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Shale gas EROI: Preliminary estimate suggests 70 or greater

A valuable measure of a fuel’s usefulness and long-term viability is its energy return on (energy) investment (EROI). This is the ratio of the energy obtained from using that fuel to the energy invested to bring that fuel to its point of use.[1],[2],[3]. Back in the early days of petroleum and natural gas production, when wells were shallower and readily accessible by land routes, EROIs were probably in the range of 100 – that is, a well would return 100 units of energy for each 1 unit of energy it took to drill it and bring the product to market.

To the extent that the growth of industrial society has been supported by readily available and cheap energy (i.e., fossil fuels with high EROI), industrial economies will be increasingly stressed as easily extracted fuels are used up and replaced by fuels with lower EROI. Some analyses suggest that an EROI greater than 5 to 10 is necessary for even a limited functioning of industrial civilization and indicate that many of the newer oil wells in difficult locations, e.g. deep seas, have EROIs in the range of 10.[4]

New methods of extracting natural gas from organic-rich shales, such as the Barnett in Texas and the Marcellus in Pennsylvania and nearby regions, appear to offer promise of a large new source of natural gas. Geologist Ken Deffeyes who several years ago made what increasingly appears to be an accurate prediction that global petroleum production would peak somewhere between 2004 and 2008, regards natural gas from shale as a game-changing opportunity.[5] He considers opposition to new horizontal drilling and hydrofracking procedures as “evidence of economic suicidal tendencies.”[6] Deffeyes is a knowledgeable geologist (long ago, he was one of the early proponents of a then-controversial theory – plate tectonics). Others share the optimism; huge amounts of capital are flowing into the new shale gas plays.

But some wonder if the potential of shale gas is overblown. Geologist Arthur Berman has argued that shale gas is not economic to produce unless the wholesale price of gas rises above $7 per million Btu.[7] Others have made similar arguments.[8] . A recent report argues that the level of effort to capture significant amounts of gas from shale is so large that it is unlikely to happen, especially if the price of natural gas remains at or below the break-even point, which this report indicates is likely in the range of $4.20 to $11.50 per million Btu.[9]

The key to the future of shale gas is its EROI. I’ve been unable to find estimates of the EROI of shale gas in the literature. However, I’ve made a preliminary first-order[10] estimate that the EROI of shale gas is in the range of 70 to greater than 100. This is probably significantly better than most other energy sources available today.

This estimate is based on my interpretations of analyses by the Environmental Defense Fund[11] and the New York Department of Environmental Conservation (NYDEC)[12] which focused on the carbon dioxide (CO2) emissions from shale gas drilling and compressing operations. CO2 emissions are directly related to fossil fuel combustion, so these studies in effect provide estimates of the energy used to extract shale gas and get it to market. Other studies provide estimates of the ultimate production of gas from an average well[13] and on the portion of the gas that must be used to process and compress it and send it through pipelines.[14] Also included were approximate estimates of the energy it took to make the steel used for well casings and a portion of the necessary pipelines, and the concrete used in the casing process, which were apportioned based on assumptions.

The NYDEC study looked at the main tasks involved in drilling and hydrofracking, including 1) site mobilization, construction and demobilization, 2) well drilling, 3) transportation of water, etc. necessary for hydrofracking, and 4), the hydrofracking process. Using activities on well drilling sites and estimated CO2 emissions based on equipment emission factors and times of operation, this study estimated a range of CO2 emissions for each of these and several smaller tasks, depending on whether the well was near or far from necessary materials, water, etc. I chose approximate average to high-end values for these tasks of 100, 95, 400, and 325 tons of CO2, respectively. Adding in several smaller tasks as well resulted in a total CO2 emission to drill and hydrofrack a well of approximately 940 tons. Since all of this work is typically powered by diesel engines, this emission can be converted with standard conversion factors[15] to Btu consumed in the form of diesel fuel. It translates to 11.6 billion Btu.

