Guest cheer leading by David Middleton
USGS Estimates 214 trillion Cubic Feet of Natural Gas in Appalachian Basin Formations
Release Date: OCTOBER 3, 2019
The Marcellus Shale and Point Pleasant-Utica Shale formations of the Appalachian Basin contain an estimated mean of 214 trillion cubic feet of undiscovered, technically recoverable continuous resources of natural gas, according to new USGS assessments.
“Watching our estimates for the Marcellus rise from 2 trillion to 84 trillion to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have,” said USGS Director Jim Reilly. “Knowing where these resources are located and how much exists is crucial to ensuring our nation’s energy independence.”
[…]
USGS
“Watching our estimates for the Marcellus rise from 2 trillion to 84 trillion to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have.”
USGS Director Jim Reilly
I had the good fortune of working with Jim Reilly at Enserch Exploration back in the 1980’s and early 1990’s… Before he became a NASA astronaut and then Director of the USGS.
“Shale” comprises more than 60% of current U.S. proved natural gas reserves… The Marcellus/Utica comprise about 50% of “shale” proved reserves… And the undiscovered technically recoverable resource potential of the Marcellus/Utica is now larger than the proved reserves and nearly as large (70%) as the current proved reserves of all “shale” plays….
Natural gas is the exact opposite of climate change: Always better than previously thought!
Oct 6, 2019
U.S. Natural Gas Reserves Continue To SoarJude Clemente Contributor
Energy
I cover oil, gas, power, LNG markets, linking to human development.
* In other words, we have even more natural gas than advertised“Watching our estimates for the Marcellus rise from 2 trillion, to 84 trillion, to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have,” USGS director Jim Reilly, October 3, 2019
Ever since the U.S. shale revolution took flight in 2008, it’s been a consistent theme: not just rising natural gas production but also rising proven natural gas reserves. In fact, over the past decade, the U.S. Department of Energy reports that our proven gas reserves have ballooned nearly 85% to almost 450 trillion cubic feet (Tcf). It’s all turned the previous pre-shale notion that reserves were dwindling and production was in permanent decline on its head.
Not even the industry itself ever envisioned how fast our natural gas business would be transformed, thanks to shale. ExxonMobil CEO Lee Raymond infamously stated in 2005: “Gas production has peaked in North America.” Not quite good sir: led by shale, North American output is up 50% since then to past 105 Bcf/d, or some 30% of the global total.
What’s even more amazing is that this boom in gas production and reserves has happened under a low-price environment, which typically work to hamper both. In other words, we have even more natural gas than advertised.
Indeed, don’t forget that reserves are just subsets of the massive gas resource that we have.
[…]
Forbes
That’s right Jude… Proved “reserves are just subsets of the massive gas resource that we have.” Proved reserves aren’t even the most likely future production estimate. Proved reserves are the >90% probability estimate.
In the US. “proved reserves” are the 1P number. This is the minimum volume of oil and/or gas expected to be produced from a reservoir (>90% probability). Proved reserves go up all of the time without additional drilling because well performance converts 2P (50% probability) and some 3P (>10% probability) into 1P. Changing economic conditions can also move contingent resources into the 1P category.
As long as proved reserves and undiscovered resource potential remain steady or rise, each barrel of oil or thousand cubic feet of gas produced pushes Peak Oil/Gas farther off into the future.
This is where some ill-informed Peak Oiler babbles something about new discoveries being at a 70-yr low.
U.S. Crude Oil and Natural Gas Proved Reserves, Year-end 2017
Most reserve additions don’t come from new discoveries. They come from reservoir management and field development operations.
“The future’s so bright, I gotta where shades”
This Natural Gas Supply Association graphic is from 2013. Cumulative production, proved resources (reserves) and technically recoverable resources have all grown since this was generated.
We can see that the rate of growth of proved natural gas reserves and technically recoverable resources are growing faster than we can burn or sell the stuff… But, there’s another category of resource that is even YUGER… Technically unrecoverable resources.
Potential Gas Committee estimates fall on the conservative side. The PGC is cautious in its appraisals. For example, even if natural gas is known to be present, if it is located too deep or in a quantity that does not justify the effort of extraction, the PGC does not count it. In fact, there is at least a 1,000-year supply of natural gas in the United States that is considered“unrecoverable”with current technology and economic constraints, such as gas locked deep under the ocean in frozen methane hydrates. It is possible that one day improvements in technology will enable the PGC to include some of those natural gas resources in its estimates.
NGSA
This is worth repeating:
In fact, there is at least a 1,000-year supply of natural gas in the United States that is considered“unrecoverable”with current technology and economic constraints, such as gas locked deep under the ocean in frozen methane hydrates.
