APPGOPO on Shale Gas

Post by **kenneal - lagger** » 09 Feb 2011, 03:01

I went to the APPGOPO meeting on shale gas at the House of Commons earlier this evening and I've come back deeply worried. This new found abundance of a "clean" fuel sounds as if it will be squandered with the same abandon as oil. It is being seen as the panacea for all our economic ills and a new stimulus for growth (How is it that unrestrained growth in our bodies is seen as a cancer but in the big wide world it is the bees knees?).

On Sunday David Cameron was quoted as saying that our fuel bills will be billions (collectively) cheaper in years to come and the talk at the meeting was of affordable gas in perpetuity. This talk means that people won't bother investing in renewables and, more importantly, in insulation. Why bother spending money insulating your house to save fuel when gas is so cheap? And then we will have "As gas is so cheap and clean, I can buy a gas guzzler (literally) and not be troubled." "Renewables? They're too expensive when I have all this cheap, clean gas."

So this lifeline our civilisation has been thrown will be burnt as quickly as we can get it out of the ground and we will be in the same situation in fifty years time; out of gas and looking for the next alternative fuel with our planet in an even worse state. I just hope that we don't find a way of getting off this planet in enough numbers to trash another one. We certainly don't deserve that chance.

The presentations will be available to view at http://www.appgopo.org.uk/ in the next few days when James posts them. Meanwhile there are plenty of previous presentations to look at/listen to.

DominicJ · Post by **DominicJ** » 09 Feb 2011, 07:54

So is it really that big?

Looks like I'll die before the apocalypse.

Now I just have the banking disaster to get through.

PS_RalphW · Post by **PS_RalphW** » 09 Feb 2011, 09:57

I haven't seen any reserve estimates for shale gas in the UK.

The ones in the US are less believable than Saudi oil reserve figures. The quantity of gas you get out of any one well is extremely sensitive to the local geology, far more than with conventional gas or oil. It is much more of a lottery, and that makes the industry even more prone to boom and bust than the oil market.

It is clear that shale gas is expensive gas. The number of nearly dry wells means that the average cost of extraction is higher , by at least a factor of two, than conventional gas. That still makes it a bargain

At present, the US has cheap gas because the initial flush of shale wells is still producing, and the economics requires the gas companies to keep drilling even when the market is well supplied. It won't last.

I think overall, shale gas will be like deep water oil, some useful quantities, but expensive, low overall recovery rates, and rapid production decline rates. There will be a long thin tail from most wells, but I expect the US to be short of gas again within the next 5 years.

Post by **kenneal - lagger** » 09 Feb 2011, 11:52

Yesterday they were talking about huge quantities at quickly reducing prices for hundreds of years. They were talking quantities such that the availability and price of LNG would make its supply to Europe no problem.

They did say that European shale might not be as good as the US because our shales have more clay which would make them more difficult to extract from. Our shales are also a lot deeper than in the US and of smaller extent so that the shale gas phenomena might not be as replicable.

They are also waiting on the US health and safety report before carrying out any major drilling. I asked if there should be a baseline survey of existing water quality and health issues in the drilling area before any drilling or fracking took place because of the problems that have turned up in the US. The answer was that the US problems probably weren't to do with the fracking so much as sloppy drilling practice through multiple water bearing strata not sealing the bore properly.

If that were the case the problem could be greater in Europe because of the increased depth of drilling. Definitely some quality control issues there then.

Blue Peter · Post by **Blue Peter** » 09 Feb 2011, 12:08

kenneal wrote:Yesterday they were talking about huge quantities at quickly reducing prices for hundreds of years.

Ken,

Who were the "they"? People trying to convince others to invest in / promote / deregulate shale gas?

Peter.

PS_RalphW · Post by **PS_RalphW** » 09 Feb 2011, 14:18

kenneal wrote:Yesterday they were talking about huge quantities at quickly reducing prices for hundreds of years.

