Shale Oil Fiasco

[Anthony Okrongly + 114]

Here's a fun fact: 5% of Germany's electricity is provided by Solar power even though they have the same solar power potential as Alaska.

https://e360.yale.edu/digest/renewables-generated-a-record-65-percent-of-germanys-electricity-last-week

Even though their average renewables runs at about 40% of electricity generation.

Texas - with nearly twice the sunlight produced just 1% from Solar.

https://www.dallasobserver.com/news/what-does-it-mean-for-texas-to-have-produced-more-wind-than-coal-energy-11725090

The cheap natural gas (42% of electricity) certainly helps.  And Texas has gone more to wind than Solar (22% of electricity). 

Texas produced about 22% of it's electricity from renewable sources. 

The question is... as the shale plays out over the next (let's be generous and say) 7 years and the cheap natural gas goes the way of the shut down oil fracking rig will Texas go the same way as Germany? 40% renewable, mostly wind. 

What are the ramifications of the shale fiasco on National Electricity Production and costs?  In 2005 Coal was 50% of U.S. energy production.  Does anyone think we will go back to that case? It seems unlikely. Using Texas as a reference for both cheap natural gas and plentiful wind/solar, it seems like a pretty straight line replacement swap from 20% wind and 40% natural gas to 40% wind and 20% natural gas. 

We will always need natural gas, nuclear and coal to provide consistency of power. Renewables will fill the remaining role. 

Even though this discussion get into the weeds at times, I don't think anyone is saying fracking will be MORE or even nearly at the SAME level as today in 20 years... right?  Will the shale plays last 20 years in any significant way? No way.  OK, 10 years?  What's the case. Extremists are saying 2020 will see peak fracked energy.... consensus is 2-5 years to peak. Nobody is saying it isn't going to peak in this decade. So now we are just arranging the deck chairs on The Titanic. 

With declining fracking for oil we get declining natural gas (by-product) which takes us back to scarcity in the U.S. for both in THIS decade. Nobody arguing on this forum (I would guess) can't easily remember the turn of the millennium. Almost nobody arguing on this forum doesn't have children and grandchildren could potentially see the turn of the next millennium. With that in mind this decade will be over quickly. If you're job is in the fracking fields and you expect to have one in 10 years I think a large percentage of you are delusional. 

I would propose that this is one of the very few forums in the U.S. where energy issues are being discussed on BOTH sides on a daily basis. If you take the word "Fiasco" out of this discussion and turn it into "Bridge" it would probably be more appropriate, because I (again) say that no one thinks shale is a permanent solution. If 30 years ago someone told you that 40% of Germany's energy would be renewable you would have dismissed it out of hand. The middle of The NEXT 30 year transition is only 15 years from now.  

If we pretended (without much effort) that we are in the middle of the CURRENT 30 year transition... and that Shale Oi/Gas is the bridge... Then we can see the writing on the wall.  If you think Shale has another 5 years before it peaks then we are 10 years into the current 30 year transition. 

I think most agree that tight energy has dramatic decline rates per well, that there is a limit to the geology involved, that it has proven to require astronomical financial inputs to acquire, that environmental policy (particularly for pollution at the well site - see Colorado) is increasing yearly and that there is no indication that the trend to replace fossil energy with renewable energy is not going to change. 

That being said, the rest is just a matter of timing. When The Titanic hit the iceberg it didn't break apart, roll over and sink immediately. It took 2 hours and 40 minutes. For the first 2 hours it was obvious what was going to happen (that time has already played out in oil since 2000). During the next 30 minutes the criticality of it all became very real (our current state). The last 10 minutes were just a loud, dramatic postscript. You can go turn in an application for a job in The Permian, but only an idiot signs up for the retirement plan when they get it. 

---------------------------------------------------------

"Cheap Energy DECADE?" Not a chance. For this entire decade to be cheap energy it would require the drillers to have access to cheap money to drill.  That is already over. And it's not coming back. The only way drilling will get back underway and create the oil and natural gas to keep it cheap is for oil and gas prices to go so high that the money simply can't resist coming back. 

There is one caveat... if the Fed decides that cheap oil is required for the U.S. economy to not tank then all bets are off for how long fracking can continue.  IF the Fed decides that pouring hundreds of billions of dollars into the fracking fields is required then QE for Oil changes Everything.  Barring that, energy prices are going up enough to keep the fracking fields on life support, and they will stay at that higher level for the the remainder of the 2020's before even that price can't support the costs of operations.

Think about that... in the past if you found oil you got tons and tons of MONEY.  Now you need tons and tons of money to get some oil.  This is barely sustainable WITH government intervention in the form of rock bottom interest rates or direct QE to the financial institutions with a directive to spend it on "Clean Natural Gas... oh, and if some oil comes out of the hole too then I guess you can sell it."

Edited January 29, 2020 by Anthony Okrongly
typo

[Gerry Maddoux + 3,627]

Mr. Okrongly:

You make a lot of good points, both in favor of renewables and the hazards of the oil and gas business. 

All I can say is, if the solar and wind and battery people have such a wonderful product that they wish to displace hydrocarbons altogether, then they'd better get going. During the Thanksgiving/Christmas/New Year's holidays, millions of people would have frozen to death if we'd had to rely even 25% on renewables. And to be fair to you, you made reference to the steady and continued reliance on oil and gas. 

On these pages, Mr. Cunningham just today referred to the horrors of the petrochemical business, calling a portion of Louisiana "Cancer Alley." That's his prerogative. However, I rather suspect that he uses items made in "Cancer Alley" every day--which makes his gripes attune to putting down prostitution but enjoying the product. 

I'll be the first to admit that we have to do better. I have railed against prolonged venting and flaring of methane gas in the Permian and Bakken on these very pages. However, the amount of methane gas from oil and gas production is just about the same as that emitted from the 95 million cows in America . . . and I eat beef and cheese and I suspect that 95% of the climate change "experts" do as well. 

The fact of the matter is that the world population now hovers just under 8 billion. We all need to be fed and warmed. Many of us need pharmaceuticals and surgical procedures. All of us want plastic items. We like to drive, or fly. All of those things are currently the result of hydrocarbons, and without them we'd be a sorry lot. 

In point of fact, none of us can build a model that shows when the world is going to run out of oil and gas. The shale fields, for example, possess ample quantities for another many years--if we can figure out how to unlock it. The enhanced production of these new wells just blows my mind: we lay down over 250 rigs and still produce more. Sure, some of this was from DUC's, but these new wells are just performing a lot better. 

Sure, the banks are tightening up on money to the shale drillers and loosening up on money loaned to any idea about renewables. Fine, have at it; if the renewables people come up with a way to make plastics, pharmaceuticals, surgical equipment, automobile bodies and tires, and still keep us warm and dry, then they should take over the market and we in hydrocarbons should just go eat worms until our money runs out. Raise your hand if you think that's actually going to happen. 

Suggestions? Yeah, I have a few: 1) Stop venting and flaring methane. 2) Establish a carbon tax--especially for private jets; 2X higher for the bankers who have stopped lending to oil and gas. 3) Figure out a way to change the intestinal flora in cow's stomachs, so the rumen doesn't convert grass and grain to methane; that's pretty easy to do. 4) Declare a thirty-day moratorium on oil and gas production--nothing like higher prices to both slow down hydrocarbon use and gig renewables. 5) Require mega-battery operators to divulge their storage facility (read article about the lithium battery meltdown in Surprise, Arizona--aptly named).      

[ceo_energemsier + 1,818]

January 24, 2020

U.S. crude oil production efficiency continues year-over-year improvements

 

 

https://www.eia.gov/todayinenergy/detail.php?id=42595

 

[Boat + 1,325]

On 1/27/2020 at 9:37 AM, Gerry Maddoux said:

I'm curious, is that Texas is close to 20% wind energy for themselves, or does most of that go to Florida?

