Is Shale Gas Potential Being Overestimated?
The Energy Tribune has an excellent cautionary tale titled New Research Questions Haynesville Shale Economics for those people who insist that abundant shale gas is the saving grace for the US energy needs and that its abundance is sufficiently large to serve as THE bridge to a solar/wind utopia.
I have been watching the energy industry for too long to ignore the fact that there is plenty of economic lucre awaiting fossil gas companies if policy makers accept the notion that natural gas is so abundant that it can be used at a greater rate than today in both electrical power generators and compressed natural gas fueled vehicles. Methane prices are relatively low today, compared to the peaks achieved in 2008, but that is only because demand across all traditional customer sectors including chemicals, fertilizer, electrical power, and residential heating is subdued by the recession.
Some financial analysts are seduced by the higher than average storage numbers that the gas industry is reporting, but it is important for policy makers to understand just how small our gas storage is in comparison to the annual demand. The US consumes roughly 20 trillion cubic feet of gas every year, but the total amount of storage in the system is only about 6-7 trillion cubic feet and at least some of that would be unusable. The system has to have relatively constant production levels in order to meet customer demands without interruption.
Shale gas wells tend to produce generously for the first year or so after being drilled, but their depletion rates are far higher than gas wells in the kinds of formations that have historically been tapped. I think of them as sprinters that wear out quickly. The problem is that their drilling costs require a longer payback time at today’s prices. Higher prices would enable the costs to be repaid in a shorter period of time, but higher gas prices would have devastating effects on the traditional customer base. Chemical manufacturing and fertilizers can move, but home heating is, by definition, a domestic demand.
It is funny – in a very sad way – how adamantly the oil/gas industry fights additional taxes under the mantra of their negative effects on hard working people, but markets their product hard in order to increase sales prices as driven by supply and demand imbalances. Of course, taxes do not go into the pockets of oil/gas company executives, but higher prices sure drive those profit numbers and the associated bonus payments, even without any improvements in actual productive performance.
‘Chemical manufacturing and fertilizers can move’.
This is already a serious problem. For decades about the only US industry that ran a surplus with the rest of the world was the Chemical Industry. Just in the last few years even that is now a deficit. One of the problems has been the high price of natural gas. Another reason nuclear would be beneficial is it would save fossil fuels (oil, and gas) for use as polymeric materials.
The thermo-chemical splitting of water by high temp reactors looks like winner for advanced generation nuclear reactors. One such system uses sulfuric acid and iodine as catalysts. I have read of greater than 50% efficiency attained at temps in the 900 to 1000 degree range. Before WWII ammonia was made from hydrogen produced by electrolysis rather than hydrogen from methane. Since electricity is necessary for electrolysis we start with an efficiency in the 30+% range so the total process efficiency must be still lower. Getting a highly efficient hydrogen production system could reduce the consumption of natural gas by about 5%. It might also lower the cost of nitrogen fertilizer and trickle down to making food more affordable. It also would increasingly benefit the oil industry, as they add hydrogen to heavy crude and the tars extracted from oil sands. Another thought is that synfuels can be produced by chemically reducing carbon dioxide with hydrogen. I have no idea of the economics associated with the chemical synthesis of hydrocarbon fuel. Does anyone know about the feasibility and cost of synfuel production? Of course ammonia could serve as a fuel. Hydrocarbons would be more desirable. This is another reason that I am enthusiastic about pursuing generation IV reactor technology.
In case anyone is interested in the chemistry -The thermo-chemical reaction goes something like this: at 900 C: Sulfuric acid decomposes to sulfur dioxide +2 oxygen+ 2 hydrogen. The sulfur dioxide grabs a water moleucle to restore to sulfuric acid. The oxygen leaves as 02 gas and the Iodiine graps the hydrogens to become hydrogen Iodide. At reheating to around 300 C, the hydrogen iodide decomposes to iodine and 2 hydrogen that are available for the above uses. The net result is that thermal energy from the reactor resulted in the splittiing of a water molecule with the energy input being trapped in the two hydrogen. As catalysts, the sulfuric acid Iodine was restored. One water molecule was split into two hydrogen and one oxygen.
The reaction diagrams something like this: at 900 C H2SO4 splits to S02 +02 +2H . The 2H +I–>IH2. When heated to 300 C IH2 –>I + 2H . The S02 + H20 –>H2S04
I am impressed with your grasp of the shale gas situation. I’m a petroleum geologist and compete with shale gas deals in a limited stash of exploration money. The decline of shale gas is precipitous and payout is often delayed, but it’s hard to drill a dryhole in it. That is the draw to poorly educated amatures–dentists, doctors and lawyers, all of whom think they are smarter than God. The only difference between doctors and God is that God doesn’t think he is a doctor. You better not buck the market, and the market is shale gas for now. Vbr
Does anyone know about the feasibility and cost of synfuel production?
This is a couple of years old, but quite interesting:
http://www.lanl.gov/news/newsbulletin/pdf/Green_Freedom_Overview.pdf
Finrod,
Thanks for the reference to Green Freedom. Peak oil, dependence on foreign oil, climate change, and development of an industry that will grow our economy should give synfuel research more visibility then is currently happening. Nuclear power has been rather limited in its ability to address our nation’s needs for liquid fuels for transportation and agriculture. The production of a synfuel and an anhydrous ammonia industry that is independent of fossil fuels would greatly expand nuclear energy’s role in the total energy picture. Green Freedom looks to nuclear as their the most affordable energy choice. Bill Gates seemed to think that the ability to reduce the carbon footprint for fertilizer was rather limited. I would think that using nuclear power for production of hydrogen to produce anhydrous ammonia would almost eliminate the carbon footprint for nitrogen fertilizer. It also would offer price stability and likely lower production costs.