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The Forum > Article Comments > The phoney boom in oil from shale > Comments

The phoney boom in oil from shale : Comments

By Paul Pollard, published 29/11/2013

The likely benefits from US fracking for oil from shale have been greatly exaggerated.

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It is quite shocking how ill prepared Austraia is for coming oil decline. Our economy is so intrinsically tied to oil that you would think that someone in government or the bureaucracy cared enough to make sure our stockpiles were adequate. The interesting thing in this article is that the US situation cannot be replicated in Australia because of lack of pipe-lines, lack of water for fracking etc. It seems we have been lulled into a false sense of security wit news of huge deposits of shale in South Australia, for instance. But if it is not economic to extract them in a envionmentally sound way, then they're of no use. We really have to start preparing now for an oil-constraind world.
Posted by popnperish, Friday, 29 November 2013 6:29:37 AM
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I have seen a few articles like this saying, hopefully, that the new fracking oil boom will be short lived as they have to keep on drilling wells to keep it up, so its much more expensive than easy-lift oil, so it will die of its own accord.

Quite so. But those are problems for the market to sort out. The immediate point is that there is a very large source of oil that no-one knew about a few years back.

If prices fall sufficiently to make this source of oil uneconomic, that just means the more conventional sources of oil have made a come back, or demand has moderated. No real source of concern.

Otherwise, the article's analysis was actually of use. Keep it up.
Posted by Curmudgeon, Friday, 29 November 2013 9:11:38 AM
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< The lesson for Australia is that we need to plan for this shrinking supply, and the related rising price of oil. >

Absolutely, Paul.

< Despite the essential role of oil throughout Australian society, there are no signs that our governments are planning for this in any way. >

So true!

This is of such enormous importance, and yet our current government has taken a backward step, from the already highly backward position of the previous government.

The preparation for a regime of much higher oil prices if not the problems with the very supply of oil, in the near future, is essential. It is just something that government should just automatically be doing.

Ah but….

The vested-interest profit-motive-driven big-donations enormously coercive big business sector rules our government, of either persuasion. They would not allow it. Even very small initial steps, such as the carbon tax and super profits tax, meet with huge opposition. And for as long as we have one political party that is willing to continue taking us down the antisustainability path, we won’t be able to instigate energy-regime reform or head towards a sustainable future… until we are forced into it.

The tiny steps towards a greener future that we have seen so far have been nothing more than token efforts, which have basically allowed business as usual to continue, with just a slight green tinge or a tiny feel-good aspect, or an attitude of being seen to be doing something while not doing anything of any significance.

So…. How do we do it? How do we do what most logically thinking people believe that we should be doing? How do we make government much more independent and get them into the position where they could actually, politically tenably, do the right thing?
Posted by Ludwig, Friday, 29 November 2013 9:31:50 AM
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Why are there no sources cited for the key point in this article?

"Unbiased observers of the US tight oil scene have therefore concluded that it is more a case of a brief boom followed by a dwindling away of a resource, than a large, long term contribution to oil supply."

How credible are these "unbiased observers"? Should we not be allowed to make our own judgments on their level of bias?

I have absolutely no quarrel with the re-statement here of the fundamental laws of supply and demand. When energy supply is short, the price will go up, whatever the source of energy. But the increased price that the article relies upon for its prediction, will bring into play a number of alternative sources that are presently unviable. Rendering conclusions such as this one totally meaningless:

"Such an ever-increasing oil price would at some point choke off demand, so that a price ceiling will likely operate eventually to limit the extent of tight oil".

An "ever-increasing" price will also serve to encourage new market entrants. Elementary economics, chapter one.

Why is there only one side of the discussion presented in articles like this? Polemic is not a replacement for argument, and can only just scrape through under the heading of "opinion". But when it contains such wildly biased conclusions as this one, it becomes an insult to the intelligence of the reader, and nothing more than a troll.
Posted by Pericles, Friday, 29 November 2013 10:02:54 AM
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Talk about wishful thinking getting in the way of real thought, here it's pipe dreams.

Paul we have enough oil under the southern end of the reef to keep us going for years. Then we have all that oil sand around Gladstone, probably from the same source.

Then when the gas runs out, in a few hundred years, we've got all that coal to convert to liquid fuel.

Sorry mate, we won't see a lack of hydrocarbons in generations.

What we should be doing however, is demanding any company in the fuel retail industry refine 2/3rds of it in Oz. The most stupid thing we can do is let fuel companies leave us without the capacity to refine our own
Posted by Hasbeen, Friday, 29 November 2013 12:30:22 PM
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Oh, must be getting old, I forgot to mention a few hundred years supply of methane clathrate, just lying around on the sea bed, waiting for us to go vacuum it up.

