US Natural Gas Potential has been Overrated

[Xenopus]

http://wallstreetpit.com/11624-peak-oil-the-rewards

Geologist Art Berman, for example, offers a decidedly negative view of the latest “big thing” – obtaining large volumes of natural gas from “tight shales.” In a comprehensive review of production and flow rates from several thousand wells drilled in the past decade in the Barnett Shale of Texas, Mr. Berman presents a gloomy forecast.

Looking at a large sampling of Barnett wells, the overall data reveal that initial gas flows decline rapidly. With some wells, the drop-off is as much as 70% in the first year, with further declines of 20% in the second year.

This hardly dovetails with the happy talk about how “shale gas” will supply US energy requirements for the next several decades, if not a couple of centuries. It appears that most Barnett wells are short-term money losers, with a few prolific wells carrying the bulk of capital expenditure.

According to Mr. Berman, the picture is not much better in other shale plays, such as the Fayetteville and Haynesville shales. And similar gloomy data are just now starting to come in on the embryonic gas play in the giant Marcellus formation of Pennsylvania.

[mtlouie]

Ah.  All we have to do is wait just a bit and the truth comes out.

You probably don't know about the big LNG broo-ha-ha that occurred here, but this is icing, believe me.

[Chip Haynes]

From all that I have read, the depletion curves for natural gas make oil look like a stable resource.

Peak natural gas is going to be a very big deal, and the downside curve very steep.

If not vertical.

[rbrgs]

I'd like to read Jeromie's analysis of this article.

[Xenopus]

I'd like to read Jeromie's analysis of this article.

So would I, damnit. Blast the man. 

[shaleoh2]

Bring It Jeromie. OMG.

[JohnLudi]

Geologist Art Berman, for example, offers a decidedly negative view of the latest “big thing” – obtaining large volumes of natural gas from “tight shales.” In a comprehensive review of production and flow rates from several thousand wells drilled in the past decade in the Barnett Shale of Texas, Mr. Berman presents a gloomy forecast.

I'm shocked I tell you, shocked!

I was really annoyed by the hoopla over this a month or so ago...it was such a blatant grasping-at-straws that I was surprised the burst of optimism carried so far with some in these circles. 

The thing that irks me about this is that whatever the actual content and subject matter, the way the news business tends to work is they put THE BIG HUGE THING in BOLD letters in the headlines...then when the real (and usually disappointing) backstory comes out it is relegated to a small paragraph on page 24.  This is one of those stories.  NATURAL GAS WILL SAVE US ALL is the headline...thus the people who are psychologically invested in BAU are sated and satisfied and have no incentive to change the way things are (even though the logistics and expense in re-engineering a petroleum economy to a natural gas economy make the whole thing a nonstarter in the first place) and they won't even NOTICE the story on page 24.  It's done.  Someone else fixed it for them, just as they said they would.  Let's go play darts at the sports bar.

Not that it really matters at this point...things have gone so far down the road of The Great Unraveling that anything short of a miracle is not going to do much more than put things off a year or two at best.  But the more people there are who are taken by surprise, the more those of us who have been paying attention may have our own plans disrupted by the panicking mob.  So that burst of Happy News last month did a great many a great disservice on many levels.

Thanks for finding this Xenopus...this is the confirmation of my suspicions.

[Satori]

http://www.ft.com/cms/s/0/b4240cf4-c585-11de-9b3b-00144feab49a.html

natural gas production may drop by 10% next year
and the price to near triple??

[Xenopus]

Ben Dell, of Bernstein Research in New York, whose work is respected by both sides in the debate, says: “The average well deteriorates more in quality, and more wells fail, than people believe. Still, I think a rise in prices would make more (shale prospects) economic. Plenty of plays work at $9 per mcf [1,000 cubic feet].”

This less-than-expected productivity in the leading gas sector tells Mr Dell that US gas production will decline on the order of 10 per cent next year, leading to $8-$9 gas, or $3 to $4 more than the forward curve anticipates.

The price HAS to go up or production will decline drastically.

[HungryRaven]

Where I am the gas industry seems to have problems.  They closed the fertilizer plant due to lack of gas.  Then they raised our gas bills by 20% each of the last few years.  They burn gas here to make electricity.  Now they say we  might have rolling brownouts this winter and we even had a test to see how much could be saved one evening by everyone shutting the heat down and lights off.  Meanwhile the city seems to have excess energy use everywhere and they just installed a obnoxious street light next to my yard that illuminates the whole area all night long.  They are planning to shut electricity off in shifts knowing damn well some furnaces will not click back on in some vacant houses causing thousands of property damage in the deep cold part of the winter meanwhile wasting electricity with useless light all night every night when the purpose I am sure is to illuminate the 15 minutes in the morning kids wait for the bus there.  Then to top off the lunacy they decided that even with the threat of rolling brownouts etc they would reduce the gas rates 16% this winter.

I just got a bid for a geothermal furnace system.  $30,000 instead of the $9000 or so for a gas system.

[Xenopus]

Where I am the gas industry seems to have problems.  They closed the fertilizer plant due to lack of gas.  Then they raised our gas bills by 20% each of the last few years.  They burn gas here to make electricity.  Now they say we  might have rolling brownouts this winter and we even had a test to see how much could be saved one evening by everyone shutting the heat down and lights off.  Meanwhile the city seems to have excess energy use everywhere and they just installed a obnoxious street light next to my yard that illuminates the whole area all night long.  They are planning to shut electricity off in shifts knowing damn well some furnaces will not click back on in some vacant houses causing thousands of property damage in the deep cold part of the winter meanwhile wasting electricity with useless light all night every night when the purpose I am sure is to illuminate the 15 minutes in the morning kids wait for the bus there.  Then to top off the lunacy they decided that even with the threat of rolling brownouts etc they would reduce the gas rates 16% this winter.

I just got a bid for a geothermal furnace system.  $30,000 instead of the $9000 or so for a gas system.

Jeez. That all sounds amazingly hairy. I wish we had installed a geothermal system years ago. My cousin did and it keeps their house at the same temperature winter and summer with v. low energy use. On the other hand, I know people who have had trouble with these systems. I don't think we can afford to go for it at the moment.

[paland]

This is talking about the wells in Texas. I thinK Jeromie was talking about newer wells somewhere much farther north.

[Xenopus]

This is talking about the wells in Texas. I thinK Jeromie was talking about newer wells somewhere much farther north.

The article says the same thing seems to be true of the Marcellus Shale wells (NY and PA). Much faster drop off in production than they had anticipated.

[mcdunc]

Some unconventional gas can (and is being) produced at $3.00 - $4.00. Mostly water driven wells not much deeper than 2000 feet.
There can be a million square miles of a solid shale bed full of gas, but only the parts that are naturally fractured enough to allow gas emulsified in water to flow, or fractured enough for free flowing gas to come out, will produce, unless artificially fractured. The shale has to also have natural fractures present to even be artificially fracked.
Most of you have know what "tight gas" is for years.

Seems to be coming to light more and more that the super producers deplete very fast while the poor wells may have a very long production gradiant.

In other words no more low hanging fruit anywhere.

[Xenopus]

Seems to be coming to light more and more that the super producers deplete very fast while the poor wells may have a very long production gradiant.

In other words no more low hanging fruit anywhere.

I think that's about right.