Britain doubles north England shale gas estimate

As anticipated, Britain has doubled its estimated shale gas resources in northern England, which could have a positive impact on reducing reliance on imports and fundamentally transform the the UK energy market.

The familiar impact of shale gas on the north American energy market, could be realized in the UK providing a domestic source of clean burning natural gas. The British Geological Survey estimated today that the Bowland shale gas area holds 1,300 trillion cubic feet (tcf) of natural gas.

There is still plenty of exploratory work programs to conclude before the economic feasiblity of the Bowland shale gas. Interested parties will also have to invest in educating the local communities and environmentalists on the latest technology that addresses most of the historical concerns on the fracking process.

For example, we have oftern referred to the tremendous success of GasFrac Energy Services of Calgary, Alberta which uses organic based fluids that are 99% recoverable and recycled back into the fracking process. At the same time, the company’s technology increases overall production rates. Very positive. It just proves that technology can solve problems and improve performance both in production rates and environmental

Reuters: Britain doubles north England shale gas estimate

 

UK shale gas survey likely to reveal reserves higher than expected

(Source: The Guadian) New estimates of the UK’s reserves of shale gas will be published on Thursday, and are expected to be much larger than originally thought – potentially supplying the UK with decades’ worth of natural gas, if a high proportion of the gas in the rocks can be extracted at a low cost. However that key question that cannot yet be answered due to the lack of experimental wells drilled so far and the challenges posed by the UK’s high density of population.

New shale gas drilling is likely to come under fire from protestors, though ministers are hoping to put off opposition by offering local communities incentives to encourage them to agree to the fracking operations. The incentives which may take the form of energy bill discounts or improvements to local amenities.

The survey of shale reserves, carried out by the British Geological Survey at the request of the Department of Energy and Climate Change, has been much delayed, reflecting how politically controversial it is. Read full story.

Deloitte: Shale gas, oil potential increasingly apparent

Oil and gas production from tight shale formations clearly is a long-term phenomenon and not a short-term trend, Deloitte LLP officials told reporters. The financial services company found growing confidence in unconventional energy resources in a survey it conducted last year, said John England, a vice-chairman and leader of its oil and gas practice.

“Huge investments are flowing into this sector from previously unheard from sources,” he said on May 21 during Deloitte’s 2013 Washington Energy Conference at nearby National Harbor, Md. “It’s a reason so many foreign companies have come into the US. Investment recently has flowed to midstream infrastructure, but there’s still strong interest upstream.”

More natural gas liquids are being recovered along with the shale gas, and that’s attracting investments too, he observed. “It’s interesting that we’re having this debate about authorizing more [LNG] exports when we’re already export significant amounts of NGLs,” England said.

Growing tight oil development also is generating more investments, he continued. “Even in the Eagle Ford and Bakken formations, recovery rates are still quite low so there’s a real technology opportunity,” he said.

Joseph A. Stanislaw, Deloitte’s independent senior energy and sustainability advisor, said the whole global energy equation is changing because of what North America is doing with shales. “This new fossil energy abundance could benefit alternatives if we use it not as an end, but a means,” he suggested. Read more…

EU Seeks Energy Integration as U.S. Shale Gas Widens Price Gap

(Source: Blomberg) According to a commission report prepared for a summit of EU leaders, shale gas production has contributed to a widening gap between U.S. and EU industrial prices for energy. The increase in European energy prices is linked to the inconsistency of EU policies to boost the share of renewable energy, increase energy efficiency and cut greenhouse gases, as well as to national policies that distort the internal market, according to a study.

Bloomberg: “EU Seeks Energy Integration as U.S. Shale Gas Widens Price Gap”

Shale gas ‘could be a new North Sea for Britain’

According to a recent report by the Institute of Directors, shale gas could be the “new North Sea” for Great Britain providing tens of thousands of jobs, and supply valuable energy resources .

The Telegraph: “Shale gas ‘could be a new North Sea for Britain’”

The geographic proliferation of shale gas and tight oil is inevitable

This article in the Globe & Mail is worth a quick read. Though the proliferation of technologies for shale gas and tight oil will spread around the world, it take more then just technology to make the process of extracting these resources work. Mainly, water. For example, China may have more shale gas then that found in all of the USA, but its in the dry arid eastern regions where water is scarce. But with time, this too is changing with the evolution of new technologies that recover and recycle 99% of the fluids used in the fracking process. Time will tell but history has shown that opportunities are created by providing solutions to problems.

