[Pops]

Good article about shale's profitability and the economic games being played in the name of the latest miracle.

Shale gas is being sold to the American public as a miracle, arriving just in time to save us from peak oil. It’s an abundant new fuel supply that will be a “game-changer,” we’re told. We’ll soon be a major exporter of gas to the rest of the world. The economics of fossil fuels have been changed forever, along with our balance of trade.

But what if the business isn’t actually profitable? What if it’s really based on accounting trickery and overstated claims?

Chris Nelder @ Smartplanet

[seahorse3]

Thanks for the article. Similar things have been said by rockman and others in the industry over at the Oildrum - that companies monkey with the numbers to show "profitability" on paper bc, after all, they are companies seeking investors or buyers.

[seahorse3]

The other thing is all that gas is a waste right now. Its cheap for a reason, we don't use it as a transportation fuel. Until we do, it doesn't assist with the PO problem at all. My personal opinion is a lot of this "hype" in the shale gas is directly related to the PO problem, and NG companies and investors are selling into the energy crisis hype that they have the answer, that we can be energy independent once again if we just develop the gas. This isn't just a wild ass guess of mine. It is based on the fact that Boone Pickens is a well known person in the oil and NG business who is advocating switching to NG to mitigate the PO problem.

As the article points out, NG may be hype and not an answer to PO. Further, even if all the NG is there, until we use it as a transportation fuel like Pickens is trying to do, its meaningless to the PO debate. It just means that when we can't afford to drive our cars, we can sit at home and have cheap NG heat.

[autonomous]

In a leaked e-mail, a federal energy official says that the hype surrounding shale gas seems to hinge on Wall Street propping it up with renewed investment. The federal energy official also asks whether there might be an impending bubble burst if the price of gas does not rise soon enough. The Chesapeake geologist subsequently responds that Wall Street has started to become skeptical, and that is why companies like his have shifted toward foreign investors.

In another leaked email, a Chesapeake geologist says that no shale gas wells are moneymakers right now. Companies are instead hoping that natural gas prices will rise, so that shale gas can be profitable. Ever since the price of natural gas fell in 2008, company officials have been predicting to investors that the price of gas will rise soon.

W. John Lee stated that "commonly used" models for projecting reserves may be ill-suited to shale gas, suggesting instead models developed very recently. This comment is important because Mr. Lee is seen as one of the foremost experts on oil and gas regulation and he is saying that a method of projecting production that is widely used by the industry is flawed.

New York Times: Leaked Industry E-Mails and Reports

[TheAntiDoomer]

ANGA Statement on the IHS Shale Gas Economic Study
Read more: http://www.sacbee.com/2011/12/07/410711 ... z1gXYbQFjB

The IHS Global Insight study confirms that shale gas, in addition to being an abundant, domestic resource, is also an economic and employment engine in the United States. Shale gas will account for 60 percent of U.S. natural gas production by 2035, up from 34 percent today, according to the study, boosting capital investment and industry-supported jobs.

"At a time when our nation's economy is still suffering from a downturn and jobs are top-of-mind for many Americans, the impact of shale gas on employment is invaluable. Last year, shale plays supported 600,000 jobs, and by 2035, the study projects that shale gas will support more than 1.6 million jobs.

Shale gas gives rise to era of energy independence
http://www.marketwatch.com/story/shale- ... 2011-12-02

U.S. natural gas in storage hit a record high 3.852 trillion cubic feet in the week ended Nov. 18, according to the Energy Information Administration. Natural gas futures prices /quotes/zigman/2199339 NG12F -4.27% lost 9.8% in November and trade under $4 per million British thermal units. Meanwhile, crude-oil futures rose 7.7%.

And “the shale gas revolution is still in its early phases,” said Chris Mayer, editor of Capital & Crisis. “Technology itself is still improving by leaps and bounds”, with productivity of drilling rigs soaring and costs dropping. “It’s an absolute game changer for U.S. energy.” Read Mayer’s recent report on shale.The U.S. has 2,500 trillion cubic feet of potential natural gas resources. Gas from shale accounts for 862 trillion of that, according to the EIA, more than double the estimate published last year. [/size]
That estimate “could very much increase by several multiples,”[/size] said Dimitris Kapsis, chief energy officer at American Utility Management. “The facts behind shale gas production have added significantly to natural gas reserves and with gains in shale gas discoveries and technology, shale product is certainly sustainable.”

[Pops]

We're gonna quit the silly size button stuff, 'kay?

[seahorse3]

"Oh no not this again" is the truth. All this talk about NG will save us makes my head hurt. The question is, when will we move from all this NG in storage to all that NG in our car gas tanks? Until then, that NG in storage will double, triple, quadruple. Until we can put in in "planes, trains and automobiles" its basically worthless. It won't do anything for GDP. For example, NG in storage has increased right? Yet it hasn't done anything for GDP, bc no one needs it. Now, what we need is lots of oil. NG is as important to PO as is coal. Until we use either coal or oil to power our transportation, I will yawn and say to IHS, show me the money? I'm looking in our parking lot right now at work and don't see one NG powered car. I live in Arkansas where this big NG shale boom is going on. It hasn't done anything. Our own county said it was too expensive to transition county vehicles to NG even though NG is cheap as its ever been. Lots of wells out there pumping that cheap NG into storage to sit there and do nothing.

[seahorse3]

According to this wiki article, there are 254 million registered cars in the US.

http://en.wikipedia.org/wiki/Passenger_vehicles_in_the_United_States

The US has a whopping 114k NG gas vehicles on the road. No wonder all that NG is building up in storage tanks. We can't use it.

http://en.wikipedia.org/wiki/Natural_gas_car

According to the same article, there are a "whopping" 12 million NG vehicles worldwide, so, looks like NG is a big nothing burger to me. Time to sell that CLNE stock I bought hoping that all this NG would get used for cars.

By the way, I know the current President of the NGA, the lobbyist group trying to get Congress to pass a "energy bill" to help out the NG industry. So far, a big nothing burger there too. So, even though energy people always say govt can't solve problems it should get out of the way, apparently, if NG is ever going to save us from PO, they need gov't intervention to do so. The free market just isn't going to do it for them - the economics aren't there.

[dinopello]

On transportation, locally CNG powers all of our municipal transit buses and I think new replacement school buses are too. So, the vehicles are out there for other areas to use as well. But, it does require special facilities for refueling and with the cost of the vehicles + new facilities and the dire shape most municipalities are in, probably not much conversion will happen quickly.

I've owned a natural gas fund for a while now (UNG). It's been a real dog but if Nat Gas does start getting used for tranport more I think the price will recover and then some. Especially as the fields deplete and/or if environmental concerns force more scritiny of fracking operations.

[seahorse3]

Well Dino, you're one of the lucky few who have NG vehicles. Until we get a lot more than the 114k cars in the US (out of 250 million) using NG, NG is a non-event. It will sit in storage doing nothing to mitigate PO.

[dinopello]

Well Dino, you're one of the lucky few who have NG vehicles. Until we get a lot more than the 114k cars in the US (out of 250 million) using NG, NG is a non-event. It will sit in storage doing nothing to mitigate PO.

Luck isn't all of what it's about. I and the majority of my town have supported investments in diversification of energy used for public transit for over 20 years. Much of the support was also based on the cleaner and more quiet operation of the CNG buses vs diesel. The latest buses are actually CNG-Electric hybrids which I don't see as much a need for but I guess they are even more quiet. We are also planning to electrify a transportation corridor with a light rail system and of course we already have an extensive electrified heavy rail subway. For me, diversification is the best response because of the uncertainty about how things are going to play out.

I should note that as these changes happened and as we push forward with other stuff like a district energy pilot etc, there is large, vocal minority that ridicules and decrys the investments as a waste. The lucky part is that they are a minority in this community. Their protests catch on though because these things are expensive and they take time. There are only a handful of CNG refueling station in Virginia, two of them in my town - and most of them private

[seahorse3]

Dino, luck has everything to do with life. It is luck you were born in the US for example, not merit.