Seafloor methane hydrates might actually already be technically recoverable resources… But, they are far from being economically recoverable.
Coupling the vastness of U.S. natural gas resources with the fact that it is also the fastest, most cost-effective path to lower carbon intensity energy production and…
I love NY attitude of Keep it in the ground. Some of those reserves are in NY state territory but the reserve pools extend into 4 other states. So long as those states drill and pump, the total play can still be recovered. (Unless NY wants to build a wall and wall off the reserves within their state)
The shale gas resources in NY can’t be recovered by wells drilled in PA and OH.
https://www.hartenergy.com/exclusives/eqt-chasing-higher-returns-marcellus-31759
A typical horizontal Marcellus completion only drains gas within less than 1,000′ distance away from the wellbore.
If you pump gas from a well, over time the production decreases to a point of becoming uneconomical. Could you then let the well sleep for a couple of years?
Depends on the lease terms and if that particular well is holding the lease. But, generally the answer is no.
Curious George
Yes, it is a common activity as old wells age. Two reasons for “aging” – The first is physical, as you indicate. The well is producing less because there is less pressure from the original entrapped fluids and gases around the well pipe pushing the “recoverable” percentage of oils and gases near the pipe towards the depleted (lower concentration) zone of oils and gases immediately beside the well pipe.
The second is economic: lower production rates means the well may be stopped altogether, or emptied less often (pumping the oil “up” many thousands of feet from the bottom of a well costs money too!). If many wells in a region are stopped, the regional deep rock layers re-pressurize slowly until oil prices rise to make recovery again from old wells become economically attractive. Boom and bust have been regrettable cycles in oil production for many decades. Many foolish decades.
So then what about repressurizing the rock by drilling in a zone surrounding the original bore?
That leads me to the question of, how close together can such wells be placed without causing a loss of production from any of them?
It depends on the porosity and permeability of the reservoir rock and the drive mechanism.
It varies quite a bit then?
What is the range, percentage-wise, of the porosity?
Excluding such factors as the amount of preexisting rock fractures and such?
My impression is that a lot of untapped rock exists around every well.
What is meant by the term “drive mechanism”?
I never heard that one before.
Is it regarding the method by which the drilling mechanism is constructed?
Porosity is the fraction of rock volume consisting of pore space. Permeability is the degree to which the pore space is connected.
There are two major drive mechanisms: 1) water drive and 2) pressure depletion (gas solution) drive.
See this post…https://wattsupwiththat.com/2019/04/22/peak-oil-abiotic-oil-eroei-realish-things-that-dont-matter/
A common misconception is that an oil company can shut in wells when they desire. Virtually all leases require justification (repair, pipeline full etc.), or the mineral rights revert to the owner. Occasionally, during severe price drops we made an agreement with a landowner to shut in for say six months hoping for better price, after which we would either resume production or plug and abandon.
In the Gulf of Mexico, the US government recently increased the time limit from 180 days to 1 year. If production can’t be re-established, the wells have to be P&A’ed and everything above the midline has to be removed.
P and A’d?
Plugged and abandoned.
No, George, you can’t. Shale has a problem due to porosity and permeability. Once the gas is extracted it would take decades for more to migrate to the formation and extracting it is not economic.
The bigger problem is that the gas extracted now is not economic outside of a few core areas. I totally disagree with the thesis of this article because when I look at the data I do not see any positive free cash flows being generated by the sector. The problem seems obvious; you can report profits by making assumptions about ultimate recovery from a well and choosing a high value lets you underestimate the depreciation. It is easy to look good if you get half the gas out but only recognize 28% of the cost of development of the well. The problem is that there is no way to game the cash flow statements or escape the financing reality. The USGA can come up with all kinds of positive assumptions but it will not change the fact that much of the production is not economic and consumes capital. Bottom line; shale is a scam outside of a few core areas.
Cabot is the biggest Marcellus player. Cabot has delivered positive free cash flow from 2016 through the first half of 2019.
Vangel, that sure is nice of them good folks to spend all that money and then sell us their product at below cost.
It would be downright rude to refuse to accept this gift.
When are they gonna run out of money to burn?
Best we get while the gettin’ is good, huh?
On second thought, your whole idea seems incredibly dubious.
Do you know how an actual scam works?
Your claim is that this scam is different: The people behind the scam are actually bleeding money every day to trick us!
Golly, are they dumb!
Either that, or you are wrong, or a deliberate liar, or simply have no idea what the hell you are talking about.
Quick question David. I am familiar with decline rates for shale oil in most of the basins. But I’ve never really looked at decline rates for gas wells in the Marcellus. What does the decline profile look like for the typical Marcellus well ?
From the decline curves I have seen, there is a very large, quick decline the first year (or 2), followed by a very long decline, with small amplitude.
