Category Archives: Peak Oil

Peak Oil

Plan Ahead: Peak Oil Conference at Univ of Texas Nov. 30

Richard Ha writes:

This year's annual Peak Oil conference is coming up. It's at the University of Texas at Austin from November 30 to December 2, 2012, and I recommend that lots of folks from Hawai‘i attend – especially our future leaders. 

Our changing world energy environment is going to strongly affect Hawai‘i. At this year's conference, there will be a full discussion of natural gas issues in addition to the world oil situation. This information and knowledge will be very beneficial to decision makers in every aspect of Hawai‘i's economy. 

This will be my fifth Peak Oil conference. I was very impressed with how many investment advisers attended the first meeting. They are interested in getting the most current knowledge possible so they can stay ahead of the pack in their field. 

Read more about the upcoming Peak Oil conference.

Big Island, Community, Peak Oil, Philippines, Renewable Energy Sources

Kenoi Can Guide Big Island into Uncharted Future

Richard Ha writes:

Big Island Mayor Billy Kenoi has consistently made the point that in this changing world, we, too, must change. He pointed that out again recently: That our highest-in-the-nation electricity cost – which is 25 percent higher than O‘ahu’s – is too heavy a burden for the Big Island’s people to bear. To help the most defenseless among us, as well as our local businesses, we need lower cost renewable electricity; not higher cost electricity.

The mayor has consistently been in favor of finding lower cost alternatives to the status quo (which is, of course, dependency on
expensive fossil fuels). The Geothermal Working Group, co chaired by Wally Ishibashi and me and authorized by the Hawai‘i State Legislature, could not have carried out its work without the mayor’s backing. It was an unfunded mandate implemented by volunteers. The mayor just told his people, “Make sure they have what they need.”

Mayor Kenoi is a quick learner; one who gets both the big picture and the small one.

He led a delegation to Ormoc City, Philippines to see how 700 MW of geothermal energy was developed in a place with a population size similar to the Big Island. I was on that trip and saw how the Philippines is way ahead of us in assessing and utilizing its resource. It’s a great credit to Filipino leaders that, as the Philippines incorporates more geothermal into its grid, the country will be very well-positioned to cope in a world of rising oil
prices.

The Philippines produces a large percentage of the food its people eat, too, as compared to Hawai‘i. Our trip also resulted in a university-to-university relationship.

It’s not that geothermal is the only solution. But because we have geothermal here on the Big Island, that fact-finding trip was a responsible thing to do. That was a very practical, useful and cost effective trip Billy led.

Sitting in the middle of the Pacific Ocean, Hawai‘i is vulnerable to events out of its control, and is sailing into uncharted waters. It’s similar to when our early predecessors sailed up from the south to find a better life.

Who can I see leading today’s expedition that carries the Big Island to a better tomorrow?

I see Billy Kenoi as that leader.

Peak Oil, Renewable Energy Sources

How To Evaluate a Renewable Energy Technology

Richard Ha writes:

Robert Rapier has been in the trenches, fighting hype and misinformation, for a long time.

In this 2006 article, he challenged Vinod Khosla:

Vinod Khosla Debunked

By Robert Rapier

Update: Vinod Khosla and I have discussed his claims. That conversation is documented here.

Who is Vinod Khosla?

When an influential person begins to affect energy policy decisions – decisions that will have a huge impact on all of our lives – we better take a critical look at the claims that person is pushing. You can’t discuss ethanol for long with an ethanol proponent without having them mention the endorsement of Vinod Khosla. If you don’t know who Khosla is, here are a couple of blurbs from his Wikipedia biography:

Vinod Khosla is an Indian American venture capitalist who is considered one of the most successful and influential personalities in Silicon Valley. He was one of the co-founders of Sun Microsystems and became a general partner of the venture capital firm Kleiner, Perkins, Caufield & Byers in 1986. In 2004 he formed Khosla Ventures.

