Guest “Frac on!” by David Middleton
NOVEMBER 10, 2020
U.S. energy-related carbon dioxide emissions fell in 2019, mainly in electric generationAfter rising by 3% in 2018, energy-related carbon dioxide (CO2) emissions fell 3% in the United States in 2019. According to the U.S. Energy Information Administration’s (EIA) U.S. Energy-Related Carbon Dioxide Emissions, 2019 analysis, total energy-related CO2 emissions in 2019 were about 150 million metric tons (MMmt) lower than their 2018 level. EIA attributes nearly all (96%) of this decline to the changing mix of fuels used to generate electricity.
[…]
EIA
CO2 emissions from electric power generation are now down to where they were in the mid-1980’s.
Here’s the really funny part: The drop in emissions is mostly (61%) due to frac’ing.
Since 1990, the share of electricity generated by natural gas-fired power plants has grown from 12% to 38%. While the share generated by non-carbon fuels (nuclear, hydroelectric, wind, solar, etc.) has only grown from 31% to 38%. Unfortunately, almost all of that growth has come at the expense of our most reliable fuel, coal.
The growth in natural gas-fired generation was made possible by the abundant supply of cheap natural gas provided by the oil & gas industry through the use of hydraulic fracturing (frac’ing) of shale and other tight formations.
Huge amounts of money were lost by investors and creditors of the fracking industry. The industry, as a whole, has not made a profit. About $300 of billion of debt was involved in bankruptcies since 2016. And the bankruptcies are not slowing down this year. The industry, with a few exceptions, resembled a huge Pomzi scheme encouraging investors to throw away their money.
There were also large losses in the US coal industry as natural gas got cheaper. But I suppose the lost capital for fracking investors and coal investors does not matter to you, because you never mention the costs of the natural gas output.
US electricity use is down over the past 10 to 15 years from outsourcing more manufacturing to China and use of power saving LED and other low energy light bulbs. I find it hard to believe the fracking industry can claim 96% of CO2 emissions reductions for 2019 versus 2005, as the EIA claims for 2019 versus 2018 . The change in US CO2 emissions is small compared with total global CO2 emissions, even if you believe CO2 is an evil gas.
Natural gas is an output of the fracking business, but you ignore the input of capital into the business … and how that money could have benefited the American public more if it had been invested in a profitable industry.
That’s why they’re called investors. They failed to account for a world wide reduction in fossil fuel cost and lost. I’m totally missing your input.
Implicit in Richard Greene’s comments – is that someone other than investors themselves should have been making the “correct” investment decisions.
Whether he realises it or not, that is leftist thinking.
I would rather investors “threw their money away” than have the government do it with my tax dollars with a proven track record that is an order of magnitude worse.
Of course private investors make bad decisions but on average they make better decisions more often – or they cease to be investors.
Govenments on the other hand can fail hopelessly, repeatedly and incessantly with no mechanism like bankruptcy to winnow the chaff.
Bingo!
It *is* leftist thinking! That capital from investors was not “lost”. It went to buy equipment (meaning manufacturing jobs). It went to pay wages and salaries of numerous workers in the fracking industry. It went to pay leases for land. It went for lots of other things.
That “capital” just changed hands, that’s all. It’s too bad some investors didn’t get a return on their capital but that is life. Sometimes you win and sometimes you lose. Don’t bet more than you can afford to lose.
Gormin
Much investment capital was lost in fracking. By your backwards logic, what America needs is more money losing industries. You must be a Joe Biden economics advisor?
That sounds like leftist thinking to me, or backwards thinking.
The investment capital was lost due to the price crashes. No one was forced or coerced into making those investments, or continuing to make such investments.
America has abundant, affordable, domestically produced oil & natural gas because of those investments.
Where would our economy be if we were paying $100/bbl and $10/mcf for imported oil & natural gas?
“David Middleton November 12, 2020 at 6:01 am
Where would our economy be if we were paying $100/bbl and $10/mcf for imported oil & natural gas?”
Indeed. Look at Australia.
Irwhine
I said nothing about government intervention. I have favored a much smaller, less powerful government since 1973, when I became a libertarian. I’ll wait while you look up that word in your dictionary. I write a politics blog that leftists curse at:
http://www.ElectionCircus.blogspot.com
“Implicit in Richard Greene’s comments” is your bizarre “interpretation” of something I never said. Where did I mention the goobermint in my comment?
You claim to be a Libertarian but speak of what other people did with THEIR money as wrong and that you have a better idea of how it should have been spent.
Being a true Libertarian, I only care how I spend MY money and detest the federal government spending MY money for anything not SPECIFICALLY identified in the Constitution.
In MY opinion, that is the definition of a Libertarian in the US.
BTW, I will go to your blog to see if this post is a one off, or if you are not really a Libertarian as you claim.
+42×1042
Mr Greene
Irwin = Irwhine = bullying
Gorman = Gormin = bullying
markel
My input is that bragging about the fracking “revolution”, as the author does in all his articles, ignores the other darker side of the industry: The lost capital. That capital could have been used for other investments that earned a profit. A nation does not benefit from money losing investments. The profits tell investors they are satisfying customers. Money losing industries disrupt economic growth. Investors may not have known that before 2016, but that is obviously what happened with the “fracking industry”. Investors make “bets,” and sometimes lose. In the fracking industry there were a lot of losers, and the situation is not improving.
