Yukon’s ‘frackonomist’ presented false oil and gas data ( Comment )
Keith Halliday’s Dec. 5 column published locally with the glib title “Love it or hate it, fracking is here to stay” starts off with invented data that hype up fracking:
Keith Halliday’s Dec. 5 column published locally with the glib title “Love it or hate it, fracking is here to stay” starts off with invented data that hype up fracking:
“Since 2010, oil and gas production in the U.S. has gone from a bit over four million barrels a day in oil equivalent to 12 million a day as of September. This is according to the Wall Street Journal and U.S. Energy Information Administration (EIA), and is largely due to surges in fracked oil and gas production.”
The EIA, in their latest overview report an overall U.S. production, rise since 2010 as follows:
2010 U.S. oil and gas production added roughly up to about daily 20 million barrels of oil equivalent (BOE), not Halliday’s fivefold distortion of four million, comprised of 9.7 million barrels oil daily plus 21.3 trillion cubic feet natural gas annually.
The energy in one BBL, barrel of oil (crude plus other extracted petroleum liquids), also 42 U.S.Gal, also 35 IG (Imperial Gallon), also 159 litres, is equal to 1.7 megawatt hours – one third cord of wood or 6,000 cubic feet of natural gas.
U.S. production of natural gas equated to about 10 mill. BOE daily, which, together with close to 10 mill barrels of oil, added up to 20 million BOE in 2011, and to over 24 million BOE daily for 2013.
Halliday’s tabloid style try with four million BOE in 2010 to hype perception of frack production increase is not a typo.
He hides that conventional oil and gas production in North America remains the economic feedstock and brittling energy backbone. And that the recently arrived high-intensity fracking standard needs ruinous and ever-increasing subsidies because it has no useful net energy output (similarly debt-increasing and future job-killing as tar sands steam extraction).
“The Middle East, the only large source of low-cost oil, remains at the centre of the longer-term oil outlook” (World Energy Outlook, International Energy Agency, 2013).
Another nice story on a supposed “glut” in his Dec. 5 piece does not check out with the energy availability and affordability problem:
“The U.S., as well as British Columbia, are now feverishly working on facilities to export North America’s gas glut to other countries where gas prices can be two or three times higher.”
He must have seen but doesn’t mention the EIA’s forecast, which, by 2020, sees U.S. oil production once again decreasing and imports of about 30 per cent as far as they look, which is 2035. Producing frack gas requires expending a lot of oil.
And most of the frack expansion infrastructure such as pipelines, LNG terminals and plants were already stalled out before the oil price drop because of investor pull back.
In terms of Halliday’s LNG export enthusiasm, keep in mind the North American frack sector, as the basis of it, has been plagued with reserve swindles and inflation.
In 2011 and 2014, it has seen fairly dramatic intervention on behalf of investor protection by government bodies like the USGS (U.S. Geological Survey) as well as EIA, which downgraded shale reserve statements by orders of magnitude.
Where is the export natural gas supposed to come from?
According to 2014, CAPP (Canadian Association of Petroleum Producers) data, Canadian natural gas production, after years of decline, continues to decline until 2021, and, followed by a shallow growth bump, again enters decline in 2027.
Their best-case scenario shows continued production decline until 2017, and after 10 years of shallow sloped growth of about 25 per cent, also decline after 2027.
Under NAFTA Chapter 6, Energy Canada cannot reduce energy exports to the U.S. before 36 months of production decline have been proven for a given sector, which further reduces flexibility and export alternatives.
The global LNG trade and production has stagnated since 2010. It was largely built on conventional gas where the profit margin was allowed to expend a whopping 40 per cent of the resource energy, just on the liquefaction process. The LNG export leader Qatar is not the only example.
Frack fields exhaust fast and are a highly subsidized and very short-term gamble dominated by predatory Wall Street whims.
The investors increasingly stay away because the long-term amortization requirements in the oil and gas industry, including of super-expensive LNG plants, terminals and ship building, don’t match up.
As a consequence of such investor skepticism, the LNG terminal projects in the U.S. have slowed down or are stalled.
In B.C., there is not a single go ahead at this point.
Current Canadian share of global LNG trade is zero per cent; the U.S. has between 0.1 and 0 per cent – a little reality check one does not hear about often.
The fact that the accomplished writer and researcher Gwynne Dyer pushed the fiction of North American oil and gas as being competitive overseas, syndicated on Oct. 23 in the Whitehorse Star as “The price of oil will hit its floor and it will rise again” is no excuse for Halliday.
The centre of Dyer’s argument reiterates a master piece from the big oil spin doctors, supposed OPEC break-even prices of well above $100. Actually, diverse government expenditures may add to any national debt but really are not part of national or private oil producers’ balance sheets, not in Qatar and not in Canada.