Vinod was featured on Dateline NBC on Sunday, May 7, 2006. He was discussing the practicality of the use of ethanol as a gasoline substitute. He is known to have invested heavily in ethanol companies, in hopes of widespread adoption. He cites Brazil as an example of a country who has totally ended their dependence on foreign oil.

Why Khosla Must be Challenged

I have previously made the case that Khosla’s claims don’t stand up to scrutiny. However, I recently got an e-mail from a reader who had watched a video presentation by Khosla. He had been referred to the video by a blog, where a poster wrote: “this is actually starting to sound like a rational plan to me.”

…In addition, another e-mail recently called my attention to a coast-to-coast road trip being fueled by E85:Kick the Oil Habit Road Trip. In one of the blog entries from the trip, there is a conversation between the driver of the E85 car (Mark Pike), Tom Daschle, and Vinod Khosla. The conversation is archived at:

Sen. Tom Daschle & Vinod Khosla talk Ethanol [ed’s note: this link is no longer active]

I documented my impressions of the exchange at:

RR Critiques the Road Trip

For me, the most disturbing part of the exchange came when Mark Pike said: “If the technology is good enough for Mr. Khosla, it’s good enough for me. I know that guy has done his research, so I trust him. I will leave all of the scientific data and research to him.”

There we come to the crux of the matter: People trust that he knows what he is talking about. The Wikipedia biography says he is “successful and influential.” Make no mistake; he is influencing people in this ethanol debate, including political leaders. Khosla is convincing people that his projections are viable. Yet, are they carefully scrutinizing his claims? No, because they trust him. Yet claims like his, will dampen conservation efforts, and Americans will not be prepared for Peak Oil. After all, Khosla, a guy they trust, says we are going to produce enough ethanol to replace our oil imports….

Robert came under immense pressure for his article because he was going against the conventional wisdom of the day. He was even accused of being an obstructionist. I liked his approach, though, because he is always interested in the greater good.

And at the end of the day, it turns out, Robert was right.

I first became aware of his work when I went to the Peak Oil conference in 2007. Then I missed the 2008 conference, but went to the 2009 conference in Denver. By that time, biofuels were starting to get traction in Hawaii.

We farmers thought the whole idea was iffy because we knew that a barrel of oil weighs over 300 pounds and when oil is $100 per barrel each pound of oil is worth 30-something cents. So if we had to grow four pounds of stuff to get out one pound of liquid, we knew that the most we could earn for the stuff was less than 10 cents per pound. Forget it.

I admired Robert’s tenacity and integrity, and I asked my friend Gail Tverberg if she would introduce us at the Denver conference. She sent him an email and I was amazed to find out that he had moved to Waimea and was sitting in Michael Saalfeld’s office at that moment. I called him and we have become good friends.

Robert writes the Rsquared blog. One of his interesting posts talks about how to do due diligence in order to evaluate a renewable energy technology. At the end of his post, he
suggests asking 10 questions.

Summary

To break this down into a short “cheat sheet,” here is a summary of some important questions that you want to ask. Try to corroborate answers by talking to employees or competitors.

  1. At what scale has the process been actually demonstrated, and is the process currently running?
  2. What is the source of raw materials for the process?
  3. What is being done with the product?
  4. What are the primary energy inputs into the process, and what is the energy balance?
  5. Will there be intermediate scale-up steps before a commercial facility is built?
  6. What are the key assumptions for a commercial facility (e.g., size, cost of production, location)?
  7. What is the presumed source and cost of biomass for a commercial facility?
  8. Has the process been proven on that specific biomass?
  9. What are the patent or patent application numbers relevant to the process?
  10. What prior work is most similar to yours, and who are your perceived competitors?

If you manage to get honest answers to those questions, you will be well on your way to burrowing through the hype to understand the true potential of a process.

This template is very useful, because we can put all proposed projects on an equal footing by comparing answers. It allows one to compare risks. If all a project’s costs are borne by private investors, then no harm/no foul. But if taxpayers or ratepayers are being asked to pay for the project, then one needs to know how much risk the tax/rate payer is assuming.

At the end of the day, the fundamental question is: Are we socializing the risk and capitalizing the return?

