Gordon Campbell asks has Peak Oil Peaked?

New Zealand journalist Gordon Campbell has just written an interesting feature "Has The Peak Oil Idea Peaked?" in his on-line publication "Werewolf". Campbell's key point is that there are now increasing volumes of unconventional oil and gas production entering the market. And that the old oil barons and the new unconventional oil barons both want to maintain prices that a) make shale oil and tar sands profitable b) don't rise so much as to incentivise renewble energy sources and c) don't cause dropping demand as was the case in 2008.

...both the new and the old oil and gas suppliers have a common interest in the price staying out of the basement, and up in the mid-range. The conventional players within OPEC and the big players outside it can live with Brent prices in the $90-100 price range. Go any higher, and the fear both within and beyond OPEC is that this could cause a re-run of the latter half of 2008, when sky-high oil prices sparked a massive global investment in alternative, cleaner forms of energy. For the industry, the trick will be to keep prices just high enough to protect the profit margins that are required (on top of the higher costs of exploration and extraction) but without throwing renewables a life line. That’s going to be the challenge: let prices rise too high and renewables will get breathing space.

...the frackers and the deepwater oil and gas explorers...need the price to stay relatively high (maybe just south of $100 a barrel) to deliver a return on their relatively expensive activities. Trouble is, the break-even estimates do vary quite widely on this point – with anything from $60-130 a barrel being cited as the break-even point for fracking when conceived as anything more than a hit and run operation.

As the IEA says its not a good outlook for renewable energy to replace fossil fuel energy quickly enough to avert dangerous climate change. Campbell concludes:

the environmental imperatives behind the peak oil concept remain. Thanks to the resilience of the fossil fuel industry though, the political battle has suddenly become a whole lot harder.

Campbell's feature is well worth reading.

Australian Energy generators betting on a shale gas future ?

The recent (optimistic) EIA report into global shale gas resources has local gas producers wondering if a repeat of the coal seam gas boom may be on the cards in Australia, particularly in South Australia and West Australia. The Australian reports on Santos’ interest in this other form of unconventional gas - Energy generators bet on shale gas future.

THE hype about shale gas increased yesterday when Santos chief executive David Knox revealed he is planning to drill an onshore well in the next month to test for the unconventional gas, which has turned US domestic energy markets on their heads.
The move comes on the back of a report by the US Energy Information Agency that said Australia was sitting on the world's fifth-biggest reserves of shale gas and was ready to become a major producer. A revolution in shale gas technology has turned the US from a net importer of gas to one with a surplus in just the past five years, capping gas prices and dashing a host of planned liquefied natural gas import terminals.

The EIA, which is the US Energy Department's respected statistics and analysis arm, completed a study of global shale gas prospects last month and found Australia was one of the most prospective countries for development. "With geologic and industry conditions resembling those of the US and Canada, the country is poised to commercialise its gas shale resources on a large scale," the EIA said.

Santos is planning to drill in the Cooper Basin, which straddles the South Australia/Queensland border. Beach Energy, which claims it has more prospective shale ground than Santos, has already drilled there and is planning to do a frac test -- where the shale is fractured to release gas -- this quarter.

Gas captured in shale does not flow as easily as conventional gas, which is released from the rocks it is found in by pressure alone. The recent technology breakthroughs of the last decade mean the shale can be fractured underground to release the gas relatively economically.

While the Cooper Basin has a good chance to become Australia's first commercial producer of the gas, there are plenty of reasons to keep an eye on companies such as New Standard Energy and Buru Energy. which have grabbed early ground in Western Australia's big Canning Basin. The EIA says the Canning, in the northern part of the state, has 229 trillion cubic feet of risked recoverable reserves, compared to 85tcf in the Cooper and 69tcf in the Perth Basin, where AWE has shale ground.

If the EIA is correct and approximately 385 tcf of gas can be extracted from shale in Australia, this would extend the lifespan of domestic gas production even under a scenario of greatly increased consumption to over a century (thus further undermining any arguments to restrict exports based on resource nationalism - though obviously environmental issues remain, particularly given the experience in the US with unconventional gas extraction).

Cross posted from Peak Energy.