The key economic theory is opportunity cost — what investments did not happen because so much money was squandered on fracking? And would our nation be better off if far less money had been invested in fracking? Thinking about the national economy, and the overall “fracking industry”, has NOTHING to do with government intervention in that industry.
My most recent article on the industry on my economics blog:
http://el2017.blogspot.com/2020/10/american-oil-gas-massacre-bankruptcies.html
Domestic oil & gas production would be lower than it was in 2005, when it was about half of what it is today… And we would be paying $100/bbl for crude oil and $10/mcf for natural gas at the wellhead.
Middleman
How could you possibly know what Americans would be paying for crude oil and natural gas in the absence of the “fracking industry? (over) investments?
So why do you keep typing claiming oil and $10 natural gas?
Do you have the ability to predict the future unlike all other humans?
My answer is I suspect you are so biased in favor of the “fracking industry” that you not only ignore the ongoing investment and loan losses since 2016, but you also also grossly exaggerate how bad things would have been without the huge investments in fracking.
It is almost like you are working in public relations for the industry.
Since you think you “know” the future oil and gas prices, please tell me where the oil and natural gas prices will be at year end 2020, so I can make some spending money on energy futures trading.
Do you work in the “fracking industry”, possibly biasing your writing?
I don’t know exactly what the prices would be. I do know that our oil & gas production would be less than half of what it is now, without frac’ing, because that’s where almost all of the production growth came from, particularly with natural gas. I also know that most of the excess production capacity developed over the past 10-15 years has been due to frac’ing.
Estimates for what oil prices would be vary over a wide range. Natural gas price estimates vary within a much narrower range without frac’ing.
The US Chamber of Commerce estimates even higher prices than $100/bbl and $10/mcf…
https://www.realclearenergy.org/articles/2020/03/31/what_would_happen_if_fracking_for_oil_and_natural_gas_was_banned_487963.html
Chesapeake, one of this year’s bankruptcies, was built on the assumption that natural gas prices would always be well above $6.00/mcf. The late Aubrey McClendon on August 1, 2008…
https://seekingalpha.com/article/88789-chesapeake-energy-corp-q2-2008-earnings-call-transcript?page=-1
Natural gas prices have been below $6/mcf since December 2008.
https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm
The surprising thing about Chesapeake is that it took this long for them to go bankrupt.
In 2008, prior to the frac’ing revolution, Boone Pickens didn’t think crude oil would even fall below $100/bbl again…
https://www.reuters.com/article/us-oil-pickens-price/pickens-says-oil-wont-go-below-100-idUSN1447865220080814
The main reason that these people thought prices would stay high was the fact that we were dependent on imported oil & gas, with the prices controlled by those who had excess production capacity.
I know I can’t predict prices. No one can. That’s why we aggressively hedge our production. Losing money on hedges when prices spike higher is a small price to pay.
I do not in the “fracking industry.” No such “industry” exists. I’ve also never worked unconventional plays, what you refer to as the “fracking industry.”
I work conventional plays in the Gulf of Mexico. We would benefit from a ban on frac’ing. Almost all oil and gas wells are frac’ed when they are completed. The sort of frac jobs performed on conventional reservoirs are nothing like those in horizontal “shale” wells. If the “shale” boom had never occurred, I could have comfortably retired in 2015… If I wanted to retire.
When politicians, celebrities and other idiots refer to “fracking,” I have no idea what they mean, because they don’t even know what frac’ing is. Many of them use the word interchangeably with drilling & production When Biden talks about banning fracking, it’s clear that he doesn’t even know what it is. When Biden talks about no more drilling on Federal lands and waters, we don’t know what he means. If he literally means no more drilling permits on leases that have already been issued, the Federal government would lose that battle in court very quickly. If he means no more lease sales, he could probably do that until the next time we have a sane president. Whatever he does to restrict domestic oil & gas production will just drive prices up. While our production will decline more quickly, we’ll be making more for it because of higher prices and less capital expenditures.
Markl = Markel = bullying
Middleton = Middleman = bullying
The gas and oil markets have been highly distorted these last years by government interventions, eg OPEC and Russia keeping their supply to the market too high for current demand. As we come out of covid, all these governments seem in a mood to cooperate to avoid what was the equivalent of overgrazing. They are restraining output to allow the oil and gas prices to rise.
Meanwhile the free part of the market has been shutting down much capacity. Once covid abates the international demand for hydrocarbons may shoot upward and prices will too, as supply falls short of rising demand.
Those who carefully invested in fracking, etc, and had liquidity to ride out the downturn may experience good profits, and their capital investments will not look foolish.
You’re full of it. As an owner of mineral (gas/oil) property and oil/gas companies, we’ve done very, very well on profits. And so has the public on lower energy prices. Can you back up any of your absurd claims? Or are you just a troll?
ecked
‘”You’re full of it” does not refute anything I wrote, nor does it deserve a reply. But it is a great example of leftist style “debate”, starting with a character attack.
What you wrote just demonstrates the 80-20 rule.
https://www2.deloitte.com/us/en/pages/energy-and-resources/articles/covid-19-implications-for-us-shale-industry.html
This downturn will result in most of the “Superfluous” production being acquired by the “Augmenters” or awarded to creditors of the “Superfluous.”