If we are going to socialize the risk and capitalize the returns, we cannot let our decisions be based on P.R. They must be based on a systematic analysis of the process.

Peak Oil, Renewable Energy Sources

Peak Oil Concerns Now Mainstream: Christian Science Monitor, Citigroup

Richard Ha writes:

The further some things recede in the rearview mirror, the clearer they become.

Concepts that were new and cutting edge at Peak Oil conferences several years ago are now mainstream.

I want to introduce you to the Resource Insights blog, which we have added to our list of blog links at right. You can always click over to it from there.

This was posted a couple days ago (that’s my emphasis there in its final paragraph):

SUNDAY, SEPTEMBER 23, 2012

This is the fourth of a six-part series introducing readers of The Christian Science Monitor to concepts useful in understanding the Resource Insights blog. Selected posts from Resource Insights are now appearing regularly on the Monitor’s Energy Voices blog. To read the previous installments of this series click on the following: Part 1, Part 2, Part 3
It is with trepidation that independent petroleum geologist Jeffrey Brown has watched global oil exports decline since 2006. With all the controversy in the past several years over whether worldwide oil production can rise to quench the world’s growing thirst for petroleum, almost no one thought to ask what was happening to the level of oil exports. And yet, each year a dwindling global pool of exports has been generating ever greater competition among importing nations and has become a largely unheralded force behind record high oil prices.

Even though the trend in oil exports has been evident in the data for some time, the analyst community was caught by surprise when a Citigroup report released earlier this month forecast an end to oil exports in 2030 from Saudi Arabia, currently the world’s largest oil exporter. Read the rest

If the Citigroup report is right and Saudi Arabia will stop exporting oil by 2030, then we in Hawai‘i are in big trouble.

Our solution, the Hawaii Clean Energy Initiative, anticipates 70 percent freedom from fossil fuel by 2030. That is to be achieved by 40 percent renewable energy and 30 percent energy efficiency – which means that 60 percent of our energy will still depend on fossil fuel.

But there may not be any oil we can afford then. And actually, we probably won’t be able to afford oil way before 2030 – even, say, 2020? That’s only eight years from now.

There are other views of the future that are just as persuasive. Richard Heinberg and others talk about the end of growth in this video:

In this scenario, oil prices may fluctuate in a relatively narrow band, going from expansion when oil prices dip and contraction when oil price rise above, say, $115/barrel for any extended period.

That is the reason we formed the Big Island Community Coalition.

We all feel the same urgency. The Coalition anticipates driving Big Island electricity prices to be the lowest in the state, in a timely manner. This protects us from whatever happens with oil prices.

We started with the desired end result, and worked backwards:
  • Protect Big Island families from rising electricity rates
  • Make the Big Island more food secure
  • Raise our standard of living relative to the rest of the world
  • Give working homeless better options
  • Help Big Island businesses become more competitive in the O‘ahu market, as well as worldwide
  • Prevent having to export our children, our most precious resource, by having jobs available here on the Big Island
To get the above desired results, we need lowest cost electricity. So our focus is clear. Read more about the Big Island Community Coalition.
Geothermal, Peak Oil

Up, Up & Away: Our Electricity Rates Increase Again

5 Comments

Richard Ha writes:

Front page article in today's Hawaii Tribune-Herald:

HELCO seeks rate increase

By COLIN M. STEWART

Tribune-Herald Staff Writer

Hawaii Electric Light Co. has requested a 4.2 percent rate increase.

The request, which was submitted to the state Public Utilities Commission on Thursday, would generate about $19.8 million in additional revenue, but would not go into effect until 2013, at the earliest, according to a HELCO press release….

Read the rest here

I'm sure there are reasons and justifications for the rate hike. But when will it end?

We need to see a reversal in electricity costs. Why should the Big Island's electricity rates be among the highest in the whole state, when we have all these resources here? 

