As far as I know Australia only has one working shale gas play (ie horizontally drilled, no caprock) close to conventional gas pipes in the Moomba area. Rather than sending all of that gas to the southern capitals some of it will go to making high priced export LNG at Gladstone. Therefore instead of telling ourselves we have a bonanza we should be thinking about conserving gas in SE Australia. This very point has been made by Dow Chemical and Incitec Pivot but fallen on the deaf ears of our politicians.

While Rex Connor in the Whitlam years could not have known about shale gas with uncanny foresight he predicted the need to send gas from WA to the eastern states. Shale and coal seam gas merely buy time. While we are exporting LNG and burning gas for baseload power other future needs are being compromised. These include heating gas, chemicals feedstock (plastics, urea etc), peaking power and most likely CNG diesel substitute. Delusions about unlimited cheap gas will come back to bite us within a decade I reckon.

Wow, the peak oil guys just do not want to let go of their concept. Basically peak oil as a story died some time back, but those wedded to the idea are still looking for gaps and holes in the current oil and gas story. In his effort to prove that reality in the oil industry must be wrong somehow, Cameron makes a few comemnts, some of which are interesting but mostly he missteps..

Consider this comment:
"neither the knowledge of unconventional energy sources nor the technology required to extract them are new"..

This is technically correct but quite misleading. Sure limited extraction for some shale oil deposits has been possible for deacdes and a major breakthrough in the technology turned Canada into a major oil exporter in the 1990s - a point Cameron neglects to mention. But teh technique known as fracking is a recent development and that has unlocked very large deposits. That is what the fuss has been about.

Cameron may be correct about some of the enthusiasm for fracking being over the top and dying away, that happens with new industries. But oil production in the US has taken a wholly unexpected, new lease of life. In addition, deep sea discoveries have increased by leaps and bounds.. and all of this has confounded the peak oil theorists.

Sorry, Cameron, time to find a new story to push.

Wishful thinking is a dreadful thing.

It can cause you to believe all sorts of fallacies, & make some most inappropriate decisions, that can cost you, or your country if you have authority, a great deal for a long time.

While it was an interesting read, the conclusions reached by the Author were hardly convincing?
It seems all the green advocates must be receiving salaries somewhere north of $150,000.00 per?
Given the common endlessly repeated chant seems to be, make energy more expensive?
And indeed, the whole thrust of the article?
Fine, but what about the 40% living just above or below the poverty line?
I disagree most vehemently with this Author!
Instead of his preferred economy mugging model, I believe we need to take full advantage of our copious energy resources to rebuild our manufacturing economy.
High tech manufacture equates to high energy usage?
Nowhere in the, par for the course, green discourse, do we find the words, nuclear power?
Nowhere do we find the words, biogas or extremely low water use, Algae farming.
Algae absorb 2.5 times their bodyweight in Co2, and under optimised conditions double that bodyweight and absorption capacity every 24 hours.
Some algae are up to 60% oil or easily extracted, ready to use bio-diesel!
Almost every household or residential high rise, produces enough waste/methane, to power the home or apartment building!
The bonus being endless free hot water and or power, just a third the cost of coal fired power!
Moreover, the product of energy produced by methane in a ceramic fuel cell, is mostly water vapour.
However, we will need to create a very strong and very sustainable economy, to make such things affordable for the average consumer.
Oil/gas?
Why not unlock the huge hydrocarbon reserves locked up in the Great Barrier reef?
Transitioning to other more sustainable alternatives will take both time and money!
Something that seems to escape some; but particularly those who seem to think, all we need do, to pay for the transition, is print more money?
Rhrosty.

Rhrosty:

...Interesting is your comment at the end of your post, the printing of money! The alternate energy sub-set is now an industry; a self-serving and vested industry. Very aware it must be too, that the western economy (since the unclipping of gold as its base value), relies on a system of money printing for survival.

…At any expense, including to the 40% you mentioned who are most impacted with escalating cost of power, the poor; present as the most adversely impacted group in our society to be subjected to the “cost-squeeze” green energy is intent on forcing onto us all!

...The “green Nazis” want for a big slice of new printed stimulus money: They care little for social consequences; the opposite to their “parade-ground” mantra!

Mark (Curmedgeon), I do believe that the only place that the peak oil concept has died is between your ears. You have made some bold statements with no supporting evidence. Just because you want something to be so doesn't mean that it is. All of the assertions I made in the article are supported by evidence which I even included hyperlinks for your reading pleasure.

You also have conflated what I have detailed in my article to suit your own purposes. The article had nothing to do with Canadian oil production (why would it when I am talking about the US situation) hence why it was not mentioned. I do believe that you are confusing oil or tar sands production with shale oil (or more correctly tight oil) production - two entirely different processes.

Some questions for you then Mark:

1. Is the Chatham House paper incorrect when it said the first well was fracked in 1947?

2. Is 900,000 barrels a day (current tight oil production) a revolutionary change in a world that consumes approx 85 mb/d?

