Category Archives: Natural gas

As Earth faces climate catastrophe, US set to open nearly 200 power plants

USA TODAY, by Elizabeth Weise, Sept. 9, 2019

Industry continues to invest heavily in carbon-polluting natural gas – government regulators favor gas

A new climate report, Volume II of the National Climate Assessment, says that the effects of global warming are intensifying and getting costlier. USA TODAY

Powerful hurricanes. Record-breaking heatwaves. Droughts that bring ruin to farmers. Raging forest fires. The mass die-off of the world’s coral reefs. Food scarcity.

To avoid a climate change apocalypse, carbon dioxide emissions need to fall by as much as 45% from 2010 levels by 2030,  according to the U.N. Intergovernmental Panel on Climate Change.

Instead, utilities and energy companies are continuing to invest heavily in carbon-polluting natural gas. An exclusive analysis by USA TODAY finds that across the United States there are as many as 177 natural gas power plants currently planned, under construction or announced. There are close to 2,000 now in service.

All that natural gas is “a ticking time bomb for our planet,” says Michael Brune, president of the Sierra Club. “If we are to prevent runaway climate change, these new plants can’t be built.”

It also doesn’t make financial sense, according to an analysis by the Rocky Mountain Institute, a Colorado-based think tank that focuses on energy and resource efficiency. By the time most of these power plants are slated to open their doors, the electricity they’ll provide will cost more to produce than clean energy alternatives.

By 2023, the U.S. Energy Information Administration estimates the average cost of producing a megawatt hour of electricity will be $40.20 for a large-scale natural gas plants. Solar installations will be $2.60 cheaper and wind turbines will be $3.60 cheaper.

Catastrophic effects ahead unless we make changes

The world needs to reduce its carbon emissions rapidly – by 50% within the next decade – or face the prospect of a global temperature rise of more than 2.7 degrees within decades, said Michael Mann, a professor of atmospheric sciences at Pennsylvania State University.

That’s enough warming to kill off the coral reefs, melt large parts of the ice sheets, inundate coastal cities and to yield what Mann calls “nearly perpetual extreme weather events.”

“By any definition, that would be catastrophic,” he said.

We’re seeing the start of it now. There’s strong data to suggest that global warming is already causing changes in the jet stream and other weather systems. That can cause hurricanes to slow down and wreak devastation in single areas for longer, said Marshall Shepherd, director of the atmospheric sciences program at the University of Georgia.

“With Dorian, we saw it stall over the Bahamas. We saw that with Harvey in Houston and Florence in the Carolinas,” he said.

More gas = more carbon dioxide

Adding dozens of new natural gas plants in the coming decades is going in the exact opposite direction of what we need, clean energy advocates say.

“If the current pipeline of gas plants were to get built, it would make decarbonizing the power sector by 2050 nearly impossible,” said Joe Daniel, a senior energy analyst with the Union of Concerned Scientists, a nonprofit based in Cambridge, Massachusetts.

An analysis by the Rocky Mountain Institute published Monday looked at 88 gas-fired power plants scheduled to begin operation by 2025. They would emit 100 million tons of carbon dioxide a year – equivalent to 5% of current annual emissions from the U.S. power sector.

The institute calculated the cost of producing a megawatt-hour of electricity of a clean energy portfolio in each state that would provide the same level of power reliability as a gas plant. It determined that building clean energy alternatives would cost less than 90% of the proposed 88 plants.

It would also save customers over $29 billion in their utility bills, said Mark Dyson, an electricity markets analyst who co-authored the Rocky Mountain Institute paper.

“If you look at how things pencil out, we’re at a tipping point,” he said. “Here’s evidence that the switch from gas to clean energy makes economic sense and is compatible with utility companies’ need for reliability.”

More power plants coming to a state near you

USA TODAY compiled its own list of 177 planned and proposed natural gas plants through August, using data from S&P Global Market Intelligence, which tracks power plants that have been officially announced, and the Sierra Club, which tracks proposed plants.

Of those, 152 have a scheduled opening date of between 2019 and 2033, though only 130 have specific locations chosen. An additional 25 are part of companies’ long-term planning processes and don’t have estimated opening dates yet.

The plants are a mix of large-scale installations meant to provide lots of electricity much of the day and smaller plants used for short periods when demand for energy is particularly high.

Texas has the most proposed plants, with 26. Next is Pennsylvania with 24, North Carolina with 12, Florida with 10, California with nine and Montana with eight.

Not all will be built. Power companies are required to estimate future needs and plan as much as 15 years out, and this list includes plants which the companies may eventually decide they don’t need.

But the numbers show that greenhouse gas-producing natural gas is still on the table for many power producers, despite warnings that the energy sector needs to be quickly moving away from carbon-producing power sources.

Another concern raised by clean energy advocates is that once built, natural gas plants typically have a 30-year lifespan. Many of these plants will end up as “stranded assets,” unused because they’re too expensive to run, while consumers will still be on the hook for the cost of the construction, said Daniel.

It’s also true that power companies are building out solar and wind generation. Over the next two years, clean energy is expected to be the fastest-growing source of U.S. electricity generation, according to the U.S. Energy Information Administration.

Even so, that will only bring the share of wind and solar in the United States electricity market to slightly under 11%.

By 2020, EIA expects natural gas will make up about 36% of U.S. electricity generation. In comparison, coal is at 23%, nuclear at 20% and hydroelectric at 7%.

Why are we still building natural gas plants?

If natural gas plants contribute to global warming and most of them are going to be more expensive, why are so many still on the drawing board? The reasons are varied.

Energy companies say gas is more reliable than renewables and cheaper and less carbon polluting than the coal it often replaces.

But renewable energy advocates say the incentives for utilities and energy producers aren’t always in line with those of consumers.

For regulated utilities, one of the easiest ways to make money is to invest capital in large building projects, such as natural gas plants. Regulators allow utilities to set rates so that they get a return on invested capital of about 10%, Dyson said. That gives energy companies an incentive to build as much as possible.

In contrast, utilities that procure wind and solar power via commonly available purchase contracts earn no returns for these projects.

“There’s a perverse incentive for some utilities to build as big as they can, rather than to build as smart as they can,” said Ben Inskeep, an analyst with EQ Research, a clean energy policy consulting firm in Cary, North Carolina.

Companies also focus on reliability. Duke Energy, a power company based in Charlotte, North Carolina, has more than 7 million customers. As it transitions away from coal, it has embraced natural gas, announcing last week that it was considering as many as five new gas plants.

Today 5% of Duke Energy Carolinas’ electricity comes from solar, a percentage it plans to increase to between 8% and 13% by 2034, according to its most recent filing with state regulators. The state has almost no wind energy because of laws restricting the placement of wind turbines.