Notice, David, how it is that Richard Greene has not responded to any of your posts. Because he can’t refute the cold, hard facts. That we are better off with this investment in fracking and gas production. That Greene’s version of “opportunity cost” is speculative because it has become apparent over time (California being the chief example in the USA) that solar and wind power are completely unreliable as a source of base load power and are investments that have little future benefit (other than more ridiculous government subsidies) to profit off.
Those of us working the Gulf of Mexico definitely felt the “opportunity cost.” We were competing with “shale” for capital. Even though the economics of deepwater GOM are superior to “shale,” we weren’t the fad. The collapse from November 2014 to March 2016 turned investors sour on the entire industry.
In 2014 our CEO was asked, what “technology” most enabled the “shale” boom. His answer was “$100 oil.” Since then, “shale” operators have managed to get their breakeven price down to around $50/bbl.
To Larry, in Taxes
I responded to every Middleman post that had a “REPLY” button. I have no idea how to reply directly to your post because there is no REPLY button. But I will reply here:
Your 12:42 comment is nonsense. I never claimed Middleman’s facts were wrong. My original comment was about his biased cheer leading for the “fracking industry”. That can be done by highlighting the good news, and ignoring the bad news. The bad news includes serious financial problems since 2016, that are not improving, and the negative effects of cheap natural gas on the US coal industry (which Obama did his best to destroy) .
Government mandates and subsidies for solar and wind energy would be worse, and I have written dozens of articles on the wasted investments on those unreliable, expensive sources of power.
The science says fracking makes sense, but investors got overoptimistic. Energy from solar and wind power replacing cheap, reliable fossil fuels makes no sense. Especially low pollution natural gas energy, the best alternative, considering that those pesky leftists oppose nuclear power, which has worked well in France for a long time.
Private investors, as a group, got it wrong about fracking, and plowed too much money into the “fracking industry”. If the government had been in charge, I’m confident the “fracking industry” would be in even worse shape.
Investors did get over-optimistic. Now they are over-pessimistic. They do that.
US electricity use is down? Whatever are you smoking? Since reaching 3.8 trillion kilowatt hours in 2005, US electricity use has remained at or above that mark until reaching a high of 4.0 trillion kWh in 2018! The drop off in 2019 was to 3.99 trillion kWh, a less than 1% decrease! And all this occurred while US consumers were being bombarded with voluntary conservation measures and energy saving appliances!
Of course the decreases in Commifornia electricity use aren’t always voluntary! Maybe we should put someone in office who wants the whole country’s power grid run just like the land of fruits and nuts!
Unfortunately we might have done just that already
Absolute Man
From EIA data accessed yesterday:
2010 electricity sales
3,754.8 thousand megawatts
12 months through August 2020
(latest 12 months data available)
electricity sales were
3,713.6 thousand megawatts
3713.6 i is SMALLER than 3.754.8
Smaller means “down”
Since the US population has grown since 2010, that means the per capita electricity sales would have declined more than the total electricity sales. In case you were interested.
2010-2019 trends have been up. Using your same data, by ~9.2 GWh/year. Not every year has increased, but the chance of any given year being higher than the one before is ~98.3%….
https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_01
BigOldBlob
Why do you insist on ignoring 2020 data available through August?
Why not use the latest data?
2010 through the latest 12 months electricity sales were DOWN/
2010 through 2019 electricity sales happened to be up a mere +1.5%
US population growth was about +6.5% during that period.
Therefore electricity use per capita was DOWN
“Why do you insist on ignoring 2020 data available through August?
Why not use the latest data?”
Because overall trends are up.
Because a pandemic year is silly to compare with it’s precedent.
“Therefore electricity use per capita was DOWN”
And? Certainly to be expected from efficiency gains. What do you think is the current trend of US electricity use? What are the ramifications of your trend?
Green Johnson
What would you have presciently invested in during 2015, 2016? You must be very wealthy.
Probably Facebook, Tesla, Apple. If someone is on the hook for 300 billion, it is not the individual investor. It is the banks. You do understand that after a bankruptcy there are still assets left. So I don’t think 300 billion has gone up in smoke. There are still plenty of American oil companies. And they can produce oil at a cost that is trending lower and lower. So “The moving finger writes, and having writ, nor all your piety nor all your wit, can change a single word of it.”
“There are still plenty of American oil companies. And they can produce oil at a cost that is trending lower and lower. ”
Nope. The producers do next to nothing on their own. They rely on the oilfield service industry to do most of the real work. And this seed corn has been largely consumed. As the remaining equipment gets used up and the underpaid/laid off hands go back to selling extended auto warranties, service rates must rise for the cost of replacing that equipment and inducing employees back. Since only a tiny fraction of current US activity will make sense at the junction of higher service prices and product prices available for the next decade, they’re gone gone goners.
Worst part is the fact that oilfield trashers don’t savie up. Too many unsold houses, post transfers, being rented out for chump change. Too much blown at the Dubai gold souk. Too many Texas X’as.
Their best bets for a soft landing are Biden’s well plugging infrastructure project, and retraining help.
