RE: Natural gas: The fracking fallacy

['Chris de Morsella' via Everything List]

 

 

From: everything-list@googlegroups.com 
[mailto:everything-list@googlegroups.com] On Behalf Of John Clark
Sent: Thursday, December 25, 2014 8:59 AM
To: everything-list@googlegroups.com
Subject: Re: Natural gas: The fracking fallacy

 

On Thu, Dec 25, 2014 at 1:33 AM, 'Chris de Morsella' via Everything List 
<everything-list@googlegroups.com> wrote:

 

>> I'm sorry Chris but that simply isn't true. Yes the Monterey shale reserve 
>> was vastly overestimated, at one time they thought it contained 15.4 billion 
>> barrels of oil but the true figure is less than a billion. However just one 
>> oil shale deposit in the USA, the Green River Formation, contains 1466 
>> billion barrels of oil, nearly 100 times what Monterey was thought to 
>> contain even at it's peak. So although embarrassing the overestimate doesn't 
>> substantially change anything. 


> Yeah… and if you believe those figures I have a bridge to sell you in 
> Brooklyn. In fact those very numbers you site are controversial and disputed 
> by many petroleum geologists.

 

What the hell are you talking about? There may be controversy over what should 
be done with shale oil but there is scientific consensus over approximately how 
much shale oil is on the planet and that most of it is in the USA. 

 

Incorrect there is not scientific consensus.. whatever this phrase actually 
means in this context, on this matter. I have clued you in to the core of the 
on-going debate about the planets shale resources. There is no informed 
consensus – outside of shale oil boosterism circles – about the fact that by 
far most of these resources ARE NOT reserves.

They cannot be exploited in a manner that yields a positive EROI let alone a 
decent return on capital expenditures.

As I said already there is a lot of gold dissolved in the world’s oceans… much 
more than all the gold in all the reserves. It is a resource, but that 
dissolved gold is not a reserve. A similar argument exists for the vast 
majority of kerogen bearing shale. It may be a resource, but it is not a 
reserve.

Yet you keep counting it as a reserve and making noises about some “scientific 
consensus” existing. Just because the EIA and IEA (both captive organizations 
staffed by a revolving door system with insider vested fossil and nuclear 
interests) say something does not make it the word of God! In fact as I have 
pointed out they have got it terribly wrong in the past and in a big way.


 

> Just because it is shale does not mean that the hydrocarbons trapped in it 
> are recoverable. 

 

And that is why geologists say that there are 4.8 trillion barrels of shale oil 
in the world with 3.7 trillion barrels of it being in the USA but only 1 
trillion can be economically recovered with existing technology. 

 

Keep reiterating discredited numbers – repating them over an dover when I have 
in a detailed fashion given you the reasons why those kerogen bearing shale 
resources ARE not reserves; in the sense they are not recoverable in a manner 
that gives a net energy return. The kerogen needs to be cooked in order to 
yield oil; cooking such a vast mass of shale – either mined and crushed or by 
trying to frack it and cook it by pumping heat into the kerogen bearing 
formation – it takes a huge amount of energy. More energy than one can get by 
burning the marginal volumes of extracted kerogen. If it is so easy to extract 
it with existing technology  then pray tell me why has everyone who has 
seriously tried, including Shell Oils many decades long attempts in the Green 
River shale formation you keep siting. Why have they all failed? Why has Shell 
Oil abandoned its efforts after dumping so many millions in attempts to squeee 
a profit out of that rock?

Unless you can answer these questions your 1 Trillion recoverable number is 
pure unadulterated bullshit! It stinks like the spun PR it is.

 

 

 > This oil is properly called "tight oil", 

 

And until about 5 years ago almost 100% of shale oil was tight oil, but 
technology marches on and today only about 75% is tight oil, and just that 25% 
is enough to cause a historic drop in oil prices that will dramatically change 
geopolitics.  

You are not making any fucking sense at all. What the hell are you speaking 
about? DO you even know what the term “tight oil” means technically? It has a 
very specific meaning, which seems to have slipped right past you. Tight oil is 
actual oil that is in tight deposits in shale formations for example. But it IS 
oil and it will flow like oil. 

Kerogen IS NOT OIL!

Kerogen bearing shale is a very different kind of resource that has proven 
uneconomical and has resisted every effort to try to produce a return on. Shell 
Oil has just recently abandoned its kerogen extraction attempts. Try to 
understand the implications of this. A major oil company, after decades of 
trying and millions and millions of dollars spent has recently thrown in the 
towl and essentially abandoned its efforts.