Similar to Russia’s or various Middle Eastern countries’ oil and gas production, the all-conventional oil production in Saudi Arabia is into gravy and profits above $25-30/BBL.
No doubt Russian and OPEC oil and gas resource extraction operations appreciate a high oil price but don’t have to worry about the outclassed Canadian and U.S. competition.
And in terms of energy markets, OPEC competes with China’s and India’s explosive renewable energy growth. Wind energy grew about 90-fold since 2005 in China.
In reality, even OPEC policies are influenced by the multinational oil majors as well as by corrupt, so-called free trade deals that give foreign corporations the illegitimate authority to de facto legislate, protection racket-style.
Also, few countries are oil exporters, and most are importers of what is not a luxury commodity. Around 50 of the poorest countries spend most of their foreign currency reserves on oil imports simply to grow or ship food.
After sinking deeper into debt growing and shipping potatoes, millet, rice or corn for a while, at and beyond a fairly universal pain threshold of $70 oil, at some point, some can’t continue.
Then more oil becomes available, and the price drops like just now or in 2008, after it had gone to $147, resulting in economic contraction paired with oil demand destruction and temporary price collapse.
A new window of availability-affordability starts the cycle over.
And so it continues, with a deadly fever turned into chronic or structural disease of a jittery, energy-starved world economy.
Specifically because the big oil-controlled North America has fallen behind and fails to grow energy industries significantly where it happens, which is in the diverse renewable community-driven sector.
The source of this dynamic or price cycle is energy scarcity, not surplus or glut, with much of conventional, affordable oil and gas running out quickly now, and for many in North America as well, the problem is being priced out of the market.
In case of a business plan or community co-op plan, the required affordable cost projection may typically run over five years or more, certainly not five weeks or months, sort of along Halliday’s embarrassing glut and low-price nonsense.
Fiona Harvey had this to say or quote on April 1, 2012 on the Guardian global development page:
“With oil prices likely to remain high, the only answer is for developing countries to move to cleaner renewable sources of energy, Fatih Birol, chief economist at the IEA, told the Guardian.
“If you diversify the sources of energy, that is a good thing, and clean energy means using free, homegrown resources, so that will bring down the import bills,” he said.’
When industrialized economies were developing, oil was the equivalent of $13 a barrel, but now developing countries must pay $120 to $130, noted Birol, which leaves developing countries “hamstrung” – so if more people are to be lifted out of poverty, clean energy must be an imperative.
The data from the IEA (International Energy Agency), widely regarded as the gold standard for energy analysis, rang alarm bells for campaigners, and is likely to be closely examined by donor governments, which have not tended to prioritize clean energy in the past.”
Halliday’s blindness on the energy eye misleads Yukoners and Canadians because wasting resources from crucial conventional oil and gas feedstock into the sinkholes of shales and tarsands only deepens the crisis and threat of energy starvation. Trouble is, should the problem hit on a real crisis or depression level, it might be late fixing it.
Like the Alberta and B.C. petro state governments, Halliday is also an ardent “free” trader as well as carbon price and carbon tax promoter, which he has put forward many times.
More neoliberal magical thinking. The polluter powers benefit by carbon pricing ideolog re-assigning responsibility in a way that exploits energy-saving light bulb campaigns, etc. Acquiring and financializing polluter offsets and permits further entrench and expand polluter rights.
Carbon price and carbon market language falsely describe big oil not as oilygarchy but as market player with a supposedly affordable and therefor adjustable product and provide climate outlaws with a fake image of being relevant solution providers.
“Put a price on carbon” was invented and successfully introduced by big oil and Wall Street in the early ’80s as a fictionalized, alternative proposal to a renewable energy orientation, very much in zero sum opposition.
Countries like Denmark that are far below projected greenhouse gas emission levels or caps, China very much putting the same gears in place, instead have strong renewable energy frameworks as policy lead or driver. With fewer unearned privileges for big oil, coal and nuclear markets work.
There, people are encouraged to participate in electric public and private transportation and other zero tailpipe emission technologies.
And they’re not cynically penalized and carbon-taxed for living with infrastructure decisions they have not made and for which little alternative is available to them.
Matthias Bichsel, then project and technology director at Shell, summed it up in October 2013 in this way, cited by the Financial Post on Oct. 18, 2013: “The United States oil and gas industry has “overfracked and overdrilled’.”
Seasoned oil and gas industrialists like Art Berman and analysts like Deborah Rogers or petroleum geologists like David Hughes, state clearly fracking is more energy waste and investment fraud than resource production.
Rather than for responsible oil and gas production, the frack bubble aims at fracking pension funds and drilling for media releases, and Halliday delivers.
