Shale Sham in the Making

A very revealing article (ht to Brigitte) appeared on Foreign Policy In Focus (link) on January 10, “The Great Oil Swindle: Scaling the Peak of Fossil Fuel Scarcity,” by Nafeez Masaddeq Ahmed. In very abbreviated summary: (1) a rash of articles dismissing the reality of fossil fuel production peaking is misguided hype based on overstating shale resources and understating the costs of their recovery; (2) some studies projecting future supplies contain highly fudged data; (3) detailed data, some buried at the bottom of overly optimistic reports, show that Peak Oil is already upon us; (4) shale gas is turning out to be much more costly to produce; wells have a sharply dipping rate of productivity, in the range of 40 percent per annum; and (5) therefore a shale bust is developing while all the news is about the shale boom. Anyone following this subject closely should read the story. It is professionally done and full of revealing detail.

A look at shale as a resource, and the technology of its recovery, is presented on this blog here.

Shale Oil and Gas: The Years They Add

The real hot topic in energy these days is not wind or solar. It is shale. By way of an example, today’s New York Times carries a story titled “The Energy Picture, Redrawn.” The focus is on shale oil and on shale gas respectively. As is usual in such coverage, the broader context provided by current reserves and trends in consumption are not highlighted at all. The graphics suggest, instead, plenty of both for a long time to come.

By way of a useful footnote to news coverage, I’ve undertaken to calculate for you just how long current proven reserves will last and how much longer the fossil age will last assuming that projected shale reserves actually pan out.

Here is a graphic that tells the tale. After that I’ll tell you how I did it.

What we see here is that without exploitation of global shale oil reserves, oil will run out by 2037. If we succeed in exploiting all reserves of shale oil, we get another 44 years and the world runs out of oil in 2081. The same for natural gas. Current conventional world gas reserves now are seen to last longer (until 2048), but exploiting all shale gas will only extend gas use by 25 years, to 2073.

What I did was to assemble three categories data: (1) current reserve estimates; I chose the World Oil estimates (link) because they are the highest. On the oil side these already include some portions but not all Canadian tar sands—which are not part of the shale of projection. (2) I obtained shale oil reserves from this Wikipedia compilation and shale gas estimates from the Energy Information Administration (link). (3) I obtained oil and gas consumption estimates from the EIA (link, link). For oil I calculated the consumption growth trend from 1982 through 2008; I extended that trend into the future. The growth is at a rate of 1.4 percent a year in barrels. For gas, the EIA provided forward estimates out to 2035; the growth here is at a rate of 1.6 percent a year, measured in trillions of cubit feet. These I extended at the same rate into future years as well.

Having a projected consumption out through 2100, I calculated, first, how rapidly known reserves would be consumed. Next, I added shale reserves to current reserves and did the calculation once again. The results are charted above.

Part of the down-side of loudly cheering shale reserves is that it lets the public fall back into an easy slumber—of ignorance. Shale is not a long-term solution. First of all, both resources will cost a lot more to exploit than crude oil and natural gas. Exploitation will have huge environmental consequences. And current estimates may well be optimistic.

The next two graphics show the same relationships in quantitative forms, the first for oil, the second for gas.

Shale Hoopla — Careful!

A New York Times headline today says “Geologists Sharply Cut Estimate of Shale Gas.” The reference is to a press release by the U.S. Geological Survey (link) dated August 23, 2011. The first two paragraphs of that press release state:

The Marcellus Shale contains about 84 trillion cubic feet of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids according to a new assessment by the U. S. Geological Survey (USGS).

These gas estimates are significantly more than the last USGS assessment of the Marcellus Shale in the Appalachian Basin in 2002, which estimated a mean of about 2 trillion cubic feet of gas (TCF) and 0.01 billion barrels of natural gas liquids.

This certainly sounds like a huge increase in shale gas estimates, indeed like an 82 TCF increase between 2002 and 2011. The same press release, however, actually references the 2002 report. And if you follow their link (here), you find the following text under Resource Summary:

The USGS assessed undiscovered conventional oil and gas and undiscovered continuous (unconventional) gas. The USGS estimated a mean of 70.2 trillion cubic feet of gas (TCFG), a mean of 54 million barrels of oil (MMBO), and a mean of 872 million barrels of total natural gas liquids (MMBNGL).

The 2 trillion in this year’s release has turned into 70.2 TCF. Was that “2 trillion” a typo. In the 2002 report, furthermore, a detailed table also repeats the numbers with many more decimal points. We still have an increase between 2002 and 2011, but it is an increase of 13.8 TCF not an increase of 82 TCF.

So why does the New York Times headline a sharp cut in shale gas estimates? Well, the Times points at a July 2011 report by the Energy Information Administration in which that agency shows shale gas reserves in the Marcellus Shale of 410 trillion cubic feet. The Times reporter then quotes an EIA official (Philip Budzik) saying that the EIA will sharply revise its estimate downward. The casual reader will wrongly conclude that the EIA has been grossly inflating its numbers and that Budzik, an operations research analyst—not an agency spokesman—knows what he is talking about. The article also mentions testimony by the EIA’s acting director, Howard K. Gruenspecht, defending the EIA’s methods before Congress this July; why wasn’t Gruenspecht interviewed?

The Times reporter might have read both the USGS and the EIA reports with a little more care. He would have discovered (1) that the USGS release actually reports a large increase, but in a subcategory of shale gas, clearly labeled “undiscovered, technically recoverable,” as shown above; (2) that the USGS release might contain an error, and (3) that in the EIA report, where that 410 trillion figure is shown, the EIA clearly states that that number includes 56 TCF of “undiscovered resources estimated by the USGS.” This means that the EIA was only counting a part (56 TCF) of the USGS’s now 84 TCF figure, not all of it, and that the 410 trillion includes a lot of other categories of shale gas (see the note on top of page 5 of the EIA report (link)). The conclusion is that Mr. Budzik might have misspoken and that EIA will probably increase rather than decrease its shale gas estimate in the future. Many a slip twixt journalism’s cup and lip. Alas, it is stories in the “newspaper of record” that build the hype that forms our precious public opinion.

You wonder where that Marcellus Shale region is? Well, here is a map of it, from the EIA’s 2011 report: