The Seventh Fold

Step 1: Declare that the possible is impossible

Step 2: Repeat as necessary

(and that’s my shortest blog ever)

Fellow Folders,

It looks like a new oil slick 100 miles long by 10 miles wide has developed in the Gulf. It is NOT thought to be related to the BP/Macondo/Deepwater Horizon oil spill that devastated the Gulf last year.

The new spill, as reported by The Examiner, is associated with the Matterhorn Seastar rig own by W&T Offshore, Inc. It is located 30 miles SE of the Mississippi delta in 2,789 feet of water.

More news will be rolling in. Keep an eye out.

As always, please remain mindful of the long term environmental, social, economic, and political impacts of consumption.

-DA

Today I awoke with an interesting gut feeling… that West Texas Intermediate – the benchmark crude stream traded on the New York Mercantile Exchange was going to break the $100 barrier. At 3:49 Eastern Standard Time, my premonition materialized.

This is a watershed moment for the psychology of the U.S. market, and portends bad things to come.

BTW, apologies to my loyal followers for my lack of posts over the last few weeks. I was lucky to find a great job, and my doctoral work needs to be completed expeditiously, so there won’t be any new posts for some time.

-DA

Fellow Folders,

In April I wrote a quick post on the (un)economics of the much-hyped shale gas ‘revolution’. That post was inspired by comments made by long-time oil industry analyst Henry Groppe which were published in the Globe and Mail. In that post, I leaned on the insights of petroleum geologist and industry consultant Art Berman, who had been arguing eloquently and persistently that shale gas reserves are greatly overstated. The point that Art argued in his 2009 presentation at the annual ASPO-USA conference (.pdf), is that the production rates for conventional gas fields and shale gas fields are significantly different. Shale gas produces high volumes for short periods while conventional fields produce at relatively low rates but do so over a long period of time. The problem with the shale gas reserve estimate methodology is that the models which accurately predict conventional production rates are being applied to unconventional plays in order to forecast future production and estimate total reserves. As a consequence, high initial flows are forecasted to decline at much slower rates than a growing body of empirical evidence suggests will be the case. This misapplication of models has resulted in a situation where the “volume of commercially recoverable [natural gas] has probably been greatly over-estimated.”

In October, I attended the annual ASPO-USA conference where I had the opportunity to talk with Art and take in another of his excellent presentations on the subject of the Marcellus shale play. For the more technically inclined, you can download the presentation from here (.pdf).

According to Art Berman the economics of shale gas production have not improved and the conclusions he drew from other shale plays apply to the Marcellus. He makes numerous forceful points: Read more…

Fellow Folders,

The NY Dept. of Environmental Protection has weighed in on the shale gas issue that I first wrote about back in April. After studying the hydrofracing process, the NYDEP has called for the prohibition of shale gas production anywhere in the watershed that supplies NYC. Specifically, the NYDEP-commissioned study deems the risks of water contamination and infrastructure damage to be unacceptably high. I applaud this decision. As I’ve said many times before, hydrofracing is inherently risky, and we can’t allow a BP-magnitude hydrofracing disaster to comprise an even more precious and increasingly scarce resource: fresh water.

The fact that we are turning to shale gas – and tacitly accepting the associated risks and costs – to fuel the ‘clean’ energy revolution is evidence that natural gas production has reached the seventh fold. We can continue to produce natural gas and even increase production rates for some amount of time, but doing so requires that we take ever-greater environmental risks by pumping toxin-laced water into the ground in order to release hydrocarbons from the best carbon sequestration device known to man: shale. And this hydrofracing process not only increases our collective exposure to severe environmental risks, the process itself is more costly than we know. The costs of production are increasing not only in dollar terms (ROI) but in energetic terms as well (See my post on EROEI and net energy).

An energy revolution is needed, but is this the direction we want to go? I think not. Turning to shale is a mistake. From an energy generation perspective we have options like solar, wind, tidal, and hydro. But these alternatives won’t fill the gap. We need to match our push for alternative sources with even stronger conservation efforts. Unlike shale gas production, voluntary conservation carries zero negative externalities. In fact, it is a net benefit from all perspectives.

Thanks for reading,

DA

Fellow Folders,

Enjoy this guest post by fellow Seattleite Joe Brewer founder and director of Cognitive Policy Works.

I highly recommend heading over to the Cognitive Policy Works website which is full of great perspective.

——

We need to build a new economy, one that promotes widespread prosperity while protecting us against ecological disaster.  The problem is that the current economy has been structured explicitly to extract wealth from the global commons and accumulate it in the coffers of an extremely powerful elite.  And it is standing in our way.

I say let the U.S. economy collapse.  It’s not serving us anyway.  Now before you go off and think I’m just a heretic who hates this country, please hear me out.

The current economy is designed to:

• Encourage widespread home ownership, which straps people to a lifetime of mortgage debt;
• Mandate that health care only be provided through employers, which enslaves people to meaningless jobs they don’t like;
• Grow perpetually, which means that natural resources must be depleted to keep the gears turning;
• Accumulate wealth in the hands of those who control capital, which drives a wedge between the haves and the have-nots;
• Drive the creation of sweat shops all over the world that enslave billions in a cycle of perpetual poverty;
• Allow corporations to co-opt our democracy, by granting them the rights of legal personhood and defining money as speech;
• Ultimately destroy the foundations of human well-being, thus spiraling deregulated markets out of control. Read more…

Fellow Folders,

I’ve said before that tar sands production in Athabasca (northern Canada) is a clear sign that oil production has reached the seventh fold. Metaphorically, all of the low-hanging fruit has been harvested and our oil addiction has forced oil producers onto ever more marginal sites of production (like deep and ultra-deep water production, heavy oil production, tar sands production, and arctic production).

Compared to the fields of old, new fields are: 1) more expensive to produce, 2) more water intensive to produce, 3) more energy intensive to produce, and 4) more risky to produce. Read more…

Fellow folders,

I just had to share this great 5 minute TED talk presentation given by Birke Baehr.

Enjoy and pass along…

Fellow Folders,

Assistant Editor Paul R. La Monica suggests that quantitative easing (QE2) is at the heart of the recent rise in the price of crude oil. (see: “Oil and Gas Prices are Climbing, Time to worry? – The Buzz“)

In theory this statement stands up. After all, cash is just like any other commodity in that as supply goes up, the exchange value goes down (provided that the velocity of circulation remains unchanged). The problem is that inflation has a much more insidious side as well. While inflation can be driven by loose monetary policy, inflation also occurs when the supply of a commodity, in this case oil, can’t keep pace with rising demand.

So, is the recent rise in the price of oil due to quantitative easing, or is it due to the fact that production can’t keep pace with demand? Read more…

Fellow folders,

Just came across this post on the UN Climate Change Conference on desmogblog.com.

Here’s an excerpt taken from here:

Canada is off to an impressive start at the United Nations Climate Change Conference in Cancun, if what you’re measuring is climate inaction and environmental embarrassment.

Today, at the first set of the Fossil of the Dayawards, Canada took home not one, or two, but all three of the awards.  The dubious ‘honour’ is voted on by an international coalition of than 400 leading international environmental organizations, including Greenpeace, who vote on the countries that performed the worst during the past day’s negotiations.  Turns out if you are really committed to climate inaction, fail to have any plan to meet already weak targets for reducing greenhouse gas emissions, defeat a climate change bill that was already passed in your House of Commons by holding a snap vote by an unelected Senate after no debate, and are complicit in trying to weaken climate policy outside of your own national borders, you can win all three of the humiliating prizes.

 

Read more…