Why unconventional fossil fuels are no Panacea

Mention “peak oil” to many people these days, particularly those on the political right and they’ll generally respond by suggesting that this was “solved” by Shale Gas and Shale Oil. Such notions are largely driven by the constant optimistic hype regarding unconventional fossil fuels that are spread by its promoters, not to mention the more ill-informed elements of the media. As I pointed out here, even George Monbiot has been taken in by such propaganda.

Unfortunately, much like the right wing hype of the “warming has stopped and now the world is cooling variety” (a typical example of such silliness can be found here, with a rebuttal from Phil Plait of Slate.com here and the UK Met Office here), the true facts and figures present a somewhat different picture.

David J. Hughes of the Post-Carbon institute  has a report out called “Drill baby Drill” which suggests that while there has been quite substantial growth in Shale gas and tight oil (otherwise known as Shale oil) production recently, there is a limit to how much of America (or indeed the world’s) energy can be derived from such sources. Furthermore, any boost to production from such sources will likely be short lived (as in a few decades at most).

Part of the problem with Shale gas or tight oil production (aside from the environmental problems, which I highlighted before) is the very large quantity of wells that need to be drilled to support production. While a small scale conventional oil field can be supported by just one or two wells, a similar sized Shale oil/gas field needs dozens of them.

Figure 1, Declines in Shale Gas Prospects [Credit: The Oildrum.com and Arc Financial Research (2012)] Note Dr Hughes (2013) reports suggest that decline rates might actually be much higher than illustrated above

Figure 1, Declines in Shale Gas Prospects [Credit: The Oildrum.com and Arc Financial Research (2012)] Note Dr Hughes (2013) reports suggest that decline rates might actually be much higher than illustrated above

To make matters worse there is the very sharp decline rate of such wells. With a typical single pump oil well, you’d expect a good few years or decades before the field “peaks” in output and a decline rate of between 3 – 10% per year afterwards. A fracking operation well can peak within a year and can see decline rates in excess of 20 – 50% (meaning you’ve potentially got a dry hole after just a few years operating!). Naturally beyond a certain tipping point you’re drilling new wells as quickly as you can not to expand production, but to just replace lost production from wells that are spent or in decline.

A further complication is the amount of land such drilling operations take up. Large swades of the American countryside are increasingly being eaten up by such fracking rigs. Furthermore fracking operations, particularly tight oil production (like Tar sands) also needs substantial quantities of water. Both to aid in the production activities but also to “flush” away the various “nasties” that get such operations produce. Of course, as fracking and shale gas have been “found out” by the public (thanks to that film of a few years ago “Gasland”), people are less willing to tolerate such operations on or near their land. This eventually will lead to a major squeeze on such fracking operations. Indeed the ramp up of production from some fields (as Hughes report suggests) is nowhere near as high as supporters would like, suggesting that only one or two of the larger shale fields (both gas and oil) are actually economically viable.

Figure 2, Intensity of Shale Gas wells on the Barnett Shale Field, note that black dots indicate the top 20%, representing multiple wells [Credit: Hughes etal, 2013 http://www.postcarbon.org/drill-baby-drill/ ]

Figure 2, Intensity of Shale Gas wells on the Barnett Shale Field, note that black dots indicate the top 20%, representing multiple wells [Credit: Hughes (2013)]

Of course I find it amusing how one of the complains I hear about wind power from right wing (nuts) is the amount of land that wind farms take up…obviously they’ve never visited a fracking operation! Nor so much as looked at the mess on Google Earth that the tar sands are creating (big enough to be seen from space! I discuss the environmental disaster that is the tar sands here).

Figure 3, Anti-wind farm protests

Figure 3, Anti-wind farm protests

Given that the best potential well locations (often referred to in the industry as “plays”) were likely drilled first, much like a fruit picker first goes for the juiciest low hanging fruit on the tree, operations have to move on to less promising “plays”. Pretty soon drilling rigs are running 24/7 just to stand still. Obviously beyond a certain tipping point the entire fracking operation in that area enters into a state of terminal decline (i.e. it peaks in production) and no matter how many wells you drill, production will continue to fall, until the whole field is essentially spent.

Hughes report suggests that the day with this finally occurs may not be that far away. While Shale gas supporters claim it’s a boom in production that will last centuries and power the entire United States, the data (drawn from official DOE and EIA figures) suggest a temporary boost to domestic production for a decade or two.

