This page has been archived and commenting is disabled.
Fracked Up: Don't Believe In Miracles
Via Jim Quinn's Burning Platform blog,
There is no doubt that fracking stopped the long-term decline in U.S. oil output. Since the all-time low output in 2006, daily oil production has increased by 30%. Natural gas production has soared even higher, but seems to have leveled off. Ignoring the environmental impacts of fracking, just the economics alone show that shale oil and gas are not the miracle that will save us from the perils of peak cheap oil. Fracking extraction of oil is extremely expensive. If oil prices were to fall to $80 per barrel, there would be no profits for frackers. They would stop drilling wells. So don’t plan on ever paying less than $3 per gallon for gasoline ever again.
Other inconvenient truths about fracking are self evident, but covered up by the MSM and Wall Street shysters.
- To maintain production of 1 million barrels of oil a day from Iraq one needs to drill just 60 new wells a year. Extracting the same amount from the Bakken would require 2,500 new wells.
- A typical fracked well poked in the ground in Oklahoma in 2009 debuted with an output of about 1,200 barrels of oil per day. Just four years later, however, output from the same well has fallen to just 100 barrels of oil per day.
- To double that output from the Bakken, for instance, would require 5,200 new wells a year, and tripling it would require 7,800 and so on. Then, to the horror of all, less than a decade after all that was done, that additional million barrels of oil a day in production would be reduced to just 100,000, no matter what the oil companies do, because of the nature of the formation where the well was drilled.
- California’s Monterey Shale, which the U.S. Energy Information Agency thought contained 13.7 billion barrels of oil in 2011, came up a little light in the loafers. Closer examination revealed the formation to be much more broken up underground than previously thought — so much so that only around 600 million barrels may ultimately be recovered with current technology. That’s a 97 percent downgrade, and there is no guarantee that other rosy predictions of shale oil riches both in the U.S. and elsewhere won’t have similar outcomes.
The best fracking locations were selected first. As time goes on, the new locations will be less productive. The existing locations deplete rapidly. The shale oil and gas boom will be peaking out over the next few years. Don’t believe in miracles.
»
- 12406 reads
- Printer-friendly version
- Send to friend
- advertisements -
But they told me that gas went above $3/gallon because of Katrina. I just assumed they were still cleaning up and stuff.
This fracking will make clean water cost more than four dollars a gallon. I guess that is why the smart money is buying up water rights. Also the smart money is changing laws slowly prohibiting rain capture or pulling out your own water from a well, they want to make sure they get a super great return on their investment.
slavery come back in USA... add to this 50mln in food stamps
But the FedGov says it's our God-given right to get drunk, fire our weapons, burn ten times the fuel required for the job, leave the hot-water running endlessly, and expect 4% growth for eternity.
I would say you do have that right, and the right to do pretty much whatever the hell else you want, as long as you don't hurt others while you are drunkenly firing guns off with the hot water running. Sounds like a blast actually....
Another in an endless series of "fracking is a ponzi" articles on Zero Hedge.
Are you contarctually obligated to publish one every day? Do you get paid to run these stories?
Ponzi? Nay, rather a cul-de-sac!
it,s a hidden code for you to buy a deepwater fleet like SDRL at once in a lifetime price. forward p/e 8 dividend 14%.
PS. I (we) do not pay the usual 30% on the divy in my offshore account because company is from Bahamas . so 14% tax free. Loaded up last two days and will continue to do so.
Thank you for the rational evaluation of fracing. There is no conclusive studies showing any detrimental effects of fracing except we're putting clean water down a hole never to be recovered and half the nation is in the grip of an epic drought. This is not a long term solution, but not for any of the conspiracy theorist reasons.
There is conclusive studies showing any detrimental effects of fracing but they are not mostly in English
Kinda like your comments.
Just kidding, pal. I couldn't resist
Of course if the fracking cracks the rock up to the water table you get Perrier avec methane on tap... as in don't smoke when you go to wash your hands...
I'm so tired of folks on ZH reciting Rick Fox's lies about fracking-induced flaming water taps. The water source he used in his movie was not affected by fracking at all - that water well was drilled through at least four layers of coal, and had been smelling of methane since it was drilled. Had nothing to do with fracking. This is a myth and it has been debunked so thoroughly one would think nobody believed it any more. I guess it just goes to show you that if one repeats a lie enough times, it becomes "common knowledge."
"Don't expect to pay less than $3 per gallon ever again."
Wanna bet?
What will gas sell for during a total economic collapse, where 50,000,000 people lose their jobs and demand for oil drops by 40%?