One case in particular, is a an old well (60 years plus) in the shale. It was a vertical, non-fractured well, but it had apparently intersected natural fractures. It is still producing (or was) after 60 years, but at marginal rates. But the current rates are (were) very close to the rates 1/2 a century ago.
Some Power companies are using this decline. They drill a number of wells, with initial high production, and sell this to the market, which pays much or all of upfront costs in the first year or two. Then the long slow decline is sufficient to run the power plant. It saves on forward hedging and on dedicated storage.
I’ve drilled a lot of wells in the Gulf of Mexico that came on at >1,000 bbl/d… 10-20 years later many of them are still chugging along at about 100 bbl/d plus a lot of water. If you can handle the water, you can produce a lot of oil over time.
At one time, Eugene Island 330 was the largest field in the Gulf of Mexico. It’s still chugging along.
Why so much water?
I am sure the explanation is a straightforward one, but I have never asked or wondered about this.
I know you are busy Dave, but I really am very curious about this.
The pore space of sedimentary rock is filled with three things 1) natural gas, 2) crude oil, and 3) brine.
In a water drive reservoir, the water sweeps the oil & gas into the borehole, causing the water cut to increase.
So it is there to start with, rather than being drawn in after production commences?
Is there more water in undersea formations than terrestrial ones?
Is it water trapped in the sediment from when it was laid down or before it became submerged, or does it seep in after the ocean covers the formation.
Or maybe it happens every which way and is peculiar to the specific location?
It was very interesting for me when I found out relatively recently that all ground water slowly turns into brine, and that fresh groundwater is thus in every case relatively young.
Letting the days go by…
http://www.euanmearns.com/wp-content/uploads/2014/02/US_typical_shale_wells.png
Shale Gas Decline Curves Demystified
All wells exhibit decline curves. Eventually all reservoirs, fields and plays exhibit decline curves.
Bryan – If you were a mineral rights owner in NY you wouldn’t love it.
This is tight gas, meaning the porosity of the shale is too tight for the gas to flow very far to the well. A mile for methane in this formation is a light-year. No poaching gas from your neighbor’s lands, at least only about a mile and a half, since that is the distance we can drill horizontally.
Now if the People’s Republic of New York could pull their heads out of their posteriors and rescind the ban on horizontal drilling and fracking technology, our methane production would be even greater.
I lived for a while in the far western Finger Lakes region. The multi -generation farmers are scraping for a living, and the tourist industry is mostly in the Finger Lakes to the east. Bringing the Pennsylvania gas boom north would be a Godsend.
There was a unique demographic split; the old time farm families are proud and very Libertarian (we don’t need any stinkin’ building codes) and the new residents are middle class Liberals (e.g. teachers, nurses) who wanted out of the larger cities (Rochester for example) and want a simpler “Birkenstock” existence; smaller homes, wood stoves etc.
Both groups resented being “governed” by the desires of those in Albany and “downstate” (read NYC).
I grew up west of the Finger Lakes, Allegany County, and the situation there is even worse. So many people would be so much better off if that ridiculous ban was lifted. But it’s not like Albany or NYC give a crap about those people.
And the beat goes on.
NY State residents should be given ‘reparation payments’ equal to 90% of the calculated value that they would receive if the gas was actually extracted from their property. After all, they are being forced by Fredo’s brother to save the planet. Should they not be compensated for that?
I am so glad that I no longer live in Upstate New York for three reasons: The weather, the taxes, and most of all being controlled by liberal politicians who in no way whatsoever represent the persons of Update New York.
David Middleton
““The future’s so bright, I gotta
wherewear? shades”Great post, as always…
“This is where some ill-informed Peak Oiler babbles something about new discoveries being at a 70-yr low.”
Well they are, but so what?
Discoveries chase prices. The inflation adjusted average price of oil is $41.70/bbl. That is since 1946. It spiked in 1980 to $116/bbl, the dropped to $38/bbl. in 2008 it spiked to $136/bbl. Now it is right back to the long term average. 70 years of extracting oil…and the average prices inflation adjusted has changed very little. When the price spikes exploration occurs, and reserves are added until the price is forced down.
Until the price of oil spikes above $100 and stays there, expect discoveries to remain fairly stagnant.
I don’t expect the size of new discoveries to ever significantly increase. The mega-giant oilfields were so big and obvious, that they could be discovered with “stone knives and bearskins”.
https://www.youtube.com/watch?v=F226oWBHvvI
While giant oilfields are still being discovered, mostly offshore and in deep to ultra-deep water… The vast majority of new discoveries are relatively small. Modern technology, primarily vast improvements in seismic imaging, enable us to economically drill and develop prospects that were essentially invisible just 10-20 years ago.
Gee … some of those graphs look kinda like hockey sticks.
