Shale Gas Reality Begins to Dawn

Jun 242012

June 24, 2012 Posted by Nicole Foss at 1:30 pm Finance

It has long been our position at The Automatic Earth that North America is collectively dreaming with regard to unconventional natural gas. While gas is undeniably there, the Energy Returned On Energy Invested (EROEI) is dramatically lower than for conventional supplies. The critical nature of EROEI has been widely ignored, but will ultimately determine what is and is not an energy source, and shale gas is going to fail the test.

As we pointed out in Get Ready for the North American Gas Shock in July 2011, the natural gas situation is not what it seems at all:

The shale gas bubble is a perfect example of the irrationality of markets, the power of perverse short-term incentives, the driving force of momentum-chasing, the dominance of perception over reality in determining prices, and the determination for a herd to stampede over a cliff all at once.

The perception of a gas glut has driven prices so low that none of the participants are making money (at least not by producing gas) or creating value. We see a familiar story of excessive debt, and the hollowing out of productive companies dead set on pursuing a mirage.

Many industry insiders know perfectly well that the prospects for recovering substantial amounts of gas are poor, and that the industry is structured as a ponzi scheme. Still, there has been money to be made in the short term by flipping land leases and building infrastructure to handle gas.

The hype is so extreme that those who fall for it contemplate, in all seriousness, North America becoming a natural gas exporting powerhouse, and a threat to Australian LNG producers, or to Russia's Gazprom.

This concept, constructed from a mixture of greed and desperation (at the lack of conventional gas prospects), is entirely divorced from reality. (See here for Dimitri Orlovs excellent piece on why Gazprom has nothing to worry about.)

Nevertheless, euphoric hype is extremely catching. Given that prices are driven by perception, not by reality, hype has the power to change the dynamics of an industry, exaggerating boom and bust cycles in practice. The hype has resulted in the perception of glut – that North America is drowning in natural gas. The inconvenient fact that this peception is completely wrong does not alter its power in relation to prices.

Natural gas companies gambling on shale gas have been facing prices so low – far below the cost of production – that all of them have been producing gas unprofitably. The financial risk has been increasing dramatically as the companies have been drowning in debt trying to ride out the rock bottom prices that have been the result of people believing the fantasy. Finally, casualties of the financial shenanigans involved are emerging. It is very likely that there will be many more, as companies that have tried to ride out the low prices go under.

Wolf Richter:

Natural Gas: Where Endless Money Went To Die

Alas, thanks to the Feds zero-interest-rate policy and the trillions it has handed over to its cronies since late 2008, the sweeps of creative destruction have broken down. Instead, boundless sums of money have been searching for a place to go, and they're chasing yield when there is none, and so theyre taking risks, any kind of risks, in their vain battle to come out ahead.

The result is a stunning misallocation of capital to the tune of tens of billions of dollars to an economic activity drilling for dry natural gas that has been highly unprofitable for years. It's where money has gone to die. What's left is debt, and wells that will never produce enough to make their investors whole.

But the money has dried up. And drilling for natural gas is collapsing. Last week, there were only 562 rigs drilling for dry natural gas, the lowest number since September 1999…

…At $2.53 per million Btu at the Henry Hub, the price of natural gas is up 33% from the April low of $1.90 per million Btu, a number not seen in a decade.

.But even if it doubled, it would still be below the cost of production. And if it tripled, it might still be below the cost of production for most producers. That's how mispriced the commodity has become.

More from Wolf Richter:

Dirt Cheap Natural Gas Is Tearing Up The Very Industry That's Producing It

The economics of fracking are horrid. All wells have decline rates where production drops over time. But instead of decades for traditional wells, decline rates in horizontal fracking are measured in weeks and months: production falls off a cliff from day one and continues for a year or so until it levels out at about 10% of initial production. To be in the black over its life under these circumstances, a well in the Barnett Shale would have to sell its production for about $8 per million Btu, pricing models have shown.

…Drilling is destroying capital at an astonishing rate, and drillers are left with a mountain of debt just when decline rates are starting to wreak their havoc. To keep the decline rates from mucking up income statements, companies had to drill more and more, with new wells making up for the declining production of old wells. Alas, the scheme hit a wall, namely reality…

…The natural gas business is brutal. The peak in drilling occurred in September 2008 with 1,606 rigs. Then the financial crisis threw it into a vertigo-inducing plunge. After last years mini-peak, the plunge continued…

…Production lags behind rig count, and while rig count for gas wells has been setting new decade lows, production has been rising month after month to new record highs. But lagging doesn't mean decoupled. And someday…. Oops, it already happened. It has started. Production has turned the corner, and not just in one field, but across the US.