I would not be the least bit surprised to see exactly that happen, and that was my thought when I read that. That statement assumes demand remains high and growing across the board. If the depression is finally revealed, I would not be the least bit surprised to see gas at 2$ a gallon again. Gas at 2, gold down around 900, silver around 13, S&P down in the 600s again. At least until the fed sets the printers to ludicrous speed(which will likely be double the old 85 bil/month), then it's off to the races
ok you bet on SVXY or SDS and the end of the world ,and I,ll bet on SDRL.
ps . If all that goes down again, and we could see $2 gas(lol), I will not care that I lose 70% or more because of QEx10 . Time is our only friend when you try to invest( put money to work is better said).
It will be SUPERMARIO QE or walking dead.
Gas is already less than $3 a gallon at some stations in New Mexico.
except for just that the former conspiracy theories are now reality...
Which theories would those be numbnuts?
I was at one of those fascinating investment manager dinners in London where they parrot back to you the official statistics fed to us by the true believers, and my table mate was telling me about all of the benefits we will see from fracking. He was somewhat surprised when I recited the reality that fracking takes more energy than it produces, costs more than the profits it produces, and tends to burn itself out faster than anyone expected. A lot of official "wisdom" has bought into the myth of fracked energy ... this is either a good short on the output, or a good chance still to be "a supplier of shovels to the miners."
isn't this same same story from last year? two years years ago? 3 years ago? no it has to 4 years ago and every year since. same story same time what with oil trading around $90 a barrel. relax there is more...much more of these stories coming as long as oil is at around $90 or less. said so a few days ago....only just starting. grab your beer and popcorn and sit back and enjoy the same old story for years and at the same time.
Cost of extraction is passed on to consumers. This is not your everyday zimbabwe, weimar inflation. Dollars are tied to energy at the hip.
Ummm....just filled up for $2.97 this afternoon
Beat me to it. $2.99 about an hour ago. It had been so long.... almost brought a tear to my eye. I suppose this means my nephew-in-law the fracker will be fucked.
I paid $5.00 a gallon yesterday. But then again I dollar cost average with the beer I buy while filling up.
Listen. You 3 ZH'ers are feeling like "RICH" Americans now.
How-bout stop into your local "WALMART" and buy a few 100-packs of tube socks? It should last you about 2 months. Each.
I hear you, but I save money on tube socks by hiring an Indian to clean up after me.
Damn Indians
Haha nice. Why waste a good tube sock like that.
I don't wear socks.
What's interesting is that, in terms of silver coin, a gallon of gas is not significantly more expensive today than it was 50 years ago. It's not that the commodity is becoming more expensive, it's that the dollar has lost96% of its purchasing power since Jekyll Island!
With compliments from your ZIRP deep in debt corporate oil friends and your Venezuelan socialist from DC.
EROEI it is.
From 1:100, to 1:50, to 1:30
and counting.
As of today, regular unleaded gasoline is selling for $2.99/gallon at my local station.
I think I know what state you live in. :)
The one that used to be an independent country?
Yeah, $2.87 yesterday at Kroger.
Listen Cherry.
Any thoughts running threw your head about who to "THANK" for your new found American "PROSPERITY"?
ISIL perhaps?
I blame the Puppy Thieves.
Some folks posted the same above you. It's not that cheap where I am, but if you're paying those prices, I have a feeling that a certain group of politicians will be taking credit for that over the next month. Then of course in Dec the price will rise again.
Average price per gallon of gas in California? $3.72 per gallon
http://www.californiagasprices.com/Prices_Nationally.aspx?d=metro
Highest gas taxes in the U.S.? California at 73 cents per gallon (54.6 cents for state of CA and 18.4 cents Federal)
https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States
California Air Resources Board plans to implement California's Cap and Trade program in January 2015 which will increase California's gas taxes by up to an additional 15 cents per gallon
http://www.mercurynews.com/opinion/ci_26428267/hidden-gas-tax-stop-this-...
But miracles are so much fun. I was counting on the Virgin Mary to help push my Jeep up-hill, and then you come along and tell me to be all realistic and shit; that's no fun.
EROEI is so inconvenient...
$4.28/gall. here / paradise tax. (yes it's a rip-off).
abiogenic, bitchez ...
If the deep-hot-biosphere exists the last thing we should be doing is extracting it's fucking contents.
must harvest the CORE!
How does ZH feel about solar?
That's a moot point! The EPA won't allow anybody to build a solar plant. Just ask the CAWCD in Arizona. They've been told "no".
solar for domestic use only
Why would it be for domestic use only? Why wouldn't it be for any use that it is an efficient alternative?
First is a low output - so no use for factories and plants
Second high cost of production and Recycling
> it's mobile and good for small houses.
As long as its not federally subsidized I don't see where anyone would have a problem with it. But as pointed out by our Russian friend, on residences or a solar farm in a community (for example).
