Posts tagged “fracking”
This is the 4th installment in a series that examines data from the recently released 2013 BP Statistical Review of World Energy. The previous posts were:
- Renewable Energy Status Update 2013
- Hydropower and Geothermal Status Update 2013
- The State of Oil According to BP
Today’s post delves into the natural gas production picture.
The US as Gas King
Over the past seven years, the US has firmly established itself as the global king of natural gas production (and consumption). In 2011, the US produced 62.7 billion cubic feet per day (bcfd) — more natural gas than any country had ever produced in a single year. That record fell in 2012 when the US produced 65.7 bcfd — which represented just over 20% of all the natural gas produced in the world. And thus far in 2013, US natural gas production is running ahead of 2012’s record production level.
Recycling and Reusing Becoming an Imperative
There is no greater example of the water-energy nexus than the juncture where water meets the hydraulic fracturing process, or fracking, of natural gas and oil. This nexus has created a public-private crossroads, with both sides attempting to further their goals. For legislating and rulemaking bodies, their goals revolve around protecting public safety and natural resources needed by society.
For energy firms, producing energy to meet demand in a profitable way is the target. Non-governmental organizations play a public advocacy role as well, sometimes positively and constructively and sometimes losing sight of their mission. Increasingly, the challenge is about producing energy in the most environmentally-friendly manner, using less water more efficiently and responsibly, and utilizing natural resources as if a sustainable imperative were upon us. It may well be.
Many believe that the effects of climate change will be felt through water — extremes of floods and droughts, rising sea levels, and warming oceans, to name a few challenges. Whether viewing the water-energy nexus through the lens of climate change or resource sustainability, the impact of energy development on water resources has reached an inflection point.
Touring a “Fracking” Site in Pennsylvania
It’s easy to talk about the shale gas revolution in the abstract and forget that it is the cumulative result of thousands of operations in locations across the country. It combines the technological marvel of precisely planned and executed drilling more than a mile below ground with the efforts of teams of skilled workers on the surface, and affects the surrounding community in many ways. Last week I had my first opportunity to visit one of these sites, near Williamsport in north-central Pennsylvania. I also saw several nearby sites in different stages of development. Although I was consistently impressed, I also tried to observe with the concerns of shale gas critics in mind.
The Anadarko Petroleum well “pad” I toured is located in Cogan House Township in rural Lycoming County, atop the Marcellus shale formation. This site visit for bloggers and other media was arranged by API, which also paid for accommodations in Williamsport. Anadarko provided experts from its local engineering and public affairs staffs and hosted a dinner with members of the community the evening before the site tour.
Reduction in Energy-Related CO2 Emissions
The United States has seen a remarkable run in reducing its greenhouse gas emissions over the last five years, reducing energy-related CO2 emissions from 2007 to 2012 by 12%, from six billion tons to 5.29 billion tons. While part of this reduction in emissions is attributable to a reduction in energy demand due to the economic downturn, another reason for this huge reduction is an increase in the use of natural gas for electricity.
In a story that is now familiar to most readers, the shale gas revolution in the United States has dramatically reduced the cost of natural gas. From a peak of $10.54 per million btu (mbtu) in July 2008, the spot price of gas at the well-head had fallen to less than $2/mbtu by April 2012.
Because utilities respond to price incentives, this caused fuel-switching of baseload electricity production from coal to natural gas, leading to a time in April 2012 when natural gas equaled coal as an energy source for the first time. This switch has partially been undone, with coal now producing 40% of electricity and natural gas 26% as gas prices have bounced back to $3.85/mbtu. Because burning natural gas for electricity produces half as much carbon emissions as coal, fuel switching is one of the main causes in the U.S. reduction in emissions.
As a result of the hydraulic fracturing (fracking) revolution, US oil and natural gas production have been rising for several years. According to the Energy Information Administration (EIA), US oil production has risen by 27% over the past 5 years.
In reviewing the data for individual states, I came across some interesting trivia. So I decided to put together a little quiz. The data source is the EIA. A table showing the Top 15 states with the highest percentage increases in oil production follows the quiz. Answers are at the end.
1. Which state had the largest percentage increase in oil production over the past 5 years?
b. North Dakota
In last week’s Energy Trends Insider (ETI) I analyzed why The Road to Chinese Shale Gas Goes Through the U.S. In addition to my article, Andrew Holland explained how the DOE Report on Economics of Natural Gas Exports Will Lead to LNG Export Permits and Robert Rapier wrote about profiting from the peculiarities of gas price fluctuations in ‘Rockets and Feathers’ — Investing in Refiners. As we have done previously, we would like to share a story from ETI with regular readers of this column. Interested readers can find more information on the newsletter and subscribe for free at Energy Trends Insider.
The Road to Chinese Shale Gas Goes Through the U.S.
China is reported to have massive unconventional natural gas resources. Technically recoverable gas reserves are forecast to be 36 trillion cubic meters, making it the world’s largest reserve pool according to EIA, and nearly 50% larger than the U.S.’s reserves. In the country’s most recent 5-year plan it laid out a goal of 6.5 billion cubic meters of production by 2015, a steep increase from the current production level of zero.
An American energy firm is launching a $250 million lawsuit against the government of Canada after the province of Quebec revoked permits that would have allowed for hydraulic fracturing in the region surrounding the St. Lawrence River, a major waterway in that part of the country.
Lone Pine Resources Inc. disclosed its November 8 filing with the United States Securities and Exchange Commission this week, detailing its suit against the Canadian federal government under the much-argued Chapter 11 of the North American Free Trade Agreement (NAFTA), a chapter that allows private companies to pursue the federal governments of participating countries — Canada, Mexico, and the United States — if they feel that their ability to operate profitably is infringed upon unfairly.
Since 2005, the “total oil supply” for the United States as reported by the Energy Information Administration increased by 2.2 million barrels per day. Of this, 1.3 mb/d, or 60%, has come from natural gas liquids and biofuels, which really shouldn’t be added to conventional crude production for purposes of calculating the available supply. Of the 800,000 b/d increase in actual field production of crude oil, almost all of the gain has come from shale and other tight formations that horizontal fracturing methods have only recently opened up. Here I offer some thoughts on how these new production methods change the overall outlook for U.S. oil production.
Let me begin by clarifying that “shale oil” and “oil shale” refer to two completely different resources. “Oil shale” is in fact not shale and does not contain oil, but is instead a rock that at great monetary and environmental cost can yield organic compounds that could eventually be made into oil. Although some people have long been optimistic about the potential amount of energy available in U.S. oil-shale deposits, I personally am pessimistic that oil shale will ever be a significant energy source.
In this week’s episode of R-Squared Energy TV, I talk about the impact of natural gas in the U.S., and the Canadian economy.
Some of the topics discussed this week are:
- How I think natural gas prices will behave over the next 10 years
- Which industries will benefit the most from low natural gas prices
- The link between hydraulic fracturing (fracking) and earthquakes
- The relative strength of Canada’s economy
In this week’s episode of R-Squared Energy TV, I answer questions on palm oil and hydraulic fracturing (fracking). Some of the topics discussed are: The EPA decision to exclude palm oil from qualifying as renewable biomass under RFS2 The Chinese influence over the palm oil trade The issue of trade-offs in our energy choices Agendas in the fracking debate After I recorded the clip, I did some research on exactly how the EPA treats palm oil (I should have done it before recording the clip), and they say that “oil palm plantations would have to meet the criteria for existing agricultural land in order for their fruit and crop residue to qualify as renewable biomass under RFS2.” I am not… Continue»