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| After several complaints by Traditional Owners, DEC officers testing Buru's Tailings |
The WA Parliament passed a landmark agreement on Wednesday night, giving Buru and its Japanese backer Mitsubishi incentives to help speed shale gas development, including support with a potential pipeline that Buru sees as an extra money spinner from transporting third-party gas. It is estimated the Canning Basin holds about 229 trillion cubic feet of gas.
Mitsubishi is an equity partner in the Woodside-led NWS consortium, which is spending $7.5 billion to ensure the venture's five LNG trains near Karratha keep operating at full capacity beyond 2020 as older fields run dry.
While the State Agreement has been a fillip, Buru's shares have dropped sharply over the past year as the market awaits news of exploration success. Mr Wulff said weak global markets were having an impact but defended Buru's potential, and reiterated the company was separately on track for production from its Ungani oilfield this year.
His comments came as Premier Colin Barnett yesterday said the WA Government would press on with controversial plans to acquire land at James Price Point, north of Broome, for use for offshore Browse Basin and, eventually, Canning Basin gas processing.
Photo Damian Kelly
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The economics of shale oil and gas are so dodgy there will be no room for a brand new stand alone greenfields plant :
ReplyDeleteThis shows Barnett's dream could be a lot more shaky than the latest IEA figures show.
"...Despite accounting for nearly 40 per cent of US natural gas production, shale gas production has "been on a plateau since December 2011 - 80 per cent of shale gas production comes from five plays", some of which are already in decline.
"The very high decline rates of shale gas wells require continuous inputs of capital - estimated at $42 billion per year to drill more than 7,000 wells - in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32.5 billion."
"....Report author Hughes said that the main problem was the exclusion of price and rate of supply: "Price is critically important but not considered in these estimates." He added: "Only a small portion [of total estimated resources], likely less than 5-10 per cent will be recoverable at a low price...
"Shale gas can continue to grow but only at higher prices and that growth will require an ever escalating drilling treadmill with associated collateral financial and environmental costs – and its long term sustainability is highly questionable."
Another report was put out by the Energy Policy Forum, and authored by former Wall Street analyst Deborah Rogers - now an adviser to the US Department of the Interior's Extractive Industries Transparency Initiative. Rogers warns that the interplay of geological constraints and financial exuberance are creating an unsustainable bubble. Her report shows that shale oil and gas reserves have been:
"... overestimated by a minimum of 100% and by as much as 400-500% by operators according to actual well production data filed in various states... Shale oil wells are following the same steep decline rates and poor recovery efficiency observed in shale gas wells."
"...."The EIA actually does retrospective assessments of their forecasting and their track record is dismal... They admit that they overestimated natural gas production 66 per cent of the time and crude 59.6 per cent of the time in their March 2013 assessment for 2012."
She added that "there is definitely a bubble." Though it would not have an impact as devastating as the banking crisis, she said:
http://www.guardian.co.uk/environment/earth-insight/2013/jun/21/shale-gas-peak-oil-economic-crisis
There is a lot about this shale gas that seems similar to all the talk about US property that led to the greatest swindle of our times - the GFC - TOTALLY OVERHYPED!
ReplyDeletehttp://thinkprogress.org/climate/2013/05/01/1946781/faster-drilling-diminishing-returns-in-shale-plays-nationwide/?mobile=nc
Everywhere else, the regional drop-offs are steep. In the Haynesville play, which quite recently was the nation’s top shale play, wells delivered roughly one third less gas on average in 2012 than in 2010, Hughes found.
In other words, shale gas regions start to lose their luster fast. Mr. Hughes pointed out that the Haynesville was hardly even targeted by shale gas drillers until 2008 – and now the best areas, the sweet spots that produced the gushers the Haynesville became famous for, seem to have been found.
“So how long do these plays last?” Mr Hughes asked at his Maryland talk. “Looking at the Haynesville, probably about 8 to 10 years before we’re on the other side of that production curve.”
It’s not just the Haynesville. In shale plays across the U.S., the sweet spots may have already been identified, Mr. Hughes cautioned. In these sweet spots, drillers can make attractive profits even when natural gas prices plunge. But these areas are rapidly becoming dotted with gas well after gas well – and as the sweet spots fill up, drillers must turn to less promising areas. That’s when average well productivity begins to fall across the play.