Now, onto the more important point which is this - NG isn't doing anything to mitigate PO on any measurable scale as a transportation fuel. I again refer you to the statistics of number of cars on the road. I didn't look at how many NG tractor trailers on the road, but I happen to know the guy at JB Hunt who operates all their trucks and as of this year, they have exactly 3 CNG trucks they are playing with but don't like.

All this to point out that CNG is not an answer to PO at anytime in the near future. Unless you point me to greater numbers of vehicles on the road than your town of the few hundred thousand cited, then its a non-event. I have followed Pickens as closely as I can because he, as you may know, has a publicly traded company which converts commercial vehicles, like buses, to CNG and puts in the infrastructure. They aren't making money and not making any headway yet to get tax credits to help cities, companies etc move to CNG commercial vehicles. The county where I live just did an exhaustive look into converting county vehicles to NG and said no, just not cost feasible now.

Thus, we have a lot of NG sitting in storage that will not help mitigate the PO problem at anytime in the next 5 years.

[dinopello]

Dino, luck has everything to do with life. It is luck you were born in the US for example, not merit.

Ug, this is the attitude that gets us in trouble. Yes, your birthing location is out of your control. Personally, I feel incredibly unluckly that I wasn't born to a Tuscan Vineyard owner. But, once you have lived in a place for decades, it isn't all luck how it turns out. If you elect to sit on your ass and not participate that's one thing, but going to hours of meetings each week with your neighbors and representatives, building consensus and having the policy discussions all influence how the place you live in evolves.

Now, onto the more important point which is this - NG isn't doing anything to mitigate PO on any measurable scale as a transportation fuel. I again refer you to the statistics of number of cars on the road.

I don't disagree with that.

All this to point out that CNG is not an answer to PO at anytime in the near future. Unless you point me to greater numbers of vehicles on the road than your town of the few hundred thousand cited, then its a non-event.

My point is that it is an event for my community. It's (only) one of the (many) responses we are taking to PO. As far as what we do here being 'an event' for the rest of the world, maybe not so much.

It's funny though, we have delegations come here all the time from places like Atlanta and Houston and all over to 'see how we do things'. This is because we have very low personal vehicle useage for a suburb and most our kids walk to school etc and other jurisdictions recognize that it is an important goal to strive for (less dependence on [driving, energy, etc...]). I imagine they discover that from a "what to do" perspective it's as easy as pie but from 'convincing the natives' it is near impossible. People want to be less dependent on driving everywhere, for everything, all the time but they balk at creating the mixed use density with little parking and with narrow, slow-moving streets that make driving less convienent while making it more desireable to pedestrians.

Back to NG, I worry that if everyone and industry did switch over to an NG transportation system, we might later be disapointed because NG depletes like a step function rather than smoothly and the price is more volatile than oil. But, basically there is a lot of uncertainty and deliberate misinformation (which I think is really the point of this thread) and that's why on the energy for transportation front, I advocate more for diversification/choices in my community, than advocating any particular fuel.

[seahorse3]

Dino, I'm sorry if it seems I was taking away from anything you are doing in your community. I'm all for anything anyone can do to mitigate. You are I are both I believe saying and believing the same thing. What I disagree with is, on the big scale, people selling this "hope" of the oil shale boom when the reality is its cheap and building up in storage for a reason, its not a replacment to oil, not on any appreciable scale and not on any scale to say we are going to be energy independent. Not even Pickens argues that. He sees NG as possibly offsetting commercial truck usage. So, I wrote this post to take acception to the hype we are being fed and make people realize that NG is cheap for a reason, we use it to heat our homes. That's basically it.

[ralfy]

Also, related:

"Documents: Leaked Industry E-Mails and Reports"

http://www.nytimes.com/interactive/us/n ... cument/p20

[Pops]

ANGA Statement on the IHS Shale Gas Economic Study

Your argument is a press release from the Natural Gas Alliance?

?