Its still just a little notch in the curve. But its a sign that the collapse in rig count is translating into lower production numbers. And when the steep decline rates are beginning to overlap the drop in rig count, production will head south in a dizzying trajectory.

Money has been thrown at the industry, but the notion is dawning that the game is up and that returns will never materialize. The ponzi scheme has reached its natural limit, and investors are waking up to the realization that they have been chasing a fantasy.

Ironically, just as the washout begins, natural gas prices may have bottomed. Conventional natural gas in North America peaked in 2001. Coal bed methane and now shale gas have been revealed to be massively overblown as an energy source. Producers are reaping the consequences of malinvestment and will be going out of business. Demand has been building with the transition from coal to natural gas for power generation. This is an ideal set up for a supply collapse and subsequent price spike.

North America is poised for a huge natural gas shock. Far from being an exporter, North America is going to experience a natural gas supply crunch. Prices will be rising at the same time as peoples purchasing power falls precipitously, thanks to deflation. The structural dependency on natural gas that has been cemented in recent years is going to guarantee maximum pain as prices reconnect with reality.

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June 24, 2012 at 1:30 pm #8489

Nicole Foss
Moderator

It has long been our position at The Automatic Earth that North America is collectively dreaming with regard to unconventional natural gas. While gas
[See the full post at: Shale Gas Reality Begins to Dawn]

June 24, 2012 at 8:41 pm #4258

Golden Oxen
Participant

I agree with your analysis and have lost a fair amount of money in holding some investments in the natural gas royalty trust area which were of course decimated. This issue, like most, has two sides to it. Your outlook and mine appear logical and compelling on paper, however the real world sees it different currently. My instincts tell me we are missing something, perhaps it is a short term problem, but the markets violent downside reaction to all of this has me wondering.

June 24, 2012 at 10:12 pm #4259

j7uy5
Member

We all were suspicious about Cheney’s secret energy meetings. Perhaps this is why it had to be done in secret: only the privileged get to know the secret of how to profit from this bubble.

June 24, 2012 at 11:30 pm #4260

davefairtex
Participant

This is a really interesting topic for me. I took a quick look at the EIA; it would seem that the chart Wolf Richter used (from April) showing the downtick in production is already out of date. Data for May seems to have set another new high.

https://www.eia.gov/naturalgas/weekly/

Reminds me of the whole Peak Oil thing; predicting a top from one downtick is sometimes asking for trouble. For me it absolutely doesn’t invalidate the argument – it will be interesting to see how long it will take to happen. At $2.60/MBTU and with the rig counts dropping, a top is all but baked into the cake.

One reason some of the companies are doing better than you might expect is they’ve sold forward a decent-sized chunk of their production in the futures markets, so they’re getting more than $5 per MBTU rather than the spot price of $2.50. ECA, the second largest producer in NA has sold forward 60% of its production for 2012 at $5.85. Also, ECA thinks they can be modestly profitable at $3/MBTU, at least in 2012. There are probably a large number of caveats behind that number.

https://www.encana.com/pdf/investors/presentations-events/corporate-presentation.pdf

June 24, 2012 at 11:57 pm #4261

agelbert
Member

Ashin wrote
“Money has been thrown at the industry”

That applies to oil depletion allowances, agricultural subsidies, nuclear power, space exploration, weapons of war, bank bailouts, etc.

Ashvin, I only ask that you step back and look at the big picture from a planetary perspective. When money is “thrown” at some industry, it is being stolen from many powerless people. The harm all this does to the environment aside for a moment, consider Vandana Shiva’s very accurate description of the fallacy of putting several energy inputs into a process in order to get one energy output and then claiming a profit. You simply cannot weigh these activities on a Return On Investment basis because the “investors” are distorting the source of “capital” for the investment by claiming and clinging to the cognitive illusion that the government subsidies, tax breaks and other wealth transfer schemes governments undertake to make these scams look profitable and cost effective are bonafide.

As you said, it’s a ponzi scheme but this ‘business model’ is based on the illusion that we are separate from each other and nature. It is an embrace the the wetiku that RE mentioned. It is a lie that covers a LOT of territory including mechanistic reductionism (the basis of the scientific method).