I think very little to none of Texas electricity goes outside the state. There has been talk of transmission lines going out of state for the last decade but as far as I know they fell through. 

[Boat + 1,325]

18 hours ago, ceo_energemsier said:

(Bloomberg) -- BP Plc’s outgoing Chief Executive Officer Bob Dudley warned Big Oil of moving too fast on investing in new technologies to counter climate change, because their failure could lead to financial ruin.

“If you go too fast and you don’t get it right you can drive yourself out of business,” Dudley said in a Columbia Energy Exchange podcastwith Professor Jason Bordoff.

Oil companies must retain a strong financial footing to be able to invest when game-changing technologies are developed, he said. In the early 2000s, before his tenure as CEO, BP invested heavily in solar technology only to write off much of the spending.

“If we understand where the technologies are going and we invest, the best thing we can do strategically is have a strong balance sheet. When it becomes really clear certain technologies are going to move very quickly and be profitable, then we’ll be able to make that shift.”

Here are other select quotes from the interview:

On Big Oil’s role in the energy transition:

BP, Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp and Total SA are “only responsible for producing about 8% of the world’s oil. If we were all driven out of business that oil would still be produced” by national oil companies and other countries.

“We want to be leaders in this and we do enormous amount as companies” such as in developing technology and reducing emissions from their own operations. But “we’re not the epicenter of these issues.”

On BP’s dividend:

“I meet with shareholders and they say ‘we would like you to move really quickly into renewables.’ I say, ‘we can do that, would you like us to cut the dividend?’ They go, ‘no, no, don’t do that.’ We’ve got to find the right balance and pace here.”

On meeting Paris goals:

“I cannot imagine how we’re going to get there without a price on carbon.”

“I don’t know how the world can get to the to goals of Paris without a very major role for natural gas.”

On renewables:

“We should not shut down what we’re doing or sell our assets to somebody else and go all into renewables and think that’s going to solve the problem.”

“We’ve been working renewables a long time and we’re supportive of it. It does have a lower return profile, there’s no question about it.”

On technology:

“Technology has not yet been cracked that will make the big movement on climate change. Renewables are fantastic. They’re one way to do it, but we’re going to come through with some solution. I hope we get the world back to some sort of nuclear capability that’s much safer for example.”

I think the idea of switching to renewables to fast is real. Some of the Dems worry me. Help or subsidizing transition lines, tech research tax breaks, for all energy to the tune of 100-150 billion on top of what we already spend is reasonable. Not multiple trillions over a decade while tech is still developing. What I don’t like are percentages that need to be renewable by a mandated date. That breeds wasted efficiency over long periods of time. 

[Boat + 1,325]

2 hours ago, Anthony Okrongly said:

Here's a fun fact: 5% of Germany's electricity is provided by Solar power even though they have the same solar power potential as Alaska.

https://e360.yale.edu/digest/renewables-generated-a-record-65-percent-of-germanys-electricity-last-week

Even though their average renewables runs at about 40% of electricity generation.

Texas - with nearly twice the sunlight produced just 1% from Solar.

https://www.dallasobserver.com/news/what-does-it-mean-for-texas-to-have-produced-more-wind-than-coal-energy-11725090

The cheap natural gas (42% of electricity) certainly helps.  And Texas has gone more to wind than Solar (22% of electricity). 

Texas produced about 22% of it's electricity from renewable sources. 

The question is... as the shale plays out over the next (let's be generous and say) 7 years and the cheap natural gas goes the way of the shut down oil fracking rig will Texas go the same way as Germany? 40% renewable, mostly wind. 

What are the ramifications of the shale fiasco on National Electricity Production and costs?  In 2005 Coal was 50% of U.S. energy production.  Does anyone think we will go back to that case? It seems unlikely. Using Texas as a reference for both cheap natural gas and plentiful wind/solar, it seems like a pretty straight line replacement swap from 20% wind and 40% natural gas to 40% wind and 20% natural gas. 

We will always need natural gas, nuclear and coal to provide consistency of power. Renewables will fill the remaining role. 

Even though this discussion get into the weeds at times, I don't think anyone is saying fracking will be MORE or even nearly at the SAME level as today in 20 years... right?  Will the shale plays last 20 years in any significant way? No way.  OK, 10 years?  What's the case. Extremists are saying 2020 will see peak fracked energy.... consensus is 2-5 years to peak. Nobody is saying it isn't going to peak in this decade. So now we are just arranging the deck chairs on The Titanic. 

With declining fracking for oil we get declining natural gas (by-product) which takes us back to scarcity in the U.S. for both in THIS decade. Nobody arguing on this forum (I would guess) can't easily remember the turn of the millennium. Almost nobody arguing on this forum doesn't have children and grandchildren who could potentially see the turn of the next millennium. With that in mind this decade will be over quickly. If your job is in the fracking fields and you expect to have one in 10 years I think a large percentage of you are delusional. 

I would propose that this is one of the very few forums in the U.S. where energy issues are being discussed on BOTH sides on a daily basis. If you take the word "Fiasco" out of this discussion and turn it into "Bridge" it would probably be more appropriate, because I (again) say that no one thinks shale is a permanent solution. If 30 years ago someone told you that 40% of Germany's energy would be renewable you would have dismissed it out of hand. The middle of The NEXT 30 year transition is only 15 years from now.  

If we pretended (without much effort) that we are in the middle of the CURRENT 30 year transition... and that Shale Oi/Gas is the bridge... Then we can see the writing on the wall.  If you think Shale has another 5 years before it peaks then we are 10 years into the current 30 year transition. 

I don't think anyone is arguing that tight energy doesn't have dramatic decline rates per well, that there isn't a limit to the geology involved, that it hasn't proven to require astronomical financial inputs to acquire, that environmental policy (particularly for pollution at the well site - see Colorado) isn't increasing yearly and that there is no indication that the trend to replace fossil energy with renewable energy is going to change. 

That being said, the rest is just a matter of timing. When The Titanic hit the iceberg it didn't break apart, roll over and sink immediately. It took 2 hours and 40 minutes. For the first 2 hours it was obvious what was going to happen (that time has already played out in oil since 2000). During the next 30 minutes the criticality of it all became very real (our current state). The last 10 minutes were just a loud, dramatic postscript. You can go turn in an application for a job in The Permian, but only an idiot signs up for the retirement plan when they get it. 

 

To sell solar in Texas you have to be able to compete with nat gas, coal and wind. It’s really been the the last 2-3 years that solar became competitive. Expect a rapid acceleration for solar from now on. If and when oil and nat gas slow down then expect an explosion of renewables.

[Old-Ruffneck + 1,256]

2 hours ago, Anthony Okrongly said:

Here's a fun fact: 5% of Germany's electricity is provided by Solar power even though they have the same solar power potential as Alaska.

https://e360.yale.edu/digest/renewables-generated-a-record-65-percent-of-germanys-electricity-last-week

Even though their average renewables runs at about 40% of electricity generation.

Texas - with nearly twice the sunlight produced just 1% from Solar.

https://www.dallasobserver.com/news/what-does-it-mean-for-texas-to-have-produced-more-wind-than-coal-energy-11725090

The cheap natural gas (42% of electricity) certainly helps.  And Texas has gone more to wind than Solar (22% of electricity). 

Texas produced about 22% of it's electricity from renewable sources. 

The question is... as the shale plays out over the next (let's be generous and say) 7 years and the cheap natural gas goes the way of the shut down oil fracking rig will Texas go the same way as Germany? 40% renewable, mostly wind. 