These solar ovens they're building in the Mojave are a monstrosity.
Solar - expensive to manufacture and produced entirely via oil-driven infrastructure, meaning the cost of electricity goes up proportionally to the cost of fossil fuels. No material byproducts during electrical generaiton - no plastic, fertilizers, pesticides, textiles or asphalt etc.
Solar is a short-term, limited-used, feel-good, non-solution to a big problem.
What's better than solar? Eat less, drive less, buy less, reproduce less... and complain less.
Like George Carlin said, if your needs aren't being met, drop some of your needs.
If the realistically economic oil is finite then we cannot just go on using it willy nilly. Slowing consumption and directing consumption toward something that 'can' provide energy for a fairly long time with minimal recurring costs then that would seem the logical way to use what is left.
Like I said, oil is more than energy. It's' "stuff" we can't live without. In agriculture it made possible growing much more food per acre, which in turn, allowed population increase and disproportional urbanization.
With oil gone the amount of net energy agailable will go down. That is the key. "Net" meaning - total amount from all the sources. No getting around that fact. We are alreayd using oil plus everything else to the best of our abilities. Eventually it'll be everything else minus oil.
Looking forward, if we were talking strictly electricity, fusion would be the best option, but I've been following the last 50 years of research religiously to say with confidence that it's a pipe dream... unless LHC people discover something more practical than a Higgs Boson.
No way out otherwise. Party's over.
I paid $3.07 this morning. Jim says there's NO WAY that last seven cents is coming off though. Bummer.
"High" yield debt.
Low yield well.
Yee Haw!
But plan on paying over $4.00 for a gallon of pure water once the aquifers become completely contaminated with their waste...
I live in Florida. I'll sell you all the water you want for 2.99 a gallon. Just bring your own buckets.
wait a minute..you got some land for sale too?
I do and like the man/woman said, "bring your own buckets."
oh great now we got fracking shills just like everything else
32 ounce bottle of Aqua whatever reverse osmosis sewer water is selling for $2.00 in stores now?
Fracking does not contaminate the water aquifer. You need to learn something about geology before spouting your mouth off.
I don't understand fracking fundamentals. And I lived out there in the heart of it.
Are any of these companies actually worth investing in? I saw them firsthand burning off fuel. Didn't sit well with me.
they are spending for every 1$ profit - about 1.5 -4 dollars.
Another ponzi...
not if you're printing dollars
The best play is to invest in midstream infrastructure MLPs (focused on the transportation and storage part of the value chain), not the producers or refiners. The AMJ is a decent way to do this. Midstream MLPs have outperformed the S&P 500 by 9x over the last 15 years. Heavy investment in energy infrastructure is still required because of decades of under-investment (as the conventional wisdom wrongly presumed that US oil and gas production was in a state of permanent decline).
Fracking is a ponzi scheme enabled by the investers' ignorance of EROI but with the obfuscation of debt and share pumping, it can be difficult to spot for the average "rube".
Does your car run on stupid, paranoid theories like that, or diesel?
.
When you compare EROI (energy return on investment) with ERCOI (extracted rube cash on investment), the gas produced by fracking is of secondary importance.
extracted rube cash on investment
Yes, I suppose the fact that some gas is actually extracted is rather secondary to the important business of pumping wealth from the ignorant!
Fracking isn't a ponzi. It's a conversion scheme like ethanol substitution. You do a little run around and turn one form of enery into another, plus environmental contamination.
You get a thing you think you can't do withotu by sacrificing another thing you think you can do without. Both of which are technically wrong, but who cares. Can kicking's what all the cool kids are into these days.
"So don’t plan on ever paying less than $3 per gallon for gasoline ever again. "
Because...we were all seriously planning for the day when gas would go back under $3/ gallon?
"So don’t plan on ever paying less than $3 per gallon for gasoline ever again"
Does not apply to readers in South Carolina.
what is so difficult to understand about the word abiogenic ... ?
why bring "biosphere" to a discussion that does not welcome it ?
oh, and leave the "deep" and "hot" modifiers in that browser
pointed to the .xxx region of the internet.
I remember on the run up $90 per barrel oil equated to around $2.75 at the pump. Now most places are still around $3.35.
Call it the gasoline contract trader premium.
The funny thing about EROI is when the cost of commodities comes down, so does the base cost of energy invested.
There is no true price discovery until the paper trade is ended.
$2.99 per gallon for regular unleaded at the Walmart in Smyrna, TN yesterday.
There are two ways to frack oil shale (NOT shale oil. there's a difference)
In situ and ex situ. Or the EROEI Twins.
Ex situ involves a giant jumbo steam (?) shovel and a giant jumbo dump truck, with wheels as tall as the Arc de triomphe. The capacity of the truck equals one and a half Plaza Hotels.