While we’re busy rah-rahing about NG, let us not forget the centuries worth of coal deposits just waiting to be tapped. For when the “carbon” hysteria ends and sanity returns.
It seems to have a rather long shelf life, so there is that.
I hear China drills gar wells into coal seams.
Does anyone do that here in the US?
I understand there are seams that are either too deep, too thin, or some combination of these and other factors, to make mining the coal economically feasible.
Do many, or any, of these contain significant amounts of gas?
How about some sort of in situ gasification process?
Coal bed methane wells are drilled in the US… I think we taught the ChiComs how to do it.
It got me to wondering about extracting methane from coal seems prior to mining to enhance safety without spending money that will not offer a direct payback.
How about in situ gasification?
Perhaps feasible in places with a ready supply of hot geothermal water?
This is just more of what US Energy Dominance looks like.
You would think if the Democrats were sane, they’d be overjoyed at the prospect of letting the free market reduce US coal consumption.
But then of course, that just frees up more coal to be shipped out of Virginia’s Lambert’s Point Pier 6 terminal. A pier without peers.” is the operator’s motto for Pier 6.
https://www.youtube.com/watch?v=OjiRLoWcqsk
More energy dominance. MAGA.
Bwahahaha!!
“You would think if the Democrats were sane, they’d be overjoyed at the prospect of letting the free market reduce US coal consumption.”
They are quite sane. They simply have no intention of letting markets allocate resources, instead of their ever-so-certified selves. These struggles are ultimately about setting up expressions of political power that can make sure that political allocation of resources once again becomes the predominant means of allocating wealth, just as in the pre-industrial world. As in the *competent* definition of the indutrial revolution:
“When a society moves from allocating resources by custom and tradition (moderns read here, by politics) to allocating resources by markets, they may be said to have undergone an industrial revolution” Arnold Toynbee-1884
Their objective is power, reinforcing the power of politics to arbitrate and allocate within society, not consumption of any one thing or another.
To understand today’s political Democrats (and the Left in other countries) is to understand George Orwell’s warnings about Marxism/totalitarianism.
“Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power.”
― George Orwell, 1984
Which then Orwell’s quote comes to play:
“If you want a picture of the future, imagine a boot stamping on a human face—for ever.”
― George Orwell, 1984
The next big scare will be running out of oxygen from burning natural gas. We know who the real oxygen thieves are.
It is a classic liars’ tactic- moving the goalposts and changing the rhetoric. Ice age,hole in the ozone layer, catastrophic global warming, “climate change” , climate emergency….Hyperventilate! Throughout almost all of human history, humans have lived under tyranny. Just because we can seen how stupid humans have been in the past , swallowing lies does NOT mean we are immune from those that would take our wealth and freedom by stealth.
The source of oxygen is photosynthesis in which one mole of CO2 produces a mole of O2. Over the long term, O2 is not going to change much given that CO2 is the limiting reactant.
Scissor,
The source of our molecular O2 (which we breath in to support oxidative phosphorylation) is H2O.
That is where two moles of water (H2O) is split by the power of collected photon energy to produce and excited electron state in Iron to split water (reduce it) and then produce 1 mole of O2 plus hydrogen to reduce NADP+ and FAD+ to NADPH and FADH as electron carriers. These are the “light reactions” of photosynthesis that requires chlorophyll antenna centers.
CO2 is taken in for the “dark reactions” of photosynthesis (Google: “Calvin-Benson cycle”) which produces sugars. The O2 in CO2 does not directly produce the oxygen we breathe.
Joel
Joel,
No iron in chlorophyll.
The metal ion in that molecule is magnesium, Mg.
Lack of iron will prevent chlorophyll production, but not because it is present in the molecule.
It is important in several other enzymes and pigments though.
I am thinking you are referring to the iron used by the protein ferredoxin, which is part of the process by which NADP+ is reduced to NADPH so I just wanted to clarify.
Also, my understanding of the specific pathways is somewhat different than you describe.
My understanding is that there are complexes of chlorophyll molecules of at least two important types that exist on a structure called a thylakoid membrane which is found in the organelle called a chloroplast.
Hundreds of such molecules gather light energy and transfer it to a central pair of the complex by the process of resonance energy transfer(RET) (resonance is the important phenomenon which gives aromatic organic molecules their unusual properties, and was first found to exist in molecules of benzene, and can be understood as electrons becoming delocalized from a specific covalent bond and thus be able to ‘travel’ around the molecule).
This transfer then facilitates a process called charge separation, which is the last of at least three vitally important function of chlorophylls in the process of photosynthesis.
