existence so they generate volumes of interesting but useless data when it ones to future production rates..
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Re: THE Shale Gas Thread (merged)

Unread postby copious.abundance » Fri 01 Aug 2014, 00:29:33

copious.abundance wrote:Abundance aplenty. Mass quantities of plenitude. Billowing founts of wholesome goodness. :)

And still more. :)

Chart of the day: The amazing 12-fold increase in natural gas production in the Marcellus Shale in just four years

Image
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Graeme » Wed 03 Sep 2014, 18:24:06

The Popping of the Shale Gas Bubble

For much of the past decade we have been inundated by reports of how the wonders of technology, specifically horizontal drilling and hydraulic fracturing, have unleashed a new era for energy supplies. Industry leaders have touted that shale gas, along with burgeoning shale oil production, will lead to America’s energy independence, kindle a manufacturing renaissance, lower bills for everyday Americans and create millions of much-needed jobs. While there is little doubt that booming shale gas production, along with a very deep recession put an end to the natural gas price spike of 2008, much of the accepted conventional wisdom about the longevity of the shale gas bonanza is wrong. America’s shale gas resources and reserves have been grossly exaggerated and today’s level of shale gas production is unsustainable. In fact, due the distortions of zero interest rates and other factors, an enormous shale gas bubble has developed. Like all bubbles, this one will pop sooner than expected and when it does, the aftermath will be very unpleasant.


Make no mistake; shale gas production over the past 12 years has been nothing short of phenomenal. From a standing start a dozen years ago, shale gas production has grown to account for nearly 50 percent of America’s gas production. However, the shale gas boom is rapidly maturing and we are quickly approaching a point where shale gas production heads into decline. In fact, the majority of shale gas basins in America are already exhibiting declining production.

Before discussing how the coming natural gas crisis will unfurl, let’s debunk some of the most commonly held myths about the shale gas.

1) The US has a 100-year supply of shale gas. While many grandiose claims about the potential supply of shale gas, such as ‘the US has a 100-year supply’, have been made in recent years; almost none have ever been supported by any empirical evidence. According to the EIA, marketed production in 2013 was 25.6 trillion cubic feet (tcf). Therefore, using last year’s rate of production, a 100-year supply would be 2,560 tcf of gas. (Note: Total US supply consists of marketed production plus net imports.) No one has ever been able to identify the shale gas fields, resources and reserves that would supply this bounty. More importantly, given that America is the most thoroughly explored petroleum producing country on earth, it is very unlikely new shale gas fields lie in wait of discovery. The only justification ever given for the 100-year supply claim has been that future developments in hydraulic fracturing (“fracking”) technology will unlock all that shale gas that has already been identified. While recent advances in horizontal drilling and hydraulic fracturing have been remarkable, technological progress does not follow a straight line.


forbes
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Wed 03 Sep 2014, 19:48:00

Again I'll remind that oil/NG isn't the computer or Internet biz. Are the shale plays a "bubble"? Of course they are...just like every other oil/NG play that's ever been developed. I can site dozens of examples but I'll stick with a few like the Texas play I'm working now: the Upper Frio/Greta Sand trend along the Texas Gulf Coast. Boomed in the late 30's it peaked just a dozen years later. Dozens of fields ranging from 20 million to 150 million bo. To date 4.5 billion bbls of oil. And then that bubble popped big time. And for good reasons: by 1950 there weren't any fields of appreciable size left to find. Two years ago I drilled three wildcats in the trend: target reserves = 50,000 bbls each. Why didn't I drill for bigger targets? Easy answer: there weren't larger undridled areas between the old productive wells and dry holes for a larger reservoir to exist. Now jump half a century to the 90's when the Austin Chalk in Texas was THE hottest oil play on the planet. And that bubble popped in less then 10 years later. Not because prices collapsed nor did companies run out of capex. They ran out of enough undrilled locations to keep fueling the boom. And it wasn't a small play: it eventually covered an area several times the current extent of the Eagle Ford trend. And have we've forgotten the great East Texas Oil Field: the largest oil field in the world ever discovered by that time. And it boomed: when 30,000 wells were drilled at an unprecedented rate at the time (thanks in part to WWII). Talk about a boom: the US was the Saudi Arabia of the world at that time...5.2 billion bo. Until the bubble popped and drilling faded away because it had been drilled up.