Geothermal, Peak Oil

My Talk at the Asia Pacific Clean Energy Summit

Richard Ha writes:

At the Asia Pacific Clean Energy Summit yesterday, I gave a bit of history about how the Geothermal Working Group Report evolved. The Big Island Labor Alliance’s geothermal committee was formed four years ago as an off-shoot of the effort to bring the Thirty Meter Telescope to the Big Island. Both projects had the same objective: To help Big Island families have a better life.

I became involved because it was all clear to me, having been to Peak Oil conferences and knowing that oil prices were probably going to keep on climbing until it became unaffordable. I had the same motivation as the Big Island Labor Alliance: To lower electricity rates for Big Island families.

Three years ago, at the request of the geothermal committee of the BILA, Senator Russell Kokubun introduced Senate Concurrent Resolution 99. It asked the question – Could geothermal be used as the primary base load electrical power for the Big Island? In the final report, the answer was yes.

The report is a consensus of all the group’s members.

You can find the final Geothermal Working Group final report on the County of Hawai‘i R & D Department website. Or on my blog.

Here is my talk:

BE IT FURTHER RESOLVED that the working group consist of eleven members with the Mayor of Hawaii County designating the chairperson, including:

The Hawaii County Energy Coordinator, or designee, me; One member designated by Hawaii Electric Light Company, Jay Ignacio; One member designated by the Big Island Labor Alliance, co chair Wally Ishibashi; One member designated by the Hawaii Island Economic Development Board, Inc.,Barry Mizuno; One member designated by the Chairperson of the Public Utilities Commission, Big island rep came to listen; The Hawaii Island Office of Hawaiian Affairs Trustee, or designee, Bob Lindsey; One member designated by the Director of Business, Economic Development, and Tourism, Andrea Gill from the energy office; One member designated by the Chairperson of the Board of Land and Natural Resources, none; One member who is a representative of a non-profit, environmental group to be selected by the President of the Senate, Nelson Ho-Sierra Club; One member who is a representative of a cultural organization to be selected by the Speaker of the House of Representatives, Patrick Kahawaiola’a-pres of the Keaukaha Community Ass’n; and One member representing West Hawaii to be selected by the Mayor of Hawaii County, Jacqui Hoover.;

SCR 99 established the Geothermal Working Group to evaluate geothermal energy as the primary source of baseload power for electricity in the County of Hawaii. An analysis of technical data and of expert testimony provides convincing rationale to develop local renewable energy plants and transition away from the county’s dependence on petroleum-fueled generators for baseload electricity. Each stage of development must consider public safety and environmental concerns. Funding for research is required to ensure that the transition never harms people, property, or wildlife and that a robust and reliable supply of energy is always available. It is critically important to the welfare of all Hawaii residents that we begin to develop local energy immediately.

Advantages of geothermal:

  • It is an indigenous resource
  • It generates revenue for the state
  • It generates community benefits
  • It provides stable power
  • It is less than half the cost of any of the renewable energy alternatives.
  • The Big Island will be over the geothermal “hot spot” for 500,000 to 1 million years

Potential adverse impacts are listed below:

– Interference with worship of the Goddess Pele

– Interference with certain Native Hawaiian practices – Rainforest destruction

– Possible health and safety impacts

– Disruption of the way of life for nearby residents

– Hydrogen sulfide and other air quality issues

– Noise

– Increased strain on an inadequate infrastructure – Impact on native fauna and flora

       IV. Recommended Steps for Hawaii State Legislators

– Make the allocation of geothermal royalties more transparent to show how benefits come back to the community. Designate the records of the allocations to be public domain.

– Establish a community advisory board to offer suggestions to the DLNR about how royalties generated by geothermal power plants are spent. The advisory board should be members of the communities that host existing or future geothermal power plants and/or those who are most impacted by the development of geothermal energy.

– Encourage the DLNR to use geothermal royalties to identify promising geothermal sites and to further develop the resource.

– In light of the probability that oil will reach $200 per barrel (Lloyds of London), the legislature is requested to commission a study to show the economic impact of various prices of oil.

– Facilitate development of geothermal with a critical review of the geothermal permitting process, regulatory capabilities, and possible investment incentives.