The EDF study also inventoried activities on well drilling sites and estimated CO2 emissions based on equipment emission factors and times of operation. Its estimate, provided on a daily basis for 1000 wells completed per year, translates to approximately 1450 tons per well completion. This figure translates to 18.4 billion Btu.

These values average 15 billion Btu. To this I added 2.8 billion Btu for the embodied energy in the steel used for the well casing,[16] 1.2 billion Btu for the embodied energy in the concrete used for the well casing,[17] 1.5 billion Btu for the embodied energy of the trucks, pumps, and other equipment used in the drilling and hydrofracking process,[18] and 10 billion Btu for the embodied energy of the steel used for a portion of the pipeline necessary to transport the gas.[19] All of these embodied energy estimates involve a number of assumptions and are subject to much uncertainty and variation from well to well, but I doubt the uncertainty of any of them is more than a factor of two. The total of all these energy costs to construct a shale gas well and get its production to market is approximately 30 billion Btu.

Another, quite different approach is to estimate the total cost of a shale gas well and then use the average amount of energy associated with a dollar of gross domestic product (GDP) to translate this cost to an energy value.[20] In 2010, U.S. GDP was about $14.5 trillion, and the nation used about 100 quadrillion Btu. This translates to about 7000 Btu of energy expended per dollar. Assuming that the energy expended in drilling and hydrofracking a shale gas well bears the same relative relationship to the dollar, the approximately five million dollar estimated cost of a well and associated infrastructure[21] translates to an energy cost of 35 billion Btu.

These energy cost values must be compared with the total energy expected to be produced by an average shale gas well. There are now enough data on wells from the major shale regions to provide such an estimate. A cumulative production estimate[22] for a typical Marcellus shale well for a 10-year period of 2.11 billion cubic feet was extrapolated to a 25-year period, yielding an estimate of approximately 2.9 billion cubic feet. This translates to approximately 2.9 trillion Btu. Other estimates suggest typical total production from Marcellus wells may in the range of 5 trillion Btu.[23] This ultimate production must be reduced by 8% to account for the approximate percentage of gas that is consumed to process and compress the gas and move it through pipelines to consumers. [24]

The estimated total energy cost of shale gas extraction is thus in the approximate range of 30 to 35 billion Btu while the estimated ultimate energy produced is in the range of 2.6 trillion to nearly 5 trillion Btu. The ratio of energy produced to energy expended for shale gas based on the approaches outlined above is thus at least 70 and perhaps well over 100. This is extremely good relative to the probable EROI values for other current energy sources.

This relatively high EROI of shale gas has several implications:

1) Shale gas is not a speculative bubble that will go away. Its favorable energy balance means that economics will inexorably drive the extraction of gas from shales, especially as supplies of petroleum grow tighter. The number of wells drilled will continue to grow, as will associated truck traffic and other activity. To the extent that appropriate regulations are not put in place and enforced and/or that voluntary best management practices are not followed, damages to the landscape and pollution events are inevitable.

2) Natural gas will be in more plentiful supply than petroleum in the years to come; businesses and infrastructure that are dependent on petroleum are likely to look for ways to convert to natural gas. However, the potential size of the shale gas play should not be overestimated. It is not likely big enough to replace dwindling and ever-more-expensive petroleum on a large scale.[25]

3) Dangers of excessive regulation threatening the development of the nascent shale gas industry are probably overblown. Shale gas companies should be able to afford to adopt and enforce best practices for all that they do. Unless it can be conclusively proven that the entire industry needs protection from unnecessarily stringent regulations, a gas company’s arguments for regulatory leniency should be considered as nothing more than advocacy for that company’s own profitability.

While the embodied energy of basic materials and machinery involved in the drilling and hydrofracking processes have been considered in this analysis, some energy costs have not been considered. These include the embodied energy of labor and associated support and infrastructure (e.g. workers’ vehicles, energy costs of housing and food for workers, etc.). Further, energy costs of remediating pollution and other problems that could result from shale gas extraction have not been considered. Also, costs of impacts to resources such as water supply, while not directly comparable to energy costs, are relevant to a deeper look at EROI.

