It almost makes you wish clean coal was economic which I doubt will ever happen. I believe the Brits have de-mothballed some coal fired generation now they have to import natural gas.

I believe we should conserve NG for some higher priority uses than baseload generation or tar sands. These include CNG as a diesel substitute in truck fleets, nitrogen fertiliser, process heat (eg food industry) and peak power, preferably via combined cycle (gas and steam turbine). The trouble with the pricing system is that one size fits all..the market can't 'see' that NG is too valuable for 24/7 electrical generation.

And one day we might get baseload from solar thermal or whatever. Sure as hell there will be a week long cold snap when we'll need that idle NG generator to cut in.

I guess the next question is whether the EROI indicates that the Fayetteville shale is a good future resource or a likely example of receding horizons?

Its interesting how this < 5 year well lifetime has a big effect on profitability. At least for oil the economics seem to become marginal under 10 years. I think this may be a important limit. And one thats been overlooked. Thanks for the article.

To give a oil example

Assume you drill a horizontal well and it produces 1000 barrels assume a price of 100 dollars a barrel
then in 1 year you get a return of over 3 million dollars
So its probably covered the cost of the well in one year and you make money.

But lets say it produces 100 barrels a day.
Then it takes say ten years to recover your costs if they are 3 million. If its say 1 million and the well lasts 5 years then your making a little bit of money.

You can see how well lifetimes less then 5 years really changes the dynamics. In general your only making money the last few years. If cost increase say 50% your no longer making money. It seems to me that a lot of this production is fairly marginal.

http://science.reddit.com/info/623yd/comments/

thanks for your support.

This past week Exxon Mobil announced the closure of their operating coal mine in Illinois, and their departure from the coal business. For those who worry most about greenhouse gas emissions this might seem to be a step forward, and, while I will likely write about that issue some other time, I would rather express a different concern today.

The current complacency over the longer term natural gas supply extends to the lack of viable replacement sources, and to what will need to be done to supply us, in the short-term, with the power that puts the light on, when I flip that switch.

Suggesting that we ought to build more coal fired plants in the short term without stating at the same time what you think our long term energy strategy should be encourages the tunnel vision which is typical of the response of our economic and political system to potential resource depletion problems. Clearly burning more coal in the short term is a stop gap measure and a highly dangerous one from the point of view of global warming. If burning coal is a stop gap, what to you foresee on the other side of the gap? These narrow focus technocratic postings about how to maintain business as usual functioning of the economy for another decade or so are useless. If you have a clearly defined energy strategy for the long term then present it, or at least post a link to a previous presentation. If you do not have a clearly defined long term energy strategy then the only sensible short term response to global warming and fossil fuel depletion is to advocate large reductions in energy use even if such reduction implies economic contraction. The goal of increasing the total volume of economic transactions forever in a finite world is insane. Our goal should be to produce a good quality of life with a minimum consumption of resources. Let growth occur in the intellectual and artistic realms and not in the magnificence of our personal dwellings and size of our piles of toys. Our economy needs to be structurally fixed and not merely propped up temporarily by technocratic energy policy.

There are other factores at play. There was a huge increase in rig utilization and holes drilled since the last low about 2002, but I read somewhere recently that there is now no spare drilling capacity. USA production declined about 5% from 2003 through 2005, and that big increase in drilling (near 100% if memory serves) just offset declines in producing wells and recovered production in 2007 to the 2003 levels. If we can no longer make significant increases in wells drilled, we will be back to a net decline. Canada cut back E&D investment sharply in 2006 and their production is expected to be down in 2008, while tarsand demand is increasing. There is no sign of major increases in LNG imports, and it already looks like a cold winter in Europe and Russia. With Japan LNG demand up, due to their #1 nuke plant being down, competition for LNG is likely to be high. My estimate is that by spring 2009 we are likely to have an NG crisis.

This was a really decent article. For whatever reason, I haven't been dropping whatever I'm doing to read articles by Heading Out, but this may change now.

