Friday, May 29, 2009

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,



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

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


  1. This shale gas story is completely amazing. Yes, the Peak Oil community looks the other way as hard as possible. Why? We can run truck, busses and even cars on NG. Oh! You mean we won't all die?
    Yeah, you may (and only maybe) suffer the huge death-defying reality of filling your car up with NG, or using PHEVs, or BEVs. How horrible!
    Your other post was dumb-founding too. There may be another huge field on top of the Haynesville field.
    I wonder if a single drill or hole can go down and then sideways at the first gas layer, and then down and sideways through the Haynesville
    field. If so, I expect honking good results in the future. I agree with you--a long-term glut and improved extraction techniques will keep gas cheap for a long time, possibly we are talking a century or two.
    I worry about Peak Banking, not Peak Oil.

  2. Another great post! Your fact-based diligence underscores why the May 2009 hits at theOilDrum are down 50% from THE PEAK.

    I can't recall a single prediction they've made wrt energy or the economy that they've got right since inception.

    Last week they were still eagerly awaiting $200/barrel oil 'cuz Matt Simmons told 'em that the UN is wrong: global population will not be 9 billion in 2050, there will be 25 billion people. Really??

  3. Good post. I can’t wait to see how the doomer crowd reacts if there’s a similar breakthrough in oil extraction technology.

    I’m also surprised Benny Cole hasn’t been around to comment on this yet. This gas stuff is right up his alley  LOL.

    Perhaps you could cross post on Peak Oil Debunked while JD is taking a break, or at least announce your new posts in the comments section over there.

  4. Benjamin is Benny Cole. Also proudly known as "Reargas" Before than "Centipede Glut," and before that "Peak Demand."
    Yeah, POD needs help. Even R Squared is avoiding the natural gas story. The NG story just kills the doom stuff.

  5. I should have guessed that was you Benny. It’s good to know you’re still around.

  6. Researchers in Norway are experimenting with a process called "smart water" which is some kind of ionization of seawater which increases oil extraction by up to 60% in limestone or chalk reservoirs. This kind of reservoir is lower performing and also comprises up to 40% of the world's current reserve pool. A hidden resource if you will.

    But on the gas: the EROEI of the gas is "low".
    That's only a problem if we're using oil or gas to extract the gas.
    We're NOT. Gas is extracted by electric or hydraulic drills and tubes. We don't need gas or diesel to run it. It could be run equally well by a big friggen windmill on site or else a nuke or some solar panels, or hell, a bunch of horses running on a treadmill. No oil required. Thus who cares about the EROEI.


  7. B Cole,

    To answer your question, one would need solid data on the exact proximity of the two fields in relation to each other. Since I don't have that kind of data, I can't answer the question.

    I also saw your CNG vehicle comment on that post - good for you, that's awesome! I plan to do a future post on CNG vehicle usage around the world, and infrastructure being built to suit CNG vehicles. It just depends on when I get the time.

  8. Freddy Hutter,

    Population is declining in developed countries. This is likely a trend we'll see as developing countries blossom: women who are empowered and educated desire fewer children than their impoverished counter-parts. You can't take anything that comes out of Simmons's mouth - not when soaked his pants over Ghawar's 30-35% water cut. What... an oil field that's been in production for nearly six decades isn't supposed to have ANY water cut!?

  9. Yogi,

    B. Cole is everywhere!! I’m sure quantum physicists are writing their equations on the man right now...

  10. DB,

    The shale gas EROEI crap is just belt of blanks the peak chickens are firing with their 50 calibers - they've got a quick reply to everything. Gas production was up nearly 9% last year, the biggest since the late-1950s, and we’re talking shale gas production in its infancy. That smokes their EROEI argument.

    Thanks for the heads up on the "smart water" research, I'll look it up.