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THE Shale Gas Thread Pt 2 (merged)

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

Natural Gas: Peering into the future w/cracked crystal ball

Unread postby Leanan » Sun 30 Apr 2006, 09:58:23

Or maybe it's the supposed forecasters who are cracked. Natural gas economy is losing steam
On the brink of the 21st century, a group of energy experts peered into the future of natural gas, and what they saw was quite rosy -- and quite wrong. To satisfy growing demand, producers could crank out a third more natural gas over the next decade at "competitive prices." It could "power our economy" for decades beyond. Or so said the National Petroleum Council in its 1999 report.

But natural gas prices soon headed skyward, with prices charged by producers spiking late last year at nearly five times 1999 levels. This past winter, though starting off warm, saw the average gas-heating household spend a record $867, a 17 percent increase, according to federal data. As for that predicted robust supply, the country's annual gas output has strangely slipped by 3 percent over the past six years.
The experts didn't have a clue. Worse, they're still clueless.
Something is broken in the economics of natural gas, say people inside and outside the industry. The bright dream of an economy built squarely on clean-burning natural gas is slowly deflating. Although we still derive almost a quarter of the country's energy from natural gas, its share will slip in coming decades, federal forecasters now say.

"What's going on now is so dysfunctional, it is really remarkable," says industry consultant Jim Choukas-Bradley.


They don't seem to get it. They know something is drastically wrong, but the only explanation they can imagine is some kind of conspiracy.

Despite their protests, maybe some producers aren't really trying, industry critics suspect. Maybe they're happy to take it easy and rake in record yearly profits. Many natural gas producers are the same companies benefiting from rocketing gasoline prices in recent years -- familiar petroleum names like Exxon Mobil, Chevron, Shell and BP.

...Some Midwestern cities are accusing producers of doing it by collusion. In an antitrust lawsuit, they suggest that producers have reached either a secret agreement or tacit understanding to bottle up production.

"I think the increase in prices is a designed thing," says Charles Wheatley, a lawyer for the 18 communities from Texas to Indiana suing five leading gas producers in federal court.


The idea that nature won't put more petroleum in the ground if you wave enough cash around seems to be completely beyond even the so-called experts.
"The problems of today will not be solved by the same thinking that produced the problems in the first place." - Albert Einstein
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Re: Peering into the future with a cracked crystal ball

Unread postby TITAN » Sun 30 Apr 2006, 10:24:49

Isn't it interesting and sad that most people will believe one conspiracy theory, no matter how rediculous (big oil collusion), and yet dismiss another, no matter how credible (truth about 9/11)?

I guess it just shows how easily westerners can create their own fairy-land and blindly live in it, without raising one question that challenges their creation. Hm, kinda like organized religion, I guess modern western society is the new faith.

"Thou shalt have cheap energy forever"... "Thou shall not tire of buying useless crap and upgrading it every 3 to 6 months"...etc...

Maybe they should listen to the nine inch nails song: 'Heresy'...
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Re: Peering into the future with a cracked crystal ball

Unread postby Eli » Sun 30 Apr 2006, 10:27:59

Great find! Leanan

That has to be one of the most asinine articles on energy that I have seen in awhile.

Something is broken in the economics of natural gas


You think?
WTF?

Yeah something is broken we have peaked in domestic NG production and there is not enough of it to go around. That is not a secret people, who follow NG know it, even though they do not like to talk much about it.

When the subject comes up they start talking about all that yet to be found gas in the Middle East that is going to save us.
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Re: Peering into the future with a cracked crystal ball

Unread postby Leanan » Sun 30 Apr 2006, 10:34:00

I suspect that what they aren't understanding is EROEI. The numbers say there's plenty of natural gas still out there...but it's in smaller deposits, deeper down, in areas that are harder to drill and farther from pipelines. So it's not being extracted as quickly. It can't be extracted as quickly, no matter the price.
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Re: Peering into the future with a cracked crystal ball

Unread postby Eli » Sun 30 Apr 2006, 10:58:04

Yes Leanan you are correct.

The article is a great illustration of how unthinkable PO or in this case PNG is to the mind of economist's.

The statement that is made in the opening of the article says it all
To satisfy growing demand, producers could crank out a third more natural gas over the next decade at "competitive prices." It could "power our economy" for decades beyond


The fact is that economists understand too well what PO means to economic growth and it is impossible for them to face the fact that the great boom that was introduced with the industrial revolution may becoming to an end.

