Shale Gas -- Friend or Foe

Richard Goodwin | Feb 01, 2012

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Since I reside in Palm Beach County, FL, I pay attention to my local electricity rates, provided by Florida Power & Light [FPL] -- a regulated utility. Recently, FPL lowered its rates by about 2% for 2012. FPL President and CEO Armando J. Olivera stated the market prices of natural gas for 2012 are trending even lower than previously expected, and this is driving a significant reduction in our projected fuel costs for the coming year.

The price of natural gas dropped from about $13/MMBTU in mid 2008 to its present price, approximately $4/MMBTU. The lower natural gas market prices are due to Shale Gas. Consider that shale gas in 2008 comprised about 11 percent of all natural gas production. But by 2010, the shale gas component jumped to 27 percent and by 2015, it will be 43 percent. This prediction attributed to IHS Global Insight (D. Yergin Dec. 2011), which says that by 2035 shale will amount to 60 percent of all natural gas production. Black & Veatch predicts the price of natural gas to remain stable until 2015 [Dec. 2011].

What is Shale Gas?

Shale gas -- a so-called unconventional resource -- never left its birthplace. It's still in the source bed whose organic matter gave rise to the gas. Because the pores in the fine-grained shale are not well connected, the rock is too impermeable to let the gas go i.e. tight shale formation.

The two basic tools drillers needed to unleash unconventional shale gas were already on hand, waiting to be combined and refined. From the offshore oil and gas industry, they borrowed horizontal drilling. The ability to drill straight down and then bend the hole, thus, making it possible to drain much more of a reservoir from a single offshore drilling platform. Onshore, horizontal drilling out to about 8000 feet from a drill site can multiply the length of a single well within a gas-bearing shale layer by five or 10 times.

The other tool was hydraulic fracturing, or fracking. Drillers pressurize a horizontal section of a well by rapidly pumping in 3 million or 4 million gallons of water (plus a bit of fine sand and chemicals) to pressures of up to 1000 pounds/square inch [psi]. The extreme pressure creates a football-shaped cloud of fractured shale about 1000 feet long, the fractures remaining propped open by sand grains. Repeat up to 30 times in one well and drill tens of wells from a single site; avoiding the costs of several vertical wells.

Using horizontal drilling and hydraulic fracturing requires just one well typically costing about $3.5MM -- as opposed to drilling several vertical wells to recover the shale gas.

Availability

In June 2010, MIT predicted that the 2000 trillion cubic feet [Tcf] of recoverable natural gas in the United States -- equivalent to a 92-year supply under current consumption rates -- will increasingly contribute to generating electricity over the next 40 years and that unconventional resources like shale will be a primary reason for that growth. A report released in July 2011 by the U.S. Energy Information Administration (EIA) estimates that there is approximately 750 Tcf of recoverable natural gas in the shale plays of the Lower 48 states alone -- providing about 35 years of supply at current demand levels. Either prediction offers an abundant supply of economically recoverable natural gas.

Location

The accompanying figure depicts the location of Shale Gas fields in the USA (per USEIA March 2010). The following lists these fields:



In most cases these drilling depths are well below potable aquifer levels. In Dec 2011, during its study of Pavillion WY for more than two years, the USEPA stated that drilling is more remote and fracking occurs much deeper than the level of groundwater that would normally be used.

Increased Demand

EPA and local regulations could lead to 45 gigawatts of coal-fired power generation being retired by 2020, stimulating as much as five billion cubic feet a day (bcfd) of gas demand just to offset lost generation from the idled plants. Total gas demand growth in the power sector alone could range between 8-10 bcfd by 2020.

Conversion of older, smaller coal-fired plants to natural gas reflects a growing trend with electric utility industry. An analysis by the Associated Press [Dec. 2011] indicates that 32 coal-fired power plants in a dozen states will be forced to close and an additional 36 might have to close. The majority of these plants are located in KY, VA, OH, TX, IN, NM, MN, MI, MO proximate the Shale Gas formation. Depending upon the specifics of each plant abandonment or conversion may occur. In some instances, depending on MW capacity, the conversion could be for base or peak demand. In either case Natural gas demand will grow as these conversions occur. This increased demand, occurring after 2015, could raise the price of natural gas. The private sector investment recognizing the probability has invested tens of billions of dollars in Shale Gas development and infrastructure.

Converting a coal plant to natural gas should cost about $440/KW ($2011). The cost to retrofit a coal-fired plant to meet SOx,NOx and Mercury emission limitations should be about the same as converting to natural gas. The Operating Cost of natural gas is about 10% lower than coal-fired plants ($2011). Natural gas conversion, either base-loaded or peaking, would cost the electric utility less.

Profit Incentive

Exxon Mobil Corp.'s purchased XTO Energy for $34.9 billion. If ExxonMobil's predictions are right, unconventional formations such as shale would provide significantly more of this country's generation and transportation fuels.