(as an aside I wonder if anyone would be good enough to ‘splain how this incredibly complicated and highly specific and exquisitely precise process originated and thus made complex sunlight powered life possible? note that Forster RET, or FRET, as currently understood, involves a thing called a virtual photon which cannot be detected since it violates conservative of energy and momentum, and the efficiency of the process of the energy transfer is sensitive to the inverse 6th-power of the separation between two molecules )
It is understood that at the conclusion of this process, the chlorophyll molecule donates a high energy electron through a series of steps called an electron transfer chain, which is an oxidative process for the chlorophyll. This oxidation is then reversed when an electron is grabbed from a water molecule, which is then considered to end up resulting in a molecule of O2 being produced from water.
My understanding is that the principle result of the energy flow is to power ATP production, as well as that of NADPH.
The specific part of the biochemical pathway that directly leads to O2 being produced from water is when chlorophyll grabs back it electrons from water, which leads to oxygen being evolved.
The iron is involved with the production of NADPH (and several other important functions of course) and NADPH is the agent which reduces CO2 to sugars, at least as far as I understand it.
I do seem to recall hearing before of this idea that O2 in the air originates from CO2, and that this was established by radioisotope studies, but like you I understand the case to be otherwise, and I am unable to find any support for that idea, at least at the present time. Maybe someone else has other information.
Joel O’Bryan October 8, 2019 at 9:10 pm
Scissor,
The source of our molecular O2 (which we breath in to support oxidative phosphorylation) is H2O.
CO2 is taken in for the “dark reactions” of photosynthesis (Google: “Calvin-Benson cycle”) which produces sugars. The O2 in CO2 does not directly produce the oxygen we breathe.
– Recycled CO2 and H2O. Thanks to our next “environment”.
High Treason,
“Throughout almost all of human history, humans have lived under tyranny.”
Weigh life times against hardship and expand with
Throughout almost all of human history, humans have searched leadership by leaders, shield by shields, explorer’s enabled subsidence …
High Treason. Fits.
What a fracking good story, David, and at the heart of it is “American ingenuity”! Every time I hear those pessimistic Club of Rome types going on I think about how many end times dates we have blown past without a hiccup. Makes the 12 years to tipping point type of comment sound hollow. Frack On!
God bless the USA, and God bless Trump! Drill, baby, drill…
The Gift That Keeps On Giving…..
What a gas! No need to be reserved – O’il drink to that!
Natural Gas – The Right Time 1976
https://youtu.be/8OGCcMpC1F4
“The future’s so bright, I gotta where shades”
Am I the only one that recognizes a Timbuk 3 quote? 🙂
Well… There’s also me.
I had never heard of this band or the song. I like it, so thank you for that.
Good video too!
Me too.
Timbuk 3 were actually were actually sort of luddites and that song was meant as an anti-technology/ anti-nuclear screed, but it didn’t turn out that way. Nuclear is probably the only thing that can dim the bright shale revolution.
I like theHead of the Class video version:
Doh! Didn’t see the video posted at the end :(. Lol
Great news. I worry that here in Canada Justin Trudeau is about to be reduced to a minority government, dependent on greens of various stripes to remain in power. This might mean no pipelines for bitumen, and limited development of natural gas. Somewhat hypocritically, a social democrat provincial government in British Columbia, in a loose alliance with greens, has pursued a big LNG facility–but only for BC gas, not for Alberta’s. Are Canadians going to allow Alberta’s economy to decline in the name of the environment?
NY State is missing out – Too bad … all because of your politicians …
– JPP
And let’s not forget the timeless irony of Obama the science illterati telling all of us that “You can’t drill your way to lower gas prices!”
https://youtu.be/jIvAbg09Kpo
This was a huge issue and controversy during the 2008 election season.
I can clearly recall that virtually everyone on the left was not only dismissive of the idea that there was significant energy to be found and recovered in the US, but positively scornful to the point of being overbearing about it.
Not enough to supply needs for more than a year or two, it would take decades to find and produce, it would cost more than it was worth, and we had all best accept the fact that oil and gas (and nearly every other natural resource) was nearly depleted and that was that, they all said loudly and obnoxiously and with incredible certainty matched only in magnitude by their abject ignorance of the actual facts.
In fact, it is just one more in the long list of old arguments made by leftists that have one by one proved to be not only false but as far from true as an idea might be.
Leftist mentality is best understood by finding out the exact opposite of what is true, good, or proper, and taking the position that this is what ought to be believed and promoted.
The charts tell the story.
And the old saying about a picture being worth a thousand words.
From which we can derive the unit of feminine beauty.
Helen of Troy was so beautiful, that she had “The face that launched a thousand ships”.
From which we get the”Millihelen”.
Beauty sufficient to launch one ship.