Can you tell me what this implies; or should imply to you about just how 
difficult it is to turn a buck on kerogen.

> As I said before all of that shale you speak about – the vast majority of 
> shale deposits in the world are kerogen deposits – HAVE NOT BEEN EXPLOITED! 

 

And as I've said existing technology can only exploit about 25% of it, but 
that's more than enough to change the economy of the world.

I bet you just pulled that 25% figure out of your ass John. What do you know 
about the actual percentages across all the shale deposits in the US? Going to 
the EIA and copying and pasting the numbers they produce – numbers that are 
under attack, for example in the article I linked to in the journal Nature – 
does not equate to a deep understanding of the particular geologic nature of 
kerogen; nor does it equip you to decide how much of that 3-D mass of shale 
formations, actually has enough oil collected in the micro fissures and cracks 
to make it feasible to frack and drain out, versus the much larger mass that is 
oil poor and uneconomic?

You just don’t know this John yet you trot out some bullshit number 25%. Back 
that number up then. Show me where these sweet spots are and how you came to 
this estimate. Give me a geologically sound argument for why anyone should 
accept your claim that these formations will yield oil at the rate and volume 
you claim they will. 

What is the real world data you base your claims on? The very EIA (and IEA) 
numbers you keep siting are under attack using a data driven fact based 
approach.

> Why not?

 

Because 25% is the best technology can do. So far. 

Smoking that crack pipe again?

> Do you actually believe that all we need is better technology?

 

Yes. 

 

Smoking that crack pipe again?

 

 

> But today is not not 5 years from now and you have zero monetary, human, 
> legal and political resources and yet you claim to know exactly how much gas 
> and oil is in the ground in the USA that can be extracted economically; all I 
> want to know is how you acquired that information.


> How about you tell me where you get your facts first John.

 

I get my facts by reading science journals like Science and Nature. What do you 
read, conspiracy theories political rants and blogs by empty headed tree 
huggers?  

Well did you even read the article in the journal Nature I linked to that I am 
quoting in this thread? You are a pompous man John, one who seems to mistake 
abrasiveness for wisdom. You do not have the facts on fossil energy matters 
John; your poor grasp of technical jargon such as “tight oil” betrays your only 
casual acquaintance with the subject matter. 

I recall many months back when you made a complete idiot of yourself on this 
very list – trying to portray the global solar PV capacity numbers I had quoted 
as being off by many orders of magnitude when in fact – as everyone knows – you 
messed up your math.

Your arrogance gets in the way of your intelligence and hijacks it my dear 
fellow. So go ahead keep calling me a tree hugger if that makes you feel 
better; it does not alter the fact that you are demonstrating a poor grasp of 
crucial energy terms, such as for example “tight oil” versus kerogen bearing 
shale rock. It just sails right past you and you remain dim.

 

> Bullshit on your bullshit John. When you sum up all the river of capital it 
> has sucked up and the mountain of derivatives built up around this bubble, it 
> is trillions.

 

Trillions? Maybe in some new form of mathematics but not in the type of 
arithmetic I am familiar with. 

 

The scale of the global derivates market is immense – even if it is hard to 
measure precisely -- with estimates of the total size at more than a thousand 
trillion dollars (for example, Paul Wilmott estimates it at $1,200 trillion) 
twenty times the size of the world’s economy.  The mountain of derivatives 
associated with packaging and trading risk and debt in the tight oil sector is 
a significant portion of that pile, which also comprises all the other 
commodity, debt, and currency bets being bought and sold.

John we are not in Kansas anymore in case you still have not figured that out.

 

 

> What I think has happened is that the price of oil has dropped from $147 to 
> $60, and that is not a estimate or a opinion or a prediction, that my friend 
> is a fact. And you can wave your hands around all you want but it won't 
> change that monumentally important facet of reality. 


> And what gives you the peculiar notion that I am disputing what are well 
> known market price points. John, what you are doing in fact is itself empty 
> hand waiving. You have said nothing here. Do you have nothing of substance to 
> say?

 

It's a FACT that the price of oil has dropped from $147 to $60 and you say that 
FACT has no substance! 

Wrong.. you say I say it has no substance. It is just a fact John. Nobody is 
disputing that the global spot price for oil has gone down; you keep trumpeting 
it like it had some magical hidden meaning. Does the current drop in the global 
spot price mean that the Green River kerogen bearing rock is now got to be 
counted as a part of recoverable reserves?

