From The University of Manchester: Fracking’s environmental impacts scrutinised
![GasDepositDiagram[1]](https://wattsupwiththat.files.wordpress.com/2014/09/gasdepositdiagram1.jpg)
Greenhouse gas emissions from the production and use of shale gas would be comparable to conventional natural gas, but the controversial energy source actually faired better than renewables on some environmental impacts, according to new research.
The UK holds enough shale gas to supply its entire gas demand for 470 years, promising to solve the country’s energy crisis and end its reliance on fossil-fuel imports from unstable markets. But for many, including climate scientists and environmental groups, shale gas exploitation is viewed as environmentally dangerous and would result in the UK reneging on its greenhouse gas reduction obligations under the Climate Change Act.
University of Manchester scientists have now conducted one of the most thorough examinations of the likely environmental impacts of shale gas exploitation in the UK in a bid to inform the debate. Their research has just been published in the leading academic journal Applied Energy and study lead author, Professor Adisa Azapagic, will outline the findings at the Labour Party Conference in Manchester on Monday (22 September).
“While exploration is currently ongoing in the UK, commercial extraction of shale gas has not yet begun, yet its potential has stirred controversy over its environmental impacts, its safety and the difficulty of justifying its use to a nation conscious of climate change,” said Professor Azapagic.
“There are many unknowns in the debate surrounding shale gas, so we have attempted to address some of these unknowns by estimating its life cycle environmental impacts from ‘cradle to grave’. We looked at 11 different impacts from the extraction of shale gas using hydraulic fracturing – known as ‘fracking’– as well as from its processing and use to generate electricity.”
The researchers compared shale gas to other fossil-fuel alternatives, such as conventional natural gas and coal, as well as low-carbon options, including nuclear, offshore wind and solar power (solar photovoltaics).
The results of the research suggest that the average emissions of greenhouse gases from shale gas over its entire life cycle are about 460 grams of carbon dioxide-equivalent per kilowatt-hour of electricity generated. This, the authors say, is comparable to the emissions from conventional natural gas. For most of the other life-cycle environmental impacts considered by the team, shale gas was also comparable to conventional natural gas.
But the study also found that shale gas was better than offshore wind and solar for four out of 11 impacts: depletion of natural resources, toxicity to humans, as well as the impact on freshwater and marine organisms. Additionally, shale gas was better than solar (but not wind) for ozone layer depletion and eutrophication (the effect of nutrients such as phosphates, on natural ecosystems).
On the other hand, shale gas was worse than coal for three impacts: ozone layer depletion, summer smog and terrestrial eco-toxicity.
Professor Azapagic said:
“Some of the impacts of solar power are actually relatively high, so it is not a complete surprise that shale gas is better in a few cases. This is mainly because manufacturing solar panels is very energy and resource-intensive, while their electrical output is quite low in a country like the UK, as we don’t have as much sunshine. However, our research shows that the environmental impacts of shale gas can vary widely, depending on the assumptions for various parameters, including the composition and volume of the fracking fluid used, disposal routes for the drilling waste and the amount of shale gas that can be recovered from a well.
“Assuming the worst case conditions, several of the environmental impacts from shale gas could be worse than from any other options considered in the research, including coal. But, under the best-case conditions, shale gas may be preferable to imported liquefied natural gas.”
The authors say their results highlight the need for tight regulation of shale gas exploration – weak regulation, they claim, may result in shale gas having higher impacts than coal power, resulting in a failure to meet climate change and sustainability imperatives and undermining the deployment of low-carbon technologies.
Professor Azapagic added:
“Whether shale gas is an environmentally sound option depends on the perceived importance of different environmental impacts and the regulatory structure under which shale gas operates.
“From the government policy perspective – focusing mainly on economic growth and energy security – it appears likely that shale gas represents a good option for the UK energy sector, assuming that it can be extracted at reasonable cost.
“However, a wider view must also consider other aspects of widespread use of shale gas, including the impact on climate change, as well as many other environmental considerations addressed in our study. Ultimately, the environmental impacts from shale gas will depend on which options it is displacing and how tight the regulation is.”
Study co-author Dr Laurence Stamford, from Manchester’s School of Chemical Engineering and Analytical Science, said: “Appropriate regulation should introduce stringent controls on the emissions from shale gas extraction and disposal of drilling waste. It should also discourage extraction from sites where there is little shale gas in order to avoid the high emissions associated with a low-output well.