“We know our customers and communities want cleaner energy, and we’re doing our part to deliver that,” said spokeswoman Erin Culbert.

But she emphasized that Duke doesn’t believe solar and wind can be cost-effective and reliable enough to meet all its customers’ energy needs.

“Continued use of natural gas is key to our ability to speed up coal retirements, and its flexibility helps complement and balance the growing renewables on our system,” she said.

Government regulators favor gas

Another hurdle for renewable energy, some supporters say, is a combination of state-level rate-setting requirements and regional market rules that have led to a compensation structure for companies that favors coal and natural gas.

Who sets those rules depends on where the plant is.

In states where retail utilities own their own power generation facilities, the rates are approved by public utility commissions. Commissioners are typically appointed by state governors.

The process is less clear in the Midwest, Northeast, Mid-Atlantic, California, and Texas, where utilities buy and sell their power through organized markets run by regional transmission organizations.

These are run by boards that by law must be independent. They are typically composed of people from the business and energy world and are chosen by complex systems. In some cases they are voted on by existing board members.

The boards set the rules, which are then approved by the Federal Energy Regulatory Commission.

Ultimately these commissions and boards are supposed to decide what’s cost-effective for both the companies and ratepayers, said Scott Hempling, an adviser to regulators, law professor at Georgetown University in Washington, D.C., and author of two books on public utility law and regulation.

“A utility’s preference for profit is neither surprising nor wrong. But it’s not the utility’s job to balance its self-interest against the customers’ interest. It’s the job of regulators to constrain the private profit impulse with public interest principles,” he said.

It’s not news that there is bias towards profit, which can disadvantage customers. “The question is why it’s allowed to persist,” he said.

There are signs that what clean energy advocates have called an automatic rubber stamp for natural gas is beginning to change.

In April, the Indiana Utility Regulatory Commission denied a permit for a southern Indiana utility named Vectren South to build a $780 million natural gas plant. The regulators weren’t convinced the utility had chosen the best option to ensure its customers weren’t in danger of being “saddled with an uneconomic investment” in the future, it said.

In Michigan last year, local utility DTE won a bruising battle to build a 1,100 megawatt natural gas plant that will open in 2022 and cost nearly $1 billion. Critics complained the projections DTE used to make its case to regulators made wind and solar look less attractive.

The three members of the Michigan Public Service Commission, who are appointed by the governor, ended up approving the project. But the board’s 136-page opinion was not complimentary toward the utility, noting it was “concerned” about the constraints DTE built into the models it used to estimate whether renewable energy would be a viable alternative.

Some utilities choose clean energy

Not every utility company is ignoring warnings about the planet’s health, or customers’ pocketbooks.

Michigan utility Consumers Energy decided last year not to build new natural gas plants and instead focus on a combination of energy efficiency, renewable energy and batteries, which it says will be cheaper for customers.

The company, which has more than 4 million customers, plans to use 90% clean energy by 2040, said Brandon Hofmeister, senior vice president for governmental, regulatory and public affairs.

When the utility was putting together its existing energy plan, it took a new approach, balancing the cost to consumers and to the Earth.

“Honestly, there was some pushback. There were several pretty tense meetings,” Hofmeister said. “You’d hear someone ask in a meeting, ‘Is that really the right thing to do for Michigan and the planet?’”

A similar story played out in Indiana, one of the nation’s top 10 coal-producing states. A few years ago, Northern Indiana Public Service Company, based in Merrillville, Indiana, was getting ready to retire its old, expensive coal-fired power plants. An analysis in 2016 said they should be replaced with natural gas plants.

To be on the safe side, Joe Hamrock, president and CEO, checked again last year.

“We knew this is moving pretty fast and we needed to take a new look. A 30-year bet on a gas plant is a long time,” he said.

When his team sat down to look at the 90 project proposals that had come in, the answer came as a shock – natural gas wasn’t even in the picture anymore.

“The surprise was how dramatically the renewables and storage proposals beat natural gas,” Hamrock said. “I couldn’t have predicted this five years ago.”

The company is now set to retire all its coal-fired power plants, which produce 65% of its electricity today, and replace them all with renewables. In nine years, it expects to get 65% of its electricity from renewables and 25% from natural gas.

What will U.S. energy look like in the future?

Electricity generators counter that it’s impossible to get entirely away from natural gas because solar and wind are intermittent. When it comes time to turn on the lights, consumers can’t wait for the sun to come up or the wind to blow.

“We believe that natural gas has a role in a clean future because we believe it will be needed to balance out renewables,” said Emily Fisher, general counsel for the Edison Electric Institute in Washington, D.C. EEI is the trade association that represents investor-owned electric utilities in the United States.

“But we’ve also got to make sure the power supply stays affordable and reliable,” she said.

Electricity generators have a point, say energy analysts who aren’t necessarily in the pro-renewable camp. But those same analysts suggest a lot less natural gas is needed than we’re using today.

“The cheapest way to reduce carbon is to replace coal with a combination of renewables and as little natural gas as you can get by with to keep the lights on,” said Arne Olson, a senior partner with Energy and Environmental Economics, a San Francisco-based energy consulting firm that works with multiple states to craft energy plans.

That makes getting to the goals of the Paris Agreement on climate change – cutting greenhouse gas emissions at least 26% below 2005 levels by 2025 – not quite so daunting. The United States initially pledged to join the agreement but President Donald Trumpsaid in 2017 that the nation would not uphold the deal.

In fact, the electric industry is already undergoing a major restructuring. Largely because of the rapid rise of cheap natural gas, coal went from producing almost 45% of U.S. electricity in 2010 to a predicted 23% next year, according to EIA data.

The energy sector has shown it can move quickly when the prices are right, said Dyson of the Rocky Mountain Institute. And, he said, it’s imperative that a similar shift happen now with natural gas – and fast.

“Constructing these gas plants is incompatible with a low carbon future,” he said.

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    ‘Are You Serious?’ John Kerry Interrupts GOP Climate Denial Logic in Disbelief

    Repost from DESMOG

    By Justin Mikulka • Wednesday, April 10, 2019 – 13:27

    John Kerry

    Congressional discussions over climate change have reached such a low point that during this week’s House hearing on the national security risks of climate change, former Secretary of State John Kerry, who was testifying, broke down and just asked his Republican questioner, “Are you serious?”

    Kerry’s incredulous question was in response to Republican Rep. Thomas Massie, the GOP star of the House Committee on Oversight and Reform hearing, which also featured testimony from former Secretary of Defense Chuck Hagel. Kerry’s and Hagel’s testimonies were followed by several hours of, at times, excrutiating questioning from committee members.

