Shale – energy future or pie in the sky?

shale-gas

The least interesting subject I can think of is shale: “soft, finely stratified sedimentary rock that formed from consolidated mud or clay and can be split easily into fragile slabs”.

It’s not interesting until one sees that it might be the west’s energy resource of the future, gradually replacing oil and other forms of gas as the primary source.  The current state of play, courtesy of ScotsToryB, is this:

Technical difficulties

For the layman, from Wiki:

Because shales ordinarily have insufficient permeability to allow significant fluid flow to a well bore, most shales are not commercial sources of natural gas. Shale gas is one of a number of “unconventional” sources of natural gas; other unconventional sources of natural gas include coalbed methane, tight sandstones, and methane hydrates. Shale gas areas are often known as resource plays (as opposed to exploration plays). The geological risk of not finding gas is low in resource plays, but the potential profits per well are usually also lower.

Shale has low matrix permeability, so gas production in commercial quantities requires fractures to provide permeability. Shale gas has been produced for years from shales with natural fractures; the shale gas boom in recent years has been due to modern technology in hydraulic fracturing to create extensive artificial fractures around well bores. Horizontal drilling is often used with shale gas wells.

Shales that host economic quantities of gas have a number of common properties. They are rich in organic material, and are usually mature petroleum source rocks in the thermogenic gasgamma radiation are the most productive. window. They are sufficiently brittle and rigid enough to maintain open fractures. In some areas, shale intervals with high natural

Some of the gas produced is held in natural fractures, some in pore spaces, and some is adsorbed onto the organic material. The gas in the fractures is produced immediately; the gas adsorbed onto organic material is released as the formation pressure declines.

What are the prospects?

ASPO USA says:

The most arresting quote came from Mike Graham of EnCana, a Canadian company that holds dominant positions in British Columbia’s Montney and Horn River plays. “Natural gas will displace coal. It will displace oil. There is no reason North America shouldn’t be energy self-sufficient if we can displace a lot of the oil with natural gas.”

To reduce the trade deficit and lessen U.S. dependence on foreign oil, you could launch an effort to use compressed natural gas in vehicles … But if the goal is to save carbon, you would use the natural gas to displace coal in the electric sector.

Population is rarely broached in climate discussions, which is unfortunate because growth is a big deal. Reducing emissions while people are increasing is like running down an up escalator.

Governor Ritter, of Colorado, wants to reduce emissions by 20% by 2020.  Clearly, natural gas is the current realistic alternative.  So, the demand is obviously there.

The politics of fuel switching are difficult, because it would raise electric rates and because coal’s markup rivals that of Fiji Water. Each year, the nation’s utilities spin $40 billion worth of coal into $160 billion of electricity. Thus, although the average coal plant is nearly 40 years-old, there’s no incentive to retire it, even though it produces three times more carbon dioxide than a modern gas turbine. If the nation was really serious about addressing climate change, the “cash for clunkers” program would have targeted those ancient coal plants, not F150s.

Does Colorado produce enough natural gas to support such a strategy? Yes, plenty. One-fifth of the state’s current exports would suffice. The math is much more difficult at the national level … For the next year or two, the nation is likely to indeed remain awash in gas. But if the country were to embrace fuel switching, as it may need to do to reduce greenhouse gas emissions quickly, the glut would disappear and boatloads more LNG and dramatic increases in drilling would be needed.

AP writer Judith Kohler adds to the speculation that there might not be enough commercially exploitable reserves and that the costs could be prohibitive:

Arthur Berman, a Texas-based geological consultant, likened the optimistic projections for production from gas shale fields across the country to banks buying into mortgage securitizations, which spurred the housing market crisis and economic meltdown.

“In the midst of a boom or a bubble, it’s hard to sit on the sidelines,” Berman said during the Association for the Study of Peak Oil and Gas conference. “If you’re not in one of these plays, then Wall Street says, ‘Well, what’s the matter with you guys?'”