June 25, 2012 at 12:17 am #4262

Nicole Foss
Moderator

This one was by me rather than Ashvin. I’m more interested in EROEI than ROI. EROEI is disastrous for shale gas, and shale oil as well for that matter. Companies that stake their future in this sector are destined to go out of business, hopefully before fracking occurs anywhere else.

June 25, 2012 at 12:18 am #4263

agelbert
Member

Ashvin,
I am reposting this from a post I made at the Doomstead Diner to underscore the point I made about the distortion of the prudent use and production of energy to transform it into an income stream fro the 1% at the expense of most people and the environment. Energy doesn’t have anything to do with it and greed has everything to do with it.

I always get strange looks when I talk about two different, seemingly unrelated, historically important events going on in exactly the same time period. It’s as if the propagandists writing the history books and the news have blunted people’s ability to think. Never mind critical thinking. That’s even more nearly impossible now.

Some things people do not want to think about:
1) During the Great Depression the U.S. government spent massive amounts of money to develop the bomb while people were literally starving. This went on for several years. During the 1930s the knowledge of the photoelectric effect was old hat (Einstein described it right after the turn of the century!) but somehow it was only developed when it was needed in space.

2) During the 1970s the incredibly efficient heat deflecting tiles on the space shuttle were perfected. This technology would have wiped out 70% of heating and cooling costs in the USA if it had been released to the public during the oil shocks of the 70s. From refrigerator/freezer insulation to house insulation to keep heat in or hot weather out, we would have been well on the road to energy independence. I even asked a NASA rep at their public presentation at Cape Kennedy in 1980 before the first shuttle flight (the speaker would torch a six inch tile he was holding which would get red hot inches from his fingers and just as quickly dissipate before reaching them. The part of the ceramic foam tile he held remained cool while he kept the blow torch inches away on the red hot section for at least 5 minutes) why this wasn’t available to the public for energy saving. You guessed it; the old “national security” trick. It was more like the old “big oil runs the USA” trick.

3) How about those nifty ski lifts and gondolas that have been around forever? The cabling strength needed was old hat towards the end of the 19th century as was the ability to power the gondola from a fixed point with pulleys. Consider how ridiculously easy it would have been to string these things across cities and neighborhoods joining shopping and work areas. Consider the difference in energy use of moving just the people and a gondola versus a 4,000 pound car or public buses that weigh much more; the oil pigs at work again, I suspect.

4) Since the 1980s the technology to have computer controlled automactic sails providing over 50% of the power for ships has been available. The Japanese even made a sail assisted oil tanker. Now why do you suppose a proven technology like sails married to computers isn’t common?

Frankly, when you start looking at the USA as an oil oligarchy type dictatorship since around 1913, all foreign policy and most of the technology that has been allowed domestically becomes quite understandable. The pieces begin to fall into place. Those are the dots the media propagandists work overtime to prevent anyone from connecting. That also explains the theft of the elections. The fossil fuel pigs just will not let go of the oil piggery (even if it kills us). Although the blue team is almost as corrupt as the red team, it’s the red team that fields the most BUSHwhackers for oil so that explains the Republican wins.

And here we are with peak oil and what does NASA do to help convince us to switch to renewables? Whatever big oil tells them to.
NASA scientists on the mars robot teams acted all surprised when the solar panels lasted several years instead of the “projected six months”. Of course they knew they would last but it wouldn’t look good to celebrate solar panel technology in a harsh martian environment, now would it. So, they claim it’s a fluke. Liars for oil goons is what they are.

All of this came together for me whe I read “The Tyranny of Oil” by Antonia Juhasz.

June 25, 2012 at 12:22 am #4265

agelbert
Member

Stoneleigh,
Sorry. I thought Ashvin had written it. I stand corrected. I ask that you consider my comments from a planetary perpective; it is, after all, the only perspective that covers all inputs and outputs.

June 25, 2012 at 12:25 am #4266

Reverse Engineer
Member

agelbert post=3905 wrote: Ashin wrote
It is an embrace the the wetiku that RE mentioned. It is a lie that covers a LOT of territory including mechanistic reductionism (the basis of the scientific method).

Credit where it is due, that was Secular Animist who wrote about Wetiku, not me.

RE

June 25, 2012 at 12:40 am #4267

g-minor
Participant

Nicole: “EROEI is disastrous for shale gas, and shale oil as well for that matter. Companies that stake their future in this sector are destined to go out of business, hopefully before fracking occurs anywhere else.”

