Jun
18
The Anti Fracking Crowd Gets Very Bad News
June 18, 2013 | 2 Comments
North American Natural Gas Shale Areas as of 2011. Click image for the largest view.
The news for the natural gas industry, consumers and landowners lucky enough to get a well on their land is tremendously helpful. Its also a huge and crushing disappointment for the anti fracking crowd. Hydraulic fracturing pays off in a very big way.
The analysis indicates that the EROI ratio of a typical well is likely between 64:1 and 112:1, with a mean of approximately 85:1. This range assumes an estimated ultimate recovery (EUR) of 3.0 billion cubic feet per well. This is similar but significantly higher to the EUR of coal, which falls between 50:1 and 85:1.
Obviously the coal folks are less than thrilled, too. For now though over 75% of our current electricity needs come from a mix of gas and coal, and 83% of our homes are heated by gas. Luckily they are the low cost leaders except for nuclear.
U.S. utilities have ordered 20 reactors shut, the most in a three-year span since Chernobyl’s aftermath, saddling the industry with a possible $26 billion in costs to pass along to consumers. The nuclear fraction of power generation is going to shrink – a massive cost instead of a savings due to the political environment built up over two presidential election cycles. And the technology remains stalled in bureaucratic red tape machine and a paper blizzard.
Lead author Michael L. Aucott said in the Wiley press release about the study, “Our analysis indicates that gas can be extracted from shale efficiently, from an energy perspective. The energy return on (energy) investment ratio (EROI) does seem to be at least as favorable as coal. However, a comparison with coal is difficult. There appear to be large amounts of coal still available. Estimates of the amount of gas available from the shale plays vary widely. It is not clear yet whether there is anywhere near enough to rival coal over the long haul.”
Aucott concluded with, “There are concerns about water pollution and other environmental impacts associated with shale gas production. With the assumption that these can be managed, and that production quantities remain consistent with initial production data, the favorable EROI suggests that shale gas will be a viable energy source for quite some time.”
The value of a fuel’s long-term usefulness and viability is judged through its EROI. The EROI had been for a few years the darling of the peak oil enthusiasts. Now its come full circle for consumers, business and policy makers to use productively again.
There is sure to be some blowback from the opposition. But to temper things right at the start Aucott and his coauthor Jacqueline M. Melillo used natural gas records obtained from horizontal, hydraulically fractured wells in only in the Marcellus Shale region commonly identified as of Pennsylvania and New York. The study was conducted using net external energy ratio methodology and available data and estimates of energy inputs and outputs. The Marcellus Shale is only one of several fields in active development and not necessarily with the best economics, but certainly is close to a huge hungry market.
The curious part of the back-story is Aucott and Melillo aren’t claiming a university association. That comes as no surprise as the results are going to be quite a political “hot potato”, right or wrong, for years to come. Still, a little googling will reveal the pair is worthy of the peer-reviewed paper getting published. Your humble writer will respect their privacy.
The last point from here is noting the study illustrates why the board of directors at Chesapeake Energy ran off co-founder, retired chief executive officer and former chairman Aubrey McClendon. And shows the grounding of the latest news that McClendon is pitching Wall Street on his new energy company for taking another shot at the US energy boom with perhaps $1 billion of startup funds.
The only way – the only way possible to screw up the U.S. energy economy is for politics and bureaucrats to get further involved.
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Many may be too young to remember the artificial shortage of natural gas caused by government pricing. But back in the 1970’s the government capped the price of gas moved on interstate pipelines. That led directly to a shortage of interstate gas.
In Texas, we had no statewide price cap and so we had plenty of gas that moved within our statewide pipeline. Of course we were paying 3 times the amount they were for gas in the NorthEast. But the price stimulated supply.
So what happened?
One cold winter that SOB Jimmy Carter nationalized our Texas gas, built a spur between the Texas Pipeline and the US pipeline and sold our gas to Democrat states up North. And, to add insult to injury – Mr. Peanut sold them our gas at 1/3 what we were paying.
An interesting question is should we look to create LNG exports fom US. Or is it in the US best interest not to ? Does this lead to better costs for us a consumers and industry?