Richard Ha writes:
This video is well worth watching.
It’s called “Shale Promises or Shale Spin? The Economics
Behind Hydrofracking. A Conversation with Deborah Rogers.” If you are following this subject at all, you should watch it.
Deborah Rogers began her financial career in London working
in Corporate Finance, specifically venture capital.
Upon her return to the U.S., she worked as a financial consultant for nearly a decade for several major Wall Street firms, including Merrill Lynch and Smith Barney.
She has also served on the Advisory Council for the Federal Reserve Bank of Dallas and on a task force for the Texas Commission on Environmental Quality.
She currently serves on a regional steering committee for the Oil and Gas Accountability Project (OGAP) and has the responsibility of addressing economic questions.
An entrepreneur herself, she founded Deborah’s Farmstead, an
artisanal cheese-making operation, now one of the premier artisanal cheese dairies in the U.S.
She was featured in a lengthy NY Times article by Ian Urbina on June 26, 2011 entitled Insiders Sound an Alarm Amid a Natural Gas Rush.
Shale gas and shale oil: Are they hype, or hope? We farmers want to know.
Nitrogen fertilizers, chemicals, plastics and other farm supplies are made from natural gas as long as it is cheap. Do we really have a hundred years’ worth of supply, and will it be cheap?
At the 2009 Association for the Study of Peak Oil conference in Denver, the petroleum geologist and consultant Art Berman described his analysis of 4,000 wells in the Barnett Shale. He showed that the average gas well produces 70 percent of its total production in the first year.
Also on the panel, though, was an oil/gas company executive, who said their calculations show that gas wells will produce for 22 years.
Now, three years later, we see that there are wells generating $120/day and they are still in production. What does that mean in
the whole scheme of things? Who is right?
There is more data now, and it still, consistently, shows that shale gas – and, by the way, shale oil – depletes really quickly, like 90 plus percent in the first five years.
And it costs $4 million or so to drill each well. Now that there is so much more data, the math on this is easy.
Farmers do not care who is right. Farmers only care about what is right. So while we do appreciate the low, below-break-even costs of nitrogen fertilizer, chemicals, plastics and other farm supplies today, we are also calculating what our costs might be if the price of natural gas rises to $5, $6, $8/mcf (thousand cubic feet).
If we cannot control the price of oil or natural gas, what do we do?
We must pivot to what is cheap and stable and actually works.
The petroleum age is barely 150 years old and already we are worrying that it will not last another 50 years; it might last even fewer years than that.
On the other hand, the Big Island will be over the geothermal hot spot for 500,000 to a million years.
The rubbah slippah folks get it. This not rocket science!