As for XTO, its holdings include the Bakken Field in North Dakota as well as those in the Appalachian region. But other fields such as the Barnett Shale in the Dallas area now supply 6 percent of the nation's natural gas. XTO's field also include the Haynesville Shale project in Louisiana and Texas as well as the Marcellus field that stretches from New York State down through Appalachia. Estimates are that 21 shale beds exist in 20 states but that it will take several years to prepare them for development.

BHP Billiton Ltd. agreed to pay about $12.1 billion for Petrohawk Energy Corp. to expand its presence in U.S. shale. Since June 1, 2011, companies including Exxon, Marathon Oil Corp. and Malaysia's Petroliam Nasional Bhd have announced at least $7 billion worth of North American shale-gas deals. In Oct. 2011, Kinder Morgan announced plans to buy El Paso Corp. for $38 billion. The combined acquisition would include 80,000 miles of pipelines spanning nearly all of the major unconventional [shale] gas formation.

Overlaying the shale gas transportation network, shale gas formations and coal-fired plants slated for abandonment shows close proximity of pipelines, shale gas and power plant (suitable for natural gas conversion). The juxtaposition of these factors creates a scenario for increased power plant demand. The expected increased demand from power sector presents a strong profit incentive for these investments -- given the expectation that natural gas prices will rise in a few years.

Job Creation

Oil and Gas Production currently employs 440,000 workers -- an 80% increase from 2003. In North Dakota, where 200 rigs are pumping 440,000 barrels of oil per day, there are 16,000 job openings with an unemployment rate equals 3.5% [lowest in USA]. In Pennsylvania, the Marcellus natural gas development has created 18,000 in the first half of 2011 -- overall job creation of 214,000. In Ohio, development of natural gas from Utica Shale has potential to created more than 200,000 jobs by 2015.

Hydraulic Fracturing -- Environmental Concern

Hydraulic Fracturing or Fracking involves the use of large quantities of water, three to eight million gallons per well, mixed with additives, to break down the rocks and free up the gas. Some 10 to as much as 40 percent of this fluid returns to the surface as "flowback water" as the gas flows into a wellhead.

Once a well is in production and connected to a pipeline, it generates what's known as produced water. Flowback and produced water contain fluid that was injected from surface reservoirs--and 'formation water' that was in the shale before drilling."

These flowback fluids carry high concentrations of salts, and of metals, radionuclides and methane. Such chemicals may affect surface and groundwater quality if released to the environment without adequate treatment.

Job and economic growth has not deterred State Regulatory Officials from imposing their own constraints on shale oil gas development. In PA salt-laden fracked water must be recycled instead of disposed and/or sent to local municipal treatment plants. In both south Texas and North Dakota, local water scarce regions, hydraulic fracturing water usage is scrutinized to minimize impact to regional aquifers.

While the states recognize the economic benefits of Oil Gas Shale Production, they are holding industry accountable for its environmental compatible development. The scientific consensus, regarding "fracking's" environmental effect is unclear.

On April 16, 2011, House Democrats representing the Energy and Commerce Committee (Henry A. Waxman), Natural Resources Committee (Edward J. Markey), and Oversight and Investigations Subcommittee (Dina DeGette) released a report that stated no scientific data to support this assertion and ignore fundamental principles of toxicology, epidemiology, and risk assessment that would be needed to determine, scientifically, whether hydraulic fracturing chemicals could be harmful to people or the environment. The report's conclusion that "questions about the safety of hydraulic fracturing persist" cannot fairly be drawn from the data presented.

Duke University researchers found that methane levels were on average 17 times higher in groundwater near fracking sites compared with areas where no gas drilling had occurred. Recently U.S. Department of Energy Secretary Steven Chu formed a subcommittee of industry, environmental and state regulatory experts to make recommendations to improve the safety and environmental performance of natural gas hydraulic fracturing from shale formations.

The group -- part of the Secretary of Energy's Advisory Board-- reviewed and identified steps that can be taken to improve the procedure's safety. Their report, intended to offer advice on practices for shale extraction to protect human and environmental health, was completed in Dec. 2011.

The report's recommendations cover four areas:

  • Making information about shale gas production operations more accessible to the public, including full disclosure of all chemicals used in hydraulic fracturing fluids. The report said no economic or technical reason exists to prevent disclosing all chemicals. It also called for creating a national database of all public information about shale gas and government funding for existing multi-stakeholder mechanisms such as the non-profit Ground Water Protection Council's Risk Based Data Management System and the State Review of Oil and Natural Gas Environmental Regulation.

  • Pursuing measures to reduce "as quickly as practicable" emissions of air pollutants, ozone precursors and methane. The report also recommended that a federal interagency planning effort be launched to acquire data and analyze the greenhouse gas footprint of shale gas operations throughout the lifecycle of natural gas use, and compare it to other fuels. The report urged adoption of a systemic approach to water management based on consistent measurement and public disclosure. The report also recommend field studies on methane leakage from hydrofractured wells to water reservoirs and adopting requirements for background water quality measurements to record existing methane levels in nearby wells prior to drilling.