Figure 4, Growth of Shale gas production by field, note plateau after 2011 [Credit: Hughes et al (2013) http://www.postcarbon.org/drill-baby-drill/ ]

Figure 4, Growth of Shale gas production by field, note plateau after 2011 [Credit: Hughes (2013)]

Already Hughes, notes shale gas production has plateaued. Its current output levels are at around 26 billion cfg/day (about 189 mtoe). That might sound like a lot until you realise that current US gas demand is running at about 25.4 trillion cfg/yr (or about 60-80 billion cfg/day once you account for seasonal variations). This means that shale gas output within the US can only meet about 37 – 32% of current US gas demand. Total US energy consumption is currently hovering around about 2,200 mtoe. So, neglecting conversion losses and cycle efficiencies (which for certain energy pathways from natural gas to vehicles for example would be significant) you would need to increase shale gas production about 12 fold, just to meet current US domestic energy demand.

I choose my words “plateaued” carefully, as it’s not clear yet whether this is a “peak” in shale gas production or merely a pause in the rate of growth. As I reported in a previous post (“is Shale Gas a Fracking Ponzi scheme”) many shale gas “plays” are simply not economic. Its costing more to produce the gas than the company can get selling it on the open market. As Hughes reports, this has resulted in a move away from dry “gas” fracking operation over to operations that extract both oil and gas.

This is also one of the reasons why there is talk of exporting shale gas to Europe or Asia. Not because they are awash with the stuff in America, but because the higher retail gas prices in Europe and Asia is the only way to make Shale gas competitive. Of course the implication of that would be that Americans take all the environmental damage associated with shale gas drilling, have their water supply polluted, Europeans and Asians get the gas and a few mega corps make all the profit. Could someone please point out to me what’s in it that for the average Joe in America?

The factors above probably explain why the EIA has begun to cut its forecasts as to the potential extractable reserves of Shale gas. They’ve pushed such “theoretical reserves” (i.e. not all are proven reserves!) down to 579 trillion cfg, or about 24 years supply at current production rates, a 42% drop on previous estimates. Of course that doesn’t mean all this gas will be produced, nor that we can maintain production at current levels for 24 years. In all probability there might be some future growth, before output peaks and then sharply declines. Indeed the EIA suggests the bulk of these reserves will be consumed in the next two to three decades. Which implies shale gas cannot function as a long term solution to America’s energy needs.

And tight oil? Tight oil (otherwise known as Shale oil and confusingly not to be mixed up with oil shales) production began a bit after shale gas fracking so it’s a little behind the curve. Hughes, again based on DoE and EIA figures predicts production ramping up from a current output of 1.2 milion bbl/day to a maximum of around 2.2 million bbl/day in 2017, before declining sharply.

Figure 5, Past and projected future production of tight oil [Credit: Hughes etal (2013) http://www.postcarbon.org/drill-baby-drill/ ]

Figure 5, Past and projected future production of tight oil [Credit: Hughes (2013)]

Again, to a journalist from Fox News who knows absolutely nothing about energy production figures, 2.2 million bbl/day probably sounds like a lot. And indeed it would be more recoverable oil that one is likely to find in the ANWR  (if indeed, as I discussed before if there is recoverable oil in the ANWR). However its small beer next a current US oil demand of around 20 million bbl/day (i.e. if Hughes is to be believed the US can only get 11% of its oil needs from tight oil). By contrast the world’s largest conventional oil field, Ghawar field  in Saudi Arabia, outputs 5 million bbl/day (yes one oil field in the Middle East pumps out twice the tight oil we could hope to get from an entire continent!).

The reality is that unconventional fossil fuels, as experts such as me have been saying for years, simply cannot be ramped up to match the production levels of the major conventional sources of fossil fuels (such as those in the Middle East). Once such sources peak, which it’s likely they will between now and 2030 (or indeed some commentators believe they’ve already peaked, see here and here), the decline rate from such fields cannot be matched by unconventional sources. As I describe here, a modest decline rate of just 3 % per year of global oil supplies would require bringing online some 2-3 million bbl/day worth of production capacity each year (i.e. we’d need to add as much tight oil capacity per year as its going to take the Americans twenty years to develop!).