What are the ramifications of the shale fiasco on National Electricity Production and costs?  In 2005 Coal was 50% of U.S. energy production.  Does anyone think we will go back to that case? It seems unlikely. Using Texas as a reference for both cheap natural gas and plentiful wind/solar, it seems like a pretty straight line replacement swap from 20% wind and 40% natural gas to 40% wind and 20% natural gas. 

We will always need natural gas, nuclear and coal to provide consistency of power. Renewables will fill the remaining role. 

Even though this discussion get into the weeds at times, I don't think anyone is saying fracking will be MORE or even nearly at the SAME level as today in 20 years... right?  Will the shale plays last 20 years in any significant way? No way.  OK, 10 years?  What's the case. Extremists are saying 2020 will see peak fracked energy.... consensus is 2-5 years to peak. Nobody is saying it isn't going to peak in this decade. So now we are just arranging the deck chairs on The Titanic. 

With declining fracking for oil we get declining natural gas (by-product) which takes us back to scarcity in the U.S. for both in THIS decade. Nobody arguing on this forum (I would guess) can't easily remember the turn of the millennium. Almost nobody arguing on this forum doesn't have children and grandchildren could potentially see the turn of the next millennium. With that in mind this decade will be over quickly. If you're job is in the fracking fields and you expect to have one in 10 years I think a large percentage of you are delusional. 

I would propose that this is one of the very few forums in the U.S. where energy issues are being discussed on BOTH sides on a daily basis. If you take the word "Fiasco" out of this discussion and turn it into "Bridge" it would probably be more appropriate, because I (again) say that no one thinks shale is a permanent solution. If 30 years ago someone told you that 40% of Germany's energy would be renewable you would have dismissed it out of hand. The middle of The NEXT 30 year transition is only 15 years from now.  

If we pretended (without much effort) that we are in the middle of the CURRENT 30 year transition... and that Shale Oi/Gas is the bridge... Then we can see the writing on the wall.  If you think Shale has another 5 years before it peaks then we are 10 years into the current 30 year transition. 

I think most agree that tight energy has dramatic decline rates per well, that there is a limit to the geology involved, that it has proven to require astronomical financial inputs to acquire, that environmental policy (particularly for pollution at the well site - see Colorado) is increasing yearly and that there is no indication that the trend to replace fossil energy with renewable energy is not going to change. 

That being said, the rest is just a matter of timing. When The Titanic hit the iceberg it didn't break apart, roll over and sink immediately. It took 2 hours and 40 minutes. For the first 2 hours it was obvious what was going to happen (that time has already played out in oil since 2000). During the next 30 minutes the criticality of it all became very real (our current state). The last 10 minutes were just a loud, dramatic postscript. You can go turn in an application for a job in The Permian, but only an idiot signs up for the retirement plan when they get it. 

---------------------------------------------------------

"Cheap Energy DECADE?" Not a chance. For this entire decade to be cheap energy it would require the drillers to have access to cheap money to drill.  That is already over. And it's not coming back. The only way drilling will get back underway and create the oil and natural gas to keep it cheap is for oil and gas prices to go so high that the money simply can't resist coming back. 

There is one caveat... if the Fed decides that cheap oil is required for the U.S. economy to not tank then all bets are off for how long fracking can continue.  IF the Fed decides that pouring hundreds of billions of dollars into the fracking fields is required then QE for Oil changes Everything.  Barring that, energy prices are going up enough to keep the fracking fields on life support, and they will stay at that higher level for the the remainder of the 2020's before even that price can't support the costs of operations.

Think about that... in the past if you found oil you got tons and tons of MONEY.  Now you need tons and tons of money to get some oil.  This is barely sustainable WITH government intervention in the form of rock bottom interest rates or direct QE to the financial institutions with a directive to spend it on "Clean Natural Gas... oh, and if some oil comes out of the hole too then I guess you can sell it."

Too much "cherry picking" from sources that aren't proven. You make reference to fracking with little expertise to back your claims. NG power will most likely be the power of choice for Texans, as their is plenty of it for the long range foreseeable future. Wind and solar in my opinion is just a phase of government handouts and the general public has no clue on the costs to build these monster solar fields and windfarms. Take government money away and there would be no incentives as still too much money per kilowatt.

Your whole read here looks like you read a lot and absorb a good bit of information, I call it if you can't dazzle them with your experience then baffle them with bullshit. That's what the government is best at.

[Gerry Maddoux + 3,627]

7 minutes ago, Old-Ruffneck said:

Too much "cherry picking" from sources that aren't proven. You make reference to fracking with little expertise to back your claims. NG power will most likely be the power of choice for Texans, as their is plenty of it for the long range foreseeable future. Wind and solar in my opinion is just a phase of government handouts and the general public has no clue on the costs to build these monster solar fields and windfarms. Take government money away and there would be no incentives as still too much money per kilowatt.

Your whole read here looks like you read a lot and absorb a good bit of information, I call it if you can't dazzle them with your experience then baffle them with bullshit. That's what the government is best at.

Well done! At the risk of sounding like a dour sort, remember that this entire "renewables crusade" has occurred during perhaps the greatest economic expansion in the history of our country. Some day, unless the whole economic sine wave has given way to modern portfolio theory, there will be a recession. Jeffrey Gundlach, the "King of Bonds," says it's likely to make the last one look like a church picnic. I recall the last one pretty well.

During a recession, cheap NG will hold things together, not solar or wind. And there is an awful lot of natural gas coming your way! 

[0R0 + 6,251]

My take on this is driven more by the shift in the slowing demographic growth trend to its initial reversal at the births end. That is an order of magnitude more severe in OECD+China, which consume the bulk of energy. The pre-retirement population is large as the global boomer generation is going into retirement age. China's boomers are all past age 45 (retirement age is 50 Women and 60 Men). Their consumption has peaked. Their only impact on energy markets now is in accumulating 2nd and 3rd apartments for investment. And funding (inadvertently, via investment products and bank savings) large scale infrastructure investment with dubious economic value. China has not had a consumption led economy since 2008. The drop of consumption's share of GDP during the crisis years of 2008-9 has not been reversed to a meaningful degree, though it is still on an uptrend, largely because GDP is overstated while consumption is easy to measure. Overall, the demographic contribution to energy consumption in China (not the overall growth) is to drop 30-40% over the next 2 decades as the boomers retire and the millennial bump reaches pre-retirement. The following generations are just so much smaller. 

EMU and Japan and NICs (Newly industrialized countries like Thailand) don't have a millennial bump in their demographics. As the remaining boomers now in their savings phase retire, their energy demand, now largely via investment will disappear over this decade. That will be another drop in their energy consumption by 20%. 

Oil share of energy will drop as heavy shipping and petrochems converts to NG, LNG/CNG. Thus the depletion curves and prices will never reach the levels projected by Hulbert type calculations. Pricing will adjust to actual cash costs of production from the new sources from Yamal and Guyana and the remaining active shales. The geological base for NG is 10X bigger than Oil's so in context of declining and then negative consumption growth in the next 2 decades, there is not going to be a depletion of NG, not even of relatively easy to reach NG.

Renewables will continue to expand into areas that are viable, perhaps displacing 30% of fossil energy demand, more than the 20% I had expected before. The complete displacement is not in the cards as yet. Contrary to thinking and associated calculations of storage and transmission vs. maintaining NG (and even coal) electricity, the buildout of there is far more expensive than the naive projections based on current commodity pricing structure, which presumes that volumes would pick up without pricing rising (lithium cobalt rhodium, cadmium tellurium, neodymium for EV cars, copper for transmission).rapid expansion of renewables will require investment in the mining and refining of all of these materials. Current pricing hardly supports it, and at $3-4 copper and appropriately proportional rise in the others, will lead you to far higher costs of implementing the regional renewables electric grids that fill up the literature. The cost figures in the projections only  hold true if the rate of adoption/installation, remains in the low single digits as proportion of total electric output/yr. Going faster means much higher costs. 