3. How much tight oil production would there be now if the oil price was say $60/barrel? $50? $40?

4. Will 4mb/d of tight oil production in the mid 2020s make much if any difference when depletion from current conventional oil fields equates to about the same amount of lost production each and every year?

5. How long can shale gas companies, funded mainly by debt, remain solvent with gas prices lower than production costs?

I could continue but unless you can provide actual evidence to support your hope that the peak oil 'concept' is dead, I don't really see the point.

Cameron Leckie

The high production rate declines that the author identifies are an inevitable feature of shale gas production and do not prevent the industry from being economic. Sure, you have to drill more wells to get the gas out than a conventional field, but as long as each well produces more revenue that it costs to drill and operate, the industry will remain profitable.

Likewise, the author is right that the development of the industry is product of high energy prices in recent years, but wrong to think this makes it unsustainable. That’s how the market works – when something increases in price then people have an incentive to produce more and find alternatives.. It is what happened in the aftermath of the OPEC oil price shocks and gulf war of the 1970s and 1980s. The gulf of Mexico and North Sea suddenly became economic to produce, whereas if you’d suggested in the early 1970s that the UK would extract oil from under the North Sea you’d be laughed out of court.

That’s why the economists are right so often, and the “limits to growth” doomsters are wrong so often, about resources availability and growth.

The author also slips deceptively between discussing the possibility that the USA could be self-sufficient in oil (which it probably won’t) and self-sufficient in energy (which it already is).

The discussion of “extreme energy” is classic anti-technology scaremongering. The North Sea would seemed “extreme energy” in the 1960s, drilling for onshore oil would have seemed “extreme” in the 1860s, town gas in the 1820s and deep-shaft coal mining in the 18th century

Hello Rhian, I think you misunderstand my point about shale gas. I don't think it is unsustainable per se, just that it is unsustainable at current production levels. To make the industry sustainable requires less production and higher prices to make it financially viable. What is unsustainable is the shale gas funding model of recent years.

I would disagree with your point about economists being right/limit to growthers being incorrect with regards to prices. We could get more oil at $200 a barrel (and it is meandering on the edge of recession with prices at half that level), however at such a price the economy would be in recession thus forcing down demand. The work of Professor James Hamilton illustrates the causal link between oil price spikes and economic recessions. The other issue to consider is Energy Return on Energy Invested. Energy sources such as tar sands and tight oil are quite marginal, say about 4:1 compared to conventional oil at about 17:1. So we might get more oil at higher prices but how much useful energy we actually get is another matter.

Not sure where you get your figures on the US being energy independent? The Energy Information Administration from the US Government indicates that the US imports around 9mb/d of oil, about 10% of its natural gas. The US exports a small quantity (relatively) of coal, hardly enough to making much of a dent in the oil and natural gas imports. And of course they cannot be directly substituted for one another (oil and coal at least).

Hi leckos

I agree the US market may have overshot as more supply comes on stream, and gas prices in the USA may rise somewhat from recent lows. The interesting question from a global perspective is whether the USA will start to export gas. There is already talk of turning redundant LNG receival terminals into LNG production facilities for export. That way, US production and domestic prices would probably both increase.

There is also an awful lot of unconventional gas and oil elsewhere in the world – including Australia - that will be developed if the price is right. If the price is not right, it will mean that someone has found a way to produce more oil or some other substitute.

The point is that the market will respond to price signals, often in ways that are hard to predict. If we really are running out of conventional oil, we'll find something else.

I also agree that high oil prices can cause recessions – though I don’t think they were responsible for the latest one. However, over time the world economy is becoming less energy intensive, meaning that the shock of higher prices is less severe than it used to be.

The tendency towards using what were once marginal reserves as prices rise and productivity improves is a familiar characteristic of the resources sector. In the gold industry, for example, it is now economic to mine ore with one or two grams of gold per tonne – a fraction of what was economic a few decades ago. In WA, iron ore mining is shifting to previously uneconomic inland ore bodies. There are even a couple of magnetite projects under way.

I admit I was wrong on the energy balances, though. I had read that the US was a net energy exporter in 2011

http://www.bloomberg.com/news/2012-02-29/u-s-was-net-oil-product-exporter-in-2011.html

… but looking behind the numbers this is only of petroleum products.

Lekos

Look, I would like to be able to retort that the only place peak oil exists is between your ears but ther are other people who share this delusion. Its not for met to prove reality but for you to refute it.. However, if you really don't know this basic point the search on Mobiot (the environmentalist) and peak oil. He recently declared it dead, and if he's calling it then it is dead. Yes, I know that other environmentalists rushed to denounce him and declare him "debunked", but they hardly count do they.. the other official, recent declaration that readily comes to mind is from citibank analysts
https://www.citigroupgeo.com/pdf/SEUNHGJJ.pdf

If you search on peak oil and dead you will find other material, but basically the oil industry hasn't made much of a fuss about its passing. They've just dropped it. Sections of which did talk about peak oil for a time.