GJ shovel fills the GJ dump truck with the oil shale, which hauls it to a GJ retort where it is retorted into viscous crude oil mixed with a thinner and piped away, Oh, Danny Boy.
In situ is better, but may be pricier. An area of oil shale is marked off and holes are drilled in the surface and heating elements are placed down them, the object of which is to raise the temperature of the oil shale 500 (some say as much as 900) degrees fahrenheit. (Give my regards to Mordor. Remember me to Sauron Square.)
Something called an ice wall is built around the perimeter to encircle the heated area to keep all the good stuff in. The whole thing then simmers for 4 or 5 years.
The oil shale oil drips down and is captured with perforated pipe, the way shale oil is.
Okay, the question is 'which has a higher EROEI? In situ or ex situ?'
Submit your answer along with a sase to 'No Time for Levity' Post Office Box etc etc.
Paid 2.93 this afternoon but refuse to get excited and think it's "cheap gas" because it drops a few cents below 3 bucks. It still cost me $53 to fill my tank. Makes me long for the early days of the "great recession" when I was paying around $1.85.
Of course if I really gave a shit I'd drive something that gets more than17 miles a gallon.
I pay $4.29. But that's for 93 octane to feed my 2004 Ford Lightning. Better yet, it only gets about 10 mpg. ;-)
My old Ford Ranger pings badly due to performance tuning, so I also run the 93 in that. Said tuning drops the V-6 mileage to around 16 mpg.
My motorcycle is a premium only vehicle, so I run the 93 in that as well. Gets around 35 mpg or so.
Luckily I live close to work. LOL
There sure are a lot of people driving BIG trucks, camaros, moostangs, chargers, challengers, and other performance vehicles.
Guess high gas prices must not be that big a deal.
Here are a few recent optimistic articles on fracking; some of their contents, especially the first one, undermines the claims in the head post:
http://reason.com/archives/2014/09/19/a-shale-gas-and-oil-bubble
http://wattsupwiththat.com/2014/09/22/study-shale-gas-impacts-have-positive-and-negative-benefits-but-theres-no-reason-not-to-make-it-part-of-the-energy-mix/
http://online.wsj.com/articles/fracking-gives-u-s-energy-boom-plenty-of-room-to-run-1410728682
Just as "global warming" made it's Orwellian journey to "climate change" when there wasn't any "warming" now "peak oil" has made a similar journey to "peak cheap oil" when there wasn't any "peak".
The entire 'peak oil' concept is based on a fallacy - that energy does not respond to supply and demand, and will remain 'cheap' until it is gone, rather than being more and more expensive as demand increases.
The entire 'peak cheap oil' idea is a similar fallacy, still proposing that energy does not responde to supply and demand. Only now it proposes that oil will simply get more and more expensive until it is gone, and that no new energy sources will become available as a result of the rising price, and no different ways to use the energy will respond to the rising cost of refining crude into gasoline and diesel.
In fact, both will happen. The only question is how much economic pressure will be required to break the relevant government-enforced cartels. But like a government edict in defiance of gravity, all governments will eventually bow to the Natural Law or they will disappear.
Peak Oil is a theory originated by a well respected geologist named M. King Hubbard in the (early?) 1950s. I suggest that there is merit to the theory although, like many other things, the timing is problematic. It should also be emphasized that, historically, the petroleum industry has been one of the most targeted industries for government intervention (and, therefore, regulation). In addition, the government controls access to much prospective public lands and can control the location and rate of exploitation to a considerable degree. If they want to speed it up, it is sped up (wars of survival) and if they want to drag it out or exclude it from development (environmentalism, recreation, set asides, etc.) It is dragged out or prevented.
More direct positive impacts from the "fracking revolution"...crock o sheet. MA electricity rates to increase 37% due to increased nat gas costs...
http://www.boston.com/news/local/massachusetts/2014/09/26/massachusetts-...
Inefficiencies in 'fracking' or 'Shale Oil' are entirely due to over-dependence on a narrow band of fuel types. The over-dependence on too-few types of fuel is due entirely to government cartelization of industries, and protection of companies from newcomers through regulation.
If the 19th century econonomic and industrial environments were as moribund as those today, we would insist on expensively chemically modifying crude oil into something resembling whale oil or coal.
It is ridiculous. Transportation is entirely dependent on diesel and gasoline because governments regulate out of business manufacturers of other types of engines who challenge the internal combustion engine.
There is no such thing as economic homeostasis. It does not exist. The only choice is between agile change and extinction.
This high-time-preference view of the world that demands money now in return for more and more marginal utility, enforced by a gun, is simply a form of organized banditry.
This lust for loot is a complex way of committing civilizational if not species-wide suicide.