The Geothermal Working Group’s principal findings

– Geothermal is a renewable resource indigenous to the island of Hawaii that is dissociated from the price volatility of petroleum fuels.

– Geothermal can be a key component in a diversified energy portfolio for Hawaii County, both for the electrical grid and for transportation.

– In Hawaii, geothermal is a firm-energy resource at lower cost than fossil fuel. – Developing multiple geothermal plants is the most prudent approach.

– Geothermal has the potential to supply baseload electricity; long term reliability and the ability to supply grid management services (currently supplied by conventional fossil-fueled power plants) must be demonstrated in order to consider geothermal as the primary energy resource.

– With geothermal power plants, agricultural fertilizers, hydrogen, oxygen, and business-enterprise power can be produced for off-peak rates during the hours of curtailed electrical demand.

Comment by Robert Rapier

Or a simpler way to put it is this. It may be that the U.S. economy and America’s per capita oil consumption of 23 barrels of oil per person per year can’t grow in the face of $100 oil. But if countries like China and their 2 barrels of oil per person per year continue to grow while buying $100 oil, then we have truly entered a new paradigm. What may happen is that both China and the U.S. end up consuming 5 or 8 barrels per person per year, which could still grow China’s economy, while the U.S. gets there by shrinking ours. China’s growth is probably the most worrisome factor because we will be competing against them for global oil supplies.

In closing: The Big Island is paying some of the highest electricity rates in the state. Our communities are struggling, and yet the Big Island will be sitting over the hot spot for 500,000 to 1 million years.

What is taking us so long?

Community, Peak Oil

‘Big Island Community Coalition’ for the Island’s & People’s Greater Good

1 Comment

Richard Ha writes:

Did you see yesterday’s Hawaii Tribune-Herald?

The University of Hawaii at Hilo is facing a $5.5 million utility bill, which is an increase of almost $500,000 in just one year – almost completely due to the rise of electricity costs. This shortfall is going to have to come straight out of the university budget.

UH-Hilo utilities cost nearly $5.5M 

By COLIN M. STEWART

Tribune-Herald Staff Writer

…In fiscal year 2011-12, UHH budgeted $5.1 million for its utility costs, with the bulk of that figure being represented by power, said Marcia Sakai, Hilo’s vice chancellor for administrative affairs. 

By spring 2012, the rate of monthly spending had increased such that the school was anticipating a shortfall of approximately $450,000, with anticipated total spending closer to $5.5 million.

…As a result of such jumps in electricity bills, Straney has appointed Sakai as the campus’ sustainability director and charged her with finding ways to cut utility costs and developing an energy management plan, making the university more efficient. He was very up front about his reasons for doing so.

“We’re not being green here. We’re not doing the right thing. This is pure economic necessity,” Straney said. “We’re just doing it to keep the lights on.”

This is exactly what is also happening to families, farmers/ranchers, businesses and everyone else who has a utility bill. 

This is why we have decided to form a coalition. The Big Island Community Coalition’s objective: To work in collaboration for the greater good of Hawai‘i Island and its people.

Our first goal: To make Big Island electricity rates lower than O‘ahu’s rates, which have been 25 percent lower than on the Big Island.

We want to:

  • protect Big Island families from rising electricity rates
  • help Big Island businesses become more competitive in the Oahu market and world wide
  • make the Big Island more food secure
  • become more competitive to the rest of the world as oil prices rise
  • raise our standard of living relative to the rest of the world
  • stop exporting our most precious resource, by having jobs so our children can raise their families on the Big Island
Community, Geothermal, Peak Oil

Very Successful Meeting on Geothermal Facts

2 Comments

Richard Ha writes:

Approximately 100 people showed up last night at the Leilani Estate Community Center to learn the facts about geothermal energy.

July 2012 030

Some of the testimony – from folks who have worked at the geothermal facility, as well as those who live close by – was especially impactful. 