Richard-san:
You fail to understand the very simple concept that cheap energy and energy independence are incredibly beneficial outcomes of the fracking boom, which leads to: improved living standards, more disposable income, higher profits for almost all companies big or small, lower unemployment, lower likelihood of US involvement MIddle East conflicts, lower unemployment rates, lower inflation rates, higher saving rates, higher banks reserves for lending, stronger stock and real estate markets, lower crime rates, lower poverty rates, etc., etc., etc.,
Whether some oil and gas companies make money on fracking or not is irrelevant and is simply a function of over supply and production inefficiency, which will eventually work itself out with some companies with uncompetitive business models going bankrupt and their assets bought by more efficient producers….
Welcome to the concept of free enterprise and free markets…
I’m sorry you can’t figure this out on your own…
+1
Salamirai
Based on your theory, what America needs is MORE money losing industries — that is the secret of economic growth ?
My comments are not about”some” companies — my comments are about the “fracking industry” as a whole. Perhaps the money invested in that industry would have benefited our nation MUCH MORE if it had been invested in the biotech industry, where it might have been used to invent a cure for prostate cancer. We’ll never know what could have happened with alternative investments. That requires imagination, which you don’t have..
Good fracking grief! The “industry” (at least the oil sector) had nearly recovered from the 2014-2016 price crash and was generating free cash flow in 2019.
https://www.rystadenergy.com/newsevents/news/press-releases/us-shale-industry-turns-cash-flow-positive/
They recovered because they reduced drilling and production costs.
https://www.worldoil.com/news/2017/2/28/rystad-examines-what-to-expect-from-us-shale-break-even-prices-in-2017
The most successful shale players (EOG, Continental Resources, Cabot Oil & Gas) were consistently profitable, mostly generating free cash flow from 2016/2017 through Q1 2020. They all did this while reducing long term debtt. EOG and Continental even generated free cash flow in Q1 and Q3 2020.
You can boost cash flow by declaring bankruptcy and giving “haircuts” top bond investors, and/or converting interest paying debt to non interest paying equity.
Fracking industry cash flow was negative in 2019, and in the nine prior years.
(see link)
Why do you cherry pick a few superior fracking companies when I am talking about the industry in total?
https://www.statista.com/statistics/1127037/us-fracking-companies-free-cash-flow/
Free cash flow for the sector was positive in Q2 and Q3 2019. Free cash flow is cash flow from operations minus capital expenditures. The companies that went bankrupt generally failed to maintain positive operating cash flow. All of the companies I listed maintained positive operating cash flow through the crashes and none of them went through bankruptcy.
I’ll post this again, even though it’s pointless.
US shale industry turns cash flow positive
August 21, 2019
August 21, 2019
–
In a remarkable turnaround, the second quarter of 2019 is the first three-month period on record when US shale operators achieved positive cash flow from operations after accounting for capital expenditures, according to Rystad Energy.
–
Rystad Energy – the independent energy research and consultancy in Norway with offices across the globe – has studied the financial performance of 40 dedicated US shale oil companies, focusing on cash flow from operating activities (CFO). This is the cash that is available to expand the business (via capital expenditure, or capex), reduce debt, or return to shareholders.
–
In the second quarter of 2019, 35% of operators in the peer group balanced their spending with operational cash flow, and reported an accumulated $110 million surplus in CFO versus capex.
–
“That is an industry first,” says Rystad Energy senior analyst Alisa Lukash. “The five dollar increase in the average WTI oil price from the first to the second quarter of 2019, coupled with operators’ efforts to keep spending within their initial budgets, resulted in a slight surplus of adjusted CFO for total capex.”
–
[…]
–
https://www.spglobal.com/marketintelligence/en/news-insights/trending/GNxldPPts4nVR0bkZ1Zy5Q2
I identify the companies that were successful, particularly through the downturns, because it demonstrates that the problem isn’t “shale”. There’s a reason why 27% of the companies produce 50% of the oil & gas.
https://www2.deloitte.com/us/en/pages/energy-and-resources/articles/covid-19-implications-for-us-shale-industry.html
My cash flow numbers (link below) are more recent than yours:
” U.S. fracking companies’ free cash flow 2010-2019
Published by N. Sönnichsen, Jun 22, 2020
This statistic depicts the free cash flow at 34 shale-focused companies in the United States from 2010 to 2019. Operating and capital expenses were higher than earnings in every year recorded here, resulting in negative free cash flow balances. In 2019, this was an estimated negative two billion U.S. dollars. ”
https://www.statista.com/statistics/1127037/us-fracking-companies-free-cash-flow/
As I should have more clearly noted, the Rystad article was referring to the sector turning free cash flow positive in Q2 2019. It was free cash flow negative in Q1 and Q4. The point of the article and the one from Barclay’s was that the sector was poised to move from production growth to generating free cash flow.
It’s nearly impossible to start out free cash flow positive in a capital intensive industry.
“Natural gas is an output of the fracking business, but you ignore the input of capital into the business … and how that money could have benefited the American public more if it had been invested in a profitable industry.”
Natural gas fracking CAPEX was “misdirected” only to the extent that the external costs of it will be imposed on the rest of us. The HUGE asset retirement obligations, the fugitive emissions, the environmental damage to large parts of Pennsylvania and West Virginia. We, not the producers/users, will pay. Yes, we are ALL users, but the price signals will be lost, as those costs are evenly spread, instead of billed on a per unit of use basis. EQT management is counting on this, as a core part of their new M&A biz model.