    Republicans made a big show of the fact that Massie has an engineering degree from the Massachusetts Institute of Technology. The conflict with Kerry arose when Massie tried to undermine Kerry’s testimony on climate change because he has a political science degree from Yale.

    Massie said, “I think it’s somewhat appropriate that somebody with a pseudoscience degree is here pushing pseudoscience in front of our committee today.”

    If science degrees are important to Massie, he must have somehow missed the thousands of climate scientists around the world who have studiedpublishedtweetedmarched, and repeated that climate change is real, caused by humans, and having major impacts now.

    During this hearing, Massie wasn’t alone in displaying bizarre logic to attack science and the reality of climate change. Rep. Paul Gosar (R-AZ) apparently thought holding up a fossil disproved that humans are causing climate change.

    Climate change has been changing all through the life of this planet. I’ve got a fossil right here from Western Wyoming — a desert — but that once was under an ocean,” he said.

    That was the sum total of his argument.

    Not to be outdone, Rep. Greg Steube (R-FL) took issue with Kerry’s statement about global warming making existing weather events more extreme by noting: “I remember growing up and having hurricanes in Florida.”

    It all led to Secretary Kerry at one point expressing his frustration to committee chairman Elijah Cummings (D-MD), saying, “Mr. Chairman, this is just not a serious conversation.”

    And it was not when Republicans were part of it. However, when Hagel and Kerry both spoke, they made clear the point that climate change is a real national security threat and requires action. Meanwhile, the Republicans on the committee indicated they intend to do nothing but continue a long history of delay and denial on climate change.

    Hagel and Kerry Agree: Climate Change Threatens National Security

    Hagel and Kerry spent their time delivering a sober analysis of the risks climate change poses to national security — a position which they repeatedly stressed during the hearing. “Climate change is already affecting national security,” said Kerry.

    Kerry also noted in his opening statement that this has been the position of every federal administration for the last 28 years. He pointed to the first Bush administration, which said in 1992, that climate change was “already contributing to political conflict.”

    We don’t need to wait for more sophisticated climate models to project the security consequences of climate change,” Hagel said in his opening statement. “The impacts of climate change are clearly evident today.”

    Both Hagel and Kerry spoke extensively about the current and future threats posed by a changing climate and had plenty of examples to make the case.

    Among the many threats, Hagel discussed rising sea levels, extreme weather, and the lack of military readiness. Kerry raised the issues of climate migration, global pandemics, water scarcity, and extreme weather’s current contribution to radicalism, which he said would continue to create instability that would be “manna from heaven for extremists.”

    Perhaps the best single example of how climate change is impacting security in the U.S. can be found at Norfolk Naval Base in Virginia. This base — the largest American military base — already is dealing with flooding and sea level rise. At one point in the hearing, former defense secretary Hagel mentioned the need to potentially relocate the base in the future due to sea level rise.

    And yet when Republicans in the hearing had a chance to respond to this rather alarming fact, they spent that time mostly ridiculing the idea that any of this should even be discussed.

    Gas Is a ‘Bridge Fuel,’ Secretary Kerry?

    John Kerry was a strong advocate for dealing with climate change throughout the hearing and acknowledged the significant strides freshman Rep. Alexandria Ocasio-Cortez, who sits on the House Committee on Oversight and Reform, has already taken to advance the issue in her short congressional tenure.

    However, Kerry also proceeded to repeatedly champion a supposed climate change solution espoused by the fossil fuel industry and did so using industry talking points, referring to natural gas as a “bridge fuel” to climate-friendly energy sources.

    While saying that natural gas would be “a component of our energy mix for some time to come,” Kerry justified this position with a flawed argument for gas.

    Gas gives us a 50 percent gain over the other fossil fuels in the reduction of emissions, so it’s a step forward,” he said.

    Kerry’s take, which compares how “clean” natural gas is compared to other fossil fuels, is true when simply comparing carbon dioxide emissions from coal-fired power to the newest gas power plants. However, that limited comparison excludes the ways natural gas production, and its potent methane contributions, are adding to climate change.

    The concept of natural gas as a “bridge fuel” to renewable sources has been debunked repeatedly. And as methane flaring, leaking, and venting in the fracked oil and gas supply chain continue to increase rapidly, the climate impacts of fracked gas can be similar or worse than other fossil fuels.

    Kerry and Hagel adeptly explained the serious national security threats posed by climate change. However, calling natural gas part of a long-term solution to preventing catastrophic climate change isn’t a serious conversation either.

    Main image: Former Secretary of State John Kerry addressing congress. Credit: Screenshot from Congressional testimony. 

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      America’s 2018 carbon emissions – the biggest increase in eight years

      Repost from The New York Times

      U.S. Carbon Emissions Surged in 2018 Even as Coal Plants Closed

      By Brad Plumer, Jan. 8, 2019
      Passenger planes at the Phoenix airport in July. Greenhouse gas emissions from airplanes and trucking increased sharply in 2018. Credit: Angus Mordant/Bloomberg

      WASHINGTON — America’s carbon dioxide emissions rose by 3.4 percent in 2018, the biggest increase in eight years, according to a preliminary estimate published Tuesday.

      Strikingly, the sharp uptick in emissions occurred even as a near-record number of coal plants around the United States retired last year, illustrating how difficult it could be for the country to make further progress on climate change in the years to come, particularly as the Trump administration pushes to roll back federal regulations that limit greenhouse gas emissions.

      The estimate, by the research firm Rhodium Group, pointed to a stark reversal. Fossil fuel emissions in the United States have fallen significantly since 2005 and declined each of the previous three years, in part because of a boom in cheap natural gas and renewable energy, which have been rapidly displacing dirtier coal-fired power.

      Yet even a steep drop in coal use last year wasn’t enough to offset rising emissions in other parts of the economy. Some of that increase was weather-related: A relatively cold winter led to a spike in the use of oil and gas for heating in areas like New England.

      But, just as important, as the United States economy grew at a strong pace last year, emissions from factories, planes and trucks soared. And there are few policies in place to clean those sectors up.

      “The big takeaway for me is that we haven’t yet successfully decoupled U.S. emissions growth from economic growth,” said Trevor Houser, a climate and energy analyst at the Rhodium Group.

      As United States manufacturing boomed, for instance, emissions from the nation’s industrial sectors — including steel, cement, chemicals and refineries — increased by 5.7 percent.

      Policymakers working on climate change at the federal and state level have so far largely shied away from regulating heavy industry, which directly contributes about one-sixth of the country’s carbon emissions. Instead, they’ve focused on decarbonizing the electricity sector through actions like promoting wind and solar power.

      But even as power generation has gotten cleaner, those overlooked industrial plants and factories have become a larger source of climate pollution. The Rhodium Group estimates that the industrial sector is on track to become the second-biggest source of emissions in California by 2020, behind only transportation, and the biggest source in Texas by 2022.