Drillers have known for a long time that individual shale gas wells tend to decline at a startling rate. Within three years, the amount of gas flowing from a single shale well can drop 95 percent, Mr. Hughes found — turning what used to be a gusher into a garden hose. Some experts believe that shale gas wells will tend to dry up within 8 to 10 years unless they are re-fracked. Of course, re-fracking not only costs drillers money, making the gas more expensive for consumers, it also has major environmental impacts.
In the Haynesville, for instance, production falls 52% in a well’s first year, Mr. Hughes said. This holds true for shale gas wells nationwide, though the rates vary from play to play. After reviewing drilling logs from thousands of Pennsylvania wells, Hughes confirmed that individual well production shows similar steep declines to those in other plays. This undermines the claims from drillers that wells in the state can continue producing for the next 30 to 40 years.
But these fast declines don’t mean that drilling will stop. Quite the opposite. It means that in order to keep the same amount of domestic natural gas flowing, drillers will need to drill faster and faster – in part to keep up with the declines from each well, and in part because on average, the new wells they drill will perform worse and worse.
If Mr. Hughes’ research is correct, each year, it will be an increasingly massive endeavor just to keep producing the same amount of shale gas that was produced the year before. And for consumers, this means rising natural gas prices.
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PEOPLE WHO THINK THE CANNING BASIN WILL BE DEVELOPED LIKE SHALE IN THE US NEED A REALITY CHECK.
http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/shale-gas/Documents/cee-shale-gas-2.pdf
"....as of early 2012, there were nearly 2000 land rigs available in the US,as compared to only 72 in Europe.This situation is not likely to change soon.Apart from the difficulty and expense of transporting existing US rigs to Europe,the majority of the US rig fleet is already deployed domestically,with no spare capacity to be transferred to Europe.
In order to develop shale gas resources European drillers would therefore have to order new equipment,either from the US or local manufacturers,which in both cases is a lengthy (9 - 12 months per rig on average) and capital - intensive process....."
AND THAT IS EUROPE - NOT THE CANNING BASIN WA.
...AND THERE IS A LOT OF FOCUS ELSEWHERE INCLUDING CHINA.
..
..
ReplyDeletehttp://www.rigzone.com/news/oil_gas/a/124801/Musings_Will_Barnett_Shale_Study_End_Debate_Over_Gas_Outlook
Scott Tinker, Director of the Bureau of Economic Geology and the Principal Investigator of the Barnett Shale study, in an article earlier in February in the Ft. Worth Star-Telegram reporting on preliminary results of the study said the average well had a EUR of 1.44 Bcf of gas, but he acknowledged that there was a wide disparity in the performance of wells in the field. That confirms that shale formations do have "sweet" spots in which production is much greater and total resources are large, contributing to low well costs and positive financial returns. Mr. Tinker went on in his interview to suggest that there were still many well locations in the richer areas of the Barnett Shale formation, but he also acknowledged that there were many wells with very poor returns. The report's average well EUR estimate is below the estimate claimed by numerous operators in the field, suggesting poor financial returns for the field.
A critic of the gas shale boom, geologic consultant Art Berman, was quoted in The Wall Street Journal article as asking "why didn't they identify the sweet spots initially, before spending $40 billion on land and wells?" This financial question is the core issue currently reshaping the shale revolution.
China oil deal puts pressure on WA
ReplyDeleteA historic $292 billion oil deal between Russia and China will put pressure on WA as an emerging energy supplier to China, according to industry insiders.
In a wake-up call for the local energy market, which supplies a small but growing chunk of China's energy needs through liquefied natural gas, the China-Russia deal is a sign that China - Australia's biggest trade partner - is expanding its horizons to feed its energy-hungry population.
The WA Chamber of Minerals and Energy and the peak oil and gas body warned yesterday that the China-Russia deal was further evidence of the increased competition Australia and WA faced to gain Chinese energy investment.
China is WA's second-biggest importer of LNG behind Japan, however industry experts expect China to soon take over as its population becomes more energy-intensive.
The implications of the China-Russia tie-up on WA's burgeoning LNG sector will send shivers down the spine of the cash-strapped State Government, which has been hanging its hat on the future development of WA's gas reserves as the iron ore sector plateaus.