If the politicians fall for that then I have a bridge I want to sell to them. There is plenty of technical discussion over at TOD, as always.

If it was so quick and cheap and easy we would have been pumping this gas for decades already. The technology is not that advanced. It simply wasn't economic before, and it is only economic now because we are desperate for more fossil energy.

Many shale gas wells make money on the associated gas condensates, which sell at $70 a barrel. They are oil wells which happen to produce a bit of gas as an added extra.

Being low tech does mean it will survive the downslope of industrial society better than deepwater oil, LNG, nuclear power, etc. but it will not prevent or even delay that downslope.

Blue Peter · Post by **Blue Peter** » 09 Feb 2011, 14:44

RalphW wrote:
kenneal wrote:Yesterday they were talking about huge quantities at quickly reducing prices for hundreds of years.
If the politicians fall for that then I have a bridge I want to sell to them. There is plenty of technical discussion over at TOD, as always.

The impression that you get from ToD is that it's actually a bit of a scam. There is lots of gas there, but most is uneconomic to get out (but there are sweet spots) - but by focussing upon the total amount, it's possible to get investors to put a lot of money in; which they will then lose,

Peter.

Post by **kenneal - lagger** » 14 Feb 2011, 05:20

The meeting will be available here when James puts it up.

http://www.appgopo.org.uk/

DominicJ · Post by **DominicJ** » 14 Feb 2011, 09:02

Blue Peter wrote:The impression that you get from ToD is that it's actually a bit of a scam. There is lots of gas there, but most is uneconomic to get out (but there are sweet spots) - but by focussing upon the total amount, it's possible to get investors to put a lot of money in; which they will then lose,
Peter.

I did look, I've not seen anyone doing sdhare issues for this sort of work.
The closest I could find were third hand recamendations for companies who might be interested in the work, but I've not seen anyone touting for business.

RGR · Post by **RGR** » 17 Feb 2011, 00:57

[quote="RalphW"]

RGR · Post by **RGR** » 17 Feb 2011, 01:07

[quote="Blue Peter"]

Post by **kenneal - lagger** » 17 Feb 2011, 01:40

The APPGOPO presentations are available now.

http://www.appgopo.org.uk/

Blue Peter · Post by **Blue Peter** » 18 Feb 2011, 11:51

RGR wrote:
Blue Peter wrote: The impression that you get from ToD is that it's actually a bit of a scam.
That's because Berman doesn't know much about them.

I, of course, can't judge. But, to make things simple, Berman seems to reckon a beak-even gas price for shale gas as $7.00/Mcf . What do you think the average break even price should be?

Peter.

RGR · Post by **RGR** » 18 Feb 2011, 14:34

[quote="Blue Peter"]

Blue Peter · Post by **Blue Peter** » 18 Feb 2011, 16:08

RGR wrote:
Blue Peter wrote:
RGR wrote: That's because Berman doesn't know much about them.
I, of course, can't judge. But, to make things simple, Berman seems to reckon a beak-even gas price for shale gas as $7.00/Mcf . What do you think the average break even price should be?

Peter.
It depends on the shale you are talking about, and it depends on what you call a "sham". Certainly someone who doesn't know the difference between a rate and economic limit isn't the person you ask to calculate it for you in the first place.

I think that he is trying to make the point that, though some parts of a Shale field will make a profit at a low gas price (I seem to recall sub-$5.00/Mcf), if you want to talk about shale gas saving the US (in the sense of a lot of shale gas) you are looking at a price above $7.00/Mcf.

I can't judge. Scanning his post, what he says seems to make sense, but I'd be the first to acknowledge that I don't have the ability to judge whether he's the sham or not.

I think I said 'scam' actually. I understood him to mean that some companies were implying to investors that the averge break even gas price for a whole field that they owned was $5.00/Mcf, when they were just using the figures from the "sweetspots". Do you think that this happens?

Peter.