Basically for the last 150 years the name of the game has been how can you get people to consume as much as possible. With PO everything is going to change and the goal is going to be how can you get people to consume as efficiently as possible. Instead of creating wants and satisfying them, the goal will soon be to meet the basic needs of Society and individuals.
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Re: Peering into the future with a cracked crystal ball

Unread postby coyote » Sun 30 Apr 2006, 17:37:55

Anytime any organization come out and says that we have enough of something 'for decades,' I always get nervous. They've just been wrong too damn many times.
Lord, here comes the flood
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If again the seas are silent in any still alive
It'll be those who gave their island to survive...
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Re: Peering into the future with a cracked crystal ball

Unread postby Leanan » Mon 01 May 2006, 07:54:33

They've just been wrong too damn many times.


Exactly.

I am fully expecting the same thing with all the oil predictions. When Gwahar tanks (which may already be happening), the experts will all be wondering why the Saudis are holding out on us.
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Re: Peering into the future with a cracked crystal ball

Unread postby Bleep » Mon 01 May 2006, 08:04:02

Leanan wrote:I suspect that what they aren't understanding is EROEI. The numbers say there's plenty of natural gas still out there...but it's in smaller deposits, deeper down, in areas that are harder to drill and farther from pipelines. So it's not being extracted as quickly. It can't be extracted as quickly, no matter the price.


The term is "stranded gas". There's some theory that building small gas-to-liquids stations would allow the gas to be converted into something that could be transported.

http://en.wikipedia.org/wiki/Stranded_gas_reserve
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Re: Peering into the future with a cracked crystal ball

Unread postby Bleep » Mon 01 May 2006, 08:46:49

Did anybody notice the third article in the external links section on

http://en.wikipedia.org/wiki/Stranded_gas_reserve

is this

Asia- Strategies for long-term oil and gas supply (link)
Andrew Vaughan

Energy supplies for industrial growth in the developing nations of the Asian region have reached a crisis point at the present time in view of the spiralling energy prices all over the world. These nations are hard put to coping with soaring energy import bills as effects of these price hikes. The crisis is further spearheaded by the increasing energy demand growth in Asia commensurate with the increasing size of industrial growth. Under the circumstances, Vaughan predicts a huge Asian market of oil and gas due to a gargantuan future demand in the region and discusses the rosy prospects of a booming oil and gas business around the world.

...skip...

Currently we have two scenarios describing general socio-political and energy industry developments. One scenario is called People Power – PP; the other The New Game – TNG. Broadly speaking globalisation sweeps all before it in the New Game demand and consumption grow. In People Power various groups and regions maintain diverse market structures. The world is a more cautious place.

... Under People Power – PP – gas demand growth is markedly less than it is the New Game world in which technology has more impact. But, I think the key message for us really isn't the differences; it is the similarities. Whichever way things go, regional gas demand grows strongly.

... First gas technologies and their impact on stranded gas reserves. Stranded gas reserves are reserves that can’t be sold because they are either too far from a market or the market is saturated, for example, the current LNG market in the Asia Pacific region : gas-to-liquids technologies can turn these stranded gas reserves into some of the world’s cleanest liquid fuels. Shell’s Middle Distillate System is, at today’s prices, highly competitive.

Where the cost to develop these stranded gas reserves is low (substantially less than $1.00/MMBtu), and a well-developed infrastructure exists, SMDS offers a real alternative. The reserves can be converted into environmentally friendly liquid fuels and other products and transported relatively cheaply to global markets.

Gas-to-liquids technology is a way of monetising reserves that would otherwise be overlooked. Shell is currently assessing the feasibility of the next SMDS development in several countries such as Iran, Indonesia and Argentina.

... (The author of this article is the Managing Director of Shell Bangladesh Exploration & Development B.V.)
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Re: Peering into the future with a cracked crystal ball

Unread postby Leanan » Mon 01 May 2006, 09:10:45

Bangladesh has reason to be worried. They had fertilizer riots a couple of months ago. Farmers protesting over a shortage of fertilizer and diesel to run their irrigation pumps marched in the streets and trashed government offices looking for fertilizer stores.
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Re: Peering into the future with a cracked crystal ball

Unread postby Zardoz » Mon 01 May 2006, 10:21:54

Leanan wrote:Bangladesh has reason to be worried. They had fertilizer riots a couple of months ago. Farmers protesting over a shortage of fertilizer and diesel to run their irrigation pumps marched in the streets and trashed government offices looking for fertilizer stores.