There’s a huge glut of Natural gas in north America at prices so cheap that some producers have gone out of business. When they get all the LNG terminals up and running, that’s likely to change, and not in a good way for the consumer. or these coal fired power plants that they’ve converted to natural gas. Again the consumer will take that hit as well.
Ignorance truly must be bliss.
That’s reality in Alberta. Maybe you should get up to speed on such matters.
Alberta isn’t in the United States or even remotely related to the Marcellus… Maybe you need a second functional brain cell.
Alberta doesn’t have to be, in the US. North America has an integrated energy market. If I needed any type of functional brain cell which I don’t, I certainly wouldn’t be able to get it from you.
What does any of that have to do with the fact that US natural gas production, reserves and undiscovered resources have exponentially increased over the past decade? It’s the reason for the “glut” and low gas prices… How does this hurt consumers?
David, I thought he was saying that if we permit the companies to sell that gas to foreigners, that would increase demand and hence prices. Which would be bad for consumers.
It’s your classic, seal the borders isolationism.
Natural gas prices are low because there’s a surplus, which enables exports. If LNG exports were prohibited, prices would crash, drilling would grind to a halt, production would rapidly drop and natural gas prices would skyrocket.
Exporting LNG stabilizes prices.
Rob. check out the number of LNG plants coming online world wide, It is entirely possible the “integrated energy market” has some supply elsewhere and those dometic prices won’t bump up much.
Meanwhile, Prince DumbAss in Ottawa says Canada will be off fossil fuels by 2050….except the elites…
Could paying $5 for a gallon of gasoline support CO2 direct air capture for conversion to liquid carbon fuels? See this article from Forbes:
I’m skeptical that in the near to mid term future, direct air capture combined with carbon conversion technology such as described in the Forbes article could compete economically with more traditional methods of producing gasoline and diesel. But maybe I’m wrong.
I think prices would have to be sustainably higher than $5/gal… But DAC has technical merit.
I went to the DAC site to check out their process.
Under, “How does DAC work?”, it says, “The system continuously captures CO₂ from atmospheric air and delivers a purified compressed stream of CO₂, using only water and energy as inputs.
They’re very discrete about that energy step. If they’re converting CO2 to methane using water and energy, then they’re inverting the water-gas shift reaction.
That takes considerable energy, which they’ll never recover.
Unless they’re using strictly nuclear power for that energy, or maybe hydro, their CO2 to fuel process will produce more CO2 than it consumes. Low CO2 solar power? Not a chance.
They’re also converting atmospheric CO2 into carbonate and then calcining it to get commercial grade CO2.
Why not mine the carbonate, and calcine that? Mining/calcining should be cheaper.
I’ve not looked at the economics, but would surmise that DAC technology lives off carbon-scare subsidies.
The economics require either a steep carbon tax or large tax credits for burying the stuff… with using it for enhanced oil recovery. I did the math a while ago. I’ll see if I can dig it up.
https://www.sciencemag.org/news/2018/06/cost-plunges-capturing-carbon-dioxide-air
Chemical equation:
16[CO2] + 18[H2O] → 2[C8H18] + 25[O2]
It takes 8.89 kg of CO2 to make 1 gallon of octane.
The cost of extracting the CO2 from the air is currently about $600/ton. This works out to $5.33/gal just to get the CO2. $100/ton would bring this down to about $0.89/gal.
Carbon Engineering claims that the cost of generating the synthetic fuel will be comparable to biodiesels once they have scaled up the process.
https://carbonengineering.com/about-a2f/
$1.00 /L = $3.79/gal, assuming USD.
$3.79 + $5.33 = $9.12/gal
That’s just the production cost. It doesn’t include profits that would be required to repay the investors, who are probably expecting at least an 8% ROI…
https://carbonengineering.com/carbon-engineering-concludes-usd68-million-private-investment-round/
This sort of thing only makes sense in a world in which crude oil is around $250/bbl or there is a $1,000/ton carbon tax. CE’s investors are true believers that oil will either become very expensive in the near future or that our government will seek to destroy our economy in the near future… Or they are just hedging against such nightmares.
Dave, maybe I’m missing something in looking at your cost calculations, so please correct me if I’m off base here.
If the cost of CO2 capture is eventually brought down to $100/ton — a very optimistic figure, of course — then isn’t the raw unburdened production cost of a gallon of DAC-derived carbon fuel, per your other figures, this:
$3.79 + $0.89 = $4.68 …… roughly $5 per gallon
If we assume that the energy needed to run the CO2 capture and conversion process comes from a dedicated SMR nuclear facility colocated on the plant site, then we have to ask the question, what would be a realistic cost per gallon estimate for producing gasoline from this integrated facility?
The only way to know for sure is to do a reasonably detailed engineering feasibility design for this kind of large-scale fuel-from-air production plant, including its SMR nuclear reactors, and then to see how the numbers actually shake out.
