Submitted by Adam Taggart via Peak Prosperity blog,
If you've watch the previous video chapter on Peak Cheap Oil, you may be wondering how any of that could be still be true given all the positive recent stories about shale oil and shale gas , many of which have proclaimed that “Peak Oil is dead”.
The mainstream press has faithfully repeated every press and PR statement made by the shale producers. And if you simply followed the headlines, you might even believe this about the US:
- It is soon going to be energy independent,
- Its oil production will surpass even Saudi Arabia putting it in the number one spot,and
- The US will even be exporting oil again like the days of old.
The only problem with this story is that it is misleading in some very important ways. And entirely false in others.
Here are there are five main things to know about the shale plays.
- They deplete very quickly. The typical shale, or tight rock, well production declines by 80% to 90% within three years.
- They are expensive. All oil and gas coming form them is several times more expensive than what we got from conventional oil plays.
- They are environmentally damaging because the fracking fluid is highly toxic and much of it escapes during the blowback process and sometimes water wells are contaminated.
- Because each well has low flow and depletes quickly, massive numbers of wells must be drilled creating significant infrastructure damage to roads and bridges. Currently no state or municipal authorities are capturing anything close to the total cost of the infrastructure damage from the shale operators which means taxpayers are gong to be left paying those bills.
- Not all shale plays are created equal – some are vastly superior to others. And even within a given play there are sweet spots and dry holes which can only be determined by punching a well in and seeing what comes out. Some call this the ‘mapping by braille’ approach.
When we put all of these together it adds up to a very expensive set of plays that will only last for a very short while.
To the extent that mainstream press has been conveying the message that peak oil is dead and that our energy concerns have been laid to rest is the extent to which they have been misleading us.
In many ways, the increased crude output from shale plays has bought us some time. We can either use the temporary boost in energy supplies, expensive though they are, to build towards a future when these too eventually run out, or we can use them as an excuse to carry on with business as usual.
If we do choose business as usual as our operating strategy - I use that word very loosely – then we will just march straight into the shale oil peak around the year 2020 and be very disappointed with ourselves and our utterly inappropriate transportation infrastructure.