I took 10 minutes to talk about a danger we are facing: Rising oil prices. If we have sincere dialogue among all the parties, we can start to see that rising oil prices will threaten our social fabric – and most of all, our spirit of aloha. And maybe we can do something about it. But we don’t have the luxury of time.

July 2012 026

Why can’t we, here on the Big Island, have lower electricity rates than O‘ahu? It would lessen pressure on the most vulnerable families, help farmers compete, help businesses create more jobs and prevent the export of our most precious resource – our children.

Mike Kaleikini, Plant Manager of Puna Geothermal Venture, talked about the history of geothermal production, mitigation measures and safety regulations. Mike has a way of explaining complex issues that is easy to understand.

Don Thomas gave a talk about the technical side of the H2S issue, which had a big impact on the audience. Both Mike and Don are very credible, as they have actual, real-life experience and speak about facts that are verifiable.

I would say the crowd was 70 to 30 percent for geothermal. But it isn’t a matter of “us” against “them.” It was the discussion and sharing of information that was most important. At some point, I hope soon, we can come to grips with the larger issues of rising prices, and how we can maximize our resources in a smart and responsible way.

July 2012 030

To cap things off, Mayor Billy Kenoi showed up after the mayoral candidate debate in Pahoa concluded. He did a good job of explaining, in a commonsense way, why there is no need for the council bill. It is redundant and adds problems that are unnecessary.

July 2012 030

All attending were Councilman Fred Blas as well as Representative Faye Hanohano.

Late last night we received a note from Petra Wiesenbauer, Jan Kama and Loren Avedon, who organized the meeting:

Richard, Mike, and Don,

Mahalo for an outstanding presentation tonite to the residents of Leilani Estates and community members.  There were many comments after the meeting that people had a better understanding of how the plant operates and its impact on the community.  Whether or not they understand the difference between H2S and SO2 is questionable, but at least they feel more comfortable knowing that they are not as much at risk as they thought. 

And Petra Wiesenbauer, who lives in and runs a B&B in Leilani Estates, sent along some further comments of her own about the meeting (as well as the photos in this post):

I think it was an extremely good meeting last night. I am so proud of everybody for staying focused and respectful.

Don Thomas was absolutely excellent. It was so good to have him there with all the numbers of emissions, comparisons of different regions and being able to putting things into perspective, i.e., the Volcano blasting out 600 to 1,000 tons of stuff every day. He was able to dismantle some of the myths and clear up rumors and anxieties.

Mike was really, really good, too in making transparent what is going on at the plant and the strict restrictions they are under in regards to their monitoring, their chemicals and general equipment maintenance.

That the Mayor was able to come at the end was an added bonus and gave the whole meeting a great finale.

I talked to Jeff Melrose a little and he said, that they are working on a brochure/informational materials about disaster response/evacuation, safety and other community concerns regarding geothermal development. He is such a great guy as well and so knowledgeable about all the Big Island planning and land dealings. He thought it was the best meeting he has been to in a long time about this whole controversy and he thought it was amazing, that something like that had not been done much earlier.

I give so much credit for the course of the evening to Loren [Avedon], our moderator. He was great and made sure there were no lengthy statements, self indulgence, lamentations and other behaviors from any of the audience that could have been counterproductive to the outcome of the meeting.

 The whole meeting came about as a result of this note that had been sent around about the July 19th County Council meeting:

“There was something odd about today’s County Council meeting…all of us testifying at the Pahoa office were in opposition to the legislation, with the exception of three people.  Apparently the anti-geothermal group had received word that the bills would be postponed for 30 days.”

Those of us who attended the County Council meeting to override the Mayor veto of Bill 256 were prepared for more than 100 folks picketing the County building, and protesting loudly. But no one showed up.

The email back and forth resulted in someone asking me to post their testimony on my blog, which I did. Then on the 22nd, this note was sent around:

 “We would actually love to take you up on your offer to come here and give a talk to interested residents here in Leilani. It would be a good way to also promote the petition http://www.change.org/petitions/hawaii-county-council-petition, and therefore it would be great to do it as soon as possible. We were wondering if you had time on Tuesday at around 6:30pm. If not any other day that is convenient for you just let us know?”

