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Frackers Face Harsh Reality as Wall Street Backs Away

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Re: Frackers Face Harsh Reality as Wall Street Backs Away

#61

Post by Gibbon1 »

toomuchtodo wrote: post #46
Spooky23 wrote: post #38

Earlier quoted context omitted.

Air source heat pumps become less effective as the temperature drops. At 17F, you lose about 25% of BTU capacity as compared to 48F. Hot water is another huge use — it’s really expensive to use electricity for that purpose.

Heat pump water heaters exist. "Heat pump water heaters use electricity to move heat from one place to another instead of generating heat directly. Therefore, they can be two to three times more energy efficient than conventional electric resistance water heaters. To move the heat, heat pumps work like a refrigerator in reverse." https://www.energy.gov/energysaver/water-heating/heat-pump-w...

> Heat pump water heaters exist.

Yeah I just put one of those in, mostly because I didn't want to run a gas line. And feel a lot more competent running a 30amp circuit than cutting and sealing a hole in the roof.

Works fine.

Also friend in Florida says she has a heat pump with an air handler. It produces heat in the winter and cooling in the summer.

Not the end of the world.

Re: Frackers Face Harsh Reality as Wall Street Backs Away

#62

Post by selimthegrim »

toomuchtodo wrote: post #9
polotics wrote: post #8

Earlier quoted context omitted.

Really? Please look up some references. Eg. https://jancovici.com/en/

Germany and other nations that poured subsidies into renewables early on (and are to be commended for their economic sacrifice for doing so) are outliers. The rest of the world caught up as soon as renewables were cheaper than fossil fuels. Capital markets don't have feelings. Humanity lucked out that solar and wind costs were driven down as rapidly as they were through manufacturing scale. We'd be screwed otherwise…

Maybe you can come down to New Orleans and explain this to our bought and paid for City Council that can't seem to understand the sentence "Peakers will be stranded assets by 2025"

Re: Frackers Face Harsh Reality as Wall Street Backs Away

#63

Post by onlyrealcuzzo »

ipsum2 wrote: post #14
burger_moon wrote: post #12

Interesting I have friends and family who work at sand mines that supply the sand for fracking. The companies they work for are still expanding and they have more overtime available than they can take. I'm not sure on the long term future of fracking but in the short 5-10 year span it doesn't appear to be going away based on how much infrastructure these companies are adding right now and how much land they're buying…

Prediction: this piece is just fearmongering, in 1-2 years we will see fracking increase, not decrease.

Not if interests rates go up. I'd recommend this book by Bethany McLean: https://www.amazon.com/gp/aw/d/0999745441/ref=dbs_a_w_dp_099...

The reason investment has died off even with the price of oil rising, I'm guessing (based on the book) is because of the slight increase in interest rates.

Re: Frackers Face Harsh Reality as Wall Street Backs Away

#64

Post by D_Alex »

panarky wrote: post #19

I'd love to see an unbiased analysis of the long-term economics of an individual shale well. There's some data that indicates volumes drop off pretty dramatically over time at the individual well level. If this is true, then it requires perpetual investment of new capital in new wells just to maintain constant production volumes. The public data isn't great because old wells are mixed in with new wells and so it's ha…

I would love to show you an unbiased analysis of long-term economics of individual shale wells, I have a few. But, confidentiality.

I can say that:

First of all the picture is quite complex, and of course not all wells are the same. Second - talking "in general" - the break-even oil price for shale oil wells has declined quite dramatically, from around $80-100 in 2014 to $40-50 today, with current wells costing less and producing more than wells of 4 years ago. However, third: The improved economics are not primarily a result of technological advances. Rather, the lower well cost is largely due to lower rig rates and cheaper and more efficient labour. The lower rig rates are not sustainable in the long term, they are low only because it is better to have the rig working and earning at least a little money (not enough to justify buying a new one in the future) than rusting away in a yard. Labour productivity gain is partly explained by the fact that the only the most experienced and efficient crews are now working, and higher well productivity is partly due to only drilling the very best prospects. The quality of crews and prospects is a barrier to raising production further.

In summary, I believe the shale boom is an economic oddity. Whether it continues for any length of time depends on the oil prices. At the current prices, it is not sustainable.

Corollary: If the oil price is effectively set by the true cost of shale oil, we should expect that the price of oil will rise to $80-100/bbl in the medium term.

Re: Frackers Face Harsh Reality as Wall Street Backs Away

#65

Post by onlyrealcuzzo »

toomuchtodo wrote: post #9
polotics wrote: post #8

Earlier quoted context omitted.

