Snake Oil: Fracking’s False Promise

When a dark and furious storm is racing in, and the tornado sirens are howling, smart folks stop staring at their cell phones, and head for shelter.  But what if the cell phones were streaming messages that the storm warnings were a hoax, and there was nothing to fear?  Twenty years ago, Peak Oil was a ridiculous absurdity conjured up by notorious idiots on the lunatic fringe.  Ten years ago, it had become an acceptable topic for polite conversation.  Today, an extremely effective disinformation campaign has inspired many to toss their energy concerns out the window.

This made Richard Heinberg hopping mad, so he wrote Snake Oil to set the record straight.  He’s been blasting the warning sirens for more than ten years, via a series of books.  Nobody sane disputes that fossil energy is finite and non-renewable.  Nobody sane disputes that our current path has an expiration date.  The argument is over when that date arrives.  For most folks, something that may become a problem 50 to 100 years from now is simply not worth thinking about.  Heinberg is getting strong whiffs of trouble right now.

The production of conventional oil and gas is close to peak, but new technology has enabled production of unconventional oil and gas.  We are now extracting oil and gas from shale.  We’re cooking oil out of tar sands bitumen.  We are drilling in deep waters offshore.  This energy is far more expensive to produce.

Today, for each barrel of new oil we discover, we consume four or five barrels pumped from elderly fields.  In 1930, oil was as cheap as four cents per barrel.  In 2002, a barrel of oil cost $25, and in 2012 it was $110 (with a $150 spike in 2008).  Deep water drilling is economically possible when the price is $90 or more.  Existing tar sands projects can continue production at $60, but new tar sands projects need at least $80.  Almost all drilling requires $70.  The era of cheap energy is over.

A hundred years ago, drilling in ideal locations led to mighty gushers of black gold.  It only took one unit of energy to extract 100 units of energy.  So, the energy returned on energy invested (EROEI) was 100:1.  By 1990, the EROEI of U.S. oil production had fallen to 40:1.  In 2013, it was about 10:1.  Tar sands, oil shale, and biofuels are all less than 5:1, and at this level, the economy gets dizzy, wobbly, and sweaty.

Every gold rush produces a few winners and legions of losers.  In order to drum up the necessary investment funding, it is customary to make highly exaggerated estimates of the immense wealth just waiting to be reeled in by wise guys (like you).  I recall industry hucksters once proclaimed that the Caspian Sea province contained up to 400 billion barrels of oil.  By 2001, after ten years of intensive work on prime sites, far less than 20 billion barrels were produced, according to petroleum geologist Colin Campbell.

Everyone agrees that the production of unconventional oil and gas has delayed our blind date with disaster a bit.  Is this delay years, decades, or centuries?  Heinberg introduces us to petroleum geologists who believe that U.S. gas and oil production will begin its decline by 2020.  “Production from shale gas wells typically declines 80 to 95 percent in the first 36 months of operation.  Given steep shale gas well decline rates and low recovery efficiency, the United States may actually have fewer than 10 years of shale gas supply at the current rate of consumption.”  In the North Dakota oil fields, 1,400 new wells have to be drilled every year, just to maintain current production, according to a story in Financial Times (27 Aug 2014).

Today, everyone has spent their entire lives in an era of rising energy production and economic growth, just like our parents did.  But economic growth is getting dodgy.  It’s being kept on life support by skyrocketing levels of debt.  As energy production approaches its decline phase, prices are sure to rise.  There will come a day when economic growth goes extinct.  Without economic growth, our way of life will eventually become a hilarious story told by the campfires of our descendants.

Should we be making serious plans for the coming challenges?  “Heck no,” says the energy industry.  Our treasure of unconventional energy is the equivalent of two Saudi Arabias!  We now have a 100-year supply of gas, according Daniel Yergin.  T. Boone Pickens says 160 years.  Aubrey McClendon says 200 years.  Even 100 years is daffy.  How was it calculated?  “Simply by taking the highest imaginable resource estimate for each play, then taking the very best imaginable recovery rate, then adding up the numbers.”  This results in projections that have no relationship to reality.

The Bakken and Eagle Ford deposits produce more than 80 percent of U.S. tight oil.  David Hughes, author of Drill, Baby, Drill, estimated that the combined production of both deposits will end up being the equivalent of ten months of U.S. consumption.  The U.S. Geological Service (USGS) estimated that Bakken contains 3.65 billion barrels of recoverable oil — about six weeks of current global consumption.  The U.S. Energy Information Agency (EIA) predicted that Bakken oil will peak in 2017.

Tim Morgan is a consultant who does a lot of work for investment bankers.  In his eye-opening 2013 report, Perfect Storm, he concluded, “the economy as we have known it for more than two centuries, will cease to be viable at some point within the next ten or so years unless, of course, some way is found to reverse the trend.”

Heinberg recommends that we shift to renewable energy with utmost speed.  Hmmm.  Solar panels and wind turbines have a limited lifespan.  Using them, repairing them, and replacing them requires the existence of an extremely unsustainable industrial civilization.  This civilization is unlikely to last long as it gets strangled by energy shortages and hammered by social unrest.  We’ll be forced to make a painful transition to muscle-powered agriculture, which cannot feed seven billion.  Somewhere along the line, televisions, laptops, and refrigerators will become useless ballast.  Even if scientists invented a way to extract affordable energy for another 200 years, it would be a foolish thing to do.  We’ve burned far too much carbon already.

I wonder if it might be more useful to voyage into the realm of unconventional thinking, on a sacred mission to explore a lot of big questions.  Over and over, we are told that cool people work really hard, become really prosperous, and buy lots of really cool stuff.  To me, that sounds like a tragic waste of the precious gift of life.  It’s causing lots of irreparable damage for no good reason.  We weren’t born to live like this.  We were born for a life of freedom, to enjoy a normal and natural standard of living.  Imagine that.

The book is short, full of helpful charts and graphs, well documented, and delightfully easy to read and understand.  The book’s Introduction can be read HERE.

Heinberg, Richard, Snake Oil — Fracking’s False Promise, Post Carbon Institute, Santa Rosa, California, 2013.