Fraser Nelson, political editor of the Conservative weekly magazine, The Spectator, has deployed his Daily Telegraph column to make the argument for
the US to use the power of its energy resources, based mainly on fracked shale gas, to
counter the current Russian military movement into Crimea. (“America has a new
weapon to use against Russia-- the E-Bomb,” March 7, http://www.telegraph.co.uk/news/worldnews/northamerica/usa/10680902/America-has-a-new-weapon-to-use-against-Russia-the-E-Bomb.html)
The fault in this argument is the
shale gas revolution in America has peaked, and costs are rising rapidly to
extract remaining reserves.
On 27 February the authoritative Bloomberg
business news service reported independent shale gas producers “will spend
$1.50 drilling this year for every dollar they get back.”
The article explains that shale
output drops faster than production from conventional methods. It will take
2,500 new wells a year just to sustain output of 1 million barrels a day in
North Dakota’s Bakken shale, according to the Paris-based International Energy
Agency.
Bloomberg also cites the
Houston-based Sanchez Energy Corporation company, which plans to spend as much
as $600 million this year - almost double its estimated 2013 revenue - on the
Eagle Ford shale formation in south Texas, which is the main drilling centre,
along with North Dakota, for shale gas exploitation
By contrast, the net debt of the
world’s biggest oil and gas exploration company by market value, Exxon Mobil, is
less than half of the cash earned from operations last year. Bloomberg stresses
that it plans to spend 68 cents for every dollar it gets back this year.
Last month ExxonMobil’s
CEO Rex Tillerson even joined lawsuit against a fracking well water tower being
built near his $5 million Texas home, the Wall
Street Journal reported.
On 5 March at its annual investors
meeting in New York, Exxon Mobil said it expects capital expenditures (capex) of $39.8
billion in 2014, 6.4% lower than last year’s spending of $42.5 billion. The
company indicated it will reduce upstream spending and remain selective in
terms of investments in downstream operations, as it loses faith in shale.
Exxon announced in June 2012 it was quitting
shale gas drilling in Poland, on eof the European Union’s great hopes for shale
reserves. Talisman
Energy of Canada have scaled back their Polish shale investments after “disappointing”
early attempts at extraction, the New
York Times reported on April 24 last year.
The fracking frenzy seems to be
coming to an early end both sides of the Atlantic.
No comments:
Post a Comment