Then we can start mining the stuff in the tundra.

So sorry fellers, stop kidding yourselves, there is so much fuel available to us, you'd almost think it was by design, if your mind worked that way.
Posted by Hasbeen, Friday, 29 November 2013 12:40:57 PM
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More wishful thinking from the peak oil lobby.

Pericles asks an excellent question about the so-called "unbiased observers". Certainly, the source is not the EIA, which the author acknowledges is “the authoritative body on US oil”. It forecasts that high levels of oil production will be sustained. Its latest outlook argues that:

“Estimates of ultimately recoverable resources of oil continue to increase as technologies unlock types of resources, such as light tight oil, that were not considered recoverable only a few years ago”

Its US unconventional oil production projections show a sharp increase in oil production to about 2.8 mb/d in 2017, followed by a gentle decline to level off at about 2 mbd by the 2030s. No sign of “a brief boom followed by a dwindling away of a resource” in those projections. And it has revised upwards its production estimates hugely in recent projections - its 2012 projections expected production to peak at less than 1.5 mb/d.

http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2013ER&subject=0-AEO2013ER&table=14-AEO2013ER&region=0-0&cases=full2012-d020112c,early2013-d102312a
Posted by Rhian, Friday, 29 November 2013 3:04:42 PM
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From my own reading I thought the author was being rather optimistic.
One comment that there are no pipelines near any Australian field
did not take notice that the pipeline companies in the US will not
build pipelines to the fields because they are constantly on the move
and the tight oil is moved by road & rail instead a much more expensive exercise.

There is a large shale oil, (tight oil to give it its correct name),
field in Australia near Coober Peady. From a map I saw the Great
Artision Basin is not near Cooby Peady, am I right ?
If so where will they get the water ? Linc Energy has the major rights
to the field with about 84% of the area.
I should mention that I recently sold my shares in Linc Energy.

The situation with US tight oil is quite critical, as the drilling
moves out from the "sweet spots" the EROEI, energy return on energy invested
falls significantly, this makes the eroei and the net energy produced
rather expensive. It is the mixing of increasingly expensive tight oil
with decreasing volumes of conventional that will drive up the price.
Actually some financial people suggest that the finance will run out
well before the oil runs out. Many companies have been burnt in the
tight oil business, Shell, & BHP amoung them.

Our current oil production is about 45% of our usage and falling at
about 3% a year. Because of this our oil refineries are being closed.
Shell's Silverwater refinery close a couple of years ago, Caltex at
Kurnell was expected to close this year or early next year and the
Brisbane refinery in one or two years. Has Geelong already closed ?
It is up for sale or closure.
Anyway soon we will import 100% of our petrol & diesel.

The governments, Labour & Liberal don't give a damn.
Posted by Bazz, Saturday, 30 November 2013 10:11:11 PM
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Hasbeen mentions the oil off the Queensland coast.
I do not know what the figures might be and I don't know what the depth
of the oil is either.
But do you really believe that it will be politically possible, after
the Gulf of Mexico BP disaster to get drilling done there ?
Perhaps when petrol reaches $15 to $20 a litre it might be possible
especially when everyone has put theirs cars on blocks because they
cannot afford the petrol, or they are starving because farmers cannot produce enough food with horse power.
Anyway, it is the insurance companies that decide these things and I
cannot see them agreeing.

No matter how big the field is supposed to be when you see quotes that
there are so many billions of barrels, just divide them by 85 million
and you will be surprised how few days they would supply the world.
The geologists say that there are no more Saudi Arabias out there
waiting to be discovered.

The simple matter is Australia is in a precarious position and we
should not be exporting our coal and natural gas.
If we start using it as replacement for petrol and diesel it won't
be long before the easy to get supplies are used and we will be into the expensive stuff.
Posted by Bazz, Saturday, 30 November 2013 10:29:07 PM
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Yep you hit it in one Bazz. I don't think it will be politically difficult to drill the barrier reef, I think it will probably become politically impossible not to, if the smelly stuff ever hits the fan.

People are only environmentalists when they are rich & comfortable. If the going gets tough, just you watch them trample those pesky greenies into the dirt. If we really need it, we will go get it.

The old cleshay about the stone age not ending because they ran out of stones will be true yet again. Transport will go electric before petroleum is exhausted, but fueled for life by a chip of nuclear substance installed on the production line. When it comes to nuclear we are currently in the equivalent of the automotive, man with a red flag walking in front, age.

Yes I would like to see us reserving more of our resources for our own future, but in this world, where Labor has trained most to demand their "entitlements" there is little chance of a government that tries to restrict the public use of the income from them, I can't see that happening.
Posted by Hasbeen, Sunday, 1 December 2013 12:03:01 AM
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