      There’s a similar story in transportation: Since 2011, the federal government has been steadily ratcheting up fuel-economy standards for cars and light trucks, although the Trump administration has proposed to halt the toughening of those standards after 2021.

      78 Environmental Rules on the Way Out Under Trump.  This is the full list of environmental policies the Trump administration has targeted, often in an effort to ease burdens on the fossil fuel industry. Oct. 5, 2017
      There are signs that those standards have been effective. In the first nine months of 2018, Americans drove slightly more miles in passenger vehicles than they did over that span the previous year, yet gasoline use dropped by 0.1 percent, thanks in part to fuel-efficient vehicles and electric cars.

      But, as America’s economy expanded last year, trucking and air travel also grew rapidly, leading to a 3 percent increase in diesel and jet fuel use and spurring an overall rise in transportation emissions for the year. Air travel and freight have also attracted less attention from policymakers to date and are considered much more difficult to electrify or decarbonize.

      Demand for electricity surged last year, too, as the economy grew, and renewable power did not expand fast enough to meet the extra demand. As a result, natural gas filled in the gap, and emissions from electricity rose an estimated 1.9 percent. (Natural gas produces lower CO2 emissions than coal when burned, but it is still a fossil fuel.)

      Transmission towers near the coal-fired Will County Generating Station in Romeoville, Ill.CreditDaniel Acker/Bloomberg

      Even with last year’s increase, carbon dioxide emissions in the United States are still down 11 percent since 2005, a period of considerable economic growth. Trump administration officials have often cited that broader trend as evidence that the country can cut its climate pollution without strict regulations.

      But if the world wants to avert the most dire effects of global warming, major industrialized countries, including the United States, will have to cut their fossil-fuel emissions much more drastically than they are currently doing.

      Climate Change Is Complex. We’ve Got Answers to Your Questions. We know. Global warming is daunting. So here’s a place to start: 17 often-asked questions with some straightforward answers. Sept. 19, 2017

      Last month, scientists reported that greenhouse gas emissions worldwide rose at an accelerating pace in 2018, putting the world on track to face some of the most severe consequences of global warming sooner than expected.

      Under the Paris climate agreement, the United States vowed to cut emissions 26 to 28 percent below 2005 levels by 2025. The Rhodium Group report warns that this target now looks nearly unattainable without a flurry of new policies or technological advances to drive down emissions throughout the economy.

      “The U.S. has led the world in emissions reductions in the last decade thanks in large part to cheap gas displacing coal,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University, who was not involved in the analysis. “But that has its limits, and markets alone will not deliver anywhere close to the pace of decarbonization needed without much stronger climate policy efforts that are unfortunately stalled if not reversed under the Trump administration.”

      The Rhodium Group created its estimate by using government data for the first three quarters of 2018 combined with more recent industry data. The United States government will publish its official emissions estimates for all of 2018 later this year.

      For more news on climate and the environment, follow @NYTClimate on Twitter.
      Brad Plumer is a reporter covering climate change, energy policy and other environmental issues for The Times’s climate team. @bradplumer
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        Shale Euphoria: The Boom and Bust of Sub Prime Oil and Natural Gas

        Repost from Resilience.org
        [Editor:  Highly recommended by Benicia activist Marilyn Bardet: “This is a sobering, lengthy, well researched article on the fracking industry’s ‘bubble’, its hype, claims and the inevitable ‘costs’ and why it is absolutely unsustainable financially, environmentally, socially, and absolutely unethical.”  Although the analysis doesn’t even mention oil trains or rail transport, it provides excellent analysis on the impossibility of sustaining any crude by rail project.  – RS]

        Shale Euphoria: The Boom and Bust of Sub Prime Oil and Natural Gas

        By Brian Davey, originally published by Feasta | MAR 24, 2016

        Those whom the gods wish to destroy they first send mad

        Resilience.orgIntroduction

        The aim of this article is to show that the shale industry, whether extracting oil or gas, has never been financially sustainable. All around the world it has consistently disappointed profit expectations. Even though it has produced considerable quantities of oil and gas, and enough to influence oil and gas prices, the industry has mostly been unprofitable and has only been able to continue by running up more and more debt. How could this be? It seems paradoxical and defies ordinary economic logic. The answer is to be found in the way that the shale gas sector has been funded. It is part of a bubble economy inflated by monetary policy that has kept down interest rates. This has made investors “hunt for yield”. These investors believed that they had found a paying investment in shale companies – but they were really proving that they were susceptible to wishful thinking, vulnerable to hype and highly unethical practices that enabled Wall Street and other bankers to do very nicely. Those who invested in fracking are going to lose a lot of money.

        A Global Picture of disappointed expectations

        Around the world big expectations for fracking have not been realised. One example is Argentina where shale oil reserves were thought to rival those in the USA. It is a country where there has been local opposition while central government pushed the industry in alliance with multinational companies and its own company YPC. However profitability has been elusive. To have any hope of profitability shale development has to be done at scale to rapidly bring down costs enough to make a profit. That requires a lot of capital and companies will not make this capital available without being sure that they are going to make a lot of money – but they cannot be sure until they have done tests for up to two years.

        “It’s a sort of chicken and egg dilemma. Without profits, the estimated $20 billion a year needed to develop the play won’t come. And without this investment in drilling tens of thousands of wells, the economies of scale won’t be reached on the fields to cut costs.

        “A reason not to rush into production — only 400 wells have been drilled — is that wells must be tested for up to two years to gauge the potential of the shale rock before a company will commit billions of dollars. This is especially the case now that low global oil prices have slimmed investment budgets for frontier plays.” (Charles Newbury, “Struggles to cut cost delay oil production in Argentina” Platts Oilgram News. August 17th 2015 at http://blogs.platts.com/2015/08/17/cut-cost-delay-oil-play-argentina/ )

        The situation in Argentina highlights the underlying problem for the economics of shale oil and shale gas. Unconventional oil and gas fields have much higher costs than conventional ones. Tapping “conventional” oil and gas from permeable geological strata is cheaper in that the oil and gas flows underground and can be pumped out with less engineering. In contrast an “unconventional gas field” has to release the gas from impermable rock and therefore needs up to 100 more wells for the same amount of gas (or oil). A field must achieve economies of scale to have any chance of making a profit. It needs more activity underground to fracture the rock and it needs more activity on the surface to facilitate that. That is why it is more dangerous to the environment and public health – and also why it is more financially expensive. It requires more ongoing capital equipment too. Without a high gas (or oil ) price all of these activities cannot be made profitable.