Some potential problems include:

1) Large amounts of gas may leak from extraction operations. Although there is much uncertainty, recent work suggests that such leakage of natural gas, because of its relatively high global warming potential, could be large enough to nullify the benefits of natural gas vs. coal and petroleum from a global warming perspective.[26]

2) Surface waters may be polluted by spilled or improperly treated flowback fluids and drinking water wells may be contaminated with chemicals used in the hydrofracking process or created in-situ as byproducts of this process. Several perceptive discussions of these potential impacts are available.[27],[28]

3) Gas itself, finding its way into aquifers from nearby wells, may contaminate drinking water. A recent study found levels of gas from nearby wells high enough to present explosion hazards.[29]

4) More drilling activity will generate more traffic on rural roads, resulting in more noise, air pollution, safety risks, and generating a need for road and other maintenance and improvements.

5) More drilling activity will fragment vast stretches of contiguous forest. (See photo of drilling sites in western PA.) Loss of contiguous forest is likely to accelerate the decline of many species of wildlife including neotropical migrant songbirds.

Serious efforts towards improving the efficiency of natural gas use could reduce the pressure to extract more gas and thereby reduce the incidence of negative impacts. (See, for example, earlier posts on this site on increasing home heating efficiency.)

Increased production of natural gas from shale is also likely to have positive impacts, including the creation of jobs and the flow of more money into rural areas.

If negative impacts can be controlled with best management practices, which will likely require appropriate and well-enforced regulations, shale gas could help maintain rural communities and ameliorate, to some degree, growing energy supply problems. Especially important, both from a global warming and from a safety perspective, appears to be minimizing gas leakage. It also seems critical that new supplies of natural gas not be squandered through wasteful usage; environmental costs resulting from shale gas will be lessened to the degree that less gas is used due to increased energy efficiency.