What does the current sot price have to do with the size of the global reserve 
figures – other than at the margins of what is recoverable at a given price 
floor? In fact lower spot prices are wreaking havoc on the upstream projects 
that are running into a funding bottleneck. This will act to diminish near term 
reserve figures. It does not act to increase reserves! Reserves will climb 
slowly up as the price floor rises; marginal resources will begin to look more 
attractive.

This is basic economics 101; it is bizarre how you seem to have such difficulty 
grasping these simple concepts.

This conversation is getting surreal.

Agreed John

No that's the wrong word, it implies far too much gravitas, this conversation 
is getting silly.  

Agreed John… you should know, for you are in the driver’s seat my man…. Wearing 
the clown suit.

-Chris

And by the way, this silly shale oil and the silly oil price collapse that it 
caused resulted in the lead article on the front page of today's (December 25 
2014) New York Times:


Oil’s Swift Fall Raises Fortunes of U.S. Abroad

By ANDREW HIGGINS DEC. 24, 2014


BRUSSELS — A plunge in oil prices has sent tremors through the global political 
and economic order, setting off an abrupt shift in fortunes that has bolstered 
the interests of the United States and pushed several big oil-exporting nations 
— particularly those hostile to the West, like Russia, Iran and Venezuela — to 
the brink of financial crisis.

The nearly 50 percent decline in oil prices since June has had the most 
conspicuous impact on the Russian economy and President Vladimir V. Putin. The 
former finance minister Aleksei L. Kudrin, a longtime friend of Mr. Putin’s, 
warned this week of a “full-blown economic crisis” and called for better 
relations with Europe and the United States.

But the ripple effects are spreading much more broadly than that. The price 
plunge may also influence Iran’s deliberations over whether to agree to a deal 
on its nuclear program with the West; force the oil-rich nations of the Middle 
East to reassess their role in managing global supply; and give a boost to the  
economies of the biggest oil-consuming nations, notably the United States and 
China.

After a precipitous drop, to less than $60 a barrel from around $115 a barrel 
in June, oil prices settled at a low level this week. Their fall, even if 
partly reversed, was so sharp and so quick as to unsettle plans and assumptions 
in many governments. That includes Mr. Putin’s apparent hope that Russia could 
weather Western sanctions over its intervention in Ukraine without serious 
economic harm, and Venezuela’s aspirations for continuing the free-spending 
policies of former President Hugo Chávez.

The price drop, said Edward N. Luttwak, a longtime Pentagon adviser and author 
of several books on geopolitical and economic strategy, “is knocking down 
America’s principal opponents without us even trying.” For Iran, which is 
estimated to be losing $1 billion a month because of the fall, it is as if 
Congress had passed the much tougher sanctions that the White House lobbied 
against, he said.

Iran has been hit so hard that its government, looking for ways to fill a 
widening hole in its budget, is offering young men the option of buying their 
way out of an obligatory two years of military service. “We are on the eve of a 
major crisis,” an Iranian economist, Hossein Raghfar, told the Etemaad 
newspaper on Sunday. “The government needs money badly.”

Venezuela, which has the world’s largest estimated oil reserves and has used 
them to position itself as a foil to American “imperialism,” received 95 
percent of its export earnings from petroleum before prices fell. It is now 
having trouble paying for social projects at home and for a foreign policy 
rooted in oil-financed largess, including shipments of reduced-price petroleum 
to Cuba and elsewhere.

Amid worries on bond markets that Venezuela might default on its loans, 
President Nicolás Maduro, who was elected last year after the death of Mr. 
Chávez, has said the country will continue to pay its debts. But inflation in 
Venezuela is over 60 percent, there are shortages of many basic goods, and many 
experts believe the economy is in recession.

But the biggest casualty so far has probably been Russia, where energy revenue 
accounts for more than half of the government’s budget. Mr. Putin built up 
strong support by seeming to banish the economic turmoil that had afflicted the 
rule of his predecessor, Boris N. Yeltsin. Yet Russia was back on its heels 
last week, with the ruble going into such a steep dive that panicked Russians 
thronged shops to spend what they had.

“We’ve seen this movie before,” said Strobe Talbott, who was President Bill 
Clinton’s senior Russia adviser in the aftermath of the Soviet Union’s 1991 
collapse and is now president of the Brookings Institution in Washington.

Russia’s troubles have rippled around the world, slashing bookings at ski 
resorts in Austria and spending on London real estate; spreading panic in 
neighboring Belarus, a close Russian ally; and even threatening to upend 
Russia’s Kontinental Hockey League, which pays players in rubles.