Really? Please look up some references. Eg. https://jancovici.com/en/

Germany and other nations that poured subsidies into renewables early on (and are to be commended for their economic sacrifice for doing so) are outliers. The rest of the world caught up as soon as renewables were cheaper than fossil fuels. Capital markets don't have feelings. Humanity lucked out that solar and wind costs were driven down as rapidly as they were through manufacturing scale. We'd be screwed otherwise…

We would've never gotten into this mess if people would recognize the concept of negative spillover / externalities and that the world is worse off for them not being taxed appropriately.

Re: Frackers Face Harsh Reality as Wall Street Backs Away

#66

Post by unforeseen9991 »

scottlocklin wrote: post #27
toomuchtodo wrote: post #21

Earlier quoted context omitted.

Heat pumps and weatherizing. Likely some homes in very cold climates will still need natural gas service (propane tanks, more likely) for emergency heat when the polar vortex hits, but a tight envelope and an efficient heat pump do most of the heavy lifting.

You live in the Bay Area, don't you? No, heat pumps (which take energy; duh) and "weatherizing" are not going to heat houses in Canada or Maine.

I'm in eastern Canada and there are many heat pumps here. Our cold here is typically a "wet cold" due to the Atlantic ocean, rather then the frigid cold of a central province like Ontario. I suspect they would work fine in Maine for the most part as well, for the same reasons.

Re: Frackers Face Harsh Reality as Wall Street Backs Away

#68

Post by [deleted] »

selimthegrim wrote: post #62
toomuchtodo wrote: post #9

Earlier quoted context omitted.

Germany and other nations that poured subsidies into renewables early on (and are to be commended for their economic sacrifice for doing so) are outliers. The rest of the world caught up as soon as renewables were cheaper than fossil fuels. Capital markets don't have feelings. Humanity lucked out that solar and wind costs were driven down as rapidly as they were through manufacturing scale. We'd be screwed otherwise…

Maybe you can come down to New Orleans and explain this to our bought and paid for City Council that can't seem to understand the sentence "Peakers will be stranded assets by 2025"

[deleted]

Re: Frackers Face Harsh Reality as Wall Street Backs Away

#69

Post by ianai »

D_Alex wrote: post #64
panarky wrote: post #19

I'd love to see an unbiased analysis of the long-term economics of an individual shale well. There's some data that indicates volumes drop off pretty dramatically over time at the individual well level. If this is true, then it requires perpetual investment of new capital in new wells just to maintain constant production volumes. The public data isn't great because old wells are mixed in with new wells and so it's ha…

I would love to show you an unbiased analysis of long-term economics of individual shale wells, I have a few. But, confidentiality. I can say that: First of all the picture is quite complex, and of course not all wells are the same. Second - talking "in general" - the break-even oil price for shale oil wells has declined quite dramatically, from around $80-100 in 2014 to $40-50 today, with current wells costing less…

How many years do the laborers have left? Is it less than the medium term of raising prices to 80-100/bbl?

I’m trying to figure out whether the current situation is likely to grow prices relatively linearly or more suddenly - if technological improvements aren’t possible.

Re: Frackers Face Harsh Reality as Wall Street Backs Away

#70

Post by D_Alex »

ianai wrote: post #69
D_Alex wrote: post #64

Earlier quoted context omitted.

I would love to show you an unbiased analysis of long-term economics of individual shale wells, I have a few. But, confidentiality. I can say that: First of all the picture is quite complex, and of course not all wells are the same. Second - talking "in general" - the break-even oil price for shale oil wells has declined quite dramatically, from around $80-100 in 2014 to $40-50 today, with current wells costing less…

How many years do the laborers have left? Is it less than the medium term of raising prices to 80-100/bbl? I’m trying to figure out whether the current situation is likely to grow prices relatively linearly or more suddenly - if technological improvements aren’t possible.

>How many years do the laborers have left? Is it less than the medium term of raising prices to 80-100/bbl?

I don't think the ageing workforce is a huge problem, if that is what you are asking. The labour pool can smoothly absorb new entrants to replace the retirees.

The problem is that if a rapid expansion of workforce is needed - eg in response to increased demand for rigs if oil prices jump into the $80-100/bbl range - the quality of the labour pool will suffer, the productivity will decline and costs will increase.

Are the prices likely to grow suddenly? In some scenarios (eg effective OPEC action, ME conflicts) - certainly. More interesting is what ought to happen in a "business as usual" scenarios. I see it as a race between the decline in production from major "conventional" fields, the growth in energy demand esp from India, China and the "little tigers", and the transition to renewable energy and the "electric economy". My pick is that the speed of the transition to renewable energy will not be sufficient to compensate for the other two factors, and that we will see an increase in the oil prices to $80-100/bbl by 2020, which will enable new production to be brought on stream profitably.

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