        Looked at in this way “unconventional oil and gas” is not the magical answer for peak oil (or later for peak natural gas) that it might have once seemed to be. To be long term viable the fracking sector requires three things: favourable geology, high oil and gas prices and easy and cheap credit. All three have proven elusive, making for disappointing results in all of the locations around the world where it has been tried. Unconventional gas is struggling to get off the ground outside of the USA and Australia. And in the USA, where it started, although it managed to get the credit to pay for the capital expenditure there are now grave doubts that a mountain of credit will ever be paid pack.

        But let’s look outside of the USA too. Take Europe for example. In 2011 the international oil and gas industry and the Polish government thought Poland was going to be a major source of shale gas. 75 exploratory wells were drilled up to 2015 and 25 were fracked. The amount of gas recovered was one tenth to one third of what was needed for the wells to be commercially viable. Besides retreating from Poland, the industry has pulled out of nascent shale drilling efforts in Romania, Lithuania and Denmark, usually citing disappointing yields.

        In the UK and Ireland too fracking is still stuck at the pre-exploratory stage, largely because of the rapid and powerful development of a movement of opposition. Although not definitive, a moratorium in Scotland and a “presumption against” fracking by planners in Northern Ireland, are political set backs for the industry. Yet even if the public and political opposition was not there, there would be reasons to doubt that fracking is viable in the UK. The doubt starts with the geology. While the British Geological Survey has produced maps of shale layers, and while it has been suggested that the carbon content might be there, the data is lacking for other key parameters, for example for rock porosity. In addition the shale in the UK has more folds and faults when compared to US fields. This might to lead to more earthquakes which would damage the wells – plus leading to a potential failure to achieve the pressure needed for fracturing if fracking fluid leaks into small faults when pushed underground.

        Oil and Gas Prices

        Now there are further doubts because of low and falling oil and gas prices. Here the issues are a little different for oil compared to natural gas on the one hand and for the situation in the USA as compared to other producing zones in the world on the other. That said, what all exploration and production companies are facing, whether in oil or gas production or whether in the USA or elsewhere, is that prices that are too low. It is proving difficult or impossible for most producers to make a profit given the costs of extracting and distribution. That has been especially noticeable for shale gas. Let us however first look at oil prices.

        During the crash of 2007-2008 global oil prices crashed from a high peak but then recovered again. Between November 2010 and September 2014 there were 47 months in which oil prices were over $90 a barrel. This period of high oil prices can be described as being broadly reflective of supply and demand. On the demand side the global economy recovered, to a large degree stimulated by a massive credit-fuelled residential and infrastructure boom in China. This pumped up demand. On the supply side production from Libya and Iran was kept out of the world market because of the turmoil in Libya and sanctions against Iran. Thus, while there was some production increase from Saudi Arabia and, eventually, even more from Iraq, these increases were largely cancelled by Iran and Libya. Demand exceeded supply and prices remained high but the situation began to change in the autumn of 2014.

        On the demand side the Chinese economy stalled while on the supply side production increased. OPEC as a whole was not the main source of that increasing production, and nor was Russia – the main source of increasing oil production was the boom in US shale oil. For reasons to be explored, production from the USA continued to soar even though prices fell and after a price rally early in 2015 prices continued to fall into 2016.

        A similar downward trend has occurred around the world in natural gas prices – though in the USA they have been lower far longer – and certainly too low to allow for profitability.

        In regard to gas the issues are somewhat different from oil because the market for natural gas is less globally networked. Natural gas markets are based on global regions and different gas prices in different parts of the world. Thus there is a north american gas market, a european gas market and a market in the far east. There are multiple long distance gas pipelines that are important economically and geopolitically. Wars and rivalries are fought over pipeline routes – this is a component in the Syrian conflict. However natural gas could not be transported so easily between continents – until recently, because now there is an infrastructure for sea transported liquified natural gas under development (LNG). Sea transported LNG begins to change things because it makes the market for natural gas more globally competitive.

        At a risk of simplifying a varied picture natural gas prices in various areas have been stable at a low level or drifting downwards over the last two years and insufficient for profitability in a gas fracking sector. In both the USA and Europe natural gas prices are a half of what they were in 2014. In the USA this has been because of overproduction of gas, conventional and unconventional, with conventional production declining and being replaced and overtaken by unconventional production – as of late in 2015 however shale gas production too began to fall. For years production has been unprofitable in all but the best areas and in decline. Now it is in decline generally.

        In Europe production decline because of depleting conventional gas fields has not prevented a fall in the gas price because demand has been falling too and this is likely to remain the case. Thus a recent report published by the Natural Gas Programme of the Oxford Institute for Energy Studies, concludes that European gas demand will not recover its 2010 level until about 2025. The decline in demand has been due to warmer winters but also due to low demand because of the low growth in manufacturing which has shifted to Asia, because of low population growth and because of energy saving measures too. At the time of writing it is being suggested that the competitive threat from the development of an LNG infrastructure will encourage Gazprom to change its pricing strategy to try to fight off future competition from sea transported supplies. In summary, it is highly likely that the gas price in Europe will remain low for a long time. If so, this completely undermines any remaining case for fracking for natural gas in europe, and particularly Britain.

        At current gas prices all the exploration and production companies active in the UK and Ireland would struggle to make a profit. There are 4 studies of extraction costs of natural gas by fracking in the UK – by Ernst and Young, Bloomberg, Oxford Institute of Energy Studies and Centrica. All have maximum and minimum extraction costs. Current gas prices per therm are less than the minimum extraction cost in the lowest study. So for the industry to continue at all it has to assume that gas prices will rise in the future.

        shale costs
        Low Gas price vs high extraction costs: Zachery Davis Boren, Greenpeace Energy Desk; August 2015 http://energydesk.greenpeace.org/2015/08/20/super-low-gas-price-spells-trouble-for-fracking-in-the-uk/

        So what is the future for oil and gas prices? Of course the future is inherently uncertain – a President Trump might provoke any number of wars making America great again – it is difficult to see how Muslims could be banned from entry into the USA without that affecting oil and gas imports from Muslim countries. Or again heightened conflict between Iran and Saudi Arabia might escalate with massive consequences, and not just for the oil and gas price. In these and other conceivable situations, the more chaos the less companies will want to invest anyway. Whether prices are high, or low, if there is too much turmoil conditions will not favour new investment. But leaving aside extreme geo-political scenarios will prices go up or will they go down? If oil and gas prices rise will this be sufficiently and for long enough for unconventional gas to be developed sustainably in the narrow financial or business sense?

        The rising price scenario

        It is important to grasp the idea that a rising prices scenario is only credible in conditions where a proportion of the industry has been driven out of the business – which is the hope of the Saudi oil industry. What the Saudis would like to see is not only the US fracking companies driven to bankruptcy but the banks that fund them with badly burned fingers and unwilling to finance the industry any more. That said the Saudis too have limited pockets. Their current aggressive foreign policy has to be funded from somewhere and it is conceivable that they could lose the capacity to push the anti-shale agenda through to the bitter end.

