Drum Goonies Stooged on Shale Gas

(Another long one, girls. Grab a nightcap - it will be worth it:))

The lunar space goats of the Oil Drum fired this ballistic warhead into orbit back in 2006:

The scud missile erratically pierced through the lower-stratosphere, trailed by this sooty sky-writing about N America's natural gas production: “Doesn't this graph just chill you?”

This scary infection - perhaps - largely started from one source: the two-headed peak swine of Matthew Simmons and Mike Ruppert, who, in a conversation back in 2003, crooped about an impending natural gas shortage for the US, predicting a “natural gas crisis in two years,” warning that America’s natural gas production was about to “fall off a cliff.”

This peak gas influenza quickly metastasized into the fanatic, screaming lungs of practically every high peak priest, including:

Richard Heinberg,

James Kunstler,

LATOC,

Mobjectivist,

Dieoff.org

You get the picture...

Now personally, when I first heard this - way before shale gas become prevalent - I though this was the biggest cargo ship full of horse shit rotting up the port: “We’ll just buy gas from somewhere else,” says your average common sense genius; and it turns out America HAD embarked on the construction of LNG import terminals (and had a number in place), plus America was already well suited to handle vast amounts of imported natural gas.

But then came 2008 - word of shale gas started leakin’. Where was the Oil Drum on this? They had this to say:

But until some solid, repeatable well data emerges, the Haynesville will remain more diamond in the rough than diamond ring.

[...]

So there you have a brief explanation of how the new technology is slowing, though it won’t stop, the declining gas reserve in the United States

This was posted April 10, 2008 - right when America was experiencing a near-9% increase in natural gas production, the biggest increase since the late-1950s! While America was tootin’ dimethyl sulfide, the peak herd was swattin’ their fly encrusted asses in the doomer feedlot, percolating their Oreo pupils on doomer feed pumped with $100+ oil PGH. Tasty!

Finally, during September of last year, when the main stream media was catching a whiff, the Drum ‘fessed up:

Navigant Consulting Inc (NCI) recently prepared a report called North American Natural Gas Supply Assessment on behalf of a natural gas organization called the American Clean Skies Foundation. In this report, NCI estimates the amounts shale gas and tight gas production can be increased in the next decade. These estimates suggest that US natural gas production can be ramped up by nearly 50% by 2020. How reasonable are these estimates?

[...]

My analysis indicates that NCI is correct in some respects. There is indeed a great deal of unconventional natural gas resources in the United States, and recent improvements in technology point to the possibility of significantly greater production.

[...]

EIA has recently reported a big increase in US natural gas production (8.8%, comparing the first five months of 2008 with the first five months of 2007). Some have suggested that the EIA numbers must be wrong. It seems to me
that what we may be seeing is the effect of a recent technological
breakthrough.

No, Drum geeks, this wasn't a technological breakthrough we witnessed - it was a psychological breakthrough(!): you demonstrated to the world that you, like your fellow peak diaper-changing neanderthals, DO NOT demonstrate a clear-headed understanding of technology! Now we have a massive, gaseous gas glut - something I gave a heads up months ago.

Of course the diehard peak Rambos always have a standard fallback to everything in every forum: “But shale gas is expensive; it’s EROEI is too low to make sense for America’s long-term energy future… the wells have a short shelf-life. Blah, blah, blah…”

While it’s true shale gas will remain more costly than conventional gas production, I’ve been arguing for some time that as the industry comes to better understand shale gas formations plus effective production techniques, the production costs will decline, production will go up, and it will become more efficient. I’ve argued this before on the Oil Drum; naturally, my comments were deleted (they do that?), so call my a liar. But while the peakers are bitching, people out in the field are working hard:

"There will be many Barnetts," according to Robert Aquilera, one of the world's most foremost experts on tight gas engineering. What else does Robert say on shale gas's price prospect? Here's an excerpt from his interview with Energy Tribune (click the "many Barnetts" link):

ET: Speaking of prices, what is a sustainable price for natural gas? I ask because I’ve heard some producers insist that shale gas wouldn’t be profitable when prices are under $8. Now, I’m hearing $5. What’s your take on the relationship between the relatively high cost of drilling for tight gas and the market price which has been so volatile lately?

RA: My take is that $5 to $6 will work in most cases and will make most shale plays competitive.

In other shale gas related news...

Petrohawk's record-setting shale gas wells

Shale gas expected to meet half of N America's needs by 2020.

Plenty of foreign interest in shale gas, including China, Europe (here, here, here), Canada (here, here).

Despite scale-backs in US gas drilling, Chesapeake Energy is ADDING rigs to drill the Haynesville Shale, Barnett drilling is holding steady.

Haynesville poised to become the world's largest gas field by 2020.

Haynesville profitable at $5 per mcf, $4 per mcf.

And so on…

Remember - shale gas production is in its infancy. The Drum's wise peak blowhards - who, along with the other peak priests, foretold an impending gas shortage in the US years in advance - discounted shale gas right when the dimethyl sulfide was leaking up right under their noses!! I've runned this point into the ground, but it's this - along with the peak oil community's many blunders - is why the Drum cannot be taken seriously.

Anywho, for a short recap of the past few years, here’s a graph. Guess who turned out right? (I would have a better graph, but Blogger didn't like my Adobe pick for some reason. I'll get a better one up when I can.)



- Brewskie