Third story down claims it's all about corruption:

http://www.thebangladeshtoday.com/archi ... 3-2006.htm
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NO SOUP FOR YOU…OR SHALE GAS!

Unread postby ROCKMAN » Fri 10 May 2013, 22:43:21

From: http://www.rigzone.com/news/oil_gas/a/1 ... ping_World

Speaking at the OTC in Houston. Just on person’s opinion. But his job does depend on understanding the situation

“Developing countries should not expect to see a North American-style shale gas revolution any time soon, according to ConocoPhillips LNG Marketing Manager Chip Schuppert.”

"…the key ingredients for the shale gas revolution in North America: …the presence of multiple, very large shale gas reservoirs…the marriage of horizontal drilling and multi-stage hydraulic fracturing technologies… existing infrastructure: the pipeline infrastructure with third-party access… a very well developed service industry and a very mobile and skilled workforce.”

"Maybe China will happen before some of the others because if the government there puts its mind to it they can facilitate that. But I think it's going to be hard for a lot of these nations to recreate the North American shale gas revolution in any kind of time frame that's even close to similar."
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Re: NO SOUP FOR YOU…OR SHALE GAS!

Unread postby rockdoc123 » Sat 11 May 2013, 09:29:08

Although the Conoco Phillips guy is right in certain cases he isn't universally correct. As an example Argentina has arguably better shale gas potential than the US. The Vaca Muerta shale is in places a couple of thousand metres thick and is present in the oil or gas window for large areas of the Nequen basin. YPF has recovered very large rates from vertical wells (with this thickness a vertical well is equivalent to a long reach horizontal elsewhere). The infrastructure is all there, very experienced work force, all that is missing is enough frac units which has been hindered by the draconian import regulations. As mentioned China is certainly a place where it could mimic the North American experience. Another place you don't hear much about is Algeria where there are two very thick shale sections in the Devonian and Silurian sequences that have produced large flow rates on fraccing by Sonatrach (the NOC).
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Re: NO SOUP FOR YOU…OR SHALE GAS!

Unread postby pstarr » Sat 11 May 2013, 11:16:50

ROCKMAN, good point. Tight-shale operations requires complex technologies and fancy services for a very special, very "demanding" clientele (wealthy Americans). I think we here in the US have been deceived by our stripper-well culture. Those range/pasture/paddock stripper operations require a 1st-world transport and service infrastructure that doesn't exist everywhere. Fresh water good roads truck terminals pipelines labor services (schools, convenience stores etc.) are endemic in the US, but would need to be built from scratch to support continuous drilling and fracting.

An analogy might be a micro-brewery. Or a boutique winery. The vinifera grape grows across the Mediterranean region, but is turned into premium wines in very few places. I don't ever see this expensive premium liquid flowing out of Algeria. Or anywhere else in the 3rd world.
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Re: NO SOUP FOR YOU…OR SHALE GAS!

Unread postby rockdoc123 » Sat 11 May 2013, 12:22:10

I don't ever see this expensive premium liquid flowing out of Algeria. Or anywhere else in the 3rd world.


It already is. Sonatrach currently produces several vertical wells in the In Salah region of the Ahnet basin which were completed in the Devonian source rock interval. They continue to drill additional wells but aren't under that same pressures the US was when the shale gas boom hit there. They have conventional gas that still is in fairly large quantities. The oil and gas industry in Algeria is very advanced, the technology employed is easily on par with anything in the US.
In Argentina last year YPF drilled a scad of wells that are currently producing. They are hampered somewhat but availability of capital and are trying to secure partners, which is why they have signed a deal with Chevron. The economics for shale oil and gas extraction in Argentina and Algeria are superior to that in the US and once the cost control efforts kicked in under full employment they would look even better.
I think you underestimate what capabilities these countries have. What is missing in these places is scads of frac units which Schlumberger and Halliburton are leary of building and sending simply because they aren't sure they could ever get them back out of the country.
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Re: NO SOUP FOR YOU…OR SHALE GAS!