He continued:
“If shale gas is extracted under tight regulations and is reasonably cheap, there is no obvious reason, as yet, why it should not make some contribution to our energy mix. However, regulation should also ensure that investment in sustainable technologies is not reduced at the expense of shale gas.”
The paper, ‘Life cycle environmental impacts of UK shale gas’ by L. Stamford and A. Azapagic, published in Applied Energy (doi 10.1016/j.apenergy.2014.08.063), is available at: http://www.sciencedirect.com/science/article/pii/S0306261914008745
Well that’s the end of their funding! Don’t they know that there is a big lie that they all have to fit their data into.
Azapagic says “However, regulation should also ensure that investment in sustainable technologies is not reduced at the expense of shale gas”.
Why? If shale gas is more economical and reliable, then it trumps “sustainable” sources hands down.
The lack of warming for 18+years in the face of increased CO2 shows that CO2 is not the climate control-knob. Methane (natural gas) may absorb long-wave thermal radiation (greenhouse effect), but its concentration is miniscule in the atmosphere, and it is readily oxidized, so it is a non-factor in the equation.
Shale gas and shale oil production threatens the economic viability of renewables.
In the US, with hundreds of billions of US dollars in tax subsidies and tax credits at stake over the next 20 years for the Wind and Solar industry, the purveyors of that industry will not go down quietly without a mud and dirty tricks fight. The watermelon-dolts being used by McKibben’s 350.org just don’t realize how they are being used by crony cpaitalists, and if they do they probably don’t care, as long as it suits their end goals of socialism and de-industrialization of western society. This undoubtedly is true in the UK and Germany as well.
Good point. Natural gas is the cleanest of fuels and now apparently in super-abundance yet the windmill crowd and their green allies will ratchet up the shrills in their attempt to keep the UK from benefitting from this energy bonanza.
“If shale gas is extracted under tight regulations and is reasonably cheap, there is no obvious reason, as yet, why it should not make some contribution to our energy mix. However, regulation should also ensure that investment in sustainable technologies is not reduced at the expense of shale gas.”
Basically shale is so cheap, if we don’t regulate its production to absurd levels it will kill “renewables” stone-dead.
Kon, the product is natural gas from fractured shales (not shale). The amount of gas producible from low permeability rocks in Great Britain isn´t considered “gas reserves” because its economic viability hasn´t been demonstrated.
The key to such a demonstration would be to drill wells, fracture them, and produce them for at least two years. This means the actual volumes will remain somewhat speculative for about five to ten years (because the exploration wells will have to be drilled over a period of time).
Because the amount of gas is an unknown quantity it´s not possible to make a solid projection. However, it´s possible to conceptualize a volume. This volume will be a function of the cost to drill and operate the wells and associated gas handling facilities, gas prices, and taxes. Whatever the volume, we know the gas will run out in the future (the same way the gas from Groningen and the North Sea fields has been almost depleted).
Thus the best approach for the British authorities would be to continue to issue permits to explore for natural gas, set the gas volumes, and allow well regulated production. A useful parallel approach would encourage wind power. As it turns out wind power has intermittency problems, but these are solved much easier if the power system is kitted with natural gas fueled turbines which speed up and generate more power as the wind dies (and viceversa).
What seems evident is that natural gas won´t last forever, therefore a prudent approach would be to “stretch it” using wind power.
As for regulations, the key is to make sure methane emissions are kept under tight control. The same applies to light hydrocarbon emissions from storage vessels. I noticed the US industry can be rather sloppy in these areas, but the British don´t have to follow US practices.
(Disclosure: I´m currently working as an advisor to a group developing proposals to improve emissions regulations in the natural gas industry in a US state).
What seems evident is that natural gas won´t last forever
=============
“The UK holds enough shale gas to supply its entire gas demand for 470 years”
=============
nothing lasts forever. in 470 years odds are every home will have a “Mr Fusion”, or we will be back in the Stone Age.
the nonsense is the idea that we should leave the “buggy whips” in the ground, for the next generation. otherwise there won’t be enough buggy whips to go around.
which is why we got rid of the horse and buggy and replaced it with the automobile. not enough buggy whips to go around. the previous generation used them all up.
Were you advising anyone that intermittency problems were a potential problem?