As noted in the article, because of its use in electricity generation, natural gas is a compelling topic. For those of us who heat our homes with natural gas, it is quite a bit more compelling.

Because natural gas is required for power generation, this is a very important post. Phillip Schewe, author of “The Grid: A Journey Through the Heart of Our Electrified World,” writes that the nation’s power infrastructure is “the most complex machine ever made.” In “Lights Out: The Electricity Crisis, the Global Economy, and What It Means To You,” author Jason Makansi emphasizes that “very few people on this planet truly appreciate how difficult it is to control the flow of electricity.” A 2007 report of the North American Electric Reliability Corporation (NERC) concluded that peak power demand in the U.S. would increase 18% over the next decade and that new power supply sources would not meet that demand. NERC also noted concerns with natural gas disruptions and supplies, insufficient capacity for peak power demand during hot summers (due to air conditioning), incapacity in the transmission infrastructure, and a 40% loss of engineers and supervisors in 2009 due to retirements. According to Railton Frith and Paul H. Gilbert,
http://sandersresearch.com/index.php?option=com_content&task=view&id=1257
http://www7.nationalacademies.org/ocga/testimony/Blackouts_America_Cyber...
power failures currently have the potential of paralyzing the nation for weeks or months. When power failures occurred in winter, millions of people in the U.S. and Canada will die of exposure. It will happen, pages 31 to 41: http://www.peakoilassociates.com/POAnalysis.html

hi all,

I'm putting together a peak oil powerpoint presentation for a friend. i hope to show him the "light" :)

I'm looking for world oil supply and demand data since the 70's to today, but am not having any luck. would any of you have any perchance? I'm looking for either the supply/demand raw data, a graph, or a link to anyone of this.

again, oil supply and demand data as far back as possible, preferably in the 70's, but i'll settle for the 80's.

thanks

HO - thanks for this article. Gas supply is a crucially important subject that has received altogether too little attention, even in PO circles.

Question to the group: Does anybody have data on the EROI of the gas business, either historical or current? I haven't seen much along those lines and I'd like to understand it better.

For those who track these things, the article that Leanan captured on production in Wyoming also contained information on well costs, at between $2.5 and $4 million for horizontal wells up to 10,000 ft long and with slick water fracing.

Based on data from 187 Fayetteville wells provided by IHS and the Arkansas Oil and Gas Commission, I find little economic justification for the play at present. None of the vertical wells that I analyzed will recover drilling and operational costs. Only 3 of the 136 horizontal wells will be economic in the most-likely case, and only 13 in the optimistic case. Further, I cannot substantiate per-well reserves that approach the levels claimed by operators.

OK, but HOW FAR underwater (economically speaking) are they?

Your article doesn't say. If they're only $5 a year unprofitable, so what? I'll look under my couch for some change and fix that problem. If they are off by 50% or some order of magnitude, then you have either a big problem or a catastrophe. Scale matters.

Nor do you state at what extraction rate/price ratio they become profitable. As a consequence, articles like this tell me "Hi! let me blow some smoke at you".

I don't disagree with the general issue "gas is in big trouble", but if you're going to say "they're not making money" and "that's a problem" then kindly scope the problem for us.

All this tells me is "Gas is going to go up in price, maybe a little soon, maybe a lot later.". That's not a big surprise.

Decline Rates from Canada

I stumbled across some decline rate statistics on Gas wells in Canada in these energy reports here:

http://www.neb.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/ntrlgs/ntrlgs-eng.html

Specifically, this short term natural gas deliverability report for 2006 - 2008:

http://www.neb.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/ntrlgs/ntrlgs-eng.html

Check out pg 23 for Initial Decline Rate on different kinds of gas wells. They model well production behavior by linking together linear segments. So initial decline for X months, then second decline rate for X more months, etc.

The non-conventional wells seem to decline twice as fast as the conventional. And the supposedly "stable long term" decline rates are as fast as the conventional wells initial rates.

I wish we could get data like this on US wells.