I hope and believe that you are right. We’ve been fighting the threat of hydrofracking in New York State for several years and I’m pretty burned out. But, as you suggest, they can still do a lot of damage tearing up the world before they collapse.

g

June 25, 2012 at 1:01 am #4268

Boris
Member

We have two very highly contrasting stories. Four days ago CNBC ran a story proclaiming the natural gas sector is to save the U.S. economy…. https://www.cnbc.com/id/47280026 … it touts how Lower Prices Spur Growth, no shortages, and more projects going online.

I generally agree with TheAutomaticEarth about 90% of what they give. I don’t accept the community building, as when TSHTF, you are going to be surrounded by millions of wolves, you can’t play nice with them. SHTF They will blow your house down and remove everything they can eat or use.

I generally believe nothing that comes from the government, the NWO and the media.

June 25, 2012 at 2:20 am #4269

ashvin
Participant

agelbert post=3905 wrote: Ashin wrote
Ashvin, I only ask that you step back and look at the big picture from a planetary perspective. When money is “thrown” at some industry, it is being stolen from many powerless people. The harm all this does to the environment aside for a moment, consider Vandana Shiva’s very accurate description of the fallacy of putting several energy inputs into a process in order to get one energy output and then claiming a profit.

I indeed was not the author of this fine piece, but I have written about Vandana Shiva before and specifically her article “Two Myths that Keep the World Poor”. You can find it at the link below:

Modern Myths that Destroy Humanity

June 25, 2012 at 3:16 am #4270

agelbert
Member

The con that is “modern civilization” is being exposed. The confluence of several “external costs” making themsevles felt because they can no longer be hidden is accelerating the exposure.
So we wilhttps://bedlamnyc.com/BEDLAMNYC/Home.html

https://images.wikia.com/hotwheels/images/c/c5/Bedlam_Mike_Nuttall.jpgl have this:

The word “exposure” has an interesting etymology.
“Medical Viewpoint: Exposure: To expose meant to leave one out in the weather to die. Exposing young children with severe disabilities was a common practice in ancient Greece.”
https://www.hss.state.ak.us/gcdse/history/HTML_Content_Main.htm

And now the VD (verbal dancer) economists for the banking MAFIA with their constant stream of euphemistic terms for credible snake oil are “exposing” Greece and anyone else that can’t handle the “exposure” (debt slavery) that the banking goons have “exposed” them to.

It’s time to “expose” (i.e. leave to die on the side of some metaphorical hill) “modern civilization”. Nature is not going to give one inch on this.

June 25, 2012 at 3:53 am #4271

el gallinazo
Member

One should not be oblivious to three major benefits of the fracking scam:

1) Suck in muppet money either directly from the naive former middle class or indirectly through governmental malinvestment.

2) Eventually consolidate the remaining conventional industry into far fewer hands.

3) Demoralize, weaken, sicken, and kill off segments of the population through environmental degradation and petrochemical poisoning.

As they would put it in NY City, what’s not to like?

June 25, 2012 at 3:56 am #4272

agelbert
Member

Ashvin,
Great article on the modern myths that destroy humanity.

It’s a repeating pattern among the 1% that they add two and two and get whatever answer keeps them in the catbird seat and continues to falsely justify the resource extraction/slave-master bankrupt, illogical and insane world view they firmly believe they are entitled to saddle the 99% and all of nature with.

As to the Christian golden rule concept, the elites have certainly pulled out all the stops to demonize it. It also follows exactly the same pattern of screwing people into poverty and them blaming them for it to the point of claiming that sustainable living habits involving clothing and eating habits are a mark of poverty, “bad” thinking and “anti-growth” thinking. It’s laughable BS but that is what we are all taught is true.

If you check out that link on “exposure” I gave you will see how the concept of caring for those with disabilities was championed by Chrstianity until the assholes in the Calvinist movement began to redefine the disabled and poor as the “un-blessed” in order to ignore the golden rule with contrived (and truly anti-Christ) mendacity and cruelty. It is Mens Rea from the word go with these Orwellian bastards seeking to label everything that is good and decent behavior as “counterproductive”, “evil” or whatever. The bright line thread that runs through all this crap from the predators is that, once they have a predatoy system creating havoc among humans, they always blame the victims.

I do admit they are quite clever even if in the long run they are actually quite stupid and suicidal.