  • Creating a shale gas industry operation organization with external stakeholders and dedicated to continuous improvement of best practice through the development and sharing of standards and the assessment of member compliance.

  • Commissioning research and development to improve safety and environmental performance. The report said that while the majority of shale gas R&D will be done by the oil and gas industry, there is a role for the federal government.

I would add the following to this list:

  • Recycle/treat 'flow back' waters

  • Establish Background of Water Quality before 'Fracking'

  • Continuous Monitoring Flow Back waters

  • Professional Engineer to Design and Seal Cement well casing -- avoid spill e.g. BP Oil Spill GOM

The tremendous volumes of water required (typically two to five million gallons per well), of which 25% to 100% may be returned to the surface as flowback water, must be recovered and disposed of responsibly (or recycled for further industrial usage) before gas production can commence. For western US states, in particular, freshwater supplies are already extremely scarce; thus, hydraulic fracturing can further strain existing water resources. Water used for drilling and fracking active wells in.

The industry, recognizing the water usage issues associated with hydraulic gracturing are improved their technologies. For example, Halliburton has recently commercialized a RapidFrac system uses a metering process that enables a single ball to open multiple sleeves isolated within an interval by swellable packers. Each RapidFrac sleeve can be tailored to specific fracture requirements along a horizontal wellbore so as to enhance post-frac production. Up to 90 sleeves can be incorporated into any one horizontal completion, ensuring maximized stimulated reservoir volume. By facilitating continuous pumping, the RapidFrac system reduces stimulation cycle time from days to hours and reduces the volume of water consumed. Besides attracting private sector investment and creating new jobs, Non-conventional Shale Gas projects are developing improved technology to address evolving environmental issues.

Technically Viable Environmental Regulation -- Shale Gas

The Shale Gas industry may have learned a lesson regarding bureaucratic ineptitude from the Gulf of Mexico Macondo Oil Spill. Their fear may be that lack of expertise in tight shale gas formations would create a 'One-Size Fits All' federal regulatory menu. The variation in geological formation from one region to another (i.e. Permian vs. Marcellus) is being dealt with at the state level. Introduction of USEPA federal mandate, lacking expertise and site specific knowledge, could lead to unnecessary delays.

Rather than generating technically insufficient National Standards, USPA could simply review the applicants proposed methodology -- asking questions regarding areas of concern. Such a review would occur on the regional level and would include state regulators and project applicants. This approach has worked well in other federal review processes e.g. Coal Ash Disposal Sites.

Comments

Over reliance on Natural Gas to supply base-load power plants introduces a risk dependency relationship. Duke Energy Corp. CEO James E. Rogers said the U.S. should be careful about relying on natural gas for energy. The electric utilities' increased demand for Natural Gas may cause a price revision by late 2012. Commodity traders expect to see buying opportunities through 2013 while sellers are advised to wait until mid-2012 at the earliest.

So for a few more years Natural Gas prices [Shale Gas induced] will remain close to $4/MMBTU. Afterwards Shale Gas could be blamed for inducing a false sense of price stability because cost of electricity may increase.

References

Bagawabdoss,K.M.; "Hydraulic Fracturing and its Impacts"; Pollution Engineering Webinar, December 8, 2011

Energy Central Webcast "Harnessing Disruption -- A Conversation with Daniel Yergin"; Dec 15, 2011

Goodwin R.W.; "Natural Gas Power Plants' Fuel of Choice; Energy Pulse Weekly; July 26, 2011

Solomon, D. and Gold, R.; "EPA Ties Fracking , Pollution"; The Wall Street Journal' December 9, 2011

Wood, V.; "Natural Gas Price Picture May Change by Late 2012"; Pipeline & Gas Journal; September 2011

Yergin, D.; "America's New Energy Security"; The Wall Street Journal; December 12, 2011

Related Topics

Comments

This shale gas business needs a lot of examination, and this article is definitely useful. Frankly, I once thought that all the talk about shale was just a lot of hooey, but a couple of very smart people told me to think again. There are a few items though that need to be looked at and considered very carefully. Apparently the US Energy Department has reduced its previous estimate of reserves in the Marcellus deposit by 66 percent, and decline rates in some of the deposits are not just high but very high.

I wonder if the author of this article could say something about this. I was thinking about writing Secretary Chu, but on the basis of some of his previous pronouncements on energy matters, I am not sure if I would be comfortable with his reply...if I got one.

While the practice of "fracking" has become controversial and has begun to encounter environmental opposition, the presence of shale gas may indicate the possible presence of other phenomena from which the energy sector may benefit. Salt caverns and salt domes usually occur in the same geographic regions as natural gas. If the shale bedrock is impermeable in the shale gas regions, then the salt-flushed caverns could hold compressed natural gas or large volumes of compressed air.

