Free Markets, Free People

Daily Archives: April 7, 2011

Our energy future should involve a lot of shale gas–if our government will allow it

This map should give you a good feeling as you survey it:

 

shalegas-map

 

All the red you see in the US is a good thing.  This graphically shows the results of a survey conducted by the US Energy Information Administration in which it assessed world shale gas resources.  The legend is a little hard to read so, for those with eyes like mine:

  • Red colored areas represent the location of assessed shale gas basins for which estimates of the ‘risked’ gas-in-place and technically recoverable resources were provided.
  • Yellow colored area represents the location of shale gas basins that were reviewed, but for which estimates were not provided, mainly due to the lack of data necessary to conduct the assessment.
  • White colored countries are those for which at least one shale gas basin was considered for this report.
  • Gray colored countries are those for which no shale gas basins were considered for this report.

And here’s a chart that give you some of the numbers.  Pay particular attention to the numbers in the left hand column:

shalegas

 

The chart doesn’t show all of the 32 countries, but I wanted you to see the amount of shale gas that is technically recoverable and the amount we import (10%).  With the development of these gas fields  we can up our domestic production and consumption (an alternative to oil in many cases) as well as become a net exporter.

Says the report:

The development of shale gas plays has become a “game changer” for the U.S. natural gas market. The proliferation of activity into new shale plays has increased shale gas production in the United States from 0.39 trillion cubic feet in 2000 to 4.87 trillion cubic feet in 2010, or 23 percent of U.S. dry gas production. Shale gas reserves have increased to about 60.6 trillion cubic feet by year-end 2009, when they comprised about 21 percent of overall U.S. natural gas reserves, now at the highest level since 1971.

In fact, this assessment provides good news for much of the world:

To put this shale gas resource estimate in some perspective, world proven reserves of natural gas as of January 1, 2010 are about 6,609 trillion cubic feet, and world technically recoverable gas resources are roughly 16,000 trillion cubic feet, largely excluding shale gas. Thus, adding the identified shale gas resources to other gas resources increases total world technically recoverable gas resources by over 40 percent to 22,600 trillion cubic feet.

Of course the catch is “technically recoverable” – i.e. is it worth bringing to market even if we have the technology to do so?  That depends on a number of things, to include the cost governments place on those attempting to bring it to market, and the hurdles governments may place in their way if they attempt to do so – such as the hydrofracking controversy.

It is estimated that 80% of the new oil and natural gas wells in the US will require hydraulic fracturing (hydrofracking).  What hydraulic fracturing does is create tiny fissures in the rock so the oil and gas can flow through the wellbore to the surface.  Hydrofracking has been used in over 1 million – yes, that’s right – 1 million wells in the last 60 years (here’s an animation of the process if you’re interested).  The fracturing takes place hundreds, if not thousands of feet below the aquifer.

But, as with all things, the process which as been in use for over 60 years and with a million wells is now “controversial” with unsubstantiated claims that hydrofracking in these shale sites will cause contamination of the ground water.

Yet no evidence of that is apparent in the history of the process or an investigation conducted by the EPA in 2004:

U.S. government studies have found no evidence of drinking water contamination from hydraulic fracturing. In 2004, the Environmental Protection Agency (EPA) conducted a study to assess the contamination potential of underground drinking water sources (UDWS) from the injection of hydraulic fracturing fluid into coalbed methane (CBM) wells. EPA found "the injection of hydraulic fracturing fluids into CBM wells poses little or no threat to USDWs and does not justify additional study at this time." EPA also reviewed incidents of drinking water well contamination believed to be associated with hydraulic fracturing operations. It found "no confirmed cases linked to fracturing fluid injection of CBM wells or subsequent underground movement of fracturing fluid."

In 1998, the Ground Water Protection Council (GWPC) and a team of state agency representatives conducted a survey of state oil and natural gas agencies to establish an accurate assessment of the number of active CBM wells associated with hydraulic fracturing. Based on the survey of 25 oil and natural gas producing states, the GWPC concluded, "there was no evidence to support claims that public health is at risk as a result of the hydraulic fracturing of coalbeds used for the production of methane gas."

So, the map points to a bonanza of natural gas that is technically recoverable, would cover our own domestic needs easily (and may see some oil dependent means of transportation and energy production look toward to switching to cleaner burning natural gas) and even have us exporting the product versus importing it.

If … key word … if the hydrofracking Chicken Little’s aren’t allowed to have their way and delay or stop such exploitation.

Look, no one wants ground water contamination – no one.   But a system that has been in use for over 60 years an a million wells with no evidence it has contributed to ground water contamination has enough time and data points to help assure us of process reliability in this case.  Here’s something we can do now to help alleviate our energy deficit and cut dependence on imports.

Will we take advantage of this opportunity?

That remains to be seen.

~McQ

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Saudi Arabia: Not happy with Obama and seeking partners elsewhere

Obviously I have mixed feelings about the country of Saudi Arabia.  On the one hand they’re a tyrannical 12th century monarchy that controls a good portion of the world’s oil and exports a brand of radical Islamism.  On the other hand they’re a bulwark against Iranian aggression and expansionism and a titular ally of the US.

So, the question then, given the situation in the Middle East, is it in the best interest of the US to do things that have them seeking  solace and partners (allies they feel they can depend on?) elsewhere?

Yeah, probably not.  But that’s exactly what is going on.  Interestingly it is Tom Brokaw who brought the situation to our attention:

After remarking on the difficulty of establishing democracy in the Middle East, Brokaw said that Defense Secretary Robert Gates “will face some tough questions in this region about the American intentions going on now with all this new turmoil, especially in an area where the United States has such big stakes politically and economically.”

“And a lot of those questions presumably will come from King Abdullah of Saudi Arabia,” reported Brokaw on the Nightly News.  “I was told on the way in here that the Saudis are so unhappy with the Obama administration for the way it pushed out President Mubarak of Egypt that it sent high level emissaries to China and Russia to tell those two countries that Saudi Arabia now is prepared to do more business with them.”

Wonderful.

All of this stems from how the Obama administration handled Egypt.  And it has caused Saudi Arabia to doubt the sincerity of the relationship between the US and the kingdom.

However, Saudi Arabia’s concerns emanate from the manner in which Egyptian dictator Hosni Mubarak was removed from power. Mubarak had been an American ally for decades and yet the Obama administration, in the eyes of Saudi criticism, turned its back on the Egyptian government when reformist protests spilled into the streets.

High sounding rhetoric talks, but actions walk, and SA is not at all happy about the actions the administration took in Egypt nor, apparently, satisfied with their assurances since.  And despite the supposed buy-in of the Arab League on the latest attack on an Arab country- Libya- I’d guess they’re not particularly happy with that either.  Another indicator they file away and continues to feed their fear of the sincerity of the US as an ally.

The good news, if there is any, is the administration has apparently figured out that it has badly messed up its relationship with SA.  Whether or not they can salvage the relationship remains to be seen.  It may take another trip by Obama and a lot more bowing and scraping to do that:

Mr. Gates met with the Saudi king on Wednesday, and the Associated Press reported that the purpose of the meeting was to smooth relations with the uneasy and oil-rich ally, noting that "this was Gates’ third trip to the area in the past month."

Thus far the Obama administration has been a foreign policy disaster.  Interestingly, some of the highest polling results for Obama deal with his handling of foreign affairs.  If anything, that should clue you into how badly it is going for him on the domestic front.

[HT: McQ2]

~McQ

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