I do not think it just happened to have ‘turned out’ that way; more like it was just how the way it was going to be. Unfortunately my advice was disregarded
Drilling for natural gas from shale is already tightly regulated. The UK’s regulations over drilling, both on shore and off shore and for oil or gas are some of the best in the world. Look up PON9b in Google, it’s one of the many Petroleum Operations Notice documents related to UK O&G regulations and covers hydraulic fracturing.
there are more murders in the UK than there is fracking. maybe the government should switch the laws on murder with the laws on fracking. apparently the fracking regulations have more teeth in them.
For me the most significant figure was “470 years” worth of natural gas supply. I cannot imagine that this resource would not be developed in a timely way.
“The UK holds enough shale gas to supply its entire gas demand for 470 years”.
So, “a nation conscious of climate change” must reconsider, or condemn itself to poverty and social strife. Consciousness should be a product of thoughtfulness and common sense, not blind faith.
There’s also enough coal for about 400 years. This coal has a high gas content and can also be fractured to recover it.
“James Lovelock: The UK should be going mad for fracking”
http://www.theguardian.com/environment/2012/jun/15/james-lovelock-interview-gaia-theory
“Scientist James Lovelock is the man behind Gaia theory, and once predicted doom for our climate. He discusses nuclear (good), wind power (bad) and why fracking is the future”
I’m surprised The Gloomian, err sorry, The Guardian would publish this.
Just wait a little. Indeed fracking is the future. Providing cheap energy is the necessary condition for sustainable global health. Every time we get the news about “not sustainable”, just wait a week, maybe two or one month and then we get news that more “CO2 generating energy” was found. In France, England, Brazil, China, etc. etc. More and more we find that natural gas and oil can be extracted because of newer technology. The idea that these resources are not “sustainable” is absurd. “Reserves” are increasing as the extraction technology is getter better and better.
And every time you get the news that CO2 is a pollutant, just wait a little. Nothing is better for food production and stimulating forestation than an increase in CO2. Nothing is better than CO2. Nothing. In fact biologists have been at work at genetic engineering to get plant genotypes with higher sensitivity to CO2 for growth. Food production in the US since 1960 is perfectly correlated with increase atmospheric CO2 concentration. Just try this correlation between increase temperature and increase CO2….not there!
So the Guardian is publishing this. Very nice. And James Lovelock is coming to …. Well, we did wait for him but finally, he is a little behind, but he, yes, recognized fracking as “sustainable to global health”!
In fact, fracking will provide the energy needed by the new young scientists who will need energy to bring about a new generation of energy production devices. Yes we will have such, don’t know yet what “such” will be or what they will be but unless cheap energy is provided to this new generation of scientists and engineers nothing better will be available.
I will say that I reside just a little north of Pittsburgh Pennsylvania and fracking is HUGE here but I am not connected in any way with the fracking industry.
Yes we have incidents or accidents, all well reported and documented in our newspaper, the Pittsburgh Post Gazette, by very good journalists and we now have a weekly very good supplement in this newspaper about “POWER BUSINESS”. Very well done. We get all sides of the issue. Industry, Government, Citizens.
Oil extraction started north of here in Titusville and we all know the great benefits and yes side effects, Now fracking, while not initiating here and certainly we hope will be initiated in many other areas, will bring cheap sustainable energy for our children to get going and discover something better and with less side effects to generate power.
Next to vaccination, (remember the polio vaccine also originated from Pittsburgh) nothing is better for sustainable public health than cheap energy and plenty of CO2 in the air.
Hydrocarbon resources aren´t sustainable. These technologies can be implemented because prices are higher. The higher oil and condensate prices allow producers to make a meager living producing the natural gas at prevailing prices in the USA. This means that prices must eventually rise to allow the producers to generate the cash flow they need. The higher gas prices do allow a healthy business, but they do impact the consumer to a small extent. But eventually the “cream” is skimmed and the gas yield is lower so the price increases are required to sustain production. This process continues until the price is so high an alternative emerges….or the consumer cuts back because the price is onerous.