I'd suggest there are some very knowledgeable industry people hanging out regularly on the Oil Drum website. Login ID's such as HeadingOut, RockMountainGuy and several others are actively engaged in exploration and financing for oil and gas in N. America, and seem quite willing to share general information. Last I checked they weren't very optimistic about the surprisingly rapid decline rates of shale gas wells, meaning they can't be classified production-wise the same as conventional wells, an error they suspect many of the "reserve projection" outfits such as IEA have made.

I wonder if the author of this paper give us the information I requested in my previous comment. There is a charlatan and parasite here in Sweden dealing in oil, and there are plenty of these people who are active where shale oil is concerned. So...can we get that information please.

Another day, another dollar. Let's clean this up- Every sensible person would like for there to be enough shale gas in the crust of the earth to make sure that we will never face the sitution that came about in 2008, but make-believe shale gas will not do the job. Yesterday I read an article by a gentleman at the Center for Global Development, and the New America Foundation who said that the world was awash in oil. I can accept that somebody can be so dumb as to believe that, but not somebody with a good job and salary.

Get this: he tells the ignorant that the world has 38 years of oil at present usage, due to reserves being 1.2 trillion barrels. I mean...let's face it, nobody should be so dumb as to make that statement at this late date.

Very good article Richard. Well worth reading. The story however is a great deal more complex than simply natural gas. One of the important features of shale bed rock formations is that they are generally very narrow in geological terms meaning that vertical wells only "see" a few feet of the gas well at a time. Horizontal drilling allows much greater exposure of the well to the shale formation.

Also these deposits do not contain only gas as appears to be implied. Some areas contain pure gas for sure but the majority contain what are termed natural gas liquids and some contain oil with natural gas.

Most of the drilling is being done to produce NGL's as it is just not economical for gas only production. Of course since you cannot produce one without the other there is a huge surplus of natural gas from the NGL wells.

What is being lost here is the immense size of these deposits. The Marcellus shale is well over 1000 miles long and while it is true that the decline rates are much higher than normal gas wells it is also relatively easy to drill more wells.

There are other reasons for the demand for natural gas increasing. Currently the price of natural has is set on a continental basis since there is no "OPEC" equivalent for NG. However the advent of large scale LNG terminals (originally designed to import natural gas but now being converted to export it from North America) will mean that natural gas will soon be priced internationally - just like oil is and soon you will see a gas OPEC.

I find it quite unlikely that old coal plants will be converted to NG. More likely new combined cycle gas turbines will be installed that have 65% efficiency and can compete with both coal and nuclear at gas prices somewhat higher than the depressed prices we see right now.

Worldwide the supplies of NG are enormous and with the advent of liquefaction terminals we will see a world wide trade in this product from both shale and conventional deposits. Coal seam gas also is contributing significantly to the glut of gas we see at present.

Off the west coast of Australia a conventional gas deposit under the Indian Ocean is being exploited by using a large liquefaction plant at sea to liquefy the gas and export it to Japan and China.

Of course as Fred will attest with the prices this low people will want to use it and that will increase demand and the price will go up. Good time to buy LNG futures I think.

Malcolm

Very interesting comment, Malcolm, although I think that we will have to wait to find out exactly how much gas is available. I can say however that my interest in NG has suddenly expandid. As you know, trying to convince people what nuclear isn't or is happens to be some of the hardest work in the world, and - I am happy to say - many persons have finally gotten the message about oil.

Converting LNG import treminals for export? I'll believe it when I see it. For exporting, on needs huge liquifaction trains of compressors and chilers. All the import terminal might provide is a storage tank and a dock. After all that expense, plus the cost of the ship, the deliverred product must compete with alternatives in the target market, meaning the local price of the gas delivered must be very low. As explained above the onl;y reason N American gas prices are so sow is that it is coming out as a byproduct of high value liquids production, but those mixed-product deposits are only a small fraction of the total "tight gas" reserves being counted, and aren't likely to last much longer.

Since the author of this paper did not choose to complete his discussion, he should thank Len and Malcolm for clearing up a few very important issues. For instance, it is common knowledge that before every millionaire goes to sleep at night he reminds himself of how wonderful it would be if he were a billionaire, and shale gas might be one of the means for giving him (or her) a chance to obtain what he sincerely believes that he deserves. I tell you what, I'll thank Len and Malcolm. Thanks guys.

http://www.prosefights.org/nmgco/intervene/intervene.htm#discovery1

IN THE MATTER OF THE APPLICATION OF NEW MEXICO GAS COMPANY FOR APPROVAL OF 2012 ENERGY EFFICIENCY PROGRAMS AND PROGRAM COST TARIFF RIDER PURSUANT TO THE NEW MEXICO PUBLIC UTILITY AND EFFICIENT USE OF ENERGY ACTS.

NEW MEXICO GAS COMPANY, Applicant. )

Case No. 11-00369-UT

FIRST SET OF INTEROGATORIES

Interogatories are permitted under NMAC 1.2.2.25 E (1).

