[GHung]

US government estimates of the amount of natural gas that can be extracted by fracking may be far too optimistic, according to a new study by the University of Texas (UT) at Austin.

In 2013, the US Energy Information Administration (EIA) issued a report saying that, according to its analysis, shale wells, which require fracking to release their gas, would be productive at current levels for “over 30 years,” that is, at least until 2040.

But researchers from UT’s Department of Petroleum and Geosystems Engineering say shale gas production may peak 20 years earlier, followed by a rapid decline in output. Their findings were reported in a feature story published Dec. 3 in the scientific journal Nature.

The problem, according to the UT researchers, goes far beyond merely running out of natural gas. The researchers warn that the US and many other countries, relying on a long-term availability of inexpensive gas, are investing billions of dollars in vehicles, factories and power plants that depend on gas.

Major proponents of fracking are President Obama in the US and Prime Minister David Cameron in Britain. Obama has boasted that “our 100-year supply of natural gas is a big factor in drawing jobs back to our shores.” And Cameron has dismissed fracking opponents as “irrational.”

But if the UT scientists are right and gas production begins to fall off around 2020, all those billions of dollars put into gas-based vehicles and infrastructure will have been wasted.

The researchers conducted their own analyses of natural gas production at the four leading US shale gas formations: the Barnett in Texas; the Fayetteville in Arkansas, the Haynesville in Louisiana, Arkansas and Texas; and the Marcellus in and around the Appalachian Basin. These four formations provide two-thirds of US gas production.

The UT team then extrapolated future output based on the formations’ geology and the expected market forces, including pricing. Their conclusion: Not only will gas production peak in 2020, output will be cut in half by 2030.

How did the EIA and the UT team reach such different conclusions? The Texas researchers said they simply studied the shale formations in greater detail.

“Resolution matters because each play [group of energy fields] has sweet spots that yield a lot of gas, and large areas where wells are less productive,” Mason Inman writes in Nature. “Companies try to target the sweet spots first, so wells drilled in the future may be less productive than current ones.

“The EIA’s model so far has assumed that future wells will be at least as productive as past wells in the same county,” Inman writes. “But this approach," [UT petroleum engineer Ted] Patzek argues, “leads to results that are way too optimistic.”

http://www.nasdaq.com/article/new-study ... d-cm420623

Whoops...

[ROCKMAN]

Ghung - The real driving force behind such studies is the Texas BEG...Bureau of Economic Geology. No organization can come close to the accuracy of their knowledge of Texas oil/NG.

http://www.beg.utexas.edu/

Who are they: Established in 1909, the Bureau of Economic Geology is the oldest and second-largest organized research unit at The University of Texas at Austin. In addition to functioning as the State Geological Survey of Texas, the Bureau conducts research focusing on the intersection of energy, the environment, and the economy, where significant advances are being made tackling tough problems globally. The Bureau partners with federal, state, and local agencies, academic institutions, industry, nonprofit organizations, and foundations to conduct high-quality research and disseminate the results to the scientific and engineering communities as well as to the broad public.

Those boys in Austin make outfits like the USGS, EIA etc. look like rank armatures stumbling around in the dark unable to find their asses with both hands. LOL. Unfortunately they are focused mostly on Texas. In addition to immediate access to all the data collected by the Rail Road commission they have big work force some of which costs them nothing: UT geology and engineering graduate students working on their masters and PhD’s.

And not just valuable to the general public. The oil patch, including the Rockman, regularly use them as a resource in our efforts.

[Paulo1]

re: "How did the EIA and the UT team reach such different conclusions? The Texas researchers said they simply studied the shale formations in greater detail."

And here I thought all the cheerleading was based on actually studying the geology in detail.

"Shale gas investment opportunities for you. Get in now!! Get in at the basement low prices while..... Oh. Right. We are in the basement, already. Now you tell me!!"

[rockdoc123]

What is lost on the general public is what is entailed with shale E&P.
At the start of shale exploration campaigns there might only be a few wells that actually recovered core from the stratigraphic section in question. That core is needed to run the appropriate tests (TOC, maturity, porosity, permeability, free gas, bound gas, Young's modulus, Poisson's ration etc.). Once those tests are done a comparison can be made to shales with similar properties which is often where the first estimate of resource potential comes from. Without a frac or two and a long term test there is no guaranty however. Even when that test information is complete, with only a couple of wells you have actually sampled a very, very small portion of a given shale reservoir. Regardless of what some might think shales are not all homogenous. Some have higher percentages of silica, others higher percentages of carbonate, some have siltstone or sandstone stringers imbedded others tight carbonate stringers filled with fossil foraminifera, high in microporosity. The lateral variability in shales can be quite startling and that is where the heart of the uncertainty lies. There is also the issue of how much gas versus liquid shales contain. Given the argument is more about recoverable reserves than resources high liquid prices meant that shales with higher gas content were economic even though gas prices were extremely low. Now with oil prices tanking a lot of those shales where one could take a loss on the gas sold because it was offset with high oil price are not going to be economic and hence no longer are reserves. The level of resource may stay the same but with dropping prices there will be a lot of reserve write downs due to no longer making the economically viable hurdle.
If resource projections are based on the best wells in an area they are going to be too optimistic, if they are based on the worst wells too pessimistic. It's one of those numbers that can't be looked at without understanding what the uncertainty is. The proper way of conducting this sort of analysis for any pool/field whether it be conventional or unconventional is to run a Monte Carlo simulation that takes the full range of reservoir variables into account. In that manner you can attach a level of certainty to what the resource is. Once that is accomplished different price scenarios can be applied to arrive at reserves. Jumping to reserve numbers with a simpler calculation is fraught with error.