Oil fracking is the same, with the added cost communizations of extra AGW and transport hazard costs.
If BOTH fracking campaigns had to pay their own way:
1. Most shale oil production operations would glide to a stop, until the lower CAPEX and OPEX/boe mideast and FSU oil was produced off. I.e., for over a decade.
2. Dry gas shale production operations would continue, with API best practices being the rule and not the exception, at whatever rate would be required to allow for it’s use as a bridge fuel.
FYI, “peak oil” is a functionally meaningless concept. Rates are so defined by their vast subsidizations, technical advances, etc., that there is no magic date for it. All we really know is that every boe is a little harder to get than the last, with today’s snapshot of subsidies. technical acumen, political/military risk. And that those variables change largely and quickly.
The ONLY viable alternative is to make the upstreamers, world wide pay their own way, with the probable exception of the low – high 13 figure asset retirement obligations they have shirked for over a century. Feel free to stop all of the relatively tiny green start up helps, if it makes you feel better.
W.r.t. ARO’s. As with similar situations with most extractive processes over history, the rest of us will be stuck with most of over a century’s worth of the world’s undone well plugs and site restorations. So it goes….
“US electricity use is down over the past 10 to 15 years from outsourcing more manufacturing to China and use of power saving LED and other low energy light bulbs.”
FALSE.
https://www.eia.gov/totalenergy/data/browser/?tbl=T02.01#/?f=M
Electricity demand has been flat in residential, commercial, and industry over the last 15 years. Not counting the COVID drop, it’s actually up slightly in industry over the last 10 years.
The only argument you actually have is that investments in fracking returned so much additional NG supply that it depressed the price of NG and lowered the ROAI – therefore there was more investment in fracking than optimal. Investors, seeing the initial success of fracking, may have piled on a bit too fast. However, your analysis is nothing more than Monday morning quarterbacking – at the time the investments were made, what other investment could have been clearly foreseen to be better?
I posted in an earlier comment that electricity sales were DOWN for the latest 12 months versus 2010.
I did not 2020 months with data.
If I had cherry picked 2019 –then electricity sales were up only +1.5 percent over 2010.
But the US population grew about +0.66 percent per year from 2010 to 2019.
So per capita electricity sales were DOWN.
Analyzing past economic results is how wisdom is gained.
It is not “Monday morning quarterbacking”.
We can read what you wrote and you said nothing about per capita electricity sales. That may have been what you meant, but what you actually wrote makes it seem like you are now just grasping at straws in an attempt to rescue your previous false statement (as written). I stand by my statement about Monday morning quarterbacking – you’re just complaing about sub-optimal investment strategy after the fact. That’s not unique to fracking by any means and it provides little useful insights
Meabee:
I wrote that electricity sales were down, and explained in a later comment that I had compared the latest 12 months of data, through August 2020, with the year 2010. That DOWN statement was correct, unless YOU object to the EIA numbers I used?
I added in a LATER comment that electricity sales were up slightly (+1.5%) from 2010 to 2019, because some people here objected to me using 2020 data.. I then pointed out that the US population grew about 6.5% from 2010 through 2019, so per capita electricity sales were down from 2010 through 2019.
I’m not “complaining” about the “sub-optimal investment strategy after the fact” — I’m pointing out that NOT all the news about the fracking industry is good, unlike what we read in a typical David Middleman industry cheer leading article. And the ONLY way to know that is to look back at the financial collapse of the “industry” since 2016, which is still in progress, and NOT to pretend everything is perfect.
If you object to the accuracy of any numbers I posted, please direct me to alternatuve sources, other than the EIA and the U.S. Census, if you think “better” numbers are available. So far your objections are false.
“Natural gas is an output of the fracking business, but you ignore the input of capital into the business … and how that money could have benefited the American public more if it had been invested in a profitable industry.”
This sounds very suspiciously like Central Planning – the free market can’t be trusted where to risk private money so leave it to the elites in government to decide. How exactly do you get to decide what benefits the “public” more than the person risking their own money? Many solar power projects have withered and died but it was the government deciding to risk the public’s money in those cases – so is that OK? It was for the “public” benefit after all.
The entire power behind capitalism is its ability to channel money into new or more efficient businesses. They will not all survive, and over time many that had been successful will be replaced by new more efficient ones (competition). Just because a relatively new industry has lots of failed companies does not mean it produced nothing worthwhile – in 20 years the technology will be more mature and efficient and a great deal of wealth will have been created – or government will shut fracking down and a huge investment will be lost to other countries that use the technology (likely China will be one of them).
Coal had its day…I am no fan of burning coal as it just produces too much pollution (real pollution, not made-up pollution like CO2). Even if you capture most of the pollutants coming out of the burn you still have large volumes of toxic ash to deal with. I would much rather have a natural gas power plant nearby than a coal one.
I have little doubt that the nut-cases elected into power will do all they can to kill fossil fuels for both transportation and electricity production.
Robert,
Only if they are allowed to steal the election! They obviously can’t win in charm or policy!
These people are anti-human whether they realize it or not.