WHEREFORE New Mexico Gas Company is asked to provide:

1 Verified statement of educational histories and work experiences of Staff Withnesses1 providing testimony before the PRC on Monday February 13, 2012

2 Verified written statements of facts and citations to facts sources used by Staff Withnesses to support assertions in testimony before the PRC on Monday February 13, 2012.

Respectfully submitted this February 7, 2012.
____________________ ___________
William H Payne date

Attempt to stop the liberal arts 'edcuated' BS,

Second set of interrogatories.
http://www.prosefights.org/nmgco/intervene/intervene.htm#discovery2

Third set of interrogatories
http://www.prosefights.org/nmgco/intervene/intervene.htm#discovery3

Ms Sweeney has neither acked or responded.
http://www.prosefights.org/nmgco/intervene/eia/eiagas.htm#sweeney

Yergin fracking page.
http://www.prosefights.org/nmgco/intervene/eia/yergin.htm#yergin

Thank you all for your commenrts but for the record I only saw my arrrcle with your remarks today 2/7/12 - I appreciate the time you spent in responding.

Please refer to my last year's article "Natural Gas Power Plant's Fuel of Choice". Today's article was an extension of some of the issue I raised last year. I agree that liquid hydrocarbons are present and profitable to extract from some shale formations, but my focus was on low Natural Gas prices and cost of electricity. Note: Current cost NG < $3/MMBTU but how long will such low prices remain. How long before NG prices rise > $4/MMBTU with higher electricity costs.

thank you all again Richard W. Goodwin, West Palm Beach FL

From: "Michael Fisher"
To: bpayne37@comcast.net
Sent: Monday, February 6, 2012 1:17:24 PM
Subject: Re: Paragon Natural Resources

However, there are some potential environmental concerns that are also associated with the production of shale gas. The fracturing of wells requires large amounts of water. In some areas of the country, significant use of water for shale gas production may affect the availability of water for other uses, and can affect aquatic habitats.
This is silly. Just listen to the argument. It will effect water availability. That is nonsense.

Second, if mismanaged, hydraulic fracturing fluid — which may contain potentially hazardous chemicals — can be released by spills, leaks, or various other exposure pathways. Any such releases can contaminate surrounding areas.
Yes, if MISMANAGED. Again this is a non point since just about anything you do, if MISMANAGED could be damaging to the area. Believe me, oil and gas companies are highly regulated and carefully MANAGE the work they do.

Finally, fracturing also produces large amounts of wastewater, which may contain dissolved chemicals and other contaminants that require treatment before disposal or reuse. Because of the quantities of water used and the complexities inherent in treating some of the wastewater components, treatment and disposal is an important and challenging issue.
Again, this sounds like someone who has virtually no knowledge of how this process actually works. You pump your fluid into an evaporation field that is lined with rubber so it doesn't leak in to the ground. Once the water evaporates off, you truck the remaining chemicals back to the plant that you bought them from. No big deal.

On Sat, Feb 4, 2012 at 9:58 PM, wrote:

Hello Mike,

Any comments?

http://www.prosefights.org/nmgco/intervene/eia/eiagas.htm#sweeney

_____

Listen to Mike's sales pitch.

http://www.prosefights.org/nmgco/paragon/paragon.htm#mike

bill

GasFrac Energy Service has developed a fracing process using "gelled" LPG, no water. I understand it works very well. Any comments?

From: "David McCoy"
To: bpayne37@comcast.net
Sent: Tuesday, February 7, 2012 3:40:01 PM
Subject: Re: energy pulse fracking article

EPA says fracking likely polluted Wyoming aquifer
http://www.reuters.com/article/2011/12/08/us-usa-epa-fracking-idUSTRE7B71TL20111208

On 2/7/2012 2:49 PM, bpayne37@comcast.net wrote:
Hello Mike,

Thanks for response.
http://www.energypulse.net/centers/article/article_display.cfm?a_id=2504

bill

___

Dave M\CCoy
http://www.radfreenm.org/

Florida Power & Light [FPL]

NEXTera may be involved in an altenegy scam?

http://www.prosefights.org/fplwind/nextera.htm#hello1

of greater proportions than Billie Sol Estes scheme?

Let's try to find out what is happening at House, NM wind farm/ranch with initial costs [manufacturing], installation and maintenance vs revenue from electricity sales to PNM.

Maintenance appears to be a problem Mike at High Lonesome reports.

http://www.prosefights.org/wind/highlonesome/audio/mike.mp3

Removal costs should be considered too..

Windmill carcases littler New Mexico.