Unconventional fossil fuels benefit only one group of people, that being the fat cats in charge of the companies behind such operations, who will make a tidy profit out of this small temporary blip in production, leaving the bill for the clean-up to society and the tax payer.

For of course the other major issue with unconventional fossil fuels is the much heavier carbon footprint associated with them. I discussed in previous post how shale gas might actually be worse than coal for carbon emissions. This could mean we could face a scenario in future where despite the fact that fossil fuel output levels are falling significantly (not necessarily by choice either!), the levels of greenhouse gas emissions continue to rise, due to this higher carbon footprint of unconventional fossil fuels.

Figure 6, GHG emissions by oil production method [Credit: Pershing & Kelly (ND), University of Utah http://www.ices.utah.edu/leftnavid3subleftnavid9subpage9 ]

Figure 6, GHG emissions by oil production method [Credit: Pershing & Kelly (ND), University of Utah]

Indeed a recent study has noted the bulk of the world’s existing fossil fuel reserves are essentially “unburnable” if we want to keep global warming to be below 2 or 3 degrees and any company spending money looking for ways to extract them is wasting their money.

Now many in the cornucopian camp would probably argue that I, and others such as Dr Hughes, are being a little unfair in the above analysis. One possible criticism is that the figures above rely heavily on data from the EIA and DOE. Both have shown to be considerably behind the curve on the topic of Shale Gas. As I mentioned in a prior post, some of the DoE’s long term forecasts for shale gas production (discussed in an article from WTG News here) by 2020 were already close to being outstripped by actual output. I relied on this data for a number of prior posts on Shale gas, and like I said, the current output now outstrips those DoE projections. Could they be wrong again?

I would argue that the reason for this mismatch is because the DOE were banking on Shale gas being a bit of a slow burner, whereas instead its turned into something of a blast and grab raid by the drilling companies. Many of the same people who a few years ago were selling sub-prime mortgages have since moved into speculating on shale gas and this has created a bit of a bubble.

A little elementary maths might help. The total area under our production curves (representing available reserves) is a fixed quantity, but we can change the slope of the curve bounding this area, i.e. produce the gas or oil more quickly (within reason of course! as such a change in slope runs into the problems I mentioned earlier), but of course we can only sustain that production for a shorter time period (as the area under the curve is still the same) and a steep rise in output will generally lead to a steep drop off the other side.

You’ll also note that I’ve been comparing future production to present demand. Of course what I should be doing is comparing future production to future demand. One of the reasons many on the right oppose renewables or taking action on climate change is that they argue that our current economic model requires ever greater levels of economic growth, which requires ever growing levels of energy to feed it. While indeed I would note there is such a link between energy production and economic growth (they are some who’d say the current economic malaise we’re experiencing is due to high oil prices and declining output). I would question how sensible it is to continue this strategy.

As it would imply that the current US energy demand (that 2,200 mtoe I mentioned) would have to increase by 3% per year to double by the mid 2040’s. Chuck in the extra energy demand from China, India and the other BRICS (growing by about 10% per year) and you wind up with a global energy demand in the order of 2-4 times its current level by 2050. You will struggle to find anyone, save a few demented Libertarians, within the energy industry who actually believes that such a feat is possible, even if we ignored the urgent crisis that is climate change, even if we exploited ever available energy source possible to its maximum potential.

The Party’s over

This also serves to vindicate a key point made in the 1970’s by the Club of Rome’s report “the limits to growth”. They point they were trying to make wasn’t thatthe worlds going to run out of oil/water/copper by 2035” or something of that nature. Instead they were trying highlight that a finite resource cannot sustain an ever increasingly level of demand indefinitely. And that the time line between exceeding the natural carrying capacity and collapse of supply was likely to be very short.

For example, let’s suppose I throw a party (to celebrate Thatcher’s demise!). I could keep 20 friends and I partying till dawn if I squeezed 200 beers into my fridge (or bought enough kegs to provide the equivalent) assuming we all drank roughly one beer an hour. However, if instead I started off with just one friend and I, and we then both texted and invited another friend each to the party each hour (with everyone else who came doing the same), we would run out of beer after about 6.5 hours (when there would be just shy of 100 revellers at the party). Even if, in anticipation of this I doubled my initial supply to 400 beers (how going to squeeze that many beers in my fridge is another story!….in fact I doubt I could get that 200 in to start with…and what am I going to do with all those empties!) would only sustain the party for a little more than an hour. Indeed if we somehow managed to keep the party going (by perhaps holding it in an off license or something!…hopefully one with a very large fridge and next to a recycling centre!) by the tenth hour the demand for beer would be 1024 beer/hr (i.e. 5 times the starting supply to keep the party going for just a further hour).

