IEA: Natural Gas Can Supply World For 250 Years
Supplies of natural gas could last more than 250 years if Asian and European economies follow the U.S. unconventional reserves, the IEA said.
The abundance of shale gas and other forms of so-called unconventional gas discovered in the United States prompted a global rush to explore for the new resource.
The International Energy Agency said Australia is taking the lead in the push toward unconventional gas, though China, India and Indonesia are close behind. European companies are taking preliminary steps to unlock unconventional gas as are other regions.
“Production of ‘unconventional’ gas in the U.S. has rocketed in the past few years, going beyond even the most optimistic forecasts,” said Anne-Sophie Corbeau, a gas analyst at the IEA. “It is no wonder that its success has sparked such international interest.”
Shale gas production in the United States is booming and the IEA estimates that unconventional gas makes up around 12 percent of the global supply.
Global supplies of natural gas could last for another 130 years at current consumption rates. That time frame could double with unconventional gas, the IEA said.
“Despite the many uncertainties associated with production, countries are still prepared to take risks and invest time and money in exploration and production, because of the potential long-term benefits,” Corbeau said.
from the GWPF
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A couple of months ago my brother informed me of an oil and gas lease my father puchased in the 40’s. It’s a huge piece and it’s smack in the middle of the Bakken formation. Wherever you are out there Papa, thanks!………I think.
The potential shale gas resource is large. However, decline rates for wells are also substantial, and recent nat gas prices around $4/mmbtu are insufficient to stimulate additional drilling. Most shale gas drillers are currently reducing gas drilling to await better prices. More realistically, shale gas will work in the $6-9/mmbtu range.
Hydrofracking is a long-established technique. It may include biocides and other chemicals. These may not be released into the environment untreated. In most cases, produced water from fracking and naturally occuring in wells are re-injected into old oil wells. In Pennsylvania’s Marcellus shale, the flowback rate (returning water) is only 15-20% of the fluid used in fracking. The gas wells themselves are dry, ie, not tied to the water table above. The returned fluid is diluted with fresh water and used for subsequent fracking jobs. As such, there is no waste water per se in many cases.
Fracking is safe if well-completion (casing and cementing) is conducted in a proper fashion. Also, enpondments (fluid storage ponds) and piping have to be sound, but this is pretty standard stuff.
Peak oil is almost certainly real. We’ve seen no real increase in oil production in the last five years, even as much more capital is being applied to the industry. From 1995-2004, incremental production of 1 mbpd (million barrels per day) required $180 billion in upstream capital expenditure; from 2005-2010, the required expenditure rose six-fold, to $1.07 trillion, for the same increase in production. The IEA, an international energy agency, has called peak crude oil production for 2006.
Our in-house studies suggest the next oil shock is likely in 2012, but probably not later than 2014.
If shale gas were so abundant and cheap why are the early shale players reducing drilling and trying to raise capital to drill for shale oil instead? I think that it makes sense to stop falling for hype as told to us by self-proclaimed experts and to see the real world as it is for ourselves. Shale has an energy density that is equivalent to a potato. Most of the hydrocarbons are trapped in the rock and hard to get out. While fracking can help release some of the hydrocarbons there is a problem of the energy content that needs to be expended to get energy out of the formations. So far it is looking as if the only thing that makes shale gas a success is an accounting assumption about the ultimate recovery per well. The assumptions are not supported by the empirical data, which suggests that the accounts are doubling the most likely production estimate in order to make the projects seem profitable. The problem is that eventually someone has to run out of money or credit because cash flows are negative and insufficient to keep production going.
So far the data is indicating that investors should be looking to coal and conventional oil instead. Once the shale scam is exposed and the bubble bursts the conventional reserves will become much more valuable. And we will have to look for conventional gas in areas that are likely to have an abundance of it but cannot produce it at a profit because they are too far from their markets. I can see a big gas to liquids plant in Mexico being very profitable once the idiots in the government allow foreign companies to develop reserves that should be there but cannot be found by PEMEX.