I would warn the cornucopian view is erroneous. Whether the price reaches the unsustainable point in 30 or 60 years is a huge unkown. To avoid the economic crisis caused by excessive prices we should be working on alternatives, and whenever they couple well to the infrastructure then they should be used. Wind power is used in Texas and it seems to work quite well coupled to natural gas turbines. This wind power allows a much better price environment for the Texas electricity consumer, and will stretch out the state´s resources.
stop please. There is no energy shortage… http://chiefio.wordpress.com/2009/03/20/there-is-no-energy-shortage/
we are not running out of stuff… http://chiefio.wordpress.com/2009/05/08/there-is-no-shortage-of-stuff/
Fernando, everything that I have read about wind power indicates that it cannot compete with conventional power. Do you know something in this regard that the others don’t?.
Fernando, While I support the opportunity for people to choose what they purchase, Texas wind power has not afforded a more competitive price choice. Wind power mixed into the TX power grid has always been priced higher but made available for those who personally choose to pay for it. By providing the higher priced wind power choice, that purchase would allow for further expansion of the programs.
In order to meet that demand but keep the price where it was, $8 billion in PUBLICALLY funded upgrades were then required. GreenChoice has 7,000 subscribers. That $8 billion was very expensive. The CREZ lines carry any electricity from any source and serves as a nice backup….but, the rest of us that are not even located near it are paying for it.
It is a wonder anyone would read the article, given the Guardian’s rapidly decreasing readership figures.
http://en.wikipedia.org/wiki/List_of_newspapers_in_the_United_Kingdom_by_circulation
But look. Since 2012 they’re stuck at 200K. Their remaining buyers are obviously total knuckleheads or in dire need of fishwrap. Or maybe MI6 buys a truckload and drives it to the paper mill. Looks like they will take an eternity to die.
The functional unit is defined as 1 kWh of electricity generated at the power plant (i.e. transmission is excluded from the system boundary).
The data are extremely biassed by drawing the line at energy generated without considering the impact of lack of dispatchability and the need for back-up and a beefy grid. Wind and solar require full back-up and more investment in transmission assets which will add significantly to the environmental burden. The offshore wind capacity factors are also extremely optimistic at 30% to 50%.
There is no sense of the relative or absolute importance of the various factors. Of course we know that even the importance of carbon dioxide is far from settled. Having some idea of the global share of each factor considered and the level of natural occurrence is surely an important starting point in assessing the presented data.
More discussion of the paper over here:
http://frackland.blogspot.co.uk/2014/09/new-life-cycle-assessment-for-uk-shale.html
Gas used in furnaces/boilers and stoves has a much lower environmental footprint because there aren’t the effciency losses associated with electricity generation.
I agree. He is presumably not aware that increased emissions from back-up to wind and solar completely negate any CO2 displacement.
There must be some desperation behind the scenes. Perhaps the lights will go out in the UK during the next super-cold winter spell.
Typo in intro. “…faired better…” should be “…fared better”.
Looks like there is a silver lining to the trouble in Ukraine.
“Ozone layer depletion?” How can shale gas (or any any other natural gas source, for that matter) affect ozone layer depletion?
Allegedly:
This is because of fire-retartant gases such as halon used in pipelines. That said, shale gas still has a similar ozone depletion potential as solar (the high values for solar are due to the manufacture of tetrafluoroethylene used in the panels).
See the Frackland link above.
They must refer to hydrocarbons leaking from the gas producing system. I think it´s a bit of a red herring, but it´s scientifically right.
If you believe Berkley Earth, leakage rates for natural gas might be on the order of 3-4% — which is higher than I had expected. see http://static.berkeleyearth.org/pdf/climate-impacts-of-coal-and-natural-gas.pdf page 5. Hopefully that’s somewhat correctable and even if it isn’t, BE makes natural gas less of a greenhouse gas problem than equivalent energy from coal.
Don K
That’s dangerous nonsense – literally. Emissions on that scale would be explosive.
Plus, industry would never tolerate such a drain on their profits. The 4% figure is a substantial portion if their margins.
I should think that’s total losses from all sources at all times during the process of drilling, fracking, transport, etc. i.e not all at one time and place.
But ifr you feel it’s wrong, check Berkley Earth’s paper, and their references and take it up with them.
Well of course fracked gas is energy equivalent to conventional gas. It is the same methane molecule, CH4.
Hey professor, get a high school chemistry grip.
But it is NOT production equivalent to conventional gas. (Decline curves, potential TRR, all that darned geophysical technical stuff). Therein lies overoptomism. Fracking helps (without causing Green dreaded problems) but does not solve the transportation fuels energy crunch coming in about a decade or so.