References

[1] While EROI is the key to a resource’s energy usefulness, there are important aspects to a resource’s costs that are not considered. These include its renewability, environmental impact, its size, and the need for ancillary resources and materials. For a thorough discussion of EROI and net energy see Heinberg, 2009, referenced below. . Also see Mulder & Hagens, 2008, referenced below.
[2] Heinberg, Richard, 2009, Searching for a Miracle: “Net Energy” Limits and the Fate of Industrial Society, http://www.postcarbon.org/report/44377-searching-for-a-miracle
[3] Mulder, K., and N. Hagens, 2008, Energy return on investment: Toward a consistent framework, Ambio, 37, 74-79.
[4] Hall, Charles, 2008, Why EROI Matters, The Oil Drum, http://www.theoildrum.com/node/3786
[5] Deffeyes, K., 2010, When Oil Peaked, Hill and Wang, NY, p.107
[6] http://www.princeton.edu/hubbert/current-events.html
[7] http://petroleumtruthreport.blogspot.com/
[8] http://baobab2050.org/2010/10/28/shale-gas-miracle-or-mirage/
[9] Hughes, J. David, 2011, Will Natural Gas Fuel America in the 21st Century, Post Carbon Institute, www.postcarbon.org/report/331901-will-natural-gas-fuel-america-in
[10] See Mulder & Hagens, 2008, for a further discussion of this term and of the methodological issues in EROI determination
[11] Armendariz, A., 2009, Emissions from Natural Gas Production in the Barnett Shale Area and Opportunities for Cost-Effective Improvements, prepared for Alvarez, Ramon, Environmental Defense Fund, Austin, TX, January 26, 2009, http://www.edf.org/documents/9235_Barnett_Shale_Report.pdf
[12] NYDEC, 2009, DRAFT Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program, NY Department of Environmental Conservation, Albany, NY, http://www.dec.ny.gov/energy/58440.html
[13]Harper, John, and Jaime Kostelnik, PA Geological Survey, The Marcellus Shale Play in Pennsylvania, http://www.marcellus.psu.edu/resources/PDFs/DCNR.pdf, accessed 6/15/11
[14] U.S. Energy Information Administration (EIA), 2011, Natural gas consumption by end use, http://www.eia.gov/dnav/ng/ng_cons_sum_dcu_nus_a.htm. The quantities used for “lease and plant fuel” and “pipeline and distribution” in 2010 represented 8.3% of total consumption.
[15] EIA, 2011a, http://www.eia.gov/oiaf/1605/emission_factors.html
[16] Wikipedia, 2011, “Embodied Energy,” http://en.wikipedia.org/wiki/Embodied_energy, and references therein
[17] Wikipedia, 2011
[18] Stodolsky, F., A. Vyas, R. Cuenca, and L. Gaines, 1995, Life-Cycle Energy Savings Potential from Aluminum-Intensive Vehicles, Argonne National Laboratory, Argonne, IL 60439. See analysis at http://michaelaucott.blogspot.com/2010/08/still-in-service-why.html, which uses this report to estimate that the embodied energy of vehicles and other machinery represents approximately 10% or less of the energy needed to operate the unit over its lifetime. This same percent of the energy used during the drilling, etc. processes was assumed to represent the energy expended in the form of embodied energy of vehicles and other equipment.
[19] Value for steel is from Wikipedia, 2011; M. Aucott assumed for this analysis that 10 miles of 20” pipeline would be installed, but that this would serve 10 wells. Energy expended for construction of pipeline was ignored. Pipelines may serve many more than 10 wells, and could last for longer than the lifetime of one well, which would lower the apportioned energy expenditure. There is considerable uncertainty with this figure.
[20] Hall, C., and M. Lavine, 1979, "Efficiency of Energy Delivery Systems:1. An Economic and Energy Analysis", Environmental Management, vol 3, no 6, pp 493-504, 1979 (First part of a 3 part article), as referenced in “North American Natural Gas Production and EROI Decline” from http://www.theoildrum.com/node/3673.
[21] Harper and Kostelnik, PA Geological Survery, 2011; $5 million dollar figure is sum of estimated cost of a Marcellus well from this the figure “Comparisons of Four Major Shale Plays” from this reference ($3.5 million) plus additional $1.5 assumed by M. Aucott to approximate the cost of associated pipelines.
[22] Harper and Kostelnik, PA Geological Survey, 2011
[23] Vanderman, Kris, 2011, Penn State University webinar, 4/21/11.
[24] EIA, 2011
[25] Hughes, 2011
[26] Howarth, R., R. Santoro, and A. Ingraffea, 2011, Methane and greenhouse-gas footprint of natural gas from shale formations, Climatic Change, http://graphics8.nytimes.com/images/blogs/greeninc/Howarth2011.pdf
[27] Penningroth, Steven, 2010, http://yosemite.epa.gov/sab/sabproduct.nsf/A4105736E3A173AC85257703006B8648/$File/Pub+Comments+by+S+Penningroth+Ithaca+NY4-7-10+for+EEC+Apr+7-8+2010+Meeting.pdf
[28] http://www.energybulletin.net/stories/2011-06-20/forum-just-how-safe-%E2...
[29] Osborn, S., A. Vengosh, N. Warner, and R. Jackson, 2011, Methane contamination of drinking water accompanying gas well drilling and hydrofracking, PNAS, http://www.pnas.org/content/early/2011/05/02/1100682108

Mike Aucott, PhD has worked as Research Scientist in Environmental Protection, a Consultant and a College Professor.

Editorial Notes: I commented to Mike that the EROEI he is suggesting seems very high - at least given what I have read on the challenging and distributed nature of the resource. Mike replied "The EROI seems high to me too. Some of the recent info, e.g. Art Berman's estimates that a typical shale gas well's total production may be only half the earlier predictions, would lower it. But it still would be pretty good if the various energy inputs are in the right ballpark. I'm hoping others will weigh in with more and better data". - SO

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