June 25, 2012 at 4:13 am #4273

ashvin
Participant

agelbert post=3916 wrote: Ashvin,
As to the Christian golden rule concept, the elites have certainly pulled out all the stops to demonize it. It also follows exactly the same pattern of screwing people into poverty and them blaming them for it to the point of claiming that sustainable living habits involving clothing and eating habits are a mark of poverty, “bad” thinking and “anti-growth” thinking. It’s laughable BS but that is what we are all taught is true.

Yeah exactly. As soon as Constantine decided to “convert”, the whole process of co-opting and manipulating the original Biblical doctrine began in earnest. The Catholic Church was almost as bad as the Gnostics in this regard! The latter essentially blamed the God of the Bible for all of humanity’s woes, and it has been one piece of propaganda after another since then. And of course the modern day “neo-cons” who claim to be Christian are so Anti-Christ that it is indeed laughable that anyone believes it or associates them with the spiritual faith.

I do admit they are quite clever even if in the long run they are actually quite stupid and suicidal.

“But I am not surprised! Even Satan disguises himself as an angel of light.”
2 Corinthians 11:14

“Therefore rejoice, ye heavens, and ye that dwell in them. Woe to the inhabiters of the earth and of the sea! for the devil is come down unto you, having great wrath, because he knoweth that he hath but a short time.”
Revelations 12:12

June 25, 2012 at 4:53 am #4274

Karpatok
Participant

So are the originators of TAE, Stoneleigh and Illargi, Christian evangelicals like Ashvin? And is the final objective of this website the kind of proselytizing that Ashvin is engaged in? Or rather is it to play on people’s confusion and fear, perhaps to make a living?

June 25, 2012 at 5:48 am #4275

el gallinazo
Member

Repent Ye Sinners! But the Wages of Sin are Lucrative (and certainly above minimum wage).

June 25, 2012 at 5:48 am #4276

Hircus
Participant

Karpatok post=3918 wrote: So are the originators of TAE, Stoneleigh and Illargi, Christian evangelicals like Ashvin? And is the final objective of this website the kind of proselytizing that Ashvin is engaged in? Or rather is it to play on people’s confusion and fear, perhaps to make a living?

There are years worth of posts from Stoneleigh and Illargi on this site. The primers are a great place to start to find out what TAE is all about; Soneleigh’s video “A century of Challenges” is also a great summary of her take on things. You should peruse them and form your own opinion.

June 25, 2012 at 5:57 am #4277

Karpatok
Participant

@Hircus: I have read everything on this site since the spring of 2008. So unless Stoneleigh and/or Illargi care to clarify what is going on, I will assume something of the above is true.

June 25, 2012 at 5:58 am #4278

Golden Oxen
Participant

@ Karpatok I feel it is a business by the design of the website and the grand tour. I see nothing wrong with that, we all have to eat and pay the rent; likewise it does not detract one iota from the validity and content of the articles which are superb and well intentioned. From my perch, I am happy I have a place to visit where I can read the thoughts of some very concerned citizens and voice an opinion on the content.

June 25, 2012 at 6:01 am #4279

ashvin
Participant

Karpatok post=3918 wrote: So are the originators of TAE, Stoneleigh and Illargi, Christian evangelicals like Ashvin? And is the final objective of this website the kind of proselytizing that Ashvin is engaged in? Or rather is it to play on people’s confusion and fear, perhaps to make a living?

I’d say the main purpose here is to expose the deceptions of the public in whatever form they take, but mainly in the areas of economics/finance, energy and environment. Whether you believe in the Christian Faith or not, it is clear that the authors of the Bible understood the material goals of men and the deceptions they would use to reach them. So I have no problem quoting scripture from time to time, as it can be very relevant to the issues we face today.

Now, Karpatok, if you come here with an agenda of deception with regards to me, I&S or TAE, then you will be EXPOSED as well. So go do your homework before making combative accusations… or else drop this whole matter altogether.

June 25, 2012 at 6:13 am #4280

Karpatok
Participant

@Ashvin P. You wish to expose me or something about me? Please by all means be my guest. Expose away. And what kind of silly threat is that exactly? Are you some kind of judge and juror in your role of proselytizor ? and it still remains for your employers to answer the question.

June 25, 2012 at 6:32 am #4281

ashvin
Participant

Karpatok post=3925 wrote: @Ashvin P. You wish to expose me or something about me? Please by all means be my guest. Expose away. And what kind of silly threat is that exactly? Are you some kind of judge and juror in your role of proselytizor ? and it still remains for your employers to answer the question.