Derg,
Not only are they anti-human, many are at least marginally insane! Evolutionary psychologist Gad Saad theorizes that parasitic or pathogenic thoughts can damage or destroy an individual’s ability to think rationally; I would go one step farther and claim that mind pathogens are actually driving many insane!
Look at the output of our universities now. There is an almost complete lack of rational thinking and intellectual integrity in academia now! Most students and recent graduates are completely unable to do more than emote about the world around them. They see everything through the lens of hatred, envy and prejudice that they were inculcated with in school. Human rights, and the liberty and prosperity that ONLY capitalism has produced, are sins in their eyes and MUST be destroyed along with the unrecalcitrant working class that refuses to accept the worker’s paradise they have imagined!
Richard Greene (above) has a few interesting points.
However, this “ encouraging investors to throw away their money” is laughable.
Investors look at the world differently. They much prefer throwing their own money at investments, rather than having the government take their money and making a real mess of “government investments.”
Example:
https://www.foxnews.com/us/bankrupt-solar-panel-firm-took-stimulus-money-left-a-toxic-mess-says-report
If an investment in infrastructure goes bust then it is still there for another speculator to pick up at a bargain price and make a profit. The skill is deciding which path to follow. There are countless examples where this has happened, quite often where government is involved.
vorlick
Based on your logic, after all the bankruptcies of fracking companies since 2016, the industry should now be profitable. That did not happen. The industry is still going downhill.
hulquest
Where did I say ANYTHING about the government ?
Where did I say “encouraging investors to throw away their money” ?
You are criticizing me for things I did NOT say or imply.
That shows your questionable character,
Richard,
Your words: “The industry, with a few exceptions, resembled a huge Pomzi scheme encouraging investors to throw away their money.”
I wrote that investors would rather throw their own money around than have the government do it.
And insofar as character: You could not even pay me the courtesy of spelling my name correctly.
Hultpest
I said the industry resembled a Ponzi scheme — I did not say it WAS a Ponzi scheme deliberately defrauding investors. Ponzi schemes persuade investors to throw their money away by rewarding early investors and punishing later investors. Some early investors do well, but not most investors.
The excessive investment in the industry brought down natural gas prices enough to doom the industry. People who bought stocks and bonds were hurt. Banks too. The one sided “fracking is wonderful” attitude of the author completely ignores the bad news … which is ongoing.
Correction:
The $300 billion of industry debt involved with bankruptcies was since 2015, not 2016, that I had typed in my first comment. Before the barbarians attacked.
Bully
Richard Greene is simply acting the part of the Schoolyard Bully. Probably a part he played well in school (unless he was bullied in school and didn’t learn from the experience).
The worst debate tactic to use, especially when you know you’re losing, is to belittle your opponent by purposely miss pronouncing or misspelling their name which is also a bullying tactic.
In that respect I am unsure if Richard deserves Samurai-sans “San” label
Brayon A
Thanks for showing us what a bully comment is like … with your own no fracking content “bully comment” aimed at me. Made my day.
I’ve had my own name spelled wrong hundreds of times (Green, rather than Greene) and I managed to survive. I’ll have you know I’ve had my head examined too. And they found nothing. You have no sense of humor, if a name spelled wrong upsets you so much. Oops, I did it again,
In fairness, I didn’t see what his point was either.
EIA: US CO2 Emissions From Electricity Generation Down to 1980’s Levels… Frac On!
There are lots of reasons to “Frac On!” but lowering CO2 emissions isn’t one of them.
In other words please stop buying into the bullshit.
Steve,
CO2 REDUCTIONS OF WIND AND SOLAR ARE MUCH LESS THAN CLAIMED
Whereas world and US renewables goals may be partially achieved by 2050, CO2 reductions would be significantly less than claimed by wind proponents.
If gas turbine power plants perform the peaking, filling-in and balancing, to counteract variable, intermittent wind and solar on the grid, they would operate at varying outputs (less efficient), and lower-than-normal outputs (less efficient), and have more frequent start/stops (less efficient).
Less efficient means: 1) more Btu/kWh, 2) more CO2/kWh, and 3) more wear and tear, and 4) more grid augmentation/expansion/storage.
The more wind and solar on the grid, the more extreme the output variations, and the more frequent the start/stops.
In the appendix are three articles that explain in detail the less-than-claimed CO2 reduction of wind electricity on the electric grid.
NOTE: US CO2 Emissions from Electricity Generation Down to 1980’s Levels, mostly due to fracked gas, and wind and solar, replacing coal. It is likely the CO2 reductions are overstated!!
https://wattsupwiththat.com/2020/11/11/eia-us-co2-emissions-from-electricity-generation-down-to-1980s-levels-frac-on/
SEE APPENDIX OF THIS ARTICLE:
WORLD AND US TOTAL ENERGY CONSUMPTION
https://www.windtaskforce.org/profiles/blogs/world-total-energy-consumption
Increasing wind and solar would not reduce CO2 as much as proponents are claiming.
The EPA and EIA both use the one-to-one principle.
If one MWh of wind is added, wind proponents claim the US grid CO2 of one MWh is reduced, i.e., a net reduction of 449 kg/MWh, grid – 40 kg/MWh, wind = 409 kg/MWh.
https://www.eia.gov/tools/faqs/faq.php?id=74&t=11
However, that MWh of wind causes disturbances, which the OTHER generators have to deal with 24/7/365.
