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Shale Gas Reality Check
Shale Gas Reality Check
In October 2014, Post Carbon Institute published the results of what likely remains the most thorough independent analysis of U.S. shale gas and tight oil production ever conducted. The process of drilling for shale gas and tight oil is known colloquially as “fracking” and has drawn a great deal of controversy—considered by some as an energy revolution and others as an environmental and human health catastrophe.
Much of the cost-benefit debate over fracking has come down to the perception of just how much domestic oil and gas it can produce and at what cost. To answer this question, policymakers, the media, and the general public have typically turned to the U.S. Department of Energy’s Energy Information Administration (EIA), which every year publishes its Annual Energy Outlook (AEO).
In Drilling Deeper, PCI Fellow David Hughes took a hard look at the EIA’s AEO2014 and found that its projections for future production and prices suffered from a worrisome level of optimism. This lead us and others to raise important questions about the wisdom of some energy policies and infrastructure projects (for example, the approval of Liquified Natural Gas export terminals and the lifting of the crude oil export ban) that have been pursued largely on the basis of the EIA’s rosy forecasts.
Recently, the EIA released its Annual Energy Outlook 2015 and so we asked David Hughes to see how the EIA’s projections and assumptions have changed over the last year, and to assess the AEO2015 against both Drilling Deeperand up-to-date production data from key shale gas and tight oil plays. What follows are Hughes’s findings regarding shale gas. The AEO2015’s tight oil projections will be reviewed in early September 2015.
…click on the above link to read the rest of the article…
BC Natural Gas Reserves Inflated, Revenues Overstated, Report Finds
BC Natural Gas Reserves Inflated, Revenues Overstated, Report Finds
Analyst David Hughes offers another challenge to the province’s nascent industry.
A new report on liquefied natural gas prospects for British Columbia challenges government claims that gas exports will lower greenhouse gas emissions, or generate $100 billion in profits for the province.
The report published today by David Hughes, one of Canada’s foremost energy analysts and a former federal government geoscientist, also contends that the provincial government has vastly overestimated the amount of gas available for export.
The National Energy Board has approved 12 export licences to Asia or the United States with another seven under review along the B.C. coast.* The provincial government, which has lowered taxes and royalties to promote the new industry, expects only three to five terminals may be eventually built.
Due to depressed oil prices, global competition and cost over-runs in the capital intensive industry, not one project has yet announced a final investment decision.
Government fact sheets claim, for example, that “British Columbia’s natural gas supply is estimated at over 2,933 trillion cubic feet,” or enough gas to last 150 years.
But Hughes notes the B.C. Oil and Gas Commission estimates raw gas reserves (gas that can be drilled and recovered based on existing economics and well data) for the province at 42.3 trillion cubic feet.
The commission calculates “marketable resources,” or what industry might be able to find, drill and frack — a highly uncertain figure, due to high decline rates and the spotty nature of unconventional shale resources — at 442 trillion cubic feet.
As a result, Hughes calls the government’s inflated figure of 2,933 trillion cubic feet, or 70 times more than proven reserves listed by the commission, “a false and irresponsible statement.”
Windfall profits questioned
Government claims about earning windfall profits from gas exports also have no basis in real economics, Hughes argues in his report.
…click on the above link to read the rest of the article…
Petroleum Truth Report: David Hughes Weighs In on The Fracking Fallacy Debate
Petroleum Truth Report: David Hughes Weighs In on The Fracking Fallacy Debate.
In the current debate about the Nature article “The Fracking Fallacy,” the discussion has focused on estimates of cumulative production of shale gas plays by the Energy Information Administration (EIA) and The Bureau of Economic Geology at the University of Texas (UT/BEG).
David Hughes provides another estimate in his recent post “Fracking Fracas: The Trouble with Optimistic Shale Gas Projections by the U.S. Department of Energy,” a summary of his comprehensive study of all U.S. shale plays Drilling Down published by The Post Carbon Institute.
The Fracking Fallacy debate is important because it casts doubt on the reliability of government estimates of our natural gas supply. If U.S. gas production is in decline by the early 2020s as described in the Nature article, or sooner as I suspect, then important policy decisions about the export of natural gas and the retirement of coal-fired electric power plants have been based on questionable information.
Cumulative production estimates are interesting but do not address the economics of shale plays. Proven reserves provide a more meaningful estimate because they supposedly represent volumes of oil and gas that can be produced commercially at a particular price.