Shale gas extraction (fracking) is a serious environmental mess especially when its unregulated… just go and see whats going on in Arkansas.
http://www.bbsradio.com/cgi-bin/webbbs/webbbs_config.pl?md=read;id=11991
We can all understand the need to be energy independent but one needs to know whats going on with this industry and the horror stories associated with before blindly accepting anything and ending up with a leaking gas well in your back yard. In Quebec, folks want a moratorium about real safety issues and not GHGs concerns some environmental groups may have. After initially trusting this industry, the Quebec government is having second thoughts, and justly so…
http://www.montrealgazette.com/technology/Province+reverses+position+shale/4145107/story.html
Alexander K says: January 21, 2011 at 7:40 am
The UK government’s attitude to energy is alarming – they are embracing. I am sure that the mental logjams the UK is suffering at the moment will be blown apart when the UK’s citizenry realise they are being regarded as ignorant fools by their own politicians, who are attempting to be suitably Green and don’t realise that they are standing in a queue waiting for a bus that has departed long ago..
—————————————————————————
But Alexander, do the English politicians make any decisions of any consequence any longer? Aren’t all the significant decisions affecting the UK made in Brussels now? If so, you are horizontally stuffed in the UK because the UK citizenry has no effect on decision making.
Douglas in Dunedin
“MG | On shale gas and cows’ farts
Nothing livens a heavy debate about climate change and shale gas quite like cows’ farts.
Natural Resources Minister Nathalie Normandeau recently suggested that an exploratory shale gas well emits less greenhouse gas than your average cow.
{…]
Note:
“I swear — I’m not making this stuff up!””
http://www.jacksnewswatch.com/
…-
Green Life:
“On shale gas and cows’ farts”
[“burps” vs “cow’s farts”]
“Meanwhile the shale gas industry wants to put 5,000 new wells on Quebec territory, and the impact on Quebec’s greenhouse gas emissions reduction target has not been calculated.”
http://communities.canada.com/montrealgazette/blogs/greenlife/archive/2011/01/20/on-shale-gas-and-cows-farts.aspx
David O. says:
January 21, 2011 at 7:11 am
The keys to this historic success have been engineering inventiveness in drilling and completion technologies, together with recognition by geologists of the vast recoverable resources in rocks previously considered to be non-prospective.
This is the latest example of the abject failure of Ehrlich (Population Bomb) and Club of Rome. Those were world-class misjudgements, and they still don’t get it.
—————————————————————————
David O, thank you for both observations – it is good to hear from and listen to someone who knows what he is talking about. If only the politicians would listen—–.!
Douglas
Pamela Gray says:
January 21, 2011 at 6:42 am
“My thoughts:
One: Anything being extracted from the ground other than open pit coal and sweet oil is gonna be more expensive, even without environmental controls.”
Don’t think that’s the case with coal bed methane, of which we have an abundance here in Wyoming, as we have an abundance of coal. Extraction requires pumping the water out of the coal seams to release the gas which creates some problems of its own. However, given the fervor with which Anadarko is pursuing this resource right now with gas prices relatively low, I have to assume it is very economically feasible. I don’t know the relative dollar expense numbers but drilling depths are generally 1000 to 2000 ft, not the deep 5000 to 15000 feet of traditional oil/gas supplies which must mean it is much less expensive. More wells are, however, required to properly tap these coal seams.
LNG tanker imports have exploded the last few years in Europe.
http://www.livetradingnews.com/gas-demand-grows-in-europe-31102.htm
Shale gas is not particularly suited for LNG. However recently there have been enormous discoveries of natural gas in the Israel offshore. The play is spreading to Cyprus and Lebanon. A recently discovered field in Israel has an estimated 14 TCF of gas. This is looking to be a major geopolitical change in energy distribution and supply for Europe.
http://www.hurriyetdailynews.com/n.php?n=israeli-gas-discoveries-could-affect-regional-politics-2011-01-17
Vangel says:
January 21, 2011 at 10:35 am
If shale gas were so abundant and cheap why are the early shale players reducing drilling and trying to raise capital to drill for shale oil instead?
