Energy reserves

[Keith Hudson]

When oil companies talk of "resources" to potential investors it's a very much larger figure than the actual recoverable amount -- what they call "reserves" -- which they quote to governmental regulators and taxation departments. The differences are, in fact, very considerable for conventional oil and gas fields. But they won't be so great for shale gas -- as I argued this morning to a correspondent who was getting confused about what "reserves" and "resources" mean.

Of course, the following might suggest that economic growth could continue indefinitely. But, as steady-staters will know, I think economic growth will come to an end when most countries of the world will not be able to get into the dumb-bell-shaped trade going on between consumer goods manufacturers (mainly China and Korea) and high-quality services of the advanced countries (that is, a minority of the population). Both ends of the dumb-bell require high investments in machinery and education respectively. 

RESERVES OF ENERGY

Shale gas and light liquid reserves are far more flexible than for superficial gas and oil. Shale strata, being the result of two or three billion years of composted marine life rather than a few hundred thousand years of land vegetation are far thicker and more extensive than the accidentally trapped bubbles of conventional oil and gas fields.

At present, about 6% of shale gas resources are recoverable and about 0.5% are accidentally vented by inadequate well design. Improved recovery, already being developed, or feasible over the long term are: (a) pad drilling (several wells drilled at different depths and in different directions); (b) enhanced completions (longer horizontal legs using larger quantities of injected sand); (c) multi-runs (back-diffusion of gas from surrounding strata after prolonged rest periods).

When conventional oil and gas production peaks (perhaps already?) and price per gallon equivalent rises permanently above about $80/barrel and when world population starts dropping steeply to due urbanisation then, plainly, there are hundreds, if not thousands, of years of reserves of shale gas and light liquid available. This will yield electricity prices that, for basic thermodynamic reasons (on the basis of energy-in versus energy-out), will always be several times times cheaper than for any alternative technology now being promulgated (e.g. nuclear power, wind, waves, solar cells, etc). 

The only cheaper method (not requiring as much capital investment as shale gas) will be the biological production of hydrogen (or electricity directly) when genetic technology is sufficiently advanced. (Some would say this is imminent -- after all, there is considerable research going on -- but I would suggest 50 or 100 years). Also CO2 production will be automatically recycled at no cost. However, biological methods would require extensive land use and thus only feasible on a wide scale if world population became very low indeed (that is, equivalent to hunter-gatherer level of 2 or 3 million).

As far as shale gas is concerned, the difference between reserves and resources is, and will be nowhere near as great as that for conventional oil drilling (or mineral extraction).  Most of the difference ultimately would be due to deep-sea resources which would require high investments costs and thus probably never exploited.   

[John deC.]

This is a very interesting economic analysis of the possible future of energy resources. I don't mean to give personal offense, but it appears applicable mainly in a parallel universe, on a planet that doesn't have a carbon budget so its atmosphere's ability to act as a sink for waste carbon is unlimited. On this Earth, the situation is different. As Kevin Anderson has explained more than once, there actually is a limit to the amount of carbon we can put into the atmosphere if we want our planet to go on being habitable. We are close to that limit now and since carbon put into the atmosphere stays there for a very long time, we would need to begin very drastic reductions almost immediately to avoid going over that threshold. Not long ago people were talking about the threshold that might enable us to limit global warming to two degrees Celsius on average. Most scientists now agree that we've overshot that threshold and are now talking about how we can avoid increases of 4 degrees Celsius. If you've been keeping up with this discussion, you know that 4 degrees very likely implies scenarios that have been characterized as being incompatible with maintaining civil society. Questions about reserves and resources are likely to be irrelevant in most of those scenarios, which is why this present analysis may not be entirely germane to the real predicament we're in. Here's the kind of thing we should be concerned about, from a recent headline: Three billion gallons of oil industry waste has been injected illegally into California aquifers. Predatory unregulated global capitalism, eager to suck the last dime of profit out of a dead-end cheap-oil-based economy, will apparently do absolutely anything to make money, regardless of the damage they cause or the cost to the public and to Nature.

In an SSE, I would assume that all costs of production are internalized and fully reflected in prices. Don't you agree?

[biz modl]

as a co2 agnostic, I feel compelled to offer info on how the co2 story is all too human:

 

http://www.michaelcrichton.net/essay-stateoffear-whypoliticizedscienceisdangerous.html

 

if one's trust in gw is based on the 'scientific consensus', then one is trusting something that has proven faulty in the past.  for example, hormone replacement treatment was supported by scientific consensus as well.  since I know a little about the fragility of computer models, I would recommend caution in evaluating the results of them.  I am not aware that the majority of the scientists in the 'consensus' have expertise in computer models of any kind, let alone climate change models.

 

have fun,   biz

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[Alex Malcolm]

Gentlemen,

 

It really doesn't matter whether Climate Change is man made or occurs naturally.  The point is that the measurable change in CO2 pollution in the atmostphere is on the rise and will accelerate climate change if our scientists are correct.  From a risk management point of view it becomes abundantly clear that we should do everything possible to reduce our emmissions to reduce the risk of run-awayclimate change as we quickly reach a tipping point.

 

You may also like to review these recent comments by Richard Heinberg.

 

Best wishes,

 

Alex Malcolm

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