So yes: the EFS, the Bakken, the Marcellus, the Deep Water plays in the GOM and along the Brazil coast, etc. etc. are all bubbles that will burst. If a price collapse, capex scarcity or a geopolitical upheaval doesn't kill a play the natural life span of every play will bring it to it's end. Nothing new here to look at folks...just keep moving along. LOL.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Wed 03 Sep 2014, 22:17:45

Graeme wrote:The Popping of the Shale Gas Bubble

forbes

As soon as I saw the title of this, I thought, "Bill Powers." :roll: Turns out I was right. :lol:

This guy has been predicting the imminent popping of the "shale gas bubble" for about 3-4 years now. He seems incapable of learning. :roll:
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Wed 03 Sep 2014, 22:28:36

Here we go - LOL!

Bill Powers - Jun. 29, 2010 - Stage Set for Ferocious Rally in Natural Gas
Due to a misunderstanding of the changing North American natural gas supply/demand balance, most investors and many on Wall Street believe natural gas prices will continue to wallow near current levels for much of the next two years. Conventional wisdom will shortly be proven wrong once again. In fact, the improving fundamentals of the North American natural gas market have set the stage for a ferocious rally in natural gas over the next 18 months. Investors who can look beyond today’s gloomy outlook stand to profit handsomely from the UNG and long term options on the UNG as natural gas prices rise and the contango of the futures curve flattens out and heads towards backwardation.

[...]

What does the fall in Texas production mean for the North American supply demand balance? With states such as New Mexico, Colorado, Utah and Wyoming also experiencing falling production, look for storage injections to trend below the five-year average. By the end of the storage injection season at the end of October, I expect U.S. storage levels to be at or below the 5 year average. Reduced storage levels and the recognition of falling production will be quite bullish for gas prices and the UNG. I expect the gas prices to reach $8 per thousand cubic feet by the beginning of heating season (November 1st) and the price of the UNG to move markedly higher with the price of the January 2012 $20 calls options to more than double.

His call for $8 NG in November 2010 turned out to be $3.71. And his January 2012 $20 call options missed by $17.33 - to the downside, of course. :lol:

Henry Hub spot prices
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Graeme » Wed 03 Sep 2014, 22:50:49

Isn't the author suggesting that this is the final "pop".

The EIA 2014 Annual Energy Outlook projects US shale gas production will grow from 9.7 tcf in 2012 to 19.8 tcf in 2040. I find the EIA’s future shale gas production estimate over the next couple of decades to be wildly optimistic for two main reasons. First, the majority of America’s shale gas fields are already experiencing production declines. According to the Texas Railroad Commission (RRC), the regulator of oil and gas activities in America’s largest gas producing state, natural gas production from all three shale fields in the Lone Star state are no longer growing. America’s oldest ’modern shale gas field’ (A field where the majority of the wells were drilled horizontally and hydraulically fractured.), the Barnett shale, production peaked in 2012 and has been declining steadily despite rising natural gas prices. The Texas portion of the Haynesville shale is in steep decline due in large part to high decline rate of its wells. More interestingly, according to recently published RRC data, natural gas production from the Eagle Ford shale has hit a plateau despite oil production continuing to grow

Production from the Haynesville shale of Louisiana, which in 2009 was expected to “become the largest gas field in the world at 1.5 quadrillion cubic feet” according to former Chesapeake Energy (NYSE:CHK) CEO Aubrey McClendon, has declined precipitously since peaking in 2012. Haynesville production is now down by nearly 50 percent according to data from the Louisiana Department of Natural Resources. To say the field has not lived up to its lofty expectations would be an understatement. The Fayetteville shale of Arkansas has been on a plateau for much of the past two years due to continued drilling by the play’s biggest operator but will likely see production fall off in the next year as it becomes increasingly mature. Natural gas production in the smaller Arkoma Woodford has been declining for several years and shows no sign of reversing.