Xinhua
The China Electricity Council (CEC) said Friday that China will face tightened supplies of electric power this year, with a shortage estimated to reach up to 40 million kilowatts. Both regional and seasonal power shortages will occur in 2012, the council warned. The CEC predicated the country's electric power consumption this year to reach 514 million kilowatt-hours, up 9.5 percent year-on-year. The growth rate represents an 11.7-percent decrease from 2011, as China is expected to experience slower economic growth this year, according to the council. The council said China will need to improve its coal-producing capacity and increase imports to support rising demand for power-generating coal. An estimated 85 million kilowatts of power-generating capacity will be added this year, the council said. (As posted on ASPOusa on 2/6/12)

If they are building 500 megawatt plants that would amount to 170 new coal burners in 2012. And more coal mines and new rail lines to haul the coal. India is on the same course, and it all means a bigger squeeze on many coal importing nations such as India, Japan and Korea.

The good news is that we have lots of shale gas. But just how good is this good news? It is not about reducing CO2 emissions that hope is already swamped. The more gas we burn the more coal available on the world market. The more gas we burn the longer Australian and Chinese coal deposits last? The more gas we use the more fracking, the more fracking the more chances of unintended consequences. We are at or over sustainable water supply. Fracking not only uses a lot of water it degrades more. It is not as simple as whose ox is getting gored

Don: "The growth rate represents an 11.7-percent decrease from 2011, as China is expected to experience slower economic growth this year" -- a possibly interesting confirmation of the new theory that "economic activity" is better measured by energy consumption than by fiscal measurements. In other words, the true value of dollars and euros etc. have become so distorted by banking practices such as lending 20 times more than their reserve, and other questionable practices, that fiscal measurements are becoming meaningless.

No matter how much natural gas you have, or how cheap it is---it is useless if you do not have a way to use it.

In my earliest recollection a very simple yardstick was used. Economic activity was measure in sulfuric acid production. Every school child then knew he lived in the Age of Iron and Steel and it took huge amounts of sulfuric acid to make steel. It also took huge amounts to make fertilizer, chemicals, and paper – well almost every thing. If a country didn’t make sulfuric acid it likely didn’t make much. And it wasn’t made in anyone’s back yard as it required large well-engineered plant.

Sure, why not energy as the yardstick instead of sulfuric acid.

Whenever two economists are together we hear fiscal and monetary bantered back and forth. Like a vaudeville routine. At one time I thought I had figured out this business – naw, I now know I haven’t. The routine goes on. Nor do I understand “banking” except in its most primitive form. I remember one day many years ago the Continental Illinois Bank fired 1200(?) people, and I don’t think anyone noticed, except those 1200. Every year the bank would list their officers in a full page ad in the Tribune. I guess they didn’t want any customer to deal with anyone less than an asst. VP.

From: "dmccoy"
To: bpayne37@comcast.net
Sent: Thursday, February 9, 2012 2:58:26 PM
Subject: Re: Possible fracking earthquake damage Shake Rattle and Roll



Bill,
http://thinkprogress.org/green/2012/01/05/398406/after-earthquakes-ohio-decides-to-stop-fracking-process-to-help-stop-the-ground-from-shaking/

On Thu, 9 Feb 2012 21:17:34 +0000 (UTC), bpayne37@comcast.net wrote:
> Thursday February 9, 2012 14:07
>
> Hello Mr Broadhead,
>
> .
>
> Your verbal comments on possible earthquake fracking damage perhaps
> should be included in a report?
>
> Please ack if you receive this email.
>
> Regards,

So they believe that fracking causes earthquakes. Well yes, definitely. Even Earnest Hemingway knew that. Don't you remember that business in FOR WHOM THE BELL TOLLS in which there was a reference to the earth moving.

By the way, if I were to name one author who made a fool of the critics and his readers, Mr H. is that man.

As to the relationship between fracking and earthquakes we have a semantic problem.

Over time opposing pressure builds up between fault faces. Some years ago it was proposed, actually tried, to lubricate faults to TRIGGER small earthquake thereby releasing the energy in small doses rather than letting the energy involved accumulate, eventually to be released in a large earthquake.

I.e. to trigger, not really cause. Sort of like setting back fires to battle a forest fire. So perhaps fracking is triggering a rash of earthquakes. Unintended consequences don’t always have to be unfavorable.

Len,
"Converting LNG import treminals for export? I'll believe it when I see it. " I am sorry to see that you are so out of touch with the energy industry.

Cheniere Energy last year received an export license to ship LNG from a converted terminal. Chenier energy is converting its Sabine Pass Louisiana LNG import terminal to liquefy US produced Natural Gas for export. The world price of LNG is much higher than the domestic price so Chenier is buying gas at US rock bottom prices and reselling it as LNG on world markets. The difference in price is more than enough to pay for all the liquefaction equipment needed.

When the US Government agreed to the export of US gas by Chenier the stock price went up 31%. As a happy recipient of the increased stock price all I can say Len is that you lack of knowledge of this business is costing you dearly.

What is going on (to educate you) is that LNG is becoming a world traded commodity just like oil. It does not as yet have a cartel organisation like OPEC but that is coming. There is so much natural gas in the US that it is poised to become the largest energy exporter in the world - reversing a 50 year trend largely due to LNG exports.