The geographic proliferation of shale gas and tight oil is inevitable

Globe & Mail (Source) This question keeps getting repeated: “Will shale gas and tight oil technologies proliferate beyond North America?”

Of course they will. There is no precedent for game-changing innovations in any business to respect territorial boundaries. So some remaining questions are, under what conditions will shale gas and tight oil be developed in other countries, how long will it take, and where first?

With respect to necessary conditions, it seems Texas has the right stuff. At a major conference in Dallas last week, a few thousand exuberant U.S. oil and gas executives were gushing over recent production growth from unconventional resources. North Dakota’s Bakken seems like yesterday’s news as attention now shines on the productive oil potential of the legendary Texas Permian Basin.

The stock, U.S. oil man’s answer to what drives such domestic exploration frenzy is the American principle of landowners’ mineral rights – if you own the land on the surface you also have title to the oil and gas beneath your feet. This alignment of financial interests between private landowners and oil companies lubricates the wheels of capitalism like nowhere else. Ergo, the converse argument goes, we are unlikely to see meaningful shale gas or tight oil development in other parts of the world, where no such subsurface benefits accrue to the landowner. But there are flaws in this line of thinking.

Read more.

Natural Gas Exports: ‘Whats the Rush?’ Asks Dow

HRN has long recommended that more natural gas be used in the U.S. and Canadian energy mix in order to take advantage of this abundant low cost burning fuel domestically before exporting these benefits overseas to countries that have totally embraced expanded usage of natural gas in transportation and power generation. In the U.S., the abundance of natural gas can play a major role in energy independence or at a minimum reducing the amount of oil imported from OPEC.

Peter Gardett covers the topic in his article “Natural Gas Exports:’What’s the rush?’ Asks Dow. An article worth reading.

Natural Gas Exports: ‘Whats the Rush?’ Asks Dow

The debate over natural gas exports from the US has broken out of the energy sector and begun to raise temperatures across the political spectrum, with a high profile Congressional hearing  this week underlining the stakes at play in a Department of Energy policy decision on the economic standing of natural gas export projects.

Despite being painted as absolutely opposed to exports of domestically produced natural gas and its position as a leader in the manufacturing sector’s opposition to unrestricted approval of export projects, Dow Chemical actually favors exports to free trade partners but is concerned about the impacts of unchecked exports to non free trade countries, the company’s Vice President for Government and Public Affairs Kevin Kolevar told AOL Energy in a recent briefing. Contine to full story.

Canada’s natural gas industry could be worth $1 trillion

The Conference Board of Canada published an analysis Monday that expects Canada’s natural gas industry to add more than $1 trillion to Canada’s economy over the next 24 years and support an average of 260,000 jobs a year over that time frame.  At HRN we completely agree!

The ambitious projection factors in all the direct investment, but also ancillary spinoffs down the supply chain and figures all regions of the country stand to benefit, even those provinces without any large natural gas holdings.

Read more: Canada’s natural gas industry could be worth $1 trillion

Is the shale gas “miracle” over-hyped?

In his upcoming book ““Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth.”, Bill Powers argues that the shale gas miracle is over-hyped and will disappoint. Mr. Powers believes that shale gas will only last 10 years, and not the 100 years that many predict.

Certainly, in the recent presidential campaign both President Barack Obama, and Governor Mitt Romney both pointed to shale gas as a major contributor to America’s energy independence. But if there are only 10 years of shale gas in the ground the contribution of shale gas to this objective would be short-lived. Who’s right?

Everyone has their own “best estimates” all from expert opinions based on years of research and study. And Mr. Powers is one of many professional opinions. Certainly the shale gas boom in the USA, and Canada has brought on a massive new energy supply source that has fundamentally changed the North American and global energy markets. And the shale gas story will not end with the U.S. as new shale gas basins are discovered, developed and put into production around the world with major geopolitical impact.

But this is not about this story, the focus is the USA (North American) energy market, and whether the shale gas reserves will provide 10 or 100 years of energy.