We should understand that outside of the US and French millennials, the rest of any consumption growth that may  happen depends entirely on African nations and India becoming sufficiently free of corruption and government impediments to allow growth. I am not holding my breath. Only Indonesia Turkey and the Philippines have a young demographic to sustain consumption and something like non-abysmal governance to allow investment. Definitely not something to hang global growth on. 

So the rest of global growth is capital deepening and transition from extensive infrastructure expansion to consumption. In the interim is growth neutral investment in efficiency of electrical production and the transportation fleet. Meaning that we just about retain the same scale of the fleet just that it is more efficient, except for US millennials moving from scooters downtown to SUVs and big trucks in exurbia. 

So I expect to see global growth continue in the low single digits this decade, and transition to near 0 for the next decade. There is potential for more growth if new security arrangements are made to replace exclusive US protection of trade. The US may participate, but will not take on the bulk of the burden burden as it does not need the oil, and general trade from EU to Asia is of no interest to it. US withdrawal from most of the world is in the works, SE Asia Australia and India remains of interest. Not likely that anything else on the Eurasian mass will receive US involvement long term. 

IF new security arrangements do not arise then we would revert to imperial economic structures that can result in chaos and redomestication of supply chains. Not conducive to global growth.

[footeab@yahoo.com + 2,194]

6 hours ago, Boat said:

I think very little to none of Texas electricity goes outside the state. There has been talk of transmission lines going out of state for the last decade but as far as I know they fell through. 

Unlike Germany/Denmark, Texas does not get to dump the intermittency problem onto their neighbors.  But with near infinite natural gas...

[Gerry Maddoux + 3,627]

41 minutes ago, 0R0 said:

Oil share of energy will drop as heavy shipping and petrochems converts to NG, LNG/CNG. Thus the depletion curves and prices will never reach the levels projected by Hulbert type calculations. Pricing will adjust to actual cash costs of production from the new sources from Yamal and Guyana and the remaining active shales. The geological base for NG is 10X bigger than Oil's so in context of declining and then negative consumption growth in the next 2 decades, there is not going to be a depletion of NG, not even of relatively easy to reach NG.

Precisely! We are in the Age of Gas. Every major global find for the last several years has resulted in more natural gas than oil, Yamal and Guyana included. As a consequence, NG pricing will remain subpar, while the price of oil has to rise . . . . at some point. With thin to nonexistent profit margins for NG, if the price of oil doesn't ultimately rise, it will shut down the whole mechanism. That isn't likely to happen, because this voluminous quantity of gas has to be offloaded in order to get at the oil. And oil is still king. 

This unusual happenstance sets the stage for some "firsts": The first time that NG is priced so low that LNG production has a large profit bias--to stimulate more growth. The first time that better LNG trains expel very little greenhouse gas. The first time that floating regas platforms make LNG a global commodity, even to Third World countries. The first time in history when oil and natural gas prices are destined to diverge this wildly.

Think of it; this is pretty amazing. In the past, crude oil was the only hydrocarbon commodity that could be transported long distances, profitably. But now, the phantasmagoric emergence of LNG as a super-clean, abundant hydrocarbon feedstock has taken the pressure off a dwindling oil resource. If this isn't the oil and gas world learning to live within the constraints placed by society, I don't know what it is. By all means, bring on solar and wind. I imagine we're going to need them all.  

[Anthony Okrongly + 114]

On 1/29/2020 at 2:16 PM, Old-Ruffneck said:

Too much "cherry picking" from sources that aren't proven. You make reference to fracking with little expertise to back your claims. NG power will most likely be the power of choice for Texans, as their is plenty of it for the long range foreseeable future. Wind and solar in my opinion is just a phase of government handouts and the general public has no clue on the costs to build these monster solar fields and windfarms. Take government money away and there would be no incentives as still too much money per kilowatt.

Your whole read here looks like you read a lot and absorb a good bit of information, I call it if you can't dazzle them with your experience then baffle them with bullshit. That's what the government is best at.

Ditto for your response.  "Wind and solar is just a phase?"  Talk about little experience to back your claims. It's a good thing that you're an "old" ruffneck, because you may be the last one. 

I'm no environmentalist, and I'm not an ideologue. But I do see things in more than 1 year or even 5 year time frames. The fact that we are fracking AT ALL is the proof that we are on the downhill side of fossil fuels. I'm 50, before I die people will wonder how anyone could have possibly doubted the demise of fossil fuels for transportation and electricity generation. Some Saudi oil guy said, "The stone age didn't end because we ran out of stones." But the bison age ended because we ran out of bison, and the whale oil age ended because we ran out of whales.  The oil age will end. The coal age will end. The natural gas age will end.

You're an old ruffneck, I'm not sure what the oilfield term for "Arrrg, there she blows" is, but it will be just as arcane an expression in 50 years. There's no need to cherry pick to see that fracking was a transitional activity that only seemed long-lived because of the short sightness of those doing it. 

Arrrgh... There's she blows... Wait, where did the money go?  arrrggg.

[Anthony Okrongly + 114]

On 1/29/2020 at 12:34 PM, Gerry Maddoux said:

Mr. Okrongly:

You make a lot of good points, both in favor of renewables and the hazards of the oil and gas business. 

All I can say is, if the solar and wind and battery people have such a wonderful product that they wish to displace hydrocarbons altogether, then they'd better get going. During the Thanksgiving/Christmas/New Year's holidays, millions of people would have frozen to death if we'd had to rely even 25% on renewables. And to be fair to you, you made reference to the steady and continued reliance on oil and gas. 

On these pages, Mr. Cunningham just today referred to the horrors of the petrochemical business, calling a portion of Louisiana "Cancer Alley." That's his prerogative. However, I rather suspect that he uses items made in "Cancer Alley" every day--which makes his gripes attune to putting down prostitution but enjoying the product. 

I'll be the first to admit that we have to do better. I have railed against prolonged venting and flaring of methane gas in the Permian and Bakken on these very pages. However, the amount of methane gas from oil and gas production is just about the same as that emitted from the 95 million cows in America . . . and I eat beef and cheese and I suspect that 95% of the climate change "experts" do as well. 

The fact of the matter is that the world population now hovers just under 8 billion. We all need to be fed and warmed. Many of us need pharmaceuticals and surgical procedures. All of us want plastic items. We like to drive, or fly. All of those things are currently the result of hydrocarbons, and without them we'd be a sorry lot. 

In point of fact, none of us can build a model that shows when the world is going to run out of oil and gas. The shale fields, for example, possess ample quantities for another many years--if we can figure out how to unlock it. The enhanced production of these new wells just blows my mind: we lay down over 250 rigs and still produce more. Sure, some of this was from DUC's, but these new wells are just performing a lot better. 

Sure, the banks are tightening up on money to the shale drillers and loosening up on money loaned to any idea about renewables. Fine, have at it; if the renewables people come up with a way to make plastics, pharmaceuticals, surgical equipment, automobile bodies and tires, and still keep us warm and dry, then they should take over the market and we in hydrocarbons should just go eat worms until our money runs out. Raise your hand if you think that's actually going to happen. 

Suggestions? Yeah, I have a few: 1) Stop venting and flaring methane. 2) Establish a carbon tax--especially for private jets; 2X higher for the bankers who have stopped lending to oil and gas. 3) Figure out a way to change the intestinal flora in cow's stomachs, so the rumen doesn't convert grass and grain to methane; that's pretty easy to do. 4) Declare a thirty-day moratorium on oil and gas production--nothing like higher prices to both slow down hydrocarbon use and gig renewables. 5) Require mega-battery operators to divulge their storage facility (read article about the lithium battery meltdown in Surprise, Arizona--aptly named).      