But trucks can use natural gas as a fuel–there are chains of natural gas stations being set up in the US, and Cummins (IIRC) is making truck engines that use natural gas. Even cars can run on natural gas.
Roger, that´s right. However, work out the amount of natural gas you would need to fuel say 20 % of the USA vehicle fleet.
So, every single conversion or new LNG engine does the business. Why rush out and convert them all, now. No need.
It’s perfectly possible to use natural gas for most ground transportation applications albeit with a loss of interior space and a somewhat increased risk of incinerating the vehicle occupants in an accident. Natural gas is widely used as a vehicle fuel in Iran and Pakistan. For some reason no one has explained to me, the EPA makes it impractical to convert existing vehicles to NG except in fleet applications. And the lack of fueling stations would be a problem for a while. But my guess is the “transportation fuels energy crunch” won’t really happen. For that matter, its possible to make NG into liquid fuels if you don’t mind spending a LOT of money on a plant and are willing to pay something like$7.50US a gallon. Shell does that today in Malaysia.
“But my guess is the “transportation fuels energy crunch” won’t really happen”
I agree, There is no energy shortage… http://chiefio.wordpress.com/2009/03/20/there-is-no-energy-shortage/
we are not running out of stuff… http://chiefio.wordpress.com/2009/05/08/there-is-no-shortage-of-stuff/
Ahhhhhhh….. Great Britain realizes that ‘frack’ is not a four letter word.
What are these sustainable technologies? Wind turbines have a short life & are high maintenance. Decommissioning them still leaves a huge lump of concrete in the ground. Solar panels only work when the sun is up & performance deteriorates rapidly. OTOH, all Norway’s hydroelectric plants are considered non sustainable by the watermelons & instead, they believe wood pellets shipped from the USA to the UK to burn in power stations is a good use of resources? Sustainable? Everything changes, Nothing lasts forever.Ergo, nothing is sustainable! Watermelons are a non sustainable crop. They require too much water. Let them wither on the vine.
Ozone layer depletion?
Ozone is a result of UV solar radiation reactions with oxygen molecules in the stratosphere. Its depletion is due to lack of this radiation. So called ”ozone holes” are first not holes but a thinning of the layer and mainly occur during the winter periods. Increased UV has also been found to cause thinning.
The sun is the cause of both formation and thinning.
The renewables cult should really get behind the shale gas. The optimism concerning the production of shale gas has been devastated in virtually every instance in which massive development has been initiated. The results for the most part show that the shale gas will be very expensive. Therefore the green cultist should support, because solar & wind will finally have a fossil fuel in which they can finally economically compete.
““There are many unknowns in the debate surrounding shale gas, so we have attempted to address some of these unknowns by estimating its life cycle environmental impacts from ‘cradle to grave’. We looked at 11 different impacts…”
Oh puhlease! What has happened isn’t a debate. Fracking started in 1947 in the Hugoton gas field in Kansas and this was a substitute for the much more damaging and unpredictable ‘torpedoing” of wells using nitroglycerine and even gunpowder back to 1865 when it was invented for completing water wells. The “debate” started when fracking became so prolific only 7-8 yrs ago that the greens noticed it and woke up to the fact that their anti-fossil fuel, anti-western civilization, anti-capitalism, anti-people, yada, yada. By then about 60% of conventional wells were enhanced using it worldwide. Torpedoing went unnoticed for 150 years and it has been a part of the technology since the beginning of the petroleum industry – how’s that for an experiment for answering all the questions that the U of Manchester could ever think to ask.
Second, what on earth could the ‘scientists’ at the U of Manchester know about the subject? They should have collaborated with a U in Pennsylvania or Texas. The whole thing is a tap dance around the renewable energy debacle. The 11 parameters they chose probably wouldn’t even contribute more than a parameter or two to a legitimate study.
There may be another surprise for them. The first question I would ask is “has there been much NG produced in these areas before?”. Such shales are the source of the conventional resources which leaked into the porous production formations. In my opinion, if there has been little production in overlying formations, chances are the shales have insufficient hydrocarbons in them to start with or they have leaked out along faults long ago. A little disclaimer here – as far as I know, idea is not a well established idea . I may be the only one that holds it. Anyone to enlighten me on this? Certainly Texas, Oklahoma, Pennsylvania, etc. had a huge conventional resources in these same areas and there have been disappointing fracking results in some European countries. I hope they are using North American hydraulic fracturers to assess the formations and do the tests.