Here is a Bloomberg article which reports NG shipments from Canada to the US may decline as much as 15% by 2009.

http://www.bloomberg.com/apps/news?pid=20601072&sid=auwWD7UDZ8WU&refer=e...

Here's is a video interview with geologist David Hughes of Canada, which is well worth watching, bc he talks about "peak coal" which, along with NG, is so critical to our production of electricity.

http://globalpublicmedia.com/david_hughes_on_canadas_oil_and_natural_gas...

Here is a post from Hughes himself talking about "peak coal" over at PO.com

As noted in my earlier post, US coal production peaked in 1998. Why? Two reasons - 1) steady declines in the Appalachian region as this is a very old mining area, with higher and higher production costs and depletion, and much of its coal is high in sulphur and therefore exceeds US Clean Air Act limits, and 2) the chockerblock transport system out of the Powder River Basin, which has reached its limits. The Powder River Basin could potentially increase production if the transportation roadblocks are eliminated - this remains to be seen. In the meantime imports from Columbia are continuing to grow.There are two basic types of coal - coal that is suited for thermal power generation and coal that is suited for metallurgical uses. The US exports metallurgical coal and still does - this is a bread and butter issue for many producers. Importing thermal coal from Columbia, which is now up to 30 million metric tonnes per year from zero in 2002, which is required to supplant deficits in thermal coal supply for power generation. Metallurgical coal exports, which are generally much higher in price/ton than thermal coal, have continued as the US steel industry has contracted radically and the demand is not there domesically for this type of coal. Despite being accused of stating that the US is a "net importer" in a previous post I said nothing of the kind - only that after a couple of centuries of satisfying all its needs domestically, the US became an importer of thermal coal in 2003 and these imports have been growing year-after-year.

http://www.peakoil.com/fortopic25978-0-asc-15.html

Onshore Texas and Louisiana overlie an enormous volume of geopressured brine reservoirs. In addition to assorted nasty dissolved solids, these brines are saturated with methane. The depth, size, etc of these reservoirs was very-well mapped because, if you were drilling for oil or dry gas, you really, really, really wanted to avoid this stuff. 30 years ago, conservative estimates of the amount of methane were sufficient to cover the entire US energy demand (not just NG demand) for 200 years.

I was involved in academic systems analysis of the problem. Producing the methane wasn't difficult: the flow rates from simple vertical wells were enormous, and any sort of simple pressure reduction allowed the methane to come out of solution. But what to do with several billion barrels of toxic/corrosive brine each year? If you reduced the pressure through, say, a turbine, the analysis suggested you could recover enough energy from the heat/pressure of the brine to pump the stuff back into some sort geologic structure at about the same depth as the reservoir. But hot brine does really nasty things to turbines.

TTBOMK, no one has figured out a practical way to produce these enormous domestic methane reserves.

David Hughes' statement about peak coal is key to understanding the problem. I went to the EIA numbers and worked it out - As we produce more sub-bituminous and less bituminous coal, the actual energy content of our total production goes down, even as we extract more tonnage.

Combine that with Jean Laherrere's 23-year discovery to production parallel. He produced a graph (On TOD Europe: http://www.theoildrum.com/uploads/510/LaherrereGas04.png) showing that conventional NG production in North America roughly but consistently lags discovery, TCF to TCF, by 23 years. It's a great predictive tool that shows NG production dropping off a cliff in the next five years. Conventional NG discoveries dropped by about 75% in the early 1980's. It makes sense: If they didn't discover it and start to develop it, they can't pump it now. The unconventional sources look as if they will restrict the drop to *only* 50%.

Keeping the lights on is going to become expensive faster than most people imagine. Also consider that half the residential housing stock in the U.S. heats with NG. When NG prices skyrocket and people start to fuel switch, where do we magically obtain the increased refining capacity for #2 fuel oil and propane? Much less the oil to refine. I figured that even a 25% (North American) shortfall in NG equals something like 1.5% of world oil production. (Caution: pulling numbers from memory)

We can create methane by gasifying biomass. This would be CO2 neutral, renewable and keep the U.S. from developing costly LNG terminals.