To some extent I agree with Fred that there may not be as much gas as we think but I tend to always put my money where big companies put theirs. They do not invest billions in LNG terminals unless they are very sure that there will be a long tern cheap and plentiful supply of natural gas to liquefy. By making bi directional facilities companies like Cheniere will gain (by export) when US gas is cheap and if it does become more scarce they will also gain by reversing the flow to import LNG from Algeria. Heads they win, tails they win.

I also would comment that there are very large reserves of untapped conventional gas in North America (Mackenzie Delta, NWT, Alberta, and Alaska) as well as substantial coal bed methane over and above the gas coming from shale deposits. As a result I do not think that natural gas is going to be in short supply for a very long time.

Indeed I see this energy supply as the single largest competitor for nuclear power plants.

Malcolm

Malcolm, I'll admit that when the big firms started putting billions into shale gas I went from not believing to believing. But I'm going back toward not believing, though maybe I wont go all the way. Ideally, gas would be a stopgap until we got to the bottom line, which is going to be nuclear plus renewables, and the key thing is that the craziness in Germany does not infect other countries - countries in which I pay taxes to be exact. As fpr large reserves of untapped conventional gas...hmm.

Don----the idea behind using back-fires is that you can control the fire you set.

Not to run around lighting more fires because there is a wild fire out of control.

Back burns are usually done in the spring when conditions are wetter, and the burn can be controlled.

What you are saying is like tossing hand grenades down a hole. There is no way whatever to predict the consequences. You would be just as likely to trigger another 9.0 as to dissipate stress as small quakes.

All I'd suggest Malcolm, is that a) Chenier doesn't turn out to be another scammer like whats-its-face back ten years ago. b) to set up LNG compression trains usually requires borrowing so much money that it is only done with 20+ year contracts with customers. If Chenier doesn't have that, I'd suggest "doing the numbers" before investing.

Fred. You are right. My analogy to back-fires is imperfect, but aren’t they all? Take yours, “Like tossing hand grenades down a hole.” A hand grenade is seismologically an exceedingly feeble device. And we CAN predict the consequences.” None. I’d say the school bus rumbling by might be a more effective trigger. I feel the school bus, never the reported earthquakes.

The idea of dissipating seismic energy in small doses was based on lubricity, not explosions. As to mag 9 earthquakes they happen in likely places, known fault systems – the problem is knowing when. They repeat. California west of the San Andreaes Fault is moving to Alaska. It will take many earthquakes. (So I happen to believe rebuilding and expanding San Francisco was foolish.) In any event the idea of triggering earthquakes preceded the shale gas boom and was the work of geologists.

More thoughts on triggering earthquakes.

Every nation that developed nuclear weapons had to have done underground and/or undersea testing. I don’t know how many but it had to add up to at least hundreds, thousands? A “small” nuclear device is one rated in the tens of millions of pounds of HE (high explosives.) I have never heard a suggestion of any triggering an earthquake.

To fix our thinking I will use my memory of the Korean War. A 105 mm howitzer shell and a 4.2 inch mortar shell delivered about 10 pounds of HE. Millions of these shells were used in Korea. (A hand grenade contains but ounces.)

So far nothing geologically scary. But if nuclear bombs were placed in selected location DEEP under ground the picture could be far different.

"Like tossing hand grenades down a hole". Or better, a hole in the ground which was mistaken for something else.

I went over to a local school and told them that I would help them with the math, but my proposal was evidently found offensive by some of the personnel. Question, why did you make the offer, Fred? Answer, because I cycle past that school a couple of times a week, and eventually I thought that I should do my part where the education of coming generations are concerned.

Now I see my mistake. I should have offered to teach ordnance engineering. Instead of hand grenades it should have been H-bombs, which might have caught the fancy of the teen-agers in that school.

For shame Professor. I don’t know about Sweden but among these united states I don’t think you could find one where you are allowed to teach arithmetic without minimum college credits in Theory of Education in Post Millennial America and Teaching Self Esteem as an Entitlement Free of any Basis.

Theory of education you say, Don. For shame to you too. Don't you know that I have and have always had and only have one theory of education, which is that I talk and the students listen, and when I tell them to talk they say more or less what I said, without any trimmings.

Of course, since you have been in the US Army you know that that approach doesn't always work. I remember lecturing some fine gentlemen on the Browning Automatic Rifle, and when one of them kept 'running off at the mouth' to someone sitting next to him, I itold him to shut up because I was trying to teach something that might save his life some day. His reply was that if I wanted to save his life, I should teach him how to ____ . I guess you know what ____ means, and I wonder what gave him the idea that I was familiar with the mechanics of such carryings on.

Fred

Don: two words. "home schooling" (unique to the US i think).

There are all kinds of things wrong with home schooling. I hesitate to enumerate them as I would likely be faulted for missing some critic’s pet issue.