Good response.  I think you mistake me for an environmentalist. I grew up in Port Arthur Texas, so anywhere short of a burning tire dump is an upgrade to the air I breathed as a kid.  That being said, I personally have no doubt that we are going to burn ALL the oil we can get our hands on ALL the coal that we can get our hands on and ALL the natural gas that we can get our hands on, regardless of governments pretending otherwise. This is for exactly the same reasons that you state. Everyone wants 3 cars, a 3,000 square foot home, perfect indoor temperature from their home to their car to the stadium, grocery store and entertainment center, etc. There's no doubt about it.  Everyone WANTS things to be different but no one either will or can.  There are too many individual desires and too many conflicting interests at any regulatory level. 

I am glad that we instituted fracking. Without out it the $130 per barrel oil would have quickly turned into $300 per barrel oil. However, I see the same blindness leading us to the next great oil price explosion. The first was caused by the idea that cheap oil would last forever. The second is being caused by the idea that America is Saudi Arabia and that Fracking is an endless sea of energy at a reasonable cost.

Taking a long view 250 years ago humans used very little fossil fuels (if any) and 250 years from now we will be back in the same environment (except we will have invested solar, wind and other renewable energies). I believe that lithium has the same resource and cost limitations as oil, only bigger. So lithium batteries that have to be replaced every 10 years is not the solution. Liquid Metal Batteries are the first reasonable idea for grid level energy storage. https://www.youtube.com/watch?v=NiRrvxjrJ1U

They take a high energy process (welding) and they reverse it to store electricity as heat. It uses normal resources that can be reused over and over again. The last remaining hurdle is making the seals long lasting enough. These are very oxygen responsive metals at high temperatures.  The seals have to keep oxygen out in a high temperature environment for many years in order to be viable. 

Coming back to the more narrow point. Energy GROWTH every year is coming to an end. Oil increases every year is coming to an end. We can pretend that oil is being offset by electric cars and coal is being offset by windmills but the fact is that oil is becoming more expensive than the alternatives because it is becoming scarce. The fact that we are fracking AT ALL is proof of that. Why do you eat the crust? Because that's all that's left from the piece of pizza. 

So, do we walk into the chopper blades like we did in 2006 again because "fracking is forever" just like people pretended that conventional oil would last forever? The answer is probably, because that's human nature. There was an economics professor that told his class they would trade on a pretend stock market. Everyone started with the same amount of money, Those who made money would pass, those who lost money would fail. The more money you make the better your grade. At midnight the end of the semester all stock would immediately go to zero.  You would think that trading would follow a curve where trading slowed down and stopped before stocks became zero. What happened is that stocks when up and up and up and trading went on and on until it hit a wall and the majority of the class failed. Why? Because even when people absolutely KNOW when the end will be they can't stop thinking they will be the exception. It won't happen to them, to their industry, to their company, to their job. 

The indicator of a trend is not agreement about the direction of the trend, it's the EXISTENCE of the DISCUSSION. Is anyone talking about the moon falling on the Earth? No. But a growing number of people are saying Fracking, Fracking, Fracking.  At first it was good. Now it's bad. I'm not saying talking about it makes it happen.  I'm saying the more you argue that fracking isn't in decline the more history says it is. 

"The Economy is Fundamentally Sound" are the last 5 words you'll hear before every recession. You will never hear those words during good times because there's no need to deny the obvious during good times.  "Fracking is fundamentally sound." 

I don't want us to hit a wall... I don't want oil prices to go banana's. I would be great if electricity in Texas continued to cost 4 cents a KWH. But the writing is on the wall.  The world will be fine.  America will be fine.  3 cars turns into 2 cars (one a hybrid or electric).  3,000 square foot house turns into a duplex. The mall turns gets replaced by an open air shopping center when the electricity gets too expensive. The best news about America is that we waste SOOOO much that we can cut our energy use in half and be just fine. China is the one who uses energy to produce things, not us. We use energy to air condition houses in Arizona and Texas. 

I don't think there's a point to this other than to enjoy discussing it... your turn. 

Edited February 1, 2020 by Anthony Okrongly
type

[Anthony Okrongly + 114]

On 1/29/2020 at 7:22 PM, 0R0 said:

My take on this is driven more by the shift in the slowing demographic growth trend to its initial reversal at the births end. That is an order of magnitude more severe in OECD+China, which consume the bulk of energy. The pre-retirement population is large as the global boomer generation is going into retirement age. China's boomers are all past age 45 (retirement age is 50 Women and 60 Men). Their consumption has peaked. Their only impact on energy markets now is in accumulating 2nd and 3rd apartments for investment. And funding (inadvertently, via investment products and bank savings) large scale infrastructure investment with dubious economic value. China has not had a consumption led economy since 2008. The drop of consumption's share of GDP during the crisis years of 2008-9 has not been reversed to a meaningful degree, though it is still on an uptrend, largely because GDP is overstated while consumption is easy to measure. Overall, the demographic contribution to energy consumption in China (not the overall growth) is to drop 30-40% over the next 2 decades as the boomers retire and the millennial bump reaches pre-retirement. The following generations are just so much smaller. 

EMU and Japan and NICs (Newly industrialized countries like Thailand) don't have a millennial bump in their demographics. As the remaining boomers now in their savings phase retire, their energy demand, now largely via investment will disappear over this decade. That will be another drop in their energy consumption by 20%. 

Oil share of energy will drop as heavy shipping and petrochems converts to NG, LNG/CNG. Thus the depletion curves and prices will never reach the levels projected by Hulbert type calculations. Pricing will adjust to actual cash costs of production from the new sources from Yamal and Guyana and the remaining active shales. The geological base for NG is 10X bigger than Oil's so in context of declining and then negative consumption growth in the next 2 decades, there is not going to be a depletion of NG, not even of relatively easy to reach NG.

Renewables will continue to expand into areas that are viable, perhaps displacing 30% of fossil energy demand, more than the 20% I had expected before. The complete displacement is not in the cards as yet. Contrary to thinking and associated calculations of storage and transmission vs. maintaining NG (and even coal) electricity, the buildout of there is far more expensive than the naive projections based on current commodity pricing structure, which presumes that volumes would pick up without pricing rising (lithium cobalt rhodium, cadmium tellurium, neodymium for EV cars, copper for transmission).rapid expansion of renewables will require investment in the mining and refining of all of these materials. Current pricing hardly supports it, and at $3-4 copper and appropriately proportional rise in the others, will lead you to far higher costs of implementing the regional renewables electric grids that fill up the literature. The cost figures in the projections only  hold true if the rate of adoption/installation, remains in the low single digits as proportion of total electric output/yr. Going faster means much higher costs. 

We should understand that outside of the US and French millennials, the rest of any consumption growth that may  happen depends entirely on African nations and India becoming sufficiently free of corruption and government impediments to allow growth. I am not holding my breath. Only Indonesia Turkey and the Philippines have a young demographic to sustain consumption and something like non-abysmal governance to allow investment. Definitely not something to hang global growth on. 

So the rest of global growth is capital deepening and transition from extensive infrastructure expansion to consumption. In the interim is growth neutral investment in efficiency of electrical production and the transportation fleet. Meaning that we just about retain the same scale of the fleet just that it is more efficient, except for US millennials moving from scooters downtown to SUVs and big trucks in exurbia. 