Unread postby pstarr » Sat 11 May 2013, 13:04:49

rockdoc123 wrote:
I don't ever see this expensive premium liquid flowing out of Algeria. Or anywhere else in the 3rd world.


It already is. Sonatrach currently produces several vertical wells in the In Salah region of the Ahnet basin which were completed in the Devonian source rock interval. They continue to drill additional wells but aren't under that same pressures the US was when the shale gas boom hit there. They have conventional gas that still is in fairly large quantities. The oil and gas industry in Algeria is very advanced, the technology employed is easily on par with anything in the US.
In Argentina last year YPF drilled a scad of wells that are currently producing. They are hampered somewhat but availability of capital and are trying to secure partners, which is why they have signed a deal with Chevron. The economics for shale oil and gas extraction in Argentina and Algeria are superior to that in the US and once the cost control efforts kicked in under full employment they would look even better.
I think you underestimate what capabilities these countries have. What is missing in these places is scads of frac units which Schlumberger and Halliburton are leary of building and sending simply because they aren't sure they could ever get them back out of the country.
Exactly. While Algeria might have source rocks suitable for initial-tertiary EOR production, it doesn't have the (small case, ie money) capital or labor base to do the job. In the broader sense that is because it lacks (large case) Capital infrastructure and the industrial necessities for doing business. Like I said, the money and machines to recreate a stripper culture probably won't ever exist in places like Algeria. I rather doubt even the majors will be able to recreate the good ole' American West.
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Re: NO SOUP FOR YOU…OR SHALE GAS!

Unread postby rockdoc123 » Sat 11 May 2013, 17:43:36

Exactly. While Algeria might have source rocks suitable for initial-tertiary EOR production, it doesn't have the (small case, ie money) capital or labor base to do the job. In the broader sense that is because it lacks (large case) Capital infrastructure and the industrial necessities for doing business. Like I said, the money and machines to recreate a stripper culture probably won't ever exist in places like Algeria. I rather doubt even the majors will be able to recreate the good ole' American West.


They have done a pretty good job of running a very successful oil industry for decades. The Capital infrastructure comes from their partners (ENI is one, Total another) and they have a labor base that is very significant. They have their own drilling company Enafor, Schlumberger and Halliburton are there in a big way. There is really nothing in their way other than access to enough fraccing equipment, which Halliburton claims they are in the process of building.

It is worth pointing out the "stripper" wells have nothing whatsoever to do with shale gas/oil. Stripper wells refer to wells that had produced from conventional reservoirs most of their reserves and have depleted reservoir energy such that only low rates can be achieved. They are only present in very old fields that have been producing for decades.
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Re: NO SOUP FOR YOU…OR SHALE GAS!

Unread postby John_A » Sun 12 May 2013, 10:22:09

rockdoc123 wrote:It is worth pointing out the "stripper" wells have nothing whatsoever to do with shale gas/oil. Stripper wells refer to wells that had produced from conventional reservoirs most of their reserves and have depleted reservoir energy such that only low rates can be achieved. They are only present in very old fields that have been producing for decades.


So Devonian shale wells producing since the 70's in Ohio aren't stripper wells? Even though some make only a barrel a day? Or less?
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Re: NO SOUP FOR YOU…OR SHALE GAS!

Unread postby ROCKMAN » Sun 12 May 2013, 11:47:29

John – Doc has me a bit confused also. I’m guessing he didn’t mean to make that implication. According to Wiki: “In the United States of America a "stripper" gas well is defined by the Interstate Oil and Gas Compact Commission as one that produces 60,000 cubic feet or less of gas per day at its maximum flow rate; the Internal Revenue Service, for tax purposes, uses a threshold of 75,000 cubic feet per day. Oil wells are generally classified as stripper wells when they produce ten barrels per day or less for any twelve-month period.” IOW the nature of the reservoir isn’t a factor.

And that’s pretty much how the oil patch sees it. And every oil well, whether completed in an unconventional or conventional reservoir, will one day become a stripper well. Every oil shale well completed today will become a stripper before the last Ghawar well declines to that status.
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Re: NO SOUP FOR YOU…OR SHALE GAS!

Unread postby John_A » Sun 12 May 2013, 13:05:43

Sounds like you need to get to work straightening out the RockDoc, Rockman! :)
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