The only major United States antagonist not hurt by the drop in oil prices is 
North Korea, which imports all of its petroleum.

David L. Goldwyn, who was the State Department’s international energy 
coordinator during President Obama’s first term, warned that an implosion of 
Venezuela’s economy could hurt the Caribbean and Latin America in ways that the 
United States would not welcome.

But “on balance, it’s positive for the U.S.,” he said of the low price of oil, 
because American consumers save money, and “it harms Russia and puts pressure 
on Iran.”

Even some of the indirect consequences of the price slump, like last week’s 
break in the half-century diplomatic logjam between Washington and Havana, have 
generally worked in the United States’ favor. Fearful that Venezuela, its main 
benefactor, might cut off supplies of cash and cheap oil, Cuba sealed a 
historic deal that has in turn lifted a shadow over the United States’ standing 
in much of Latin America.

Another casualty of the price collapse has been Belarus, a former Soviet 
territory long reviled by American officials as Europe’s last dictatorship. It 
produces no significant amount of crude oil itself but  has nonetheless taken a 
big hit. This is because its economy depends heavily on the export of petroleum 
products that Belarus produces using crude oil supplied, at a steep discount, 
by Russia.

Marwan Muasher, a former foreign minister of Jordan who is now a vice president 
at the Carnegie Endowment for International Peace, predicted another domino 
effect in Syria as Russia and Iran find it difficult to sustain their economic, 
military and diplomatic support for President Bashar al-Assad.

Others speculate that Persian Gulf oil producers, though still wealthy, might 
trim their financial support for radical Islamist rebel groups in Syria.

Mr. Muasher said the drop in oil prices could also prod Middle East oil 
producers toward political and economic change by challenging so-called rentier 
systems in which governments derive much of their income from rents paid by 
foreigners for resources. “Whatever the case, it is clear that the effect of 
the new oil price levels will not be limited to the economic sphere,” he wrote 
in a Carnegie report.

This view is particularly strong in Russia, where former K.G.B. agents close to 
Mr. Putin have long believed that Washington engineered the collapse of the 
Soviet Union by getting Saudi Arabia to increase oil output, driving down 
prices and thus starving Moscow of revenue.

In many ways, the recent price fall really is the United States’ work, flowing 
to a large extent from a surge in American oil production through the 
development of alternative sources like shale.

By offsetting declines in conventional oil production, increases in shale oil 
output have allowed overall American crude oil production to rise to an average 
of about nine million barrels a day from five million a day in 2008, according 
to the United States Energy Information Administration. That 
four-million-barrel increase is more than either Iraq or Iran, the second- and 
third-largest OPEC producers after Saudi Arabia, produces each day, and it has 
put strong downward pressure on world prices.

The geopolitical shakeout set off by the oil market has not gone entirely 
America’s way. Russia’s troubles have so far shown no sign of pushing Mr. Putin 
toward a more conciliatory position on Ukraine, and some analysts believe they 
could make Moscow even more pugnacious and prone to lashing out.

The Bank of England’s Financial Policy Committee, which monitors possible 
systemic threats, warned in minutes released this week that “sustained lower 
oil price also had the potential to reinforce certain geopolitical risks.” It 
voiced alarm, too, over an increased risk of deflation in the eurozone, the 
18-nation area that uses Europe’s common currency.

The price drop could also encourage more freewheeling use of oil products like 
gasoline, undermining what appears to be a growing consensus among nations that 
carbon emissions must be reeled in to offset the most dire effects of global 
warming.

While authoritarian oil producers like Russia are clearly suffering, China is 
enjoying a huge windfall thanks to the price drop. It imports nearly 60 percent 
of the oil it needs to power its economy.

China became the world’s largest importer of oil in 2013, surpassing the United 
States, and so stands to benefit from plummeting prices. Bank of America 
Merrill Lynch estimated last month that every 10 percent decline in the price 
of oil could increase China’s economic growth by 0.15 percent.

Strong growth in China would lift demand for oil and help reduce the current 
agonies of OPEC, which pumps around a third of the world’s oil but, largely as 
a result of increased American production, has lost much of its ability to 
dictate prices by controlling output.

In an interview with the Middle East Economic Survey this week, the Saudi 
energy minister, Ali al-Naimi, indicated a fundamental rethinking by OPEC, 
saying that it needed to focus on keeping its market share rather than trying 
to raise prices by slashing production. “We have entered a scary time for the 
oil market,” he said.
=====

  John K Clark


    


 

 

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