So I expect to see global growth continue in the low single digits this decade, and transition to near 0 for the next decade. There is potential for more growth if new security arrangements are made to replace exclusive US protection of trade. The US may participate, but will not take on the bulk of the burden burden as it does not need the oil, and general trade from EU to Asia is of no interest to it. US withdrawal from most of the world is in the works, SE Asia Australia and India remains of interest. Not likely that anything else on the Eurasian mass will receive US involvement long term. 

IF new security arrangements do not arise then we would revert to imperial economic structures that can result in chaos and redomestication of supply chains. Not conducive to global growth.

I agree with this broad view with the exception of China.  China is developing A NEW type of economy that will be incomprehensible to us (particularly those of us over 40 years old).  I will give you a cold war example of this. In the 1960's the U.S. and USSR had the same telephone systems. Basically centrally managed government approved/regulated.  In the USSR their's was state owned, in the U.S. we basically had a government allowed monopoly. VERY Efficient. 1 phone in each home (more or less). Everyone can talk to everyone else. Centrally managed. 

The the U.S. broke up the monopoly.  From an economic view it was a simple choice - competition vs central management.  The result was that the baby bells competed against each other. First we could buy a home phone instead of renting it, then we could get it in colors, then it cost $14 instead of $60, then we got call waiting, caller ID, and voicemail  (so far so good, not that big a change. )  Then one of them created a stupid, pointless, wasteful, expensive radio based telephone using towers (Cells). The rest is history. 

Can you tell me how it is better for an economy and a society to replace one phone per family that cost $15 and a service that cost $35 per family with each individual person carrying a $1,000 computer made of the most fragile glass in their pocket with an average family of 4 paying $200+ per month for service that used to cost $35?  On what planet is that better or more efficient, or even make sense? This why the Soviets were certain that America was doomed. We were so wasteful. Our economy was going from relying on manufacturing to relying on WASTE (ahem "consumption").  There's no way that would work. 

We survived the USSR collapsed, our system (at the muzzle of the USS Ronald Reagan Aircraft Armada) conquered the world. 

Now China is creating the same type of transition and we simply don't understand it ... mostly because we aren't allowed to know about it. Case in point. Did you know that every major city in China is connected by high speed rail that travels at 100 - 200 mph. In less than 10 years they designed, built and deployed that system. It continues to expand and go faster every year. It's over 10,000 miles long and growing. It took San Francisco longer than that to build a new onramp for the Golden Gate Bridge that was less than 2 miles long.  We can't make a single high speed line between LA and San Francisco.

This is simply not known in America, just like the average USSR couldn't understand what a microwave oven was. China is creating something new. The old economics won't apply. The U.S. is becoming a dinosaur.  Imagine working at a Chinese train engine factory building 200 mph trains day after day then the specs come across to build a dozen trains that go 60 MPH... "Why would anyone want this piece of junk?"  "Oh, it's for America. That makes sense. "  Because we don't build our own train engines, China builds our clunky, chunky, slow, old train engines right beside their 200 mph engines. That is happening in finance, manufacturing, AI, communications, etc. 

So, I agree with much of what you say, but your assessment of China is incorrect because you are behind an information firewall.  If you look, however, you will find. You may say that China is a "communist state" like the USSR was so they will fail. China is not like the USSR. It has a central communist government the retains the right to deploy resources, but it doesn't centrally manage those resources. It allows a market element with oversight. It's a different beast.  No they don't have democracy. But, look at what "voting" has brought us to. It's chaos at this point. The judiciary is fighting against the states, the states are basically fiefdoms, the national politicians are accusing each other of treason and trying to put each other in Jail.  It's not just Trump, it's system wide. Money runs the country. It's medieval. But hey you get to vote for two predigested choices.  Hillary or Donald, George or Al, etc. So it's going to be OK.  

Edited February 1, 2020 by Anthony Okrongly

[Gerry Maddoux + 3,627]

37 minutes ago, Anthony Okrongly said:

I don't think there's a point to this other than to enjoy discussing it... your turn. 

I can't say anything better than you just said it.

But I do have a question: What kind of pig is that in the picture?

[Anthony Okrongly + 114]

23 minutes ago, Gerry Maddoux said:

I can't say anything better than you just said it.

But I do have a question: What kind of pig is that in the picture?

Ha ha.  I'm an in-home dog trainer.  One of my clients had a large pot belly pig that acted just like the dogs did.  Plus I have a farm.  So I've kissed horses, goats, chickens, rabbits, donkeys. etc. 

In 2010 I sold my house in Dallas and bought a 10 acre farm for cash. My electricity bill is $26 per month (in Texas). My property taxes are $309 per month (sorry, not per month... per YEAR). I haven't had any debt in 10 years. We are all self employed (wife, me, son's family) The only thing we depend on is that every year people get dogs and some percentage of those dogs will piss and bark, jump and mouth, chew on the rugs and eat the iphone charger. It's heaven. It's why I follow energy.  My Prius has 415,000 miles on it.  My wife's has 430,000 miles on it. It's why I like to follow energy trends. They won't effect me, but they're interesting to me. 

 

Edited February 1, 2020 by Anthony Okrongly

[0R0 + 6,251]

4 minutes ago, Anthony Okrongly said:

I agree with this broad view with the exception of China.  China is developing A NEW type of economy that will be incomprehensible to us (particularly those of us over 40 years old).  I will give you a cold war example of this. In the 1960's the U.S. and USSR had the same telephone systems. Basically centrally managed government approved/regulated.  In the USSR their's was state owned, in the U.S. we basically had a government allowed monopoly. VERY Efficient. 1 phone in each home (more or less). Everyone can talk to everyone else. Centrally managed. 

The the U.S. broke up the monopoly.  From an economic view it was a simple choice - competition vs central management.  The result was that the baby bells competed against each other. First we could buy a home phone instead of renting it, then we could get it in colors, then it cost $14 instead of $60, then we got call waiting, caller ID, and voicemail  (so far so good, not that big a change. )  Then one of them created a stupid, pointless, wasteful, expensive radio based telephone using towers (Cells). The rest is history. 

Can you tell me how it is better for an economy and a society to replace one phone per family that cost $15 and a service that cost $35 per family with each individual person carrying a $1,000 computer made of the most fragile glass in their pocket with an average family of 4 paying $200+ per month for service that used to cost $35?  On what planet is that better or more efficient, or even make sense? This why the Soviets were certain that America was doomed. We were so wasteful. Our economy was going from relying on manufacturing to relying on WASTE (ahem "consumption").  There's no way that would work. 

We survived the USSR collapsed, our system (at the muzzle of the USS Ronald Reagan Aircraft Armada) conquered the world. 

Now China is creating the same type of transition and we simply don't understand it ... mostly because we aren't allowed to know about it. Case in point. Did you know that every major city in China is connected by high speed rail that travels at 100 - 200 mph. In less than 10 years they designed, built and deployed that system. It continues to expand and go faster every year. It's over 10,000 miles long and growing. It took San Francisco longer than that to build a new onramp for the Golden Gate Bridge that was less than 2 miles long.  We can't make a single high speed line between LA and San Francisco.

This is simply not known in America, just like the average USSR couldn't understand what a microwave oven was. China is creating something new. The old economics won't apply. The U.S. is becoming a dinosaur.  Imagine working at a Chinese train engine factory building 200 mph trains day after day then the specs come across to build a dozen trains that go 60 MPH... "Why would anyone want this piece of junk?"  "Oh, it's for America. That makes sense. "  Because we don't build our own train engines, China builds our clunky, chunky, slow, old train engines right beside their 200 mph engines. That is happening in finance, manufacturing, AI, communications, etc. 

So, I agree with much of what you say, but your assessment of China is incorrect because you are behind an information firewall.  If you look, however, you will find. 