Those generators:
1) Have to operate at part load, say 75%, to be able to ramp up 25% and ramp down 25%, in case of gas-fired CCGT plants
2) Have more frequent start/stops
3) Have more MW of plant has in synchronous mode, i.e., hot standby
4) Have more wear and tear
5) Require more grid augmentation/expansion
On the Irish grid:
With 17% wind, CO2 was reduced not 17%, but only 0.526 x 17% = 8.94%
With 22% wind, CO2 was reduced not 32%, but only 0.320 x 22% = 7.04%
When imported gas consumption by the Ireland power sector was not sufficiently reduced with increased wind, the Irish government held an inquiry.
Eirgrid, the grid operator for all of Ireland, under oath, finally HAD TO ADMIT, what had been obvious from ITS OWN 15-minute, real-time GRID OPERATING DATA.
Above Item 5 should read:
Also wind requires more grid augmentation and expansion
forecasting available wind allows more gradual start up of CCGT plant: grid scale batteries also ease the transition.
Yes, the Irish grid is interesting – it is virtually all wind/gas, giving a unique pattern to gas ramp up. Not much in the way of batteries or other resource yet in Eire.
Griff,
1) Forecasting wind costs money, but that is not charged to owners of wind systems to make it APPEAR their electricity is much less costly than reality.
2) Grid-scale batteries are off the charts expensive to own and operate.
Here are some numbers.
ECONOMICS OF TESLA POWERPACK and POWERWALL SYSTEMS
http://www.windtaskforce.org/profiles/blogs/economics-of-tesla-powerpack-and-powerwall-systems
COST SHIFTING IS THE NAME OF THE GAME REGARDING WIND AND SOLAR
http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-name-of-the-game-regarding-wind-and-solar
Willem, the UK National Grid does UK’s wind forecasting for power supply purposes: I have no doubt the cost is included in its charges to electricity producers.
The experience of SA electricity suggests a grid scale battery saves them money
When it is a real possibility that lowering CO2 emissions will become required by law and their plan is to kill the oil & gas industry, before they finish killing the coal industry… pointing out that natural gas is the fastest, most economically sustainable pathway, is the only logical thing to do.
Unfortunately, logic has nothing to do with it.
Lowering CO2 emissions is merely an interesting artifact of converting our energy infrastructure away from coal to natural gas, not a formal policy objective, because those running the system understand economics and business and it is good business. In addition, most of the readers of this website are not CO2 alarmists so don’t find this a particularly salient point either.
That said, it is a fact that our conversion to gas is lowering our CO2 emissions, and as such it is a useful tool to (try to) reason with the public who the alarmists are alarming.
I personally think the administration and industry have failed pretty badly in this regard, and that this unfortunately hurt Trump in the suburbs in this election. Had I been in charge I’d have been crowing about this every day and adding policy initiatives to press it further. By that I mean defining regulations to require automobiles to support hybrid gasoline/CNG operation within 10 years with a minimum CNG range of just 40 miles. This would be coupled with a mandate for home refilling compressors tailored to this requirement. This approach is incredibly feasible as all of the technology is in hand, the cost would be minimal, and the resulting cars would be far more practical than electric hybrids. (Like you could safely evacuate from the Florida Keys during a hurricane for example)
The intent would be to convert the majority of our urban transport to CNG which would both lower CO2 as well as improve urban air quality. One thing we can all appreciate given the Covid lockdowns is that the extended improved urban air quality we have experienced IS nice, so a reasonable thing to continue to pursue, and it would further reduce our CO2 footprint to boot. Painlessly. And to market this benefit I’d simply reference the natural gas indoor forklifts that most consumers are familiar with from home center shopping, and the fact that MANY people safely congregate around open gas cooktops in their kitchens in perfect safety (only in California are we stupid enough to ban new housing from using natural gas : ( ).
Finally, while I’m not a CO2 alarmist in any way (at least until the USCRN tells me it is really worth caring about, which I don’t anticipate in my lifetime), I do appreciate the appeal of an all electric future. I would simply argue that it is reckless and in fact dangerous to attempt such a transition in just 20-30 years. We only replace 5% of our cars each year so it will take a minimum of 20 years to roll over the existing fleet once ALL new cars are electric anyway, so we really need to be practical, not utopian. So I’d embrace the basic goals, but frame it as Project 2100 instead, as a realistic and laudable goal for driving our national policy. So don’t fight them in the trenches, simply take their victory from them with rational policy most folks will find agreeable.
MHO anyway.
Bingo!
Add in CCUS (carbon capture utilization and storage) and you’ve taken the issue away from the Democrats. You would also totally eliminate the need for imported oil from outside of North America.
Whether or not climate change is a problem becomes a moot point.
Great idea until you start calculating the additional natural gas consumption/energy cost plus the massive capital investment required for this solution.
If it’s the only way to continue generating electricity with natural gas and coal, it’s worth the investment… particularly if the CO2 can be used for enhanced oil recovery.
The Petra Nova project was working just fine until low oil prices shut it in.
https://www.nrg.com/case-studies/petra-nova.html
The system needs at least $50/bbl to be economic.