        If the oil price does bounce back the beneficiaries would be the survivors. There is a view then that the current low prices will eventually lead, not only to falling production in the future but to bankruptcies and capital expenditure cut backs both in the conventional and unconventional sectors. It would speed the decline of oil fields like those in the North Sea where investment is now being slashed. With declining supply, inventories will be sold off, the market will move back into balance…. and then further the other way – so that eventually demand again exceeds supply. Higher prices, possibly spiking, will encourage new investment and the fracking companies will surge back at the other side of the crisis.

        What must however be assumed for this to happen is that at some point “growth will resume” because, over the last two hundred years, it always has. If growth resumes the demand for energy will revive in order to feed it – making more material production and consumption possible. Some economists argue that one factor encouraging a revival in demand ought to be the low energy prices themselves. Higher energy prices act as a drag on the economy so low energy prices should do the opposite – i.e. stimulate it. In a recent speech the chair of the US Federal Reserve, Janet Yellen, said that falling energy prices had, on average put an extra $1,000 in the pockets of each US citizen. It is assumed that this would encourage extra spending and thus extra income.

        The falling or stagnant prices scenario

        An alternative view is more sceptical about the revival of the global economy and of demand because of the high level of debt. In an economy where indebtness is low, falling energy prices probably would act as a stimulus for energy consumers. But will there be any or enough stimulus where the debt to income ratio is high? In an indebted economy windfall gains from reduced energy prices are likely to be partly used to pay off debts rather than being spent. A further issue is what will happen because of the way in which the finance sector has made itself vulnerable? It has channelled substantial credit to the energy sector – to exploration and development companies that now have difficulties paying this credit off? It certainly will not help in finding investment money to get fracking off the ground in the UK and elsewhere if it all ends in tears in the USA.

        In the pessimistic scenario if the economy does not revive then there can be some scepticism that energy prices will revive too. This is the scenario in which deflationary conditions continue and even deepen. On this view the global economy is entering a long period of stagnation, decline and chaos. Some economists are describing how growth has slowed using descriptive phrases like “secular stagnation”. The fate of the Japanese economy from the early 1990s onwards gives grounds for comparison and concern. After a quarter of a century Japan has not escaped prolonged recessionary conditions. Because the global economy is highly indebted central banks have driven down interest rates to zero and now even below that. This has led to a bubble in asset markets but it has done little to spur generalised economic growth.

        There could be a vicious circle here – without demand arising in a sustained growth process pushing up energy prices the profitability of the unconventional sector will never be sufficient to make future investment in that sector pay. In these circumstances future oil and gas production will not rise. Production will fall in the USA, especially as more of the identified sweet spots in the best plays are exhausted. In textbook supply and demand theory falling supply should eventually lead, ceteris paribus, to a rise in prices that justifies more investment and therefore more production. However “ceteris paribus” (other things remaining unchanged) does not apply in a stagnating or a declining economy. A declining economy is not one where private economic actors invest money in the hope of a future return because the necessary confidence and conviction about the future is not there. Purchasing power is hoarded, purchases are deferred where possible, debts are paid off where possible. These actions tend to intensify the deflation. If this is what happens, and it seems likely, it will make the problems of the shale gas sector even worse.

        The Fracking Companies and the Finance Sector

        Before the current difficulties Wall Street made a fortune in fees arranging debt finance for the US shale sector. Investors who were “looking for yield” instead of the ultra low interest rates payable on government debt thought the way to find that yield was to pile their money into junk finance to fund the frackers. Despite the economic reality Wall Street encouraged the misinvestment. Now the wall of energy sector junk finance repayable in the future is huge. The further forward one goes the higher it is. How much of this debt will ever be repaid? And what will happen to those who lent it if it is not? Given what has already been said the long run ability of the sector to repay its debt seems highly questionable. How did it come to this?

        debt wall
        Source: http://www.artberman.com/art-berman-shale-plays-have-years-not-decades-of-reserves-february-23-2015/

        For several years prior to the crash of 2007-2008 the finance sector in the USA were knowingly giving loans to people with no income, no jobs and no assets. The people who organised this were doing so because they were earning fees on each loan arranged. What did they care about the virtual certainty that the loans would never be paid back? The crash was the inevitable result – the consequence of an ethical catastrophe. The banks had packaged the loans up into mortgage backed securities and sold them on so that someone else other than the originating bank carried the risk. Ratings agencies played their role in this crooked system and got fees rating securities that others called “toxic trash” as AAA. Meanwhile derivates contracts against defaults on these rotten securities were also sold even though it was not possible to pay up when the defaults happened – without being bailed out by the monetary authorities, as happened with AIG.

        The Shale Bubble – toxic water, toxic air and toxic finance too

        For several years after 2007-2008 shale was the next big money spinner – and the next ethical catastrophe for Wall Street. Just as it was blindingly obvious for years that sub prime would crash, but it was a nice money spinner at the time, so Wall Street has made a lot of money pumping up the shale bubble. All the evidence about health and environment costs have been ignored and the information about them suppressed. The information about the economics was ignored too. Of course, someone has to lose eventually but “while the music has played” there has been plenty of money for all sorts of players – petroleum engineers and geologists, PR companies, corrupt politicians, the companies supplying the pipelines, rigs and fracking gear. They had their snouts in the money trough and in many cases abandoned their ethics and their critical faculties while they were feeding.

        Nor were investors looking closely enough at where they were going or at what they were funding. Even before the current price crash, many US fracking companies, just like those in Argentina and Poland, were struggling to make real profits yet vast quantities of money were channelled to them. Honest and astute observers who could see that the shale boom was a Wall Street induced bubble were ignored. One example was a report written by Deborah Rogers in early 2013 in which she drew attention to the difference between the reality and the message put out by the PR machine.