It is very true that high speed rail in China and also in Japan and Europe are very efficient ways to move large numbers of people around in a fast safe and most significantly oil efficient way. It is also very capital intensive and requires a high density population, which the US only has in very tight short corridors in the North East and CA coast. The US urbanized when both rail and cars were around and concentrated into existing cities. Europe urbanized in the rail age so its cities developed with rail paths networking them all. China is urbanizing on planned grids into new cities. It can do what the US can't in high speed rail. US passenger rail went bankrupt 60 70 years ago, only short haul regional metro lines and a few subsidized long distance rail lines remain for passenger travel within Amtrak. Otherwise, the US is air and car travel. High speed rail makes little sense in that context and on a financial basis would never recoup the investment but for a very few crowded corridors where constructing the rail lines is entirely out of the question unless they are underground. . 

The US relies on barges and ships for large scale commercial commodity transport, connected to medium length rail lines for the rest. Only the dry areas going North-South and the transcontinental freight lines are substantial rail transit. Goods don't really need the high speed. The US rail lines stop frequently along substantial portions of their tracks as the industrial base is widely distributed. When oil prices spiked during the China bubble, the US was very hard hit because of long commutes and transport distances on trucks. Some of the industrial base and its broadly scattered workers became detached from the dense major .metros that could function economically at those high oil prices. I pointed it out with a simple chart of relative gross margins of consumer prices vs. basic raw commodities (most significantly oil) and working age employment participation rates.

In order to get to a population density where the high speed rail systems could be economically justified, the US would need to import nearly half of EU's population or 1/4 of China's, and settle them throughout "flyover country", where they would be unlikely to want to live. There is no real problem for the US to do that, the food is there, the land is there and the materials for construction are there. Perhaps one day there would also be a need for that.  . 

In the interim, we can observe whether China actually obtains a benefit over the US air travel and road model with its high speed rail, other than eventually saving a large amount of oil imports.

[Anthony Okrongly + 114]

3 minutes ago, 0R0 said:

It is very true that high speed rail in China and also in Japan and Europe are very efficient ways to move large numbers of people around in a fast safe and most significantly oil efficient way. It is also very capital intensive and requires a high density population, which the US only has in very tight short corridors in the North East and CA coast. The US urbanized when both rail and cars were around and concentrated into existing cities. Europe urbanized in the rail age so its cities developed with rail paths networking them all. China is urbanizing on planned grids into new cities. It can do what the US can't in high speed rail. US passenger rail went bankrupt 60 70 years ago, only short haul regional metro lines and a few subsidized long distance rail lines remain for passenger travel within Amtrak. Otherwise, the US is air and car travel. High speed rail makes little sense in that context and on a financial basis would never recoup the investment but for a very few crowded corridors where constructing the rail lines is entirely out of the question unless they are underground. . 

The US relies on barges and ships for large scale commercial commodity transport, connected to medium length rail lines for the rest. Only the dry areas going North-South and the transcontinental freight lines are substantial rail transit. Goods don't really need the high speed. The US rail lines stop frequently along substantial portions of their tracks as the industrial base is widely distributed. When oil prices spiked during the China bubble, the US was very hard hit because of long commutes and transport distances on trucks. Some of the industrial base and its broadly scattered workers became detached from the dense major .metros that could function economically at those high oil prices. I pointed it out with a simple chart of relative gross margins of consumer prices vs. basic raw commodities (most significantly oil) and working age employment participation rates.

In order to get to a population density where the high speed rail systems could be economically justified, the US would need to import nearly half of EU's population or 1/4 of China's, and settle them throughout "flyover country", where they would be unlikely to want to live. There is no real problem for the US to do that, the food is there, the land is there and the materials for construction are there. Perhaps one day there would also be a need for that.  . 

In the interim, we can observe whether China actually obtains a benefit over the US air travel and road model with its high speed rail, other than eventually saving a large amount of oil imports.

Well said. You're probably right. Right now I have a bias toward China's ability to deploy resources in a way that America hasn't been able to do since the early 20th century.  It feels like we are grandfathered into a corner (regulations, political expediency, political discord, costs, etc.) where China is in the creation stage of their modern society. I have no evidence other than the current realities on the ground in China. So it's just a feeling. I'm not saying there is anything we can or should do about it, I'm just saying that we, in America, have a very dated and inaccurate view of what's happening in China technologically, societally, and financially. My point was that the 70's and early 80's was an inflection point where American uniqueness creating a different world. I think that the 2030's will be that for China. 

But I could be wrong. I'm a dog training homesteader in East Texas. 🙂

[ronwagn + 6,290]

On 1/29/2020 at 9:35 AM, Anthony Okrongly said:

Here's a fun fact: 5% of Germany's electricity is provided by Solar power even though they have the same solar power potential as Alaska.

https://e360.yale.edu/digest/renewables-generated-a-record-65-percent-of-germanys-electricity-last-week

Even though their average renewables runs at about 40% of electricity generation.

Texas - with nearly twice the sunlight produced just 1% from Solar.

https://www.dallasobserver.com/news/what-does-it-mean-for-texas-to-have-produced-more-wind-than-coal-energy-11725090

The cheap natural gas (42% of electricity) certainly helps.  And Texas has gone more to wind than Solar (22% of electricity). 

Texas produced about 22% of it's electricity from renewable sources. 

The question is... as the shale plays out over the next (let's be generous and say) 7 years and the cheap natural gas goes the way of the shut down oil fracking rig will Texas go the same way as Germany? 40% renewable, mostly wind. 

What are the ramifications of the shale fiasco on National Electricity Production and costs?  In 2005 Coal was 50% of U.S. energy production.  Does anyone think we will go back to that case? It seems unlikely. Using Texas as a reference for both cheap natural gas and plentiful wind/solar, it seems like a pretty straight line replacement swap from 20% wind and 40% natural gas to 40% wind and 20% natural gas. 

We will always need natural gas, nuclear and coal to provide consistency of power. Renewables will fill the remaining role. 

Even though this discussion get into the weeds at times, I don't think anyone is saying fracking will be MORE or even nearly at the SAME level as today in 20 years... right?  Will the shale plays last 20 years in any significant way? No way.  OK, 10 years?  What's the case. Extremists are saying 2020 will see peak fracked energy.... consensus is 2-5 years to peak. Nobody is saying it isn't going to peak in this decade. So now we are just arranging the deck chairs on The Titanic. 

With declining fracking for oil we get declining natural gas (by-product) which takes us back to scarcity in the U.S. for both in THIS decade. Nobody arguing on this forum (I would guess) can't easily remember the turn of the millennium. Almost nobody arguing on this forum doesn't have children and grandchildren could potentially see the turn of the next millennium. With that in mind this decade will be over quickly. If you're job is in the fracking fields and you expect to have one in 10 years I think a large percentage of you are delusional. 

I would propose that this is one of the very few forums in the U.S. where energy issues are being discussed on BOTH sides on a daily basis. If you take the word "Fiasco" out of this discussion and turn it into "Bridge" it would probably be more appropriate, because I (again) say that no one thinks shale is a permanent solution. If 30 years ago someone told you that 40% of Germany's energy would be renewable you would have dismissed it out of hand. The middle of The NEXT 30 year transition is only 15 years from now.  

If we pretended (without much effort) that we are in the middle of the CURRENT 30 year transition... and that Shale Oi/Gas is the bridge... Then we can see the writing on the wall.  If you think Shale has another 5 years before it peaks then we are 10 years into the current 30 year transition. 

I think most agree that tight energy has dramatic decline rates per well, that there is a limit to the geology involved, that it has proven to require astronomical financial inputs to acquire, that environmental policy (particularly for pollution at the well site - see Colorado) is increasing yearly and that there is no indication that the trend to replace fossil energy with renewable energy is not going to change. 