I really don’t have to do much, you have exposed yourself in your original comment. You are implying that this site has some ulterior motive and is being used as a means to teach religious doctrine and make “believers” out of the readers, and/or for personal financial gain. That is not true – it is a bold-faced lie, and you are using it as a means of undermining years and years of hard work that has gone into this site by I&S and has produced fantastic insights for their readers. Frankly, what you are doing is more deceptive than even the worst corporate spammer that shows up on this forum and it makes me SICK, so it will not continue anymore…

No one here owes you an answer to anything. Now drop it and contribute something meaningful to the discussion here, or leave.

June 25, 2012 at 6:48 am #4282

Karpatok
Participant

What is really behind your tizzy fit Ashvin? Do you feel that YOU have been exposed in some way? I merely asked a few questions? I did not make a statement so how can I have lied? If you are so concerned about the well being of the web site and your employers stake why did you turn it into a scripture spouting site? Are all 756 members evangelicals like yourself and looking for that kind of validation and enlightenment? I am still waiting for a reply from Stoneleigh and Illargi. And by the way, I have greatly appreciated the insights and posts over the years. But I find your Bible thwacking very distasteful.

June 25, 2012 at 6:59 am #4283

skipbreakfast
Participant

Karpatok, the lecture by Stoneleigh that I attended was by “koha”–that’s what we in New Zealand use to refer to payment “by donation” or “pay what you want/can” at the door. That should tell you a lot about the nature of this enterprise. There is so much valuable insight through TAE that comes to you for free–compare that to the hucksters offering (often perfectly legitimate) economic analysis for a lot of money.

June 25, 2012 at 7:05 am #4284

Karpatok
Participant

Skipbreakfast, I wholeheartedly agree with you and that is not the bone I am picking here. I have never doubted Stoneleigh’s good intentions and as I stated I very much appreciate her presentations over the years.

June 25, 2012 at 7:22 am #4285

Karpatok
Participant

@Ashvin P. You have removed one of my posts. What do you hope to gain from that? As I said to you, to ask a few questions is not lying. I made no statement. But as I still am asking, are Stoneleigh and Illargi evangelicals like yourself? Because if they are, there is a definite agenda to this website and it puts a whole different slant on things.

June 25, 2012 at 7:58 am #4287

ashvin
Participant

One more comment like that, Karpatok, and I am forced to ban you.

Take what’s written here at face value and share your thoughts on these pressing issues if you want. But do not try to come here and undermine the site and its authors with your silly “questions” and ridiculous insinuations.

One more, and you will be banned for the time being.

June 25, 2012 at 8:13 am #4288

Karpatok
Participant

Ashvin P. You are behaving in a very irrational and immature manner. First you had a tantrum and you removed it. Now you are behaving like an asshole. Did your employers feel threatened enough to encourage you to ban me for questioning the agenda of this site? Why would they feel so threatened? And why would you? This kind of censorship implies many unsavory things. For example the allowing of bible thumping like yours but the banning of any conspiracy ideas is certainly the most arbitrary of favoritisms. But then the constant appeal to authority is unsavory in itself.

June 25, 2012 at 8:38 am #4289

Karpatok
Participant

As I said in the most recent post that you have removed, censorship is the bailiwick of a coward. You are showing yourself to be a very irrational and unappealing moderator. Why don’t you use that swelled head of yours to answer whether this is basically an evangelical site? It is not a silly question. It is a very serious question having to do with the intent of the authors? Why should it be censored? What are you afraid of? I think AShvin that the cock has already crowed thrice.

June 25, 2012 at 9:30 am #4290

rwg
Member

I did some back-of-the-envelope calculations and sensitivity analysis on the USGS and industry estimates of our US non-conventional gas reserves a few months ago. Using the USGS number and a higher estimate of the growth rate, it may be that – even using “official” data – we have something on the order of as little as 14 years worth of this resource. (Never mind that we also permanently contaminate enormous ground water resources.)

At the same time, even though EROEI is really THE issue from a physics standpoint, if we are willing to put more energy in than we really get out, then we have “endless” supplies of energy. And the willingness is not measured by the physics of it all, it’s measured by whether the activity will give a good enough cash flow. Since that’s all rigged, I believe we will have a fair bit of negative EROEI energy sources developed. I think it is imperative that people become familiar with the EROEI because when most folks see that the emperor is wearing no clothes, they really will say, “Hey, that ain’t right!” In the meantime, we also need to expand people’s awareness of the options they have to face an energy descent future without thinking that our only possible version of that is quick collapse and loss of civil society.