        According to Rogers “Industry admits that 80% of shale wells ‘can easily be uneconomic.’ Massive write-downs have recently occurred which call into question the financial viability of shale assets and possibly even shale companies. In one case, assets were written off for more than 50% of the purchase price within a matter of months……publicly traded oil and gas companies have essentially two sets of economics. There is what may be called field economics, which addresses the basic day to day operations of the company and what is actually occurring out in the field with regard to well costs, production history, etc.; the other set is Wall Street or “Street” economics. This entails keeping a company attractive to financial analysts and investors so that the share price moves up and access to the capital markets is assured. “Street” economics has more to do with the frenzy we have seen in shales than does actual well performance in the field. With the help of Wall Street analysts acting as primary proponents for shale gas and oil, the markets were frothed into a frenzy. Boom cycles have the inherent characteristic of optimism. If left unchecked, such optimism can metamorphose into a mania such as we saw several years ago in the lead up to the mortgage crisis. (Deborah Rogers, “Shale and Wall Street” Energy Policy Forum 2013 http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf)

        Long before the price slide beginning late in 2014 the much hyped boom was not what it seemed. Roger’s article shows many parallels between the crazy and unethical excesses of Wall Street prior to the 2007 crash and what has been happening in the shale boom. As had happened with sub prime mortgages which were bundled up to become part of mortgage backed securities and then sold on – new kinds of financial assets were invented and sold to allow the unwary to invest their money in order as to “get a part of the action” and participate in the shale bonanza too. One bank instrumental in all of this was Barclay’s Capital, working together with a company called Chesapeake Energy. To help Chesapeake the Barclay’s financial wizards invented a structure called a Volumetric Production Payment (VPP). Rogers quotes a finance industry magazine, Risk, from March 2012.

        “The main challenges in putting together the Chesapeake VPP deal were getting the structure right and guiding the rating agencies and institutional investors—who did not necessarily have deep familiarity with the energy business—through the complexities of natural gas production.”

        The resulting financial assets were highly complex, off balance sheet, and as Barclay’s admitted the rating agencies had to be “guided” so that they could understand the complexities of the deal. (So much for the competence and independence of the resulting “rating”. ).

        Production taking precedence over profitability (and over economic rationality)

        The result was that current profitability took second place to an industry PR narrative about what was supposedly going to happen in the future as the shale companies grew and grew. Prior to the crash of 2007 bank employees were under pressure and being incentivised by bonuses to make as many loans as possible – even though many loans were unsound. Now the fracking company managers were being incentivised to produce as much product as possible even though they were losing money. The measure of the future dream was production growth rather than what it ought to have been – profitable production growth. The latter depended on whether that production growth was actually covering costs of production and it was not. It should be stressed again that this was happening before the current price slide. For example an analyst Arthur Berman looked at the financial figures for Exploration and Development Companies representing 40% of the US shale industry for 2013 and 2014 and found them to be powerfully in the negative. There was a $14 billion negative cash flow in 2014. (http://www.artberman.com/art-berman-shale-plays-have-years-not-decades-of-reserves-february-23-2015/)

        berman

        Nevertheless the good news headlines about the production growth kept the share prices rising and the managers were on bonuses to make that production growth happen. Apart from the sceptics and the communities whose environments and health were under attack, the industry, the government, some naïve academics and Wall Street, all played their part in pumping up the dramatic narrative of the resurgent American Oil and Gas Dream. Eventually the USA would rival Saudi Arabia and more…becoming great again no doubt. As a more recent article in the Wall Street Journal explained:

        “Markets have been waiting for U.S. energy producers to slash output during a period of depressed crude prices. But these companies have been paying their top executives to keep the oil flowing. Production and reserve growth are big components of the formulas that determine annual bonuses at many U.S. exploration and production companies. That meant energy executives took home tens of millions of dollars in bonuses for drilling in 2014, even though prices had begun to fall sharply in what would be the biggest oil bust in decades. The practice stems from Wall Street’s treatment of such companies’ shares as growth stocks, favoring future prospects over profitability. It has helped drive U.S. energy producers to spend more unearthing oil and gas than they make selling it, energy executives and analysts say.

        It has also helped fuel the drilling boom that lifted U.S. oil and natural-gas production 76% and 31%, respectively, from 2009 through 2015, pushing down prices for both commodities. “You want to know why most of the industry outspent cash flow last year trying to grow production?” William Thomas, CEO of EOG Resources, said recently at a Houston conference. “That’s the way they’re paid.” (Ryan Dezember, Nicole Friedman and Erin Aillworth. “Key Formula for Executives Pay: Drill Baby Drill” http://www.wsj.com/articles/key-formula-for-oil-executives-pay-drill-baby-drill-1457721329)

        The Euphoric Economy at Work – how to rip off manic investors

        All of this raises the question of how, with profitability so low, this reckless show has managed to stay on the road for so long and still continues. A cynical answer would be to say that the function of Wall Street is to connect the greedy and stupid with people and institutions without scruples who will spend their money for them. For this to happen optimism must be generated at all times whether this optimism has any foundation or not. The study of bubbles is all about people who are able to swim in an ethical sewer oblivious to their environment. They are too “euphoric” or high on the prospect of making a lot of money to calmly calculate what is happening. Another word for this is mania. It helps to consider this as a period of collective madness like a mania – a period of collective excitement in which the capacity for ethical and other judgements are impaired.

        In this collective insanity one can think of the money making calculations like this – if you buy the right to drill and are able to identify the geologically favourable “sweet spots” then at first the results are likely to be good. Instead of then drilling the less favourable locations and seeing your profits fall away you tell beautiful stories to another company with deep pockets enticed by the good news of the early success. So it is possible to sell the less favourable areas. Or maybe you sell the company, merging it with another. In this Wall Street (or the City of London no doubt) will come to your aid because it makes nice fees from mergers and acquisitions. The new owners then makes the loss. It is the buying company that then has to write down its balance sheet when it subsequently discovers that it was sold a mirage.

        The stories about being duped are never told as loudly and plainly as the stories of the wonderful shining future that sell the fraud in the first place. That’s because managers do not like to speak loudly about their incompetence to avoid the embarrassment of admitting they were duped. It is usually possible to deny that it would have been possible for them to know what was happening and, after all, why should these managers care when it was other people’s money that they were losing? (The money of shareholders or bond holders).

        But if the faith in the industry can be maintained then these kind of deals can at some time make the banksters and crooked production company bosses much more money than merely by drilling and fracking for shale gas or oil. Thus buying and selling drilling leases (bundled up together just like sub prime mortgages were) was a great money spinner for companies like Chesapeake. The greater the euphoria generated, the more money to be made. This is Deborah Rogers again:

        “Aubrey McClendon, CEO of Chesapeake Energy, stated unequivocally in a financial analyst call in 2008: ‘I can assure you that buying leases for x and selling them for 5x or 10x is a lot more profitable than trying to produce gas at $5 or $6 mcf.’”

        Eight years later Aubrey McClendon was dead. He had been charged on a federal indictment of bid rigging from late 2007 to 2012 and drove his car at high speed into a bridge. There was a strong suspicion that he had killed himself.

        The madness of shale goes on. Wall Street and the shale companies are still managing to play the same game of passing the risk parcel to the bigger fools who will take the loss. If people can be persuaded to buy into the companies just before they go bust then the smarter and bigger players can get out. At the time of writing (March 2016) there are suspicions that the banks are orchestrating a rise in the price of oil in order to help the shale companies raise capital which will enable them to pay off the banks while letting “the suckers” take the fall. This led one analyst to describe the glut, not just of oil, but of stupidity.

