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Malthusians Blow It Again, As Barnett Shale Grows

Shale gas - Nick Grealy ReportsNick Grealy
Administrator of NaturalGas2.0NoHotAir and ShaleGasInfo Blogs

 

Members of the “we’re running out” crowd of Malthusians are always predicting doom but natural gas keeps advancing and the Barnett Shale, for example, keeps growing.

Way back in 2008, before most people had heard of the Marcellus shale, and before anyone except geologists had heard of the Eagle Ford and the Utica shales, the premier US shale was the Barnett Shale, just about under Fort Worth Texas.

Proven by George Mitchell and others (shout out to Bill Marble!) around the turn of the 21st century,  the Barnett produced from vertical wells often on single pads until Devon took over Mitchell Energy in 2002 and made George Mitchell rich to the point of $3.1 billion at time when even the WSJ didn’t even mention shale gas. Devon introduced horizontal wells and multi well pads making the Barnett even more productive. This was also back in the days when frac fluids were proprietary and thus “secret”, and when although wells were very productive by standards of the day, they also declined rapidly.

What didn’t decline was the flip side of the Barnett success.

Barnett Shale

Processes used eight to ten years ago in the Barnett look like the dark ages today, but expert studies of the time, such as the infamous Florence Geny report from OIES in 2010, reflected the fervent wish to dismiss shale gas as some teeny little Texas thing which would never amount to much, especially in Europe.

This was seized upon by different actors for different reasons. Big oil, Big gas, Big coal, Gazprom and Greenpeace were united in feeling threatened by abundant, ubiquitous and thus cheap, natural gas. Back in the days of $100 plus oil, the conventional wisdom, egged on in the Barnett by the City of London’s favourite doomster, Art Berman, had built an entire wardrobe full of new clothes that the Emperors hadn’t yet paid off.

What happened next is that the Marcellus fooled everyone, including me, by showing exponential growth in an industry where all the analysts were linear. Shale is a technology story more than anything else, and history will show that for the first time, the sleepiest fuel, natural gas, in a very sleepy energy industry which had only about three new technologies since the Middle Ages blew all previous assumptions away at the speed of an iPhone.The iPhone as it was called back then didn’t even exist until 2007 for example.  Shale phobes, and the declining number of conventional experts who look at charts of the past to predict the future, would do well to remember that.

Gas_Production_from Barnett Shale 2000-2013

Over the past ten years, Blockbuster video, DVD’s, Nokia phones and even desktop computers have been put on the junk heap of history. But thanks to the miracle of anti-social media like Facebook (2004) and Twitter (2006), anyone can be an expert and Berman had a huge fan base among Greens who liked using one geologist’s opinion as being representative of an entire industry.

The role of the Barnett was useful to UK Greens when talking about the UK’s Bowland. Everyone who should have known better insisted on thinking the Barnett would be the model for the Bowland in number of wells drilled and productivity declines. Thinking otherwise was simply too horrible a prospect to face.

Meanwhile the Marcellus went from strength to strength and that play was only mentioned in the UK in the context of the Gasland Movie. Although Pennsylvania started producing gas at volumes that could only be described as humongous, the lack of catastrophe proved to the conventional industry worldwide that shale gas’s genie was not going back in the bottle, even if antis simply ignored any events that were counter narrative.

News came last week of a long overdue upgrade to the Barnett resource assessment. We should well remember this every time we hear, as we still do, that the UK’s 1300 TCF Bowland, won’t amount to much and won’t happen for ten years or so.

Devon Energy rig at work in Barnett Shale region

Devon Energy rig at work in Barnett Shale region

The Barnett is not only thriving, it’s growing and the all important recovery factor is growing along with it. Back in 2003, the US Geological Survey gave an assessment of resources which history has shown as blatantly false:

The U.S. Geological Survey (USGS) now estimates that the Barnett Shale – where the “fracking” boom was born – holds almost twice as much recoverable natural gas than their last estimate 12 years ago.

In 2003, when the USGS last issued its assessment of how much undiscovered natural gas and natural gas liquids are beneath the Barnett Shale, they relied on estimates of gas recovered through vertical drilling. Since then, the industry has switched primarily to horizontal drilling paired with hydraulic fracturing (commonly called “fracking”) to recover gas from the Barnett Shale geologic formation.

The USGS in 2003 estimated the Barnett Shale held 26.2 trillion cubic feet of undiscovered natural gas and 1.0 billion barrels of undiscovered natural gas liquids.

Today the USGS estimates the Barnett shale holds 53 trillion cubic feet of shale natural gas, 175 million barrels of natural gas liquid and 172 million barrels of shale oil. The agency did not assess potential oil resources back in 2003.

Since 2003, more than 16,000 horizontal wells have been drilled into the formation. Those wells have helped produce more than 15 trillion cubic feet of natural gas and 59 million barrels of oil in the Barnett.

If one can make a parallel between the Bowland and the Barnett, we should see it produce not the one or two percent UK doubters have predicted, but over 50 percent or 650 TCF. The UK only uses 2.3 TCF of gas.

Of course the analogy for the Bowland is closer to the Marcellus, but the notion that the Bowland and others yet to come in the UK,will produce hundreds of years worth of gas isn’t a prediction any of us will be likely to see.On the other hand, any idea the UK could be energy independent thanks to natural gas is not so far fetched either. The UK would have an actual surplus, one that may have a fleeting export market before the frackophobes of France, Netherlands and Germany get blindsided by reality and access their own.

2016 and 2017 will be different and UK shale will either succeed or we get condemned to using US LNG. 2015 was a horrible year and the only way is up.The Barnett, showed the way first.

Lets not forget how that turned out.

Editor’s Note: This story is yet another demonstration of how Malthusian doomsday prophecy never quite works out because it invariably fails to consider the impacts of prices and technology. Thomas Malthus ultimately rejected the hypothesis name after him, one that supposed we’d soon run out of every resource due to the math of population growth, but his theory is still the guiding force behind modern opponents of almost everything.

They neglect, for example, to consider shortages produce higher prices. Those higher prices make people use less of things and substitute other stuff, as well as invest in developing more. Both serve to ensure we never run out of anything. Oil and gas reserves, in fact, always grow with higher prices because it’s then possible to economically justify spending more to extract them. It’s a fundamental principle seemingly incapable of being grasped by some.

Barnett Shale

Worse, despite a record of repeated failure, the Mathusuians among us today continue to assume technology is static. They forever project on the basis of past performance, which almost never works, as Nick aptly demonstrates above. That’s because the real resource isn’t the oil or gas but, rather, human ingenuity and the power of the increased division of labor, which is why it’s easier to become wealthy where there are more people to share the work and specialization is possible.

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