Source rocks they are called and these are usually shales and when looking at new sedimentary basin (that is one untested by drilling), the oil company always considers the source rocks. If these do not show promising signs, the exploration company will probably pass.
I assumed that the authors had a certain level of understanding about frakking shale for hydrocarbons. They might not have the gear needed to address this issue. A shale must have certain characteristics to be a candidate for frakking and so the figure given above of 470yrars might not be realistic. The oil business can be tricky.
Anyone who uses the phrase “negative benefit” is being dishonest. Benefits are by definition good or positive (“bene” = “good”). Something negative cannot, by definition, be a benefit of any kind. The writer should be honest and say “fault” or something equivalent.
Also, regarding the regulations: they should have consulted their economics department if it hasn’t been thoroughly corrupted. With the widespread occurrence of these shales, regulations WILL match competing countries’ regs or you can throw a big welcome party and no one would show up. At current prices, natural gas can’t afford Euro-type regulation and wifty government management and Britain is too tied up by the green Lilliputians at present. It will take an act of will on the part of a wishy washy gov to change much. By the time Rumania and Ukraine develop their shale gas (it underlies the entire country in the former), you will be getting your energy from them for 470 years. You’d think the country that invented economics would know that despite abundant resources, regulations designed by Greenpeace or risk to capital has kept resource rich Africa largely poor. If you are an international petroleum company, go to PA, OK, TX, ND or AB (Canada) if you are in it for profit.
The US has developed Shale Gas and currently US Natural Gas costs about $4 per mcf. The rest of the world pays about $12 per mcf. The question for the UK is: Do you want to cut your heating bills by 2/3? Yes or No
http://www.sunnewsnetwork.ca/video/3564181057001
The Case for Fracking
All seems well in this report until the last sentence I read: “However, regulation should also ensure that investment in sustainable technologies is not reduced at the expense of shale gas.”
As if it were not already apparent that so-called “sustainable technologies” are actually NOT sustainable, only provide a fraction of total electric generation in almost every country in the world that uses them, and require wasteful, duplicative gas or coal-generated backup units in order to provide power when the weather ensures those sources can’t generate enough power to maintain the electric grid. So stop the illogic and political correctness, University of Manchester.
Thank you for enlightening me considerably about fracking. I have been called several times by Energy Citizens to support the Keystone pipeline. But I felt the issues raised by “Greens” (Reds who hate people and would do anything to the natural world so long as it hurts or kills people) were not fully answered. It is now clear that we DO need some regulations to ensure high-quality drilling; and with those in place, we have an overwhelmingly beneficial thng.
Inexpensive energy is the enemy of the green movement. They have to make other sources of energy less attractive and less affordable in order to increase demand for their favored energy sources.
It also exposes many of the lies pushed by the greens. We aren’t running out of fossil fuels. Sustainable green energy sources are not more affordable. Green energy sources do not lead to more jobs and more prosperity. Public “investments” in green energy do not have a pay-back, except for the corporations that use tax dollars for their profit.
Fernando Leanme
Enjoyed your comments on the accompanying Sea Ice thread, but I am having trouble with this one:
” Wind power is used in Texas and it seems to work quite well coupled to natural gas turbines. This wind power allows a much better price environment for the Texas electricity consumer, and will stretch out the state´s resources.”
For instance your statement is in direct conflict with the information here: http://edmhdotme.wordpress.com/2012/01/01/hello-world/
My understanding is that, currently, wind power will work, but not “quite well”, and it will considerably increase the expense of the electricity produced by natural gas.What is your basis for the above statement, specifically, regarding price?
Thanks
The trouble with shale has nothing to do with environmental concerns. As long as drillers follow industry standards shale gas and oil will be easy to produce safely. And as long as shale production is limited to the small core areas of decent formations it can be quite profitable. The trouble is that you cannot build a company by drilling a few wells in the good spots of your shale formation. If you stick to what is profitable you will be out of drill targets in a few years and will have to go and find something else to do. The incentive is to go for the marginal targets by borrowing as cheaply as possible and using Estimated Ultimate Returns rather than actual well data as the basis of the depreciation schedule. By underestimating the costs and expanding production the negative cash flows will not matter if the story is promoted properly. By the time assets have to be written down the insiders and early investors would have cashed out and gone on to better things.