The second reason I find the EIA’s projection for production growth to be inaccurate is the mistaken belief that higher natural gas prices will bring on substantial new shale gas production. More specifically, according to the EIA’s reference case, the agency expects natural gas prices to rise approximately 3.75 percent per annum between 2012 and 2040 with prices reaching $7.65 per MMBTU in 2040 (in 2012 dollars). While many economists like to think that higher prices will always bring about more supply, the laws of physics and geology always win and in increasingly mature areas, like much of the US, rising prices will at best only slow down the production decline. For example, between 1973 and 1984 the average US price for natural gas rose from $.22 per thousand cubic feet (mcf) to $2.66 per mcf, while production dropped an incredible 19 percent.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Thu 04 Sep 2014, 12:13:01

^
In 2010 he thought the final "pop" was imminent - as in months.

And he makes the mistake of assuming the Haynesville shale's decline has been for geologic reasons. No, the reason the Haynesville shale has slowed down is because there is too much supply coming from the Marcellus and other places.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby Timo » Thu 04 Sep 2014, 12:59:50

Nova Scotia just banned fracking. Too dangerous, and not worth the risks. Costs outweighed the benefits.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Thu 04 Sep 2014, 13:03:44

c/a - You're half right...sorta. The HS busted long before the Marcellus was producing much. The bust was all about well head prices. I was at Devon when they were drilling the HS as fast as possible....had 18 rigs running just on our own leases. NG was heading above $12/mcf and they couldn’t buy enough casing to drill the wells they had planned. And then came the price bust. Every day I sat in the morning meeting with an the engineers/managers. Within just several months they began voices a bit of concern which turned into full blown panic in several more months. They made it very clear: if prices dropped below $6/mcf they were screwed. And then it dropped well below that price. By the first quarter of 2009 the cancelled the contracts on 14 of those 18 rigs and paid a total of $40 million in penalties. Paid $40 MILLION TO STOP DRILLING THE HAYNESVILLE SHALE.

As stated above there are three common ways for a hot play to bust: priced collapse, geopolitical upheaval and you run out of locations to drill. The price collapse busted most of the HS play...but not all of it. Devon still kept 4 rigs running around Carthage because that sweet spot still worked at the lower price. So his statement was half right: they ran out of $6+/mcf geology to drill but they still had a bit of $4/mcf geology to drill. So those $6+/mcf locations are still out there waiting for a rig. When prices get high enough (whether the Marcellus is still booming or not) the rigs will return.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Thu 04 Sep 2014, 17:15:54

^
That, of course, begs the question as to why the price crashed in the first place? And the obvious answer is, the price crashed because too much supply was coming online. As I said.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby ROCKMAN » Fri 05 Sep 2014, 06:30:02

c/a - Still not that simple. US NG consumption increased from 2008 to today by 20% according to the EIA while prices decreased from $12/mcf in 2008 to around $4.50/mcf today. And if one studies the rapid price rise followed by an even more rapid price decline there was very few new shale wells drilled during that period. Increased production from the shale plays takes years to affect the market. OTOH consumption levels can drop very quickly as they did when the economy took a hit 6 years ago.
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Re: THE Shale Gas Thread Pt 2 (merged)

Unread postby copious.abundance » Thu 20 Nov 2014, 00:48:09

Abundance aplenty. Up and up she goes. Where she stops, nobody knows. :)

A couple weeks old, but anyway ...

U.S. shale gas output breaking records: Production in "unchartered territory," Bentek analysis finds
U.S. natural gas production has risen for the 10th consecutive month, moving steadily into "unchartered territory," analysis from Platts finds.

Bentek Energy, the forecasting unit of Platts, found gas production in the Lower 48 states averaged 69.9 billion cubic feet per day in October, breaking the previous record and posting the 10th straight month of gains.

Gas production in October was 7.9 percent higher year-on-year.

Jack Weixel, director of analysis at Bentek, said projects slated to come online in the U.S. northeast should push the U.S. gas output above the 72 billion cubic feet per day mark by the end of the year.

"The current level of production is unchartered territory for the domestic natural gas market and shows no signs of slowing," Weixel said in a Thursday statement.

[...]
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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