As for the bit about fracking being used in 1947 that's irrelevent.. The basic technology might well have been used, but its modern application where they've worked out all the bugs and problems (which took some doing, as I understand it).. is quite recent. You understand, there is a vast different between using a version of the technology and its full, practical application.. just think Bell using the first telephone and practical, city-wide phone networks..

Now Cameron I hope all that helps.. but peak oil as a concept as gone and its no good complaining to me about it..

Mark, your view that the peak oil concept is dead seems to be heavily reliant on that old saying that if you hear something three times it must be true. I prefer to let data and logic inform my view on an issue - ideological predispositions are not helpful here.

I am aware of Monbiot's U-turn but could care less. A key report which helped change his view is nothing but industry PR. It is easy to write a report suggesting that oil supplies will be bountiful, tweak an assumption or two here, make up a number or two there. Some links below will expand in detail on this:

http://resourceinsights.blogspot.com.au/2012/07/fool-me-twice-shame-on-me-oil-industry.html

http://energybulletin.net/stories/2012-07-30/monbiot-peak-oil-u-turn-based-bad-science-worse-maths

http://www.davidstrahan.com/blog/?p=1570

http://www.theoildrum.com/node/9327

Obviously journalistic standards in the mainstream media today do not assist the understanding of complex issues such as our energy future. A lack of energy literacy doesn't help either. Ultimately energy is ruled by the laws of thermodynamics not economics. Get your head around that and concepts such as EROI/EROEI/Net energy and we wouldn't even be having this discussion.

Your response to my point about fracking technology misses the point entirely. As I acknowleged in the article the technology has improved significantly. Without sustained high oil prices however (it was only a decade or so ago that The Economist said we would be swimming in oil at a price of US$5 a barrel, whatever happened to that?) tight oil production would in most cases not be viable.

Technology is not energy. Despite the exponential growth in technological capability the oil being found now is in smaller reservoirs, more difficult to get at, of lower quality and as a result more costly. Almost to the point where to bring new production online requires an oil price that is recession inducing.

So we could argue forever about whether peak oil is a real concept or not, but it is largely irrelevant and history will sort that out. Any unblinkered look at our energy future however, suggests that it will be problematic, whether that is oil or renewables (as you pointed out in your recent article).

Cameron

I see by your latest post that you are showing some signs of sense - that's good. Quite so, the concept of peak oil is now largely irrelevent. Good. As for the price, sure its become more expensive of late but not for the reasons you think. The problem is OPEC and their failure to invest in production facilities and exporation - for very good reasons of their own. On this point I recomend James Smith's article in the Journal of Economic Perspectives in 2009.

As for the oil becoming more expensive to extract, sorry but the very same thing could be said about all the resources and prices have been falling in real times (apart from the peak of the past few years). the price issue is an OPEC thing.

Now Cameron I hope that helps but if you knew about Monbiot you should really have made some reference in your article. Peak oil is dead - you should have made some reference to the new peak oil or some such. Leave it with you.

Mark, using the term peak oil is not particularly helpful because it is a very simplistic phrase, which people can and will read into it what they want, to describe a very complex situation. Which peak oil are we talking about? Per capita - passed decades ago, crude oil production - on a seven year plateau, liquid fuels production - a marginal increase since 2005, oil exports - declining since 2005. Are we talking production in terms of volume or energy content?

If we measure 'liquid fuels' on an energy content basis then the marginal production gains over the last few years are even less impressive. If we applied a net energy analysis to global liquid fuels production we would find that even though the liquid fuels supply has made some statistically insignificant gains in the last few years, society is getting less useful energy to fuel our economy. This is a paradox which a simplistic view on the oil/liquid fuels situation will not assist in understanding. Added to that the major growth in liquid fuels production has been coming from natural gas liquids, which are primarily used as a petrochemical feedstock rather than as a transportation fuel.

I skimmed the paper you referenced, and its analysis of OPECs situation tells only a portion of the story. There is no mention of the up to 300 billion barrels of OPECs 'political' reserves - that most likely don't exist but have been added by OPEC nations to bolster their production quotas. Nor do you provide any reasonable argument as to why OPEC would want to increase their production, let alone if they are capable of significant gains (barring Iraq).

As far as Monbiot goes, my article was on the USAs situation, nothing to do with the global story. Hence why should I mention it?

Rhrosty;
Those that believe that peak oil is real and with us now are not necessarily greenies.
I have been reading on the subject for some years now and I am by no
means a greeny. I suspect that only a small minority of "peakists"
would be greenies.
I think you are confused on that because both greenies and peakists
are both asking for alternative energy but for different reasons.

As Leckie has been trying to explain, "Peak Oil" is becoming a more
complex story as its effects become more noticeable.
Production of oil could fall off its peak because we cannot afford it.
Under that scenario, there would never be a shortage of supply.
However what may happen is a balancing mix of the two functions,
a mild physical shortage and for most of us an unaffordable supply.