That was the psychology leading into the current financial crunch, Berman said. Analyses show that gas shale fields in Texas and elsewhere aren’t as profitable and likely don’t contain as much retrievable gas as the industry and others portray, he added.

Not so, say the exponents:

The Potential Gas Committee at the Colorado School of Mines in Golden said in June that the U.S. natural gas reserves total nearly 2,000 trillion cubic feet, up about 35 percent from 2006 estimates and mostly due to such unconventional gas fields as shale and the Rockies’ sandstone formations.

Peter Dea, chief executive of Denver-based Cirque Resources, said the abundance of natural gas “truly is an American treasure.” He called the vast layers of rock containing gas in Texas, the Northeast and elsewhere game-changers.

“It really gives us surety of this 100-plus-year supply that we now have in America,” Dea said.

On this side of the pond, gas is already exploited, mainly from Russia for Europe and we all know the issues there, mainly political.

Nohotair, shale gas promoter, has much to say on the way China jumps as to how far shale goes:

China gets more than enough LNG from Australia thanks, so much that the Ozzies are getting nervous, and the Qatari’s are having kittens since they were depending on sitting in the middle of the world LNG web with Europe on one side and China on the other.

Bloomberg pointed out [in August that] “Carbon capture and storage, particularly for China, is not one of the priorities — the cost is an issue,” Su said in an Aug. 4 telephone interview from Beijing. “If we spent the same money for CCS on energy efficiency and the development of renewables, it would generate larger climate-change benefits.

China does have shale reserves and according to Zhang Yuqing, director of Natural Gas Department of NEA, the resource volume of China’s low permeable gas, coal bed methane, and shale gas are each respectively estimated at 100 trillion cubic meters, 30 trillion cubic meters, and 100 trillion cubic meters. Besides, China is rich in high sulfur natural gas and carbon dioxide-containing natural gas.

At present, China has an annual coal-bed methane output of 5.8 billion cubic meters, and it is preparing for the pilot development of shale gas.

Europe is in a position to go over to shale bigtime. Donald I. Hertzmark, a consultant who advises multinational oil companies on gas projects, said that in a decade or so, the new shale gas resources would improve Europe’s ability to withstand any future reduction in Russian pipeline shipments.

Early estimates of recoverable European shale gas resources range up to 400 trillion cubic feet, less than half the industry’s estimates of what is recoverable in the United States. But European energy executives say they are excited about the prospects because the Continent’s conventional gas reserves are too small to meet demand.

BP plc maintains [and I reprint this in full]:

BP Plc, Europe’s second-largest oil company, forecasts that gas resources may rise 60 percent to 100 years of global use at current rates, helped by unconventional sources that are undeveloped or unidentified.

New discoveries could contribute 4,000 trillion cubic feet of gas resources “over the next few years,” BP Chief Executive Officer Tony Hayward said yesterday. BP estimates that global proven natural-gas reserves totaled 6,500 trillion cubic feet, or 1.2 trillion barrels of oil equivalent, at the end of 2008, enough for 60 years.

“Reserve estimates are rising sharply as technology unlocks unconventional resources,” Hayward said in a Buenos Aires speech posted on the London-based company’s Web site. “Estimates vary, but the U.S. may now be sitting on between 50 and 100 years worth of recoverable natural gas.”

BP forecasts that there is potential to find tight and shale gas resources in North Africa, the Middle East, Europe, China and in the southern areas of Latin America. There are potential reserves in coal seams in Australia and Southeast Asia, according to the statement.

And in the UK?

Nohotair, on the UK situation:

While Ofgem plays “Living in the Past”, in Buenos Aires at the World Gas Conference it looks like the UK has left the planetary building. Shortage? Security of supply? Lights out Britain? At the least the rest of of the planet is looking to the future in confidence, not fear.

The US Energy Information Administration forecasts that unconventional sources will meet 56% of US supply by 2030, up from 27% in 2000. And the rise of unconventional gas will occur elsewhere too, with particularly good growth prospects in Australia and China.

Bang goes the UK having to compete with China for gas supplies theory.