Just today I read several stories about the terrible situation in Philadelphia regarding public schools. The gist of one story was how terrible it was to not being able to fund 91 school policemen. I spent 13 years in public schools and never even heard of a school policeman. What in the world would he have done? A policeman was never needed. Now they are.

Let’s not mince words. They are needed for one and only one reason - to deal with Black misbehavior. The proximate victims are the majority of Blacks, most often women. Perhaps more important are all those who’s education has been diluted merely to accommodate.

I miss the point Don. If they need policemen in schools, then they should put them there. And the money to finance their presence should come from the wars in which the US is engaged. Yes, I am a Democrat, but I would not only vote Republican (if I voted), but also come to the US to work for the Republican candidate if it were certain that they would not be like George W. and Obama.

Professor, I fear for my country.

"The Philadelphia Inquirer's big story Feb. 4 was about how a budget crunch at the Philadelphia School District had caused the district to lay off 91 school police officers. Over the years, there's been no discussion of what has happened to our youth that makes a school police force necessary in the first place. The Inquirer's series "Assault on Learning" (March 2011) reported that in the 2010 school year, "690 teachers were assaulted; in the last five years, 4,000 were." The newspaper reported that in Philadelphia's 268 schools, "on an average day 25 students, teachers, or other staff members were beaten, robbed, sexually assaulted, or victims of other violent crimes. That doesn't even include thousands more who are extorted, threatened, or bullied in a school year."

“How might one explain the greater civility of Philadelphia and other big-city, predominantly black schools during earlier periods compared with today? Would anyone argue that during the '40s and '50s, back when Williams attended Philadelphia schools, there was less racial discrimination and poverty and there were greater opportunities for blacks and that's why academic performance was higher and there was greater civility? Or how about "in earlier periods, there was more funding for predominantly black schools"?

Or how about "in earlier periods, black students had more black role models in the forms of black principals, teachers and guidance counselors"? If such arguments were to be made, it would be sheer lunacy. If white and black liberals and civil rights leaders want to make such arguments, they'd best wait until those of us who lived during the '40s and '50s have departed the scene.”

Paragraphs from a Walter E Williams syndicated column of 2/15/12.

I am a little squeamish about writing this comment – lest I add grist to the racist mill. Walter Williams unlike most columnists who comment on social issues is Black and conservative. Being Black he is able to use statistics that send white columnists to seeking cover. He is a PhD economist (UCLA) and a professor, author, photographer and only about ten years younger than I am.

You dont have to be "squeamish" Don. This morning people employed on Swedish trains protested about a new system, because it meant that when they questioned travellers who did not have tickets, they were often threatened, and it has happened that conductors have been attacked.

The Swedish Minister of Justice is visably incompetent or stupid or both, and is evidently incapable of dealing with that kind of situation or any kind. And not just that lady. The government in this country and in the US take a deep and sincere interest in what is taking place thousands of miles away from Stockholm or Washington, but ignore things happening around the corner. The police in Washington once warned an American Nobel Prize author against taking a smoke break in the street outside the White House because he could be mugged.

If you ask somebody who knows about these things, like me, I would say that the problem is pornography, dope, vulgarity, population growth, and the failure of the education system. Who is responsible for the latter? The answer is the politicians and school administrators, because I am convinced that it is possible to get the right teachers, although that might take time.

Don: Your seeking for a simple solution is regretable. Understanding the problem is the first step to solving it. The fact that you might consider "Being Black he is able to use statistics that send white columnists to seeking cover." to bear any relevance should be your starting point. The day you convince me that in Philly the colour of one's skin has absolutely no more relevance to a person's life (or their opinions) than their hieght or etc. will be the day we can start hoping for a solution to the education system. Until then, you can expect continued problems.

Fracking in oil and gas wells, I believe, does not generally cause earthquakes, because the source rocks for oil and gas are invariably soft. They are not capable of accumulating much shear stress, and so there's little stress for the fracking to release.

Where earthquakes do get triggered -- with some regularity -- is in the deep disposal wells into which the flowback fluids are often pumped. Those wells may penetrate hard rock layers where stress has accumulated. If the well crosses dry fracture zones, the injected fluids can lubricate the fractures and release accumulated stress.

The idea of using injection to deliberately trigger small quakes to release stress and avoid larger quakes was mooted perhaps 20 years ago. It never found favor. The problem is that stresses in the crust often extend over thousands of miles. If stress is releived in one zone, it only increases the stress in adjacent zones. I don't think we have tools to map out stress fields in crustal rocks in anything like the detail that would be needed to plan a safe sequence of "preventive" earthquakes.

Regarding groundwater contamination, my undestanding is that contamination is not possible if the well is "properly" cased and cemented. However, what seems to be emerging from studies is that leakage around the casing is rather common. Measurements of the air downwind of active gas fields appear to show much higher methane gas leakage than can be accounted for by normal operations. The rate of drilling these days is so high that a lot of it is done by inexperienced crews.

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