I’ll note here that the Forbes article’s author, Dr. James Conca, is promoting SMR technology in his writings and is participating in the development of SMR’s through his technical consultant firm.
I assumed it was US tons.
$600/ton
907.185 kg/ton
$0.66/kg
8.89 kg/gal
$5.88/gal
If I used tonnes, it works out to $5.33/gal.
I was also assuming US dollars… If those are Canadian dollars, it’s cheaper.
I had assumed that they are heavily subsidized or operating on some sort of grant or tax credit scheme.
Any info on that?
It seems clear that pulling CO2 from air when it is only four one hundredths of one percent would be less economical than finding a source which is already enriched in CO2, such as the stack from a FF plant, or some underground source.
Or maybe from the gigantic oversupply of hot air billowing out from the pieholes of warmistas?
The 45Q tax credit pays about $50/ton for this sort of thing.
Thanks, David. Very revealing analysis.
It seems to me that DAC will never contribute anything of competitive economic benefit. Not fuels, not CO2.
Not unless the price of oil goes through the roof or our government does something extraordinarily stupid.
There is no reason to take CO2 out of the air.
If you want more Greening of the earth, which has even with just a little over 400 ppm been greening substantially.
And there are no discernible weather/climate changes to be worried about. – From the increase in CO2 in the atmosphere, from the observations/data that I have seen . . .
– JPP
Thermodynamics will not be cheated. Taxpayers will be.
Note to Club of Rome, “Pop Bomb” Ehrlich and other Malthusiastic bean counters:
“…don’t forget that reserves are just subsets of the massive gas (etc.) resource that we have.”
Taking reserves and dividing that by annual consumption is not a good statistic for writing a best seller forecasting the crash of Western Civilization, billions of deaths through starvation and armed clashes over scarce food and materials over the coming 20yrs. Regarding the tme framework of 20yrs, guess what? Infill drilling of resources costs money (do tell!). For a major mining company, think 30,000m of drilling and diamond saw-continuous channel sampling on the deposit ~$100/m (contractor) plus assaying at $35m plus owner costs in planning, subsequent core handling, logging, splitting (for assaying) shipping samples, housing retained material for permanent record, selected metallurgical testing and resource modelling (contractor). This is done periodically to maintain only 20yrs of ore into the future for company planning. This is why geoligists and mining engineers (I’m both) don’t write doom blockbusters!
I am having some trouble understanding exactly what you are saying here, Gary.
Maybe I am just tired, but would you please elaborate if you have time?
Fortunately, much of it also appears to lie not in NY but in the currently sane state of Pennsylvania, birthplace of at least one person whom I admire, respect, and deeply love.
There is no reason to take CO2 out of the air.
If you want more Greening of the earth, which has even with just a little over 400 ppm been greening substantially.
And there are no discernible weather/climate changes to be worried about. – From the increase in CO2 in the atmosphere, from the observations/data that I have seen . . .
– JPP
By the way David, I have a bone to pick with the USGS on reserves and resources under the stewardship of Jim Reilly. A colleague of mine (G. Nash) and I wrote an article in The Canadian Mining and metallurgical Bulletin critiquing the impractical and ‘academic’ reserves and resources scheme of Canada and USGS and proposed a new one that would serve industry and governments much better : “The Concept of Reserves – Expanded “. Through letters to the bulletin and our replies, the journal let us run a debate that went on for over a year in print in the late 1970s
The USGS had released a bulletin in 1976 on the topic that we used as the example of an inadequate classification. In 1980, the US issued a new scheme- essentially ours, although they changed the name of the key category to “reserve base”. There was no acknowledgement and this in a day when there was considerably more civility in such things than with the privateers of today. I’m sure this was the work of a committee and not Jim Reilly himself. The UN then stole it. It was picked up in a book published by Elsevier, however with our article and debate series as a chapter.
https://www.sciencedirect.com/science/article/pii/B9780080358642500067
Reserves and resources aren’t defined by the USGS. They are defined by the SEC, with input by the SPE.
I was referring to this Circular re their revision of a 1976 one
https://pubs.usgs.gov/circ/1980/0831/report.pdf
Reporting the existence of “deposits” and “reserves” is as meaningless as is reporting that there are many thousands of tons of gold in the oceans’ water.
The reality is that most of the companies producing this gas are losing money and the reserves are abandoned after a few years.
More Than 50% Of The Mighty Permian’s 2018 Oil Production Has Vaporized
That has to be one of the dumbest articles I’ve ever read.
In Australia we do have vast reserves of gas (Coal as well) however, being the smart country and all that, we export it, sell it (Rather, practically give it away to consumers in Asia), then import it back in to Australia at higher rates.