Vangel,
The answer to your question is simple, oil is currently at $90/bbl and natural gas is a $4.5/mcf. A bbl of oil has about 6 times the btu content of an mcf of gas, this means that natural gas is currently selling for $27 per bbl oil equivilant, less than 1/3 the price of oil. One of the reasons that natural gas is currently so cheap compared to oil, is because of the amazing success of shale gas in the past few years. We currently have a huge excess in natural gas production capacity, (check out the EIA web site). As soon as the supply and demand ratio starts to reverse, people will increase the amount of gas drilling once again.
There is also another untapped resource of natural gas, that is even larger than shale gas, trapped in methane hydrates. We will not run out of natural gas for many generations.
John Peter says:
January 21, 2011 at 7:57 am
“I thought that feeding animals for human consumption required more arable land than providing the same amount of food for vegetarians.”
Might I suggest that most animals grown for human consumption are produced on land that cannot be considered arable. This land usually has at least one of the following characteristics:
Poor water supply/arid
Very steep country
Low fertility
Excessive temperature ranges or too hot or cold
Heavily aforrested
Animals can be considered as a means of concentrating a poor potential for food production into a reasonable potential, because of their ability to move around concentrating poor quality plant material into high quality protein.
The main exception to using poor country for animal production would be in raising cattle for milk production, which requires good pasture, i.e. arable land.
Shale oil/gas is not new. What is new is $100/bbl oil and technology getting cheaper. Should this trend continue, watch how fast OPEC decides that $100 is too high. They did it before to kill the boom, I do not put it past them to try it again.
Composition of natural gas
Methane is 70%-90% of NG out of the well, what’s delivered is almost pure methane, with an odorant called mercaptan added so leaks can be detected easily.
Shale gas is just natural gas trapped in shale deposits, gasoline is a mixture of hydrocarbons ranging from C5 to C10, some cyclic, some straight chain.
Should this trend continue, watch how fast OPEC decides that $100 is too high. They did it before to kill the boom, I do not put it past them to try it again.
Too many oil producers need the money. Nigeria and Venezuela will collapse without high prices. Iran will be in trouble too, for that matter. OPEC is no longer the closed, largely Arab, organisation that it was.
The only way price can really, really come down is if the Saudis flood the oil market. My understanding is that they don’t have the production capacity to do that.
Steve Koppits has it right. In addition, shale gas well production rate declines about 60% in the first year, and becomes unproductive in about 5 years, so at a given level of production it is necessary to “run like H— ” just to stay in place. At prices below $6.00/bcf producers can’t afford new gear for drilling. They will use existing gear on existing developments to recover marginal cost for a time. Also, while the Shale formations are vast, most projections of gas production assume that the entire formation can produce like the areas being exploited, which is nonsensical. Developers always try to develop the best plays first. divide any estimates you have seen so far by at least 3. Also conventional gas in the USA is in decline, and in the UK is in advanced decline, and the shale gas has to offset the decline. It is unlikely that North American NG production will get more than 50% above the average of the last 5 years, and unlikely that shale gas will push the peak out more than 20 years at such volume. Its great to have the resource, but it is not a magic bullet.
Also it is likely that producers are underestimating, or downplaying the water pollution risk from frakking. Yes the gas is well below the water table, but there is evidence that water migrates upwards through faults in the rock to contaminate ground water, and there have also been cases of gas percolating up to produce flammable surface water, with molecular analysis proving that the gas came from the deep formations. A couple of counties in Pa. have already outlawed frakking. Don’t get too excited y’all.
Steve Koppits has it wrong. Shale gas is being produced in the $3 range. Many companies have plain and simply cut their expenses in half.
Meanwhile, the high oil prices have turned around oil production declines. Even here in the USA, the most drilled up “post peak oil” area, we’ve seen three years of increases production and reserves.
The whole peak oil thing was built around data from a long period of basically flat (inflation compensated) oil prices. The current prices are higher, and if they persist, they will warp Hubbert’s curves beyond recognition.
Murray Duffin says,
Also, while the Shale formations are vast, most projections of gas production assume that the entire formation can produce like the areas being exploited, which is nonsensical. Developers always try to develop the best plays first. divide any estimates you have seen so far by at least 3.
