Tag Archives: Chesapeake Energy

We Need More People With Cutting-Edge Energy Knowledge!

Richard Ha writes:

Hawai‘i should be sending more people to the Association for the Study of Peak Oil (ASPO) conference. The folks at ASPO are on the leading edge of energy data interpretation. We need more people with cutting -edge energy knowledge.

aspo logo

For example, for several years now ASPO folks have been utilizing Energy Return on Investment (EROI) as a tool to evaluate energy
options.

If HECO had understood the concept and its parameters, it
may not have committed to Aina Koa Pono’s biofuel project so wholeheartedly.

Biofuels, in general, have very low EROI ratios (net energy). It takes a ratioof 3 to 1 just to maintain society’s petroleum infrastructure. Biofuels, except for cane ethanol, are lower than 2 to 1.

If we can’t make money in Hawai‘i now with cane ethanol, what makes us think we can do cellulosic biofuels, which are more costly and more difficult?

Despite spending hundreds of millions of taxpayer dollars, there are zero commercial competitive cellulosic biofuels in production
today. Zero. We wish AKP well, but it should use its own money, not that of the rate payers.

The shale oil and shale gas story is probably only be an interim solution. Aubrey McClendon, the fracking cheerleader of Chesapeake Energy, has been removed as its Chairman and will soon resign as CEO. The ASPO folks have known for several years that shale oil and gas is a bunch of financial smoke and mirrors.

When HECO responded to Consumer Advocate questions about how it justified its pricing, the utility used the Energy Information Agency (EIA) 2012 AEO report’s high-case scenario for its long-term forecast.

But the EIA’s short-term forecast, just a couple of weeks ago, estimates the 2014 price of oil at $101/barrel – while HECO estimates that oil will cost $180/barrel in 2015. The rate payer wouldn’t care about this if they didn’t have to subsidize the biofuels at $200/barrel.

Putting a secret $200/barrel biofuel surcharge on rate payers, and then telling them, “Trust us, this won’t hurt much” – while raising the pay of top executives – stands in sharp contrast to the CEO of Japan Airlines, who insists on being treated exactly like his workers. Watch that short (2:20) video for a very different approach than we are used to. Really interesting.

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.