Does anyone know of other efforts (using sophisticated PR techniques, I hope) to get the word out to folks about how we can prepare for this?

Thank you.

June 25, 2012 at 10:08 am #4293

TF_Colorado
Member

Would appreciate if you could provide the EROEI of shale gas and a link to your source. I heard you speak in Boulder several years ago when you pointed out the EROEI of various forms of energy – and that the tar sands were a ridiculous 1:1.

June 25, 2012 at 12:45 pm #4295

agelbert
Member

I agree with Golden Oxen.
I don’t see any problem with Ashvin’s quoting of scripture. Since when is quoting the book that has influenced most of our law and a great deal of literature including Shakespeare’s works as well as the basis for sound morality out of line?
The fact that many evil people in religions have gamed the wording of the bible to justify divide and conquer tactics, war, racism and genocide does not mean the bible’s overiding message that the OS (operating system) of humans requires observance of the golden rule and to be good stewards of the environment in order for them to be truly happy.

And after all, Ashvin runs this place and runs it quite well at that.

June 25, 2012 at 1:17 pm #4297

Reverse Engineer
Member

agelbert post=3941 wrote: I agree with Golden Oxen.
I don’t see any problem with Ashvin’s quoting of scripture. Since when is quoting the book that has influenced most of our law and a great deal of literature including Shakespeare’s works as well as the basis for sound morality out of line?

It’s not out of line. It is perfectly appropriate given the complex interrelationships involved between economics, ethics, morality etc.

What is innappropriate is to censor or disallow opposing commentary.

This has been the subject of some debate tonight on the Diner, and it appears some posts which were deleted have now been restored, from what I gather anyhow.

You can’t discuss these topics without the fundamental belief structure different people have beign brought into it. You can start talking about Natural Gas, then somebody brings up Stewardship of the Earth, then somebody else brings up Greed, then somebody else quotes from the Bible…you know how it goes by now.

No matter what side of this multifaceted polyhedra you are coming at this from, the calamity we ALL agree we are faced with here is positively BIBLICAL in its proportions. BIGGER than Biblical, since in those years there were not 7B people walking the Earth. So who could fault any Christian for looking to the Bible for answers? I certainly do not.

What I DO fault people for is CENSORSHIP. If you are going to write your spin, you MUST let opposing viewpoints have a fair opportunity to do the same and challenge you. IMHO, your best course of action is to be Open and Honest about all you believe to be true. It is ALL on the Table here now folks. This is the Big One. The Final Battle Between Good & Evil for All the Marbles.

Stand Tall! Stand up for what you BELIEVE in. Be Honest and forthright. This is what the Banksters do NOT do. Do not make the same mistake of hiding the truth you believe in and standing tall for it.

RE
https://www.doomsteaddiner.org

June 25, 2012 at 2:28 pm #4298

Nicole Foss
Moderator

Karpatok: I am considerably bemused that anyone who has read our work here could possibly come to the conclusion that we represent a proselytizing christian evangelical perspective. Suffice it to say that we do not. Also, the last thing we would wish to do is to fan the flames of fear. We are warning people that collective fear is coming, what effects that will have on society, and how to prepare psychologically so as not to be caught up in it. As always, on the way up people are not nearly concerned enough, so that warnings sound like fear-mongering. On the way down people panic, and trying to keep them calm and focused under those circumstances is even more difficult. In a year or so people will be calling my Pollyanna, because I’ll be telling them it’s not the end of the world, and that they can still keep putting one foot in front of the other if they don’t lose their heads. Such is life for contrarians. Because one is always out of step with received wisdom and collective mood, credibility suffers when it matters most. People are more comfortable being wrong all together than right alone.

Golden Oxen: TAE is a company. It is a full time job for Ilargi and me and we have to eat, as you say. As for touring, we simply go where we are asked to go. A packed tour schedule reflects a lot of local interest. When travelling a long way, one might as well be as useful as possible. We stay with local people and ask for far less than anyone else doing this work. We would make more money if we flipped burgers for a living.

The received wisdom on natural gas simply reflects the hype uncritically. Never take hype at face value. Most so called analysis just extrapolates forward a combination of PR and previous trends, with no attempt to anticipate trend changes. We typically disagree with mainstream opinion as it has very little value (except to the few who are helped to feather their nests at everyone else’s expense as the herd is encouraged to stay invested on the ponzi scheme).