Ofgem isn’t necessarily wrong, simply out of date and unable to keep up with the rapid changes going on. Utilities have, until now, been boring, predictable and glacial in the rate of change. We’re sure Ofgem’s report is full of old, respected high paid wisdom. But that is the point. An Ofgem report takes three years to prepare, while in the new world of abundant natural gas speed is measured in months, or weeks.

[Also] what Eon UK can’t admit that is that Kingsnorth shows that CCS isn’t economical in the new world of abundant gas.

Shell’s CEO Peter Voser came out with an interesting statement at the Buenos Aires Forum:

The U.K.’s fears of over reliance on imports of natural gas in the future are overdone because supply of the fuel will remain ample and secure, said Royal Dutch Shell PLC Chief Executive Peter Voser Tuesday.

The focus of the U.K.’s fears – supply from Russia – made up less than 5% of total supply in 2008 and will be a similar proportion in 2020, he said. Shipments of liquefied natural gas and pipeline imports from Norway will be a much larger proportion of U.K. supply, he said.

“The U.K.’s energy challenge is acute. This raises the question why it can afford to dismiss natural gas as a future source of energy.”

It’s clear that shale gas and other unconventional sources, at a minimum, can prop up current sources of natural gas, it isn’t anywhere near as dire in the UK as Ofgem and the MSM are making out and one has to wonder why the fear tactics and the political implications behind those.

7 comments for “Shale – energy future or pie in the sky?

  1. dearieme
    October 18, 2009 at 15:59

    We used to have a big shale oil industry in West Lothian before crude oil out-competed it – the old shale oil companies became one of the sources of BP. It’s not just shale-derived natural gas that (may) be abundant – there’s lots of conventional natural gas too, partly because many failed attempts to find oil do at least find gas. The problem with gas is that although it’s fine as a heat source and as an electricity-generating fuel, it’s not a good transport fuel. You can synthesise petrol and diesel from it using Fischer-Tropsch chemistry, but it’s clumsy and costly. There’s a gap in the market, I suspect, for a process that synthesises transport fuel from natural gas plus coal; that way, the hydrogen:carbon ratio could be got right without much waste.

    • October 18, 2009 at 16:57

      As a layman, my thought is that perhaps we needn’t press gas into being a transport fuel. Leave that as oil and the greenstuff without wrecking the economy over it and alter the way we do work – more from home or localized. For example, there are a hell of a lot of bikes around in our area. Transport, as in carrying goods, in Britain at least, could be done by sea or canal again to an extent, with the road method more expensive. Electric trains?

  2. October 18, 2009 at 20:55

    Simple economics. If the cost of getting it from shale is more than you can sell it for then no go. If you can get it and make a profit then its a go. It will then be delivered as the customer wants and is prepared to pay for.

  3. Peter Mc
    October 18, 2009 at 21:07

    “by sea” (applause)

    “by canal” watch out, GB will read this, go all fin de siecle Stalinist and announce a £50 bn ‘hero project’ to canalize Britain, then money oddly never appearing.

    I talked about this with a civil engineer from a big consultancy a few years ago and he agrees: canals are one of the ways forward.

    On shale: when I hack into the cliffs hereabouts for fossils I often catch a whiff of oil. The old alum industry used the low oil content of the shales to allow them burn for months in the shale and brushwood ‘clamps’. The oil industry came a propecting a couple of decades ago but the oil was not economic. Then.

    • October 18, 2009 at 21:36

      Might be a way forward then?

  4. xlibrl
    October 20, 2009 at 18:32

    Various secondary sources of energy sit waiting devolopment and act as a cap on traditional ones, at between 40 and sixty dollars a barrel of equivalent oil. In the meantime technology changes in exploration and drilling make the traditional sources ever more abundant. In already existing sources, a new technique increased immediately recoverable gas reserves 40% last year. This will only continue. We are accustomed to thinking that when a thing is invaluable, it is scarce. But energy is not scarce, it is just scared. The earth has unlimited supplies of it. To ensure against this possibility, the left invented the carbon joke to play upon us.

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