MDN November 12, 2020 at 12:00 am
…conversion to gas is lowering our CO2 emissions, and is a useful tool to (try to) reason with the public who the alarmists are alarming.
Conversion to gas is lowering our CO2 emissions, and is a useful tool to appease the public who the alarmists are alarming.
Fixed it for you.
There’s a saying about appeasement, something about crocodiles as I recall.
“…WHOM the the alarmists etc…”
Fixed it for you.
On the other hand, those blow-off flames that light up the night landscape sure smell clean, the poisonous (and flamable) cack in our drinking water, the seismic instabilities, the destruction of habitat, the radioactive wastewater…
Without subsidies, I am told, no fracker has yet shown a profit, they promised to break even at $147 a barrel! Fracking is a financial scam, used to leverage other loans for other scams.
That’s how I see it, anyway.
Setting aside the idiotic rant about environmental myths, the break-even oil price for most “shale” oil plays is around $50/bbl. For “shale” gas plays, it’s $1.50 to $2.50/mcf.
The most successful “shale” players (EOG, Cabot, etc.) have been consistently profitable for years. For that matter, the entire sector was either generating, or close to generating free cash flow before prices collapsed.
https://www.rystadenergy.com/newsevents/news/press-releases/us-shale-industry-turns-cash-flow-positive/
The only reason they were cash flow negative was the 2014 price collapse.
Exactly what subsidies do you believe frac’ing companies receive? The “green” power generators receive massive subsidies. O&G operations receive basically no special support, and in fact are subject to regulations that, if applied to the green power generation operations, would decimate their business.
Old Retired Guy
who happened to be the Chief Tax Officer of a Fortune 50 company for many years
As an expert, your words carry more weight. Subsidies? I think the term “externalisation of costs” is relevant here, as in, when are they going to pay damages, clean up their mess or at least just stop their godawful waste? As for direct subsidies, “I was told”, that the initial development of this “technology” was heavily ‘supported’ by government grants and concessions. The only outside influence I can see for myself, though, is the adgasm over the Fracking Revolution, which is, as I said, mostly a financial scam used to leverage loans further up the pyramid. The entire love affair revolves around fund managers believing promises and gambling other people’s money. Or did you personally fill in tax returns on those dividents the wells paid? I mean, with so many happy investors, every well is pumping wads of cash, right? Devaluing the currency while they wait is also a form of subsidy, a kind of stupid-tax.
But my interest in financial affairs is merely that of a circus spectator. I see capitalism as merely the transition team of the Hive-minded Bolsheviks, economics theories the lullabyes they murmer as they fluff the viscose pillow over our tiny little faces.
paranoid goy
Thanks for taking the pressure off me.
$147 a barrel?
Who said that?
I wrote an article about natural gas flaring, venting in January 2020, that might interest you
https://elonionbloggle.blogspot.com/search?q=oil+and+gas+bankruptcies
Who said that? Can’t remember, but I am cursed with a mutated memory; I remember the things people say, especially if they do so from a position of doubtful authority. I had some money lying around at the time, and all my friends with more ambition that brains insisted I choose between the “fracking revolution” and derivatives, and not gamble on real estate. (I paid off the bond on my little farm …)
Like this US election farce; Why do I seem to be the only person on earth to remember George Soros saying “2016 will be the last democratic elections in the USA”? Or when Trump suggested we forget about ventilators and which is the most profitable treatment, and eat our vegetables? Or who was the little bastard on CNN that told me “…questioning the official narrative on 911 is blasphemy…” No, really, who was he, I paid for my word memory, by being totally incapable of remembering faces and names!
Larry the Cable Guy.
You guy frack me up : )
The main thing is to remember that the main thing is the main thing.
The main thing is that CO2 is NOT the driver of any climate change. Else, why was the Medieval Warm Period and the Roman Warm Period and the Holocene Climate Optimum WARMER than it is now? It was obviously not because of CO2! See any ice core data studies.
Human CO2 is a new, additional climate driver, operating in addition to natural climate drivers responsible for other historical climate events.
It is now the primary driver of climate change.
So, “human CO2” is a new kind of , erm, what… er, artificial CO2 that doesn’t melt when it should, or maybe the colour scares the birdies? It has extra coughies in it?
Just funning you. Here, click on my name, it will take you to a simple explanation of where the seasons come from, and ends with explaining climate change as a purely natural phenomenon, no artificial gasses needed. No Maths needed, no graphs, real simple.
If anthropogenic CO2 “is now the primary driver of climate change,” it would now be colder than when “the ice age cometh” without it…
“In a remarkable turnaround, the second quarter of 2019 is the first three-month period on record when US shale operators achieved positive cash flow from operations after accounting for capital expenditures, according to Rystad Energy.”
Financial results brought to you by the oilfield service industry. The referenced producers have been using them as their sacrificial anodes since the early teens. Check ’em out folks. They are washed up, and the CAPEX that bought their now worn out frac fleets 15-20 years ago has fled. The investment community knows that it can not get the service rates required for an adequate ROR in this decade. So, the referenced E&P’s, “winners” in the mix or not, all are intoning “So far, so good” every floor, after falling off the skyscraper…
Use “Ultra Character Map”, in the App Store, to form subscripts.