In a similar vein, even if by some miracle we could double available fossil fuel production rates via unconventional sources (and as I think I’ve shown, we can’t!), such a move would only offset the inevitable peak in supply by a few years or a decade.

But there is another way. 97 GW’s of Renewable energy capacity was installed in 2011 (as mentioned in the REN 2012 report), a little under half of all electricity generating capacity installed that year. The Germans have demonstrated, that you can grow an economy and cut overall energy consumption, while increasing reliance on renewables. And Germany hasn’t exactly got the world’s best renewable resources (they are at the same latitude as Newfoundland and have significantly poorer wind coverage that countries such as America or the UK). In short, they’ve proven it’s possible to break the energy – economy link I mentioned earlier. And Portugal is doing even better than Germany, getting a good 70% of its electricity from renewables.

Now, as I speculate (here) there is probably some upper limit to how much of renewable energy that can be installed at any one time, but it’s clearly a much more sensible strategy than continued reliance on fossil fuels. Especially once you accept the age of such sources is in its twilight years.

Now while I would accept the argument that the so-called “peak oil pessimists” have perhaps unrated the potential of unconventional oil and gas sources. But given that such sources still cannot rescue us from the inevitable train wreck and given their very heavy environmental and carbon footprint, I would therefore argue in favour of abandoning such extraction and focusing on other resources instead.

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About daryan12

Engineer, expertise: Energy, Sustainablity, Computer Aided Engineering, Renewables technology
This entry was posted in clean energy, climate change, economics, efficiency, energy, fossil fuels, Global warming denial, peak oil, politics, power, renewables, Shale oil, subsidy, sustainability, sustainable, Tar Sands. Bookmark the permalink.

13 Responses to Why unconventional fossil fuels are no Panacea

  1. stan says:

    we should quit wasting gas on electricity and heating and oil extraction and cement production

    • daryan12 says:

      True, but we’ve got to get all of these things from some other source. There are alternatives, but my concern is that the dangerous myth of shale gas “for a thousand years” is preventing investment in the alternatives.

      Also you forgot a more important thing that comes from NG – Ammonia based fertilizers, i.e. most of our food!

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  3. Chilli says:

    Hi Daryan. Are you seriously treating the movie “Gasland” as a reputable source of unbiased information about shale gas? You do know the famous flaming tap sequence was a set up don’t you? Caused by natural gas seeps into wells which have been occuring for hundreds of years – long before fracking started. What do you think about a filmmaker who knowing tells such lies in a supposedly factual documentary?

    • daryan12 says:

      I was not making any judgement on the content of the film, I was pointing out that “Gasland” has drawn attention to the issues around Shale Gas. In a similar vein I mentioned in a prior post how Fox News and right wing tabloids have led to an increased skeptism of AGW, that doesn’t mean I endorse Fox News (actually, I’d point out that the science does not support their position…indeed it contradicts much of what they say!).

      But to answer the question, the Gas industry launched a pretty slick campaign to debunk this film, claiming that all these cases of methane seeps (there have been several, not just those seen in the film) were “natural“…kind of like how deniers put AGW down to “natural variation“…of course one would have to question that it is oddly coincidental that these incidents seem to start being reported at a higher rate in areas of Shale gas drilling. One would be forgiven for thinking there might be a link between the two, or those Earthquakes off Morcombe bay (where shale gas drilling is taking place). Now the movie was incorrect to report a link (rather than a suspected link, coincidence by itself doesn’t make a scientific case) as well as leaving out the whole issue of “biogenic v’s thermogenic” methane origin, but that doesn’t mean that the link claimed in the film has been debunked, just that we can’t precisely confirm it.

      There is of course a sure fire way of resolving this issue (and ultimately debunking Josh Fox or confirming his point) – set up monitoring equipment around shale gas wells and do a sort of before and after study of methane seepage levels over several years. Of course the opposition of the shale gas industry to such measures, much like the fact they seem unwilling to disclose the levels of water and atomspheric discharge from shale gas operations, kind of suggests that they are hiding something & Josh Fox might be onto something.

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