Now there are calls to included CO2 emissions from exported fossil fuels, burnt by consumers over seas, in Australia’s emissions figures.
Australia! The lucky country!
These articles are a joke. On one hand, we have Luddites who are anti-technology and would repress activities that would benefit individuals. On the other hand, we have Panglossians who believe the nonsense about technological advances bringing us the best of all worlds when those advances are not real. Resources are NOT the same as reserves. The US shale sector has burned through hundreds of billions of capital and has yet to provide a positive free cash flow from shale production. The entire shale miracle fraud is based on the same kind of manipulation and accounting sleight of hand that gave us the AGW fraud.
It is time for rational individuals to step back and ask for objective evidence. The climate alarmists need to stop putting out reports about expert judgment and show us objective evidence that supports their thesis. The shale miracle people need to do the same. If shale production has required the destruction of capital and if funding gaps have to be filled by the sale of properties to a greater fool, by borrowing more money, or selling more equity, where exactly is the miracle? Why can’t the sector generate positive free cash flows after a decade and a half of production? Isn’t it time that the writers of these types of articles and their readers found out that a resource is not the same as a reserve? Or discovered that much of the excitement has been driven by changes in accounting rules designed to help the struggling young shale industry?
The market price for the stocks of most shale companies is down around 80% or more from their peaks. The industry is struggling and on the margin, we are seeing bankruptcies soaring. Shouldn’t that tell us something? And why is the USGA more reliable and trustworthy than the IPCC?
Cabot is the biggest Marcellus player. Cabot has delivered positive free cash flow from 2016 through the first half of 2019.
EOG Resources is one of the biggest shale players. They’ve generated positive free cash flow three of the last five years.
In Q2 2019, nearly 90% of the major shale players generated positive free cash flow.
This may be the same Vangel who used to troll quite regularly at BishopHill blog some years ago, with essentially the same story.
The story worked in 2014 when oil prices were through the roof and the cost of doing business was prohibitively expensive.
Vangel, a better question might be why do you conflate past stock price declines with current profitability?
Stock prices fluctuate for all sorts of reasons, many of which are related to speculative excesses having little to do with the underlying fundamentals of the companies involved.
The list of stocks that are well off historical peaks is very long, and hardly isolated to the case of energy companies.
Is Amazon less profitable now that it was when the price of the stock was 20% higher?
Now that the country is up to its eyeballs in natural gas and at $2.25/Mcf it’s very difficult for producers to make a profit, is it time to cut back drilling and development?
Prices always drive the pace of activity… But, you have to keep drilling to maintain or increase production.
If you were the sole owner of EQT, would you put up the “For Sale” sign in hope that XOM or RDS or CVX would overpay for your present value?
I’d do that any day of the week. Getting another oil company to overpay for your assets is like winning the Lottery. Overpaying for another company’s assets really bites. That’s why there’s a “rule of thumb” that you never go with the company that you just sold your old company to… Because you’ll get blamed for whatever goes wrong. (Says the geo who is working for the company that bought his previous company, which bought the one before that.)
I’ve worked for 4 companies in the last 3 years. However I’m still sitting by the same window.
I’ve worked East Cameron 346 since 1988 for 4 of the 5 companies I’ve worked for… 1, 3, 4 and 5.
I have painful memories of the last gas “bubble” which lasted from 1985 until the late ’90s. In fact, it took so long to dissipate that people took to calling it the gas “sausage” instead of the gas “bubble.”
What’s new this time is the rapid decline curves of fracked wells and the concomitant need to continue drilling to maintain deliverability.
The $64,000 question for managers is, at $2.25/Mcf, is drilling simply recycling dollars and while not making any money ?
Cabot, the biggest Marcellus player, is making money like crazy. There costs are about $1.41/mcf.
I have wondered if anyone ever uses an existing borehole to drill a new horizonal leg at a different depth, and if not, why not?
Sidetracking existing boreholes is a common procedure. However, the flexibility depends on the design and status of the original well.
These are great articles, Mr. Middleton. I’ve had various brushes with the energy sector (including oil), but your expertise adds way more to my understanding than anything else I’ve encountered. In sum, thank you, and I look forward to more!
High Treason,
“Throughout almost all of human history, humans have lived under tyranny.”
Weigh life times against hardship and expand with
Throughout almost all of human history, humans have searched leadership by leaders, shield by shields, explorer’s enabled subsidence …
High Treason. Fits.
10,000 years BC:
https://news.uchicago.edu/story/stone-age-graveyard-reveals-lifestyles-green-sahara-two-successive-cultures-thrived-lakeside
https://www.google.com/search?q=archaeology+findings+sceletons+hands+bound+Sahara+lake&oq=archaeology+findings+sceletons+hands+bound+Sahara+lake&aqs=chrome.