        “Even the experts are stunned by this unprecedented glut in stupidity of managers of other people’s money: “Billions of dollars of dilutive equity continue to roll in with seemingly no end in sight,” Houston-based oil investment bank Tudor, Pickering, Holt & Co. said in a research note.” (http://oilprice.com/Energy/Crude-Oil/In-Risky-Move-Wall-St-Backs-Shale-With-Nearly-10-Billion-In-Equity.html)

        Ethical or Financial Bankruptcy – which is more fundamental?

        It is common in economics to refer to markets becoming frothy at times like this. Commentators seek to find the fundamentals underlying the “froth” (perhaps better described as scum). But what are “the fundamentals” in this story? The really fundamental thing is not that this sector is financially bankrupt – it is that it is ethically bankrupt too. An ethically bankrupt sector is definitely not sustainable. Any economic sector that destroys the environment including the climate, assaults public health and then enlists government in a corrupting endeavour to write and use the regulations in such a way as to undermine the very possibility of resistance is corrupt to the core. An industry that destroys people’s health and environment and then settles in court on condition that people are bound to secrecy about what has happened to them, as is common practice in the USA, cannot be trusted to tell the truth. It does not surprise in the least therefore that the unethical business methods of this sector, as well as the unethical methods of its allies in finance, also rely on trickery and defrauding anyone stupid enough to invest their money in it.

        What will happen in the USA will no doubt have a big impact for the future credibility of the fracking industry in the UK and elsewhere in the world. That story is not yet in its final chapter but what has happened in the USA is already a cautionary tale and we would be stupid to ignore it. Local authorities in the UK should be careful that they are not caught out picking up the environmental costs of a collapsing industry. It has already happened in the USA and Canada – the advantage of limited liability to an industry without ethics is that it enables it to pass the cost of clearing up to communities after bankruptcies.

        “CBC News reported that falling gas and oil prices have prompted many smaller companies to abandon their operations in Alberta, Canada, leaving the provincial government to close down and dismantle their wells. In the past year alone, the number of orphaned wells in Alberta increased from 162 to 702. At the current rate of work,deconstructing the inventory of wells abandoned just in the past year alone will be a 20-year task.” (Source: Johnson, T. (2015, May 11). Alberta sees huge spike in abandoned oil and gas wells. CBC News.http://www.cbc.ca/news/canada/calgary/alberta-sees-huge-spike-in-abandoned-oil-and-gas-wells-1.3032434 )

        In conclusion – a mountain of debt that will never be repaid?

        People might ask, if the future of fracking is so much in doubt then why bother to build a movement of opposition to oppose it? The answer can be expressed by adapting a famous quote by John Maynard Keynes. In the original Keynes says “the market can remain irrational longer than you can remain solvent”. The market can also remain irrational long enough to do a lot of damage. What this article has barely done at all is refer to what are called, in economics-speak, the “external costs” of fracking – the damages to climate, to local environments and to public health. Nor has this article examined the claimed benefits to employment and to local economies which are usually grossly overstated. There is now plenty of evidence about these things. What I have tried to do instead is to show that even in the narrowest of meanings of “economic” fracking does not make sense. A lot of damage is being done and there will be little positive to show for it. The ability to continue this destructive path is due to the legacy of political influence of the fossil fuel lobby in government and in the finance sector. The legacy influence has been strong enough to ignore and crush the opposition despite the damage. In the USA it can be argued that the fracking boom has been an irrational, unethical and ultimately unprofitable attempt to extend the lifetime of fossil fuels in order to keep the oil and gas industry in work, aided and abetted by Wall Street. It is an industry trying to secure a future for an influential network of professional and business interests that should, in truth, be being wound down – including the engineers, the university departments of petroleum geology, the regulators to name a few. A mountain of debt has been accumulated to perpetuate the illusion that these people have a future in which they can go on much as before – a mountain of financial debt that will never be repaid.

        Stupidity has a knack of getting its way – Albert Camus


        Sources and further reading:

        On geological uncertainties: Mason Inman “Can Fracking Power Europe?”, March 2016 at http://www.scientificamerican.com/article/can-fracking-power-europe/

        Charles Newbury, “Struggles to cut cost delay oil production in Argentina” Platts Oilgram News. August 17th 2015 at http://blogs.platts.com/2015/08/17/cut-cost-delay-oil-play-argentina/

        Low Gas price vs high extraction costs: Zachery Davis Boren, Greenpeace Energy Desk; August 2015 http://energydesk.greenpeace.org/2015/08/20/super-low-gas-price-spells-trouble-for-fracking-in-the-uk/

        European natural gas supply and demand:https://www.oxfordenergy.org/publications/the-outlook-for-natural-gas-demand-in-europe/ and https://www.oxfordenergy.org/wpcms/wp-content/uploads/2016/01/Gazprom-Is-2016-the-Year-for-a-Change-of-Pricing-Strategy-in-Europe.pdf

        Oil Majors as a source of investment capitalhttp://www.telegraph.co.uk/business/2016/02/12/oil-firms-urged-to-avoid-dangerous-investment-cuts /

        Deborah Rogers, “Shale and Wall Street” Energy Policy Forum 2013)http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf

        Fragility of UK explorer’s finances: http://www.companywatch.net/wp-content/uploads/2016/01/oil-and-gas-smaller-cap-research-11-January-2016-final.pdf

        Crisis in US Shale Sector: http://www.bloomberg.com/news/articles/2016-03-11/oil-boom-fueled-by-junk-debt-faces-19-billion-wave-of-defaults

        Arthur Berman “The Miracle of Shale Gas and Tight Oil is Easy Money”http://www.artberman.com/the-miracle-of-shale-gas-tight-oil-is-easy-money-part-i/

        http://www.artberman.com/art-berman-shale-plays-have-years-not-decades-of-reserves-february-23-2015/

        http://www.cnbc.com/2016/03/02/ex-chesapeake-ceo-mcclendon-dies-in-car-wreck-day-after-indictment.html

        Ryan Dezember, Nicole Friedman and Erin Aillworth. “Key Formula for Executives Pay: Drill Baby Drill” http://www.wsj.com/articles/key-formula-for-oil-executives-pay-drill-baby-drill-1457721329

        “Energy in the economy”: Brian Davey Credo. Economic Beliefs in a World in CrisisFeasta books 2015. http://www.credoeconomics.com Chapters 32 and 33.

        Teaser image: By Zarateman – Own work, CC0, https://commons.wikimedia.org/w/index.php?curid=26017874

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