I heard that Marcellus Shale is a vast
source of natural gas. I decided to check out this rumor.
The first clue of its vastness was the recent KKR investment of $350 M
. If KKR thinks it's good, it must be good.
Of course the article contains the line I would expect ....
"...a rock formation that ... is said to have vast amounts of natural gas..."
... It's even phrased as a rumor("is said to have...") and it contains a good example of something I wrote in 2000:
"Acapulco effect": To this day, the impact of a large discovery on the private lives of those involved is such a compelling story for the media that the anecdote prevails over meaningful statistics. (Careful accounting is never a glamorous story.) A discovery of 100 million barrels may buy someone a ticket to a life of leisure in Acapulco but it covers less than 2 days of global consumption.
Hot on the trail, I continued digging into the vastness of Marcellus. But first I discovered some of the nasties:
NEW YORK, NY July 22, 2008 —The Marcellus Shale is what industry people call an unconventional play. It’s loaded with natural gas, from Eastern Ohio to the Catskill Mountains. But the gas is very hard to extract. It’s packed tight 7,000 feet deep.
... But WNYC has learned... that New York state regulators have been actively promoting the safety of a practice that has caused environmental damage elsewhere. And they may not be ready to handle the regulatory complexities. ...
...Drill rigs have brought a lot of wealth, but at the same time they’ve dredged up a host of environmental problems – contaminating water supplies and drying up aquifers.
The culprit is a practice called hydraulic fracturing. It’s never been done much in New York. But it’s the only way to get gas out of the Marcellus Shale. Basically the driller blasts the bottom of the well shaft with water, sand, and chemicals, under very high pressure in order to free up the gas. ...
Heading on to the subject of vastness, I found this study by Navigant Consulting ...
North American Natural Gas Supply Assessment
Prepared for: American Clean Skies Foundation, July 4, 2008.
which lists Marcellus quantity ...
U.S. Gas Shales » Major Play Highlight » Marcellus
NCI’s estimate of mean technically recoverable gas is 34.2 Tcf.
Right now the USA is running at 23 TCF/year (quite a bit of which comes from Canada, mostly Alberta).
Let's see: 34.2/23 = 1.5 years supply at today's rate.
Sounds more like an insurance policy against Canadian "independence."
If I go one step further and extrapolate that some of Marcellus gas will be a substitute for oil, I must consider the energy content of this vast supply in comparison to oil.
USA annual gas consumption = 23 Quads
USA annual oil consumption (2008) = 41 Quads
Total Marcellus = 34 Quads
Hmm... I don't think that will take us very far.
You can find estimates of "gas in place" for Marcellus that will far exceed the 34.2 TCF, but I don't find such explanations very comforting. I'm reminded that, as Buzz Ivanhoe told me once, people talk about "resources" when it's someone else's money and "reserves" when it's their own money.