Though Australia's oil exports are comparatively small on a world scale, both the oil and gas energy markets are intrinsically linked, so the China-Russia deal will inevitably create a smaller energy market for WA's LNG sector.
The oil deal, which will play out for 25 years after coming on line in the latter half of this decade, comes against a backdrop of WA losing out on a huge windfall from the $40 billion Browse development and growing pressures over costs and productivity levels across the oil and gas sector.
A spokesman for the Australian Petroleum Production and Exploration Association said the deal should serve as a timely reminder that Australia's attractiveness as a place to invest was under enormous pressure.
According to the State Government, there is $111 billion worth of oil and gas projects under construction or committed to across the State - which includes the $40 billion Browse project - and $91 billion is under consideration.
WHY DO THEY KEEP CLAIMING FOOD BOWL?
ReplyDeleteSUGAR AND COTTON......
ARE THEY SAYING VEGETABLES CAN BE GROWN AND FLOWN INTO ASIA CHEAPLY?
SOMETHING IS MISSING HERE.
HAASE WELCOMES THE RELEASE OF THE LIBERAL PARTY’S 2030 VISION FOR DEVELOPING NORTHERN AUSTRALIA Barry Haase, Federal Member for Durack said the release of The Liberal Party’s 2030 Vision for Developing Northern Australia was a clear sign of the Liberal Party’s determination to develop Northern Australia. Mr Haase said the document highlights how Northern Australia could drive economic growth in coming decades by: • developing a food bowl, including premium produce, which could help to double Australia’s agricultural output; • building an energy export industry worth $150 billion to the economy, with a major focus on clean and efficient energy, providing major increases to resource exports; and • growing the tourist economy in Northern Australia to 2 million international tourists annually. “As Tony Abbott said, we have to break the development deadlock that has held Northern Australia back for so long.
- See more at: http://www.kimberleypage.com.au/2013/06/barry-haase-on-the-northern-australia-plan/#more-31043
....
Shane Van Styn says he welcomes the opposition’s northern Australia package.
He describes it here as “the Liberal-National Coalition’s 20 year vision for Northern Australia”.
You can read his statement here:
June 21, 2013
Van Styn welcomes Liberal-National Northern Australia package
The Nationals WA Candidate for Durack, Shane Van Styn, has welcomed the Liberal-National Coalition’s 20 year vision for Northern Australia, announced today.
Mr Van Styn said the Northern Australia package will have clear benefits to agriculture, tourism and industry in the Pilbara, the Kimberley, the Northern Territory and northern Queensland.
“We all know how much potential Australia’s north holds. This package will help to unlock that potential and transform Australia’s north into a major economic driver for our Nation,” Mr Van Styn said.
Key elements of the Northern Australia package include:
• Development of a food bowl, including premium produce to double Australia’s agricultural output;
• Growing the tourist economy in the North to two million international tourists annually; and
• Building an energy export industry worth $150 billion to the economy, with a major focus on clean and efficient energy, providing major increases to resource exports.
Mr Van Styn credited the Federal National Party for working to develop Australia’s north.
“No longer will Northern Australia be seen as the last frontier. It is in fact the next frontier for development of agriculture, business, tourism and clean energy that will benefit all of Australia.
“For so long, this area has been neglected by the Federal Government. The Northern Australia package is a significant step forward in placing the Kimberley on the Federal agenda.”
Mr Van Styn said the Northern Australia package would complement the work being undertaken by The Nationals WA by investing in regional communities in the State’s north.
“The Royalties for Regions funded Pilbara Cities program is already hard at work committing infrastructure and services in Karratha, Port Hedland and Newman.
In the Kimberley, Royalties for Regions is developing a major FOOD - BOWL and economic driver in the ORD-EAST KIMBERLEY Expansion.
- See more at: http://www.kimberleypage.com.au/2013/06/shane-van-styn-on-the-northern-australia-package/#more-31037
BIGGEST STUFF UP WITH ENERGY.....
ReplyDelete"... the Government's merger plan would amount to a "monopoly tax" on consumers and warned the impact on the WA economy would be worse than the carbon tax and mining taxes combined."