That being said, the rest is just a matter of timing. When The Titanic hit the iceberg it didn't break apart, roll over and sink immediately. It took 2 hours and 40 minutes. For the first 2 hours it was obvious what was going to happen (that time has already played out in oil since 2000). During the next 30 minutes the criticality of it all became very real (our current state). The last 10 minutes were just a loud, dramatic postscript. You can go turn in an application for a job in The Permian, but only an idiot signs up for the retirement plan when they get it. 

---------------------------------------------------------

"Cheap Energy DECADE?" Not a chance. For this entire decade to be cheap energy it would require the drillers to have access to cheap money to drill.  That is already over. And it's not coming back. The only way drilling will get back underway and create the oil and natural gas to keep it cheap is for oil and gas prices to go so high that the money simply can't resist coming back. 

There is one caveat... if the Fed decides that cheap oil is required for the U.S. economy to not tank then all bets are off for how long fracking can continue.  IF the Fed decides that pouring hundreds of billions of dollars into the fracking fields is required then QE for Oil changes Everything.  Barring that, energy prices are going up enough to keep the fracking fields on life support, and they will stay at that higher level for the the remainder of the 2020's before even that price can't support the costs of operations.

Think about that... in the past if you found oil you got tons and tons of MONEY.  Now you need tons and tons of money to get some oil.  This is barely sustainable WITH government intervention in the form of rock bottom interest rates or direct QE to the financial institutions with a directive to spend it on "Clean Natural Gas... oh, and if some oil comes out of the hole too then I guess you can sell it."

Bernie Sanders wants to ban fracking and most Democrats agree with him (even though most of them don't know what fracking is). 

[Anthony Okrongly + 114]

7 minutes ago, ronwagn said:

Bernie Sanders wants to ban fracking and most Democrats agree with him (even though most of them don't know what fracking is). 

What politicians say they want to do is as useless as a 5 year old saying where they think the car should go, in my opinion. Trump is a perfect example. He is the most focused president ever on his agenda (immigration, kill Obamacare, China). He is willing to lie, cheat, steal, ignore every convention, etc. and his results have been... ?  Get Mexico to stem the flow of "refugees", nothing on Obamacare, and The China trade pact probably isn't worth the cost of getting it to happen.  So, excuse me if I'm indifferent to the comments made by a desperate candidate who couldn't beat Hillary Clinton in a primary.  He has loyal followers, but not enough, and if he got into office "the system" would crush him imho.

I think Bernie is a placeholder. At some point in the next 20 years a much younger "Bernie" will catch fire and get elected by Millennials promising free college, elimination of college debt and saving the Earth. None of which will do them any good, but it will happen. 

Edited February 1, 2020 by Anthony Okrongly

[Douglas Buckland + 6,308]

“...the way of the shut down oil fracking rig, will Texas go the same way as Germany?”

Can somebody tell me what an “oil fracking rig” is?

[ronwagn + 6,290]

14 hours ago, Anthony Okrongly said:

Ha ha.  I'm an in-home dog trainer.  One of my clients had a large pot belly pig that acted just like the dogs did.  Plus I have a farm.  So I've kissed horses, goats, chickens, rabbits, donkeys. etc. 

In 2010 I sold my house in Dallas and bought a 10 acre farm for cash. My electricity bill is $26 per month (in Texas). My property taxes are $309 per month (sorry, not per month... per YEAR). I haven't had any debt in 10 years. We are all self employed (wife, me, son's family) The only thing we depend on is that every year people get dogs and some percentage of those dogs will piss and bark, jump and mouth, chew on the rugs and eat the iphone charger. It's heaven. It's why I follow energy.  My Prius has 415,000 miles on it.  My wife's has 430,000 miles on it. It's why I like to follow energy trends. They won't effect me, but they're interesting to me. 

 

I love that you have chosen the life that you love and made it work. Also that you were able to stick with your Prii so long and keep them running. Congratulations on both. My miniature poodle is now 16 years old and still going strong. He is a masked black and white still going strong. He still can jump from one bed to another in a motel! I have had many dogs, all untrained. My poodle trains me. 

[Anthony Okrongly + 114]

21 hours ago, ronwagn said:

I love that you have chosen the life that you love and made it work. Also that you were able to stick with your Prii so long and keep them running. Congratulations on both. My miniature poodle is now 16 years old and still going strong. He is a masked black and white still going strong. He still can jump from one bed to another in a motel! I have had many dogs, all untrained. My poodle trains me. 

Pretty cool!

Now this story throws my entire "Germany gets it's energy from renewables" under the bus.

https://oilprice.com/Alternative-Energy/Renewable-Energy/Is-Germany-Too-Dependent-On-Renewable-Energy.html

Unintended consequences.  If there are ANY periods when renewables provide ZERO energy to the grid then that means you must maintain 100% generation capacity using conventional generation means. So, renewables don't actually displace ANY conventional generation. What they do is make conventional generation plants LESS economical and less viable as a capital investment, because on the days that renewables do generate power the conventional investment is being under-utilized. 

This looks like a real problem. With that in mind what good are renewables? They undermine stability, they undermine economic viability of conventional generation, and it's unavoidable because "backup" capacity has to be maintained at 100% of power generation. 

[Gerry Maddoux + 3,627]

2 hours ago, Anthony Okrongly said:

Unintended consequences.  If there are ANY periods when renewables provide ZERO energy to the grid then that means you must maintain 100% generation capacity using conventional generation means. So, renewables don't actually displace ANY conventional generation. What they do is make conventional generation plants LESS economical and less viable as a capital investment, because on the days that renewables do generate power the conventional investment is being under-utilized. 

This looks like a real problem. With that in mind what good are renewables? They undermine stability, they undermine economic viability of conventional generation, and it's unavoidable because "backup" capacity has to be maintained at 100% of power generation. 

Well, sir, you've just defined the foibles in the system--the ones none of the renewables people have discussed. Reason? They're counting on giant lithium-ion batteries from Elon Musk's Gigafactory 1 to store energy during high-production days and weeks, then feeding it back into the system as needed during the low-production days. That's an awful lot of lithium, cobalt, nickel, manganese, and so forth to be aggregating into a giant battery. And they're not without danger: one of those battery dumps (that nobody knew was in their neighborhood) just burned in a place called Surprise, Arizona. 

I think this whole renewables gig is out of control. There's absolutely no doubt that in the wind corridors of Texas and Oklahoma, and from desert solar farms, there can be a whole lot of energy generated. But to depend on a battery seems a bit Buck Rogers to an aging guy like me.

 

[ronwagn + 6,290]

3 hours ago, Anthony Okrongly said:

Pretty cool!

Now this story throws my entire "Germany gets it's energy from renewables" under the bus.

https://oilprice.com/Alternative-Energy/Renewable-Energy/Is-Germany-Too-Dependent-On-Renewable-Energy.html

Unintended consequences.  If there are ANY periods when renewables provide ZERO energy to the grid then that means you must maintain 100% generation capacity using conventional generation means. So, renewables don't actually displace ANY conventional generation. What they do is make conventional generation plants LESS economical and less viable as a capital investment, because on the days that renewables do generate power the conventional investment is being under-utilized. 

This looks like a real problem. With that in mind what good are renewables? They undermine stability, they undermine economic viability of conventional generation, and it's unavoidable because "backup" capacity has to be maintained at 100% of power generation. 

Wow! That is a great point, but I hate coal and dislike nuclear. I am a strong advocate for natural gas, biogas, co-burning of biomass and trash, wood and pellet stoves in rural areas, natural gas trucking, ships, trains, cars, etc. My main objection to nuclear is we have the radioactive material scattered all over America and cannot agree on the plan to store it all in Nevada at Yucca Flats.