The US Energy Information Administration (“EIA”) estimates that there are 2,203 trillion cubic feet (Tcf) of natural gas that is “technically recoverable” in the United States. At the rate of US natural gas consumption in 2011 of about 24 Tcf per year, 2,203 Tcf of natural gas is enough to last about 92 years.

However, given human nature and fundamentals to migrate to the lowest cost, as long as natural gas remains at current low levels, consumption is likely to increase as more power plants, trucks, cars, etc convert to natural gas. And during this same time of increasing demand we would likely see increases in natural gas prices which over time would temper demand. It is challenging to see how Mr. Powers gets from the EIA’s 92 year estimate to less then 10 years.  His theory is primarily based on stating that the data used by EIA and others is fundamentally flawed by over estimating the production life of shale gas wells. In other words, production drops off sooner and faster then most predict.

(The EIA states: “Technically recoverable reserves consist of “proved reserves” and “unproved resources.” Proved reserves of crude oil and natural gas are the estimated volumes expected to be produced, with reasonable certainty, under existing economic and operating conditions. Unproved resources are additional volumes estimated to be technically recoverable without consideration of economics or operating conditions, based on the application of current technology.”)

The key question here is what is the production life cycle of a shale gas well? It has always been know that this cycle is relatively short and dramatic compared to the longer production life of a traditional gas well. These life cycles differ between basins, whereby one basin may average longer production then another. It is not uncommon to see a production drop-off of 50% in the first 12 months of production in many wells. Numbers vary between basins and between wells.

Perhaps the EIA is wrong in their 92 year estimate, though their access to data seems to be quite extensive. There certainly are some variables including their usage of 2011 natural gas consumption rates their calculation and not predicting any increasing consumption rate over time. Either from economic growth, or increaseed usage of natural gas as part of the overall energy mix. Based on this alone one could resonable estimate that 92 years is not one hundred percent accurate. But with that said, predictions are never one hundred percent accurate and for this reason alone we know Mr. Powers calculations are likely off.

So if we took all the scientific calculations, and included Mr. Powers predictions we would like find a life span for shale gas between sixty and seventy years – about one generations worth of energy. Only time will tell who is right.

You can read a complete interview with Mr. Powers on the Energy Report: US Shale Gas Won’t Last 10 years

Forbes: In Obama’s Second Term, Shale Gas Production Not Likely to Slow Down

Shale gas a game changer for U.S. energy economy

A few years ago, when shale gas started to take off we wrote a series of articles that predicted the far reaching economic and geopolitical impact of shale gas. Slowly but surely these predictions are coming coming to fruition and also entered into the presidential campaigns of both Mitt Romney and President Barack Obama.

Both candidates have stated that domestic shale gas, and domestic oil production are important to the US and must increase.Obama stated that both candidates agree on this point and adds that the U.S. must also explore alternative clean energy technologies and opportunities. Obama noted that domestic production of oil and gas was at a level higher than it had been in recent years, but Romney said it wasn’t due to Obama but instead in spite of his policies.Romney when on to state:

“Mr. President, all of the increase in natural gas and oil has happened on private land, not on government land. On government land, your administration has cut the number of permits and licenses in half. If I’m president, I’ll double them.”

Over the years the HRN opinion is clear and consistent. Its going to take all energy sources to make the U.S. energy independent. We agree that it will take increased production of oil, natural gas from shale, clean coal technologies, increased energy contributions from solar, wind, nuclear and others. We  lean towards natural gas as being the leading opportunity to represent a greater percentage of the overall energy mix while reducing CO2 footprint.

However, the energy needs of the U.S. are massive. From a political point of view, it does not make sense to open up and increase the production of shale gas if its simply to going to be exported to Asia. That defeats the purpose. The U.S needs to encourage the domestic consumption of natural gas not export its benefit to Asia.

This will become one of the many top issues for this presidential campaign. Both candidates should provide a balanced approach to the issue recognizing all energy sources as valued long term investments, while understanding that natural gas provides the best opportunity to bridge the gap to a clean energy future. Today, the U.S. needs to increase demestic production; leverage the domestic and environmental advantages of natural gas and invest in clean energy for the future.

Shale gas a game changer for U.S. energy economy [Richmond Times-Dispatch, Va.]