Murray, we just started exploring, let alone exploiting, the vast shale formations. We (they) can’t develop the best plays first, because they haven’t discovered the best plays. Murray Duffin is talking like this is the end-game, but its the beginning. Costs are plummeting, fracking technology is improving rapidly. Idiot counties in PA notwithstanding, this is a boom with legs, a boom like no other. We’ll be multiplying not dividing estimates – and we’ll be using numbers a lot bigger than three.
See http://www.theoildrum.com/node/7075 , and dream on. The first two formations developed have been completely explored. The Marcellus will follow the same “sweet spot” scenario.
Doug, you can’t produce what you haven’t discovered. Check discoveries over the last 60 years. Also check the “Megaprojects” wiki. Where are the developments that will produce increases when the base production is declining about 4-5%/year? Dream on.
For the “Gasland” fans –
http://energyindepth.org/2010/06/debunking-gasland/
The USA sits on 27.1% of the entire world’s supply of recoverable coal reserves, and incredibly 78% of the entire world’s supply of recoverable shale oil reserves.
And now the US Marcellas Gas Shale field is coming on line.
Makes you wonder why we are importing anything, doesn’t it!
Murray, read your link, http://www.theoildrum.com/node/7075 carefully. It’s warning you how hard it will be for investors to make money, a decent ROI, on shale gas. Yes, some of the wells won’t put out 100% for 65 years like the promoters in the bucket shops would have you think. Yes, the entire seventeen county area in the Barnett shale is not all equally productive. Your link talks about ALL the potential for the INVESTMENTS to be disappointing all the while acknowledging how huge the actual deposits are. Base production declining? Isn’t that a moving target? “More fully explored than the other shale formations” If you’d said that, I’d say, “OK” But you say they are fully explored and then infer they are fully developed. That is simply not true.
All form of resource extraction leave a footprint – its often downplayed by the producers and over-blown by the greens.
That fact remains that thousands of shale gas wells have been drilled without issue, but the focus falls on those problematic wells where operators have not followed proper protocol. Shale gas development is breaking out all over Europe; energy security and environmental issues will have to find a way to co-exist. Natural Gas for Europe focuses on unconventional resources, providing updated information on the plays, players and activities http://www.naturalgasforeurope.com
Sorry Murray, if you are getting your information from the oil drum website, you might be a little misinformed. Might as well waste your time at Realclimate.
As someone who was once a bit Malthusian in college, and learned how wrong I was in a 30 year career in the oil business.
The oil supply is holding in pretty well. Heck, I just sold some oil wells I obtained 25 years ago and they are producing more now than they did then. We drilled a slew of horizontal additions and increased production dramatically.
The December 6 Oil and Gas Journal has a detailed country by country summary of worldwide prodution and reserves.
Compared to last year oil production is up 2% and proven reserves are up 9%. Gas reserves are up too, while gas production is not reported.
Mature area such as the US and Canada show increases, while Mexico and Norway lead the declines. The elephant in the room, Saudi Arabia continues to increase reserves, finding more oil than they produce, and claims they can keep up the current rate of production for 80 years without finding another drop. I’m not sure I believe that, but it is irrelevant, becase they ARE finding more.
I just finished an interesting trip. I spent 10 days in Nepal and Bhutan with employees of Saudi Aramco, followed by a month in India. I heard first hand about the production in Saudi and saw first hand the burgeoning demand potential from breakneck development in India. Interesting how far ahead of us India is in CNG powered trucks and busses.
From my point of view, if oil prices stay high new production will keep rolling in, and old production will see continued revitalization I don’t see a peak oil catastrophy in the works.
Here’s a nice article:
http://www.nytimes.com/2010/11/17/business/energy-environment/17FUEL.html?_r=2&ref=businessspecial2
@Sloane says:
January 21, 2011 at 10:47 am
Wow, that’s some serious, incisive reporting. Now I’m quaking in my boots. Who knows, there could be an “Old Faithful”-sized eruption right here in River City because someone in Arkansas is “fracking” the Earth. Cowabunga, Buffalo Bob, this could be the next “Global Warming”.
/sarc
But Chomsky says we’ve reached a peak.
sarc.