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Energy plan under fire on two fronts
The State Government's energy policy has been dealt a double blow with the economic watchdog undermining claims that the revival of the Muja power station would not result in higher prices and a leading private electricity player blasting the move to remerge Verve and Synergy.
Ky Cao, managing director of private retailer Perth Energy and a former Western Power executive, claimed the Government's merger plan would amount to a "monopoly tax" on consumers and warned the impact on the WA economy would be worse than the carbon tax and mining taxes combined.
His prediction came as the Economic Regulation Authority estimated that excess generating capacity in the South West cost households and businesses an extra $26 million last year.
Energy issues have dominated the early months of the Government's second term, with new Energy Minister Mike Nahan trying to implement Premier Colin Barnett's merger policy while sorting out Verve's bungled plan to refurbish 47-year-old coal-fired power plants at Collie.
Mr Cao said a merger would effectively recreate the State-owned monopoly that the split of the old Western Power in 2006 was designed to break.
He called on the Government to complete a "root and branch" review of the wholesale energy market before pressing ahead with a merger.
"Recreating a State-owned monopoly will once again entrench waste and inefficiencies in the system," Mr Cao said. "It will be an illogical tax on all consumers, regardless of their circumstances."
He took aim at the lack of transparency about the decision to pursue a merger, saying it had been taken without apparent input from the Public Utilities Office or Treasury, undermining confidence that the Government was acting as an independent umpire in the market.
...
Assange 'proud' to help leaker Edward Snowden escape Hong Kong
ReplyDeleteJULIAN Assange says he is proud that WikiLeaks has helped US leaker Edward Snowden escape from Hong Kong and seek refuge in Ecuador.
The United States is demanding Mr Snowden, charged with revealing vast US surveillance, "not be allowed to proceed further" overseas after the former spy landed in Moscow.
But Mr Assange's WikiLeaks organisation has insisted Mr Snowden was bound for Ecuador "via a safe route" escorted by the organisation's own legal advisers and diplomats.
"Mr Snowden requested that WikiLeaks use its legal expertise and experience to secure his safety," the organisation said in a statement.
"Once Mr Snowden arrives in Ecuador his request will be formally processed."
Mr Assange's lawyer, former Spanish judge Baltasar Garzon, said the US's pursuit of Mr Snowden and his client for disclosing information in the public interest was "an assault against the people".
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Mr Assange has told Fairfax Media he is "thankful and proud of the courage of WikiLeaks' staff and all those who have assisted Mr Snowden's exit from Hong Kong".
Ecuadorean Foreign Minister Ricardo Patino confirmed via Twitter that "the government of Ecuador has received an asylum request from Edward Snowden".
Mr Patino last week met Mr Assange at his country's diplomatic mission in the UK.
Later he hinted at what could be to come when he told reporters: "If he (Snowden) applies for asylum in Ecuador then ... shouldering its full responsibility the Ecuadorean government will analyse the request".
Mr Assange on Saturday said US President Barack Obama had betrayed younger generations.
It was outrageous Mr Snowden was being charged with espionage "when the US government is spying on each and every one of us", the former computer hacker said in speech that was meant to be delivered from the embassy's balcony, but was published online instead, due to an undisclosed "security situation".
"The charging of Edward Snowden is intended to intimidate any country that might be considering standing up for his rights," Mr Assange said.
"That tactic must not be allowed to work."
Mr Snowden, who fled to Hong Kong to reveal sensational details of cyber-espionage by the US, flew to Russia on Sunday on a commercial flight.
He is spending the night in Moscow's Sheremetyevo Airport and is booked on an Aeroflot flight to Cuba on Monday, the Russian news agencies ITAR-Tass and Interfax have reported.
Aeroflot has no direct flights from Moscow to Quito in Ecuador. Travellers would have to make connections in Paris, Rome or Washington DC, which could be problematic for Mr Snowden.
SUBSCRIPTION ANYBODY?
ReplyDeletehttp://www.energynewsbulletin.net/storyview.asp?storyid=798532077§ionsource=s0
Slugcatcher and the question of over-promising and under-delivering
Monday, 24 June 2013
IT IS never good policy to spend what you haven’t got, a lesson Slugcatcher hopes the Australian government has learned over the past two years. It is a lesson another government, Israel, is about to learn – as are two companies, Woodside Petroleum and Buru Energy.