Agelbert: I consider everything from a broad perspective, and I have no argument with Vandana Shiva. Energy profits are frequently claimed where none exist.

June 25, 2012 at 2:37 pm #4299

Nicole Foss
Moderator

David Hughes is the expert on EROEI for natural gas. I believe several of his ASPO presentations are available online, as is a major paper of his (the name of which currently escapes me). Also, I highly recommend Art Berman’s work at The Oil Drum. There are links to both in my shale gas primer (linked to at the beginning of this piece).

June 25, 2012 at 3:16 pm #4300

Reverse Engineer
Member

stoneleigh post=3944 wrote: In a year or so people will be calling my Pollyanna, because I’ll be telling them it’s not the end of the world, and that they can still keep putting one foot in front of the other if they don’t lose their heads. Such is life for contrarians.

Can I jump the line and call you a Pollyanna NOW Stoneleigh? 😉

Not the End of the World to be sure, just TEOTWAWKI.

I am not terrifically concerned here whether there is a Christian subtext to TAE or not, but I will say you did not answer the question posed. I mostly am concerned with free flow of ideas, and long as Karpatok’s posting rights are now valid again, I will stand down as Advocate for Karpatok and she can speak for herself.

You do good work Stoneleigh, keep it up. In fact keep up MORE of it. Your articles are too far and few between these days.

RE

June 25, 2012 at 3:41 pm #4301

Raúl Ilargi Meijer
Keymaster

OK, first of all, Agelbert et al, I run this site, not Ashvin. Not to take anything away from him, ot anyone else (Nicole!) , but that’s how it is, even if Ash is a full-fledged moderator who took over a lot of things while Nicole and I were bouncing around down under at the speed of pinballs, and has my full blessing until and unless I say otherwise (and that would be between the two of us).

If Agelbert is confused about who runs this joint, others might be as well, and that’s not a good thing, it’s important to know who’s responsible in the end. So there you are.

As for Karpatok, though I still can’t seem to figure out what THE question is (maybe someone can tell me?!), I sincerely hope (s)he was drunk when all that stuff came down. It all doesn’t look very intellectually stimulating, and it makes very little sense to me. What are we accused of here, making money with bible quotes? Really?

If and when Ashvin feels that he needs to ban someone temporarily, again, he has my full blessing, it’s not something any of us do lightly, though quite a few self-righteous folks have accused us of doing just that through the years. Comes with the territory. And I lose no sleep at all about what other people feel or think about that.

RE, I see you have more comments now than anyone, in fact, over twice as much as even Ashvin has. Here’s suggesting that quantity is smothering quality in your case. Show some constraint please. I also don’t really like all the incessant links and other references to your own site, it starts to reek of blog whoring at some point, and nobody likes that smell. If you want to write something for TAE, send it to me, and I’ll consider posting it.

June 25, 2012 at 4:18 pm #4302

Reverse Engineer
Member

ilargi post=3947 wrote: no sleep at all about what other people feel or think about that.

RE, I see you have more comments now than anyone, in fact, over twice as much as even Ashvin has. Here’s suggesting that quantity is smothering quality in your case. Show some constraint please. I also don’t really like all the incessant links and other references to your own site, it starts to reek of blog whoring at some point, and nobody likes that smell. If you want to write something for TAE, send it to me, and I’ll consider posting it.

Ilargi, do you know the Retail Motto? “How do we do it? VOLUME!” I write a LOT. I SWAMP every website I ever have been allowed to post on, ALWAYS. Invariably also, this PISSES OFF the OPB Owner of the site, as clearly it has now pissed you off. Result of course in the end, the Doomstead Diner was born. However, I still enjoy going out and Trolling the web, and I don’t just hit on you (although TAE is a favorite of mine these days) I hit on Steve on EU and Gail on OFW also.

Far as “whoring” DD is concerned with links in my posts is concerned, I call that “plugging”. Anybody can jack any kind of link at all into a post if they know how BBcode works, so I do it all the time as a promotional tool.

Finally, I have quite enjoyed my chats with Ashvin both here and on DD, and the relationship we developed as well. You have now claimed your Big Dog Status as the TAE Admin-in-Chief, so fine there, but really most of what I write doesn’t even fit on TAE pages at all anyhow, so I just won’t bother submitting it here.

I will post in the comments for so long as you leave my posting priviledges up. However, don’t expect these keyboard fingers to slow down any. Fastest Gun on the Net. Have Keyboard, Will Travel

RE
https://doomsteaddiner.org
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