By the next day, I had confirmed that Don Thomas, Wally Ishibashi and Mike Kaleikini would attend. All this happened really quickly.

With only two days notice, 100 people showed up, standing room only. I was amazed.

• Here is a recent Civil Beat article, titled “Arguments Against Geothermal Are ‘Absurdly Elitest,’ Says Scientist.

• You can still sign the Hawaii County Council petition here, which asks:

We humbly ask you to sign our petition before July 30th, 2012 asking the County Council of Hawaii to honor the Mayor’s veto of Bill 256, Draft 2. The bill would allow the County to create a one-mile safety buffer zone around the Puna Geothermal Power Plant. [Read more at the link]

Peak Oil

Rapier Speaks on Others’ Views re: Global Energy

Richard Ha writes:

In the following video from Consumer Energy Report, Energy Expert Robert Rapier discusses a recently released paper by former Eni Executive Leonardo Maugeri, in which Maugeri suggests that by the end of the decade, global oil supplies will increase by 17 million barrels per day. Rapier also talks about George Monbiot’s reaction to that report. Monbiot is a prominent environmentalist concerned about global warming.

I like Robert Rapier’s views. He is fearless, credible, easy to understand and has common sense.

Though some articles recently have suggested that the U.S. has more petroleum resources than Saudi Arabia, and suggest, “Don’t worry, be happy,” we must play the position on the chess board as it exists – not as we wish it were.

Where are we now and where do we want to go?

In general, oil at $125 a barrel has thrown the world into recession. If it falls below $70 per barrel, some folks will lose money and stop production. We will probably be between those two prices for a short while. Oil is a finite resource, and the forces of depletion are relentless.

Hawai‘i has a lot of catching up to do. We need to move toward geothermal so we can dodge the bullet.

Photo

Look who I got to hang out with the other day. It’s Scotty Blaisdell, left, and Robert Rapier, right. They are classmates from a small Oklahoma town, both of whom have made it big in Hawai‘i. Scotty is the award-winning Star 101.9 radio co-host known as “Scotty-B.”

Peak Oil

Geologist Arthur Berman Says ‘Shale Gas is a Commercial Failure in the U.S.’

Richard Ha writes:

Lately we have been hearing that natural gas will save us. But there are other opinions, and the truth probably lies somewhere in between.

• Chesapeake Energy, the largest shale gas producer, is losing billions of dollars. 

• ExxonMobil's CEO Rex Tillerson just announced that all in the gas business were "losing their shirts."

Exxon CEO: 'Losing Our Shirts' on Natural Gas Prices

–Making "no money" on U.S. natural gas

–Prices have fallen below cost of production

–Current prices aren't sustainable

By Jerry A. DiColo and Tom Fowler

NEW YORK–Even energy titan Exxon Mobil Corp. (XOM) is showing signs of strain from low natural gas prices.

On Wednesday Exxon Chief Executive Rex Tillerson broke from the previous company line that it wasn't being hurt by natural gas prices, admitting that the Irving, Texas-based firm is among those hurting from the price slump.

"We are all losing our shirts today." Mr. Tillerson said in a talk before the Council on Foreign Relations in New York City. "We're making no money. It's all in the red."

His comments mark a departure from remarks made earlier this year on how lower natural gas prices hadn't yet hurt the company because of its operational efficiency and low production costs…. Read the rest

Arthur Berman is a geologist who has done extensive research in the area of shale gas production. In Denver, in 2009, I heard him on a panel discussing shale oil at the Association for the Study of Peak Oil (ASPO) conference. What he said made sense to me: It's only logical that natural gas from oil shale tends to decline rapidly, because gas flows more rapidly than oil.

In this YouTube video, Berman states,"To maintain current production, we need to replace one third of the country’s gas wells with new ones each year.”  

He calls shale gas a "commercial failure in the U.S."

 

The price of shale gas is too low because of oversupply. What is the break-even price? When we find that out, we will know a lot more about its sustainability.