Refracktion's Blog Post

Refracktion, the article from your blog that you linked to is incredibly deceptive. I wouldn’t advise posting it in any venue where someone with advanced knowledge of the industry might read it.

Only the most naïve and unsophisticated reader would fall prey to this sort of "fake news". There’s a reason that UKOOG is a widely read and highly respected body of experts with a large platform that attracts many professional readers while your platform is a small blog that spouts conspiracy theories and attracts a small audience of eco-terrorists.

I’ve put down a couple rebuttals to the blog post below:

You argue against the “trick” of using a 20 year type curve vs. a 30 year type curve because doing so pushes forward benefits realized. Let’s leave aside the fact that you have often argued for even shorter type curves, and instead look at the ignorance displayed in the argument you make. The base case shown in the shorter type curve actually has a lower EUR than the one with the longer type curve that you show in the comparative chart. So there’s no front-loading going on there. That’s especially evident when you consider that only 6 or 7% of the reserves would be developed between years 20 and 30 in the longer type curve. Type curves are used to estimate EURs based on early information about a well, shortening the type curve may actually lead to a more conservative assumption as to EURs as you cut off possible small rates of production at the end of the curve, but it wouldn't lead to front loading benefits especially with a lower base case EUR. Either type curve could be used, but there’s no trickery here.

You then make the fallacious argument that switching to a shorter type curve means that employment would be cut by 10 years. Employment opportunities are going to be a function of the intensity of capital employed and the rate of capital deployment but not type curves. 10 years less production from a single well means that gas volume needs to be replaced sooner with more spending and more employment. Regardless, it’s an irrelevant argument because these are only type curves – no one knows how long an individual well will produce as that will depend on many factors including commodity prices and costs into the future. Some wells may be refracked many times, we don’t yet know. What we do know is that the industry can create tens of thousands of jobs as it has elsewhere. A 20 year curve doesn’t change any of that – not a single bit.

You then cite an Oil and Gas Journal article which you claim includes data on Marcellus wells of 2.5km in length with a range of 1.65 to 8 bcf/well. We don’t know what the report actually says because the link you supplied does not bring us to the article you claim to have used. No matter. There is always variability in returns over any oil and gas play. You want your audience to believe the worst about the industry, so you try to take advantage of the uncertainty by casting the UKOOG estimates as implausible….“It would seem then that forecasting a possible average EUR of 8.0 bcf is very optimistic to say the least.” Of course a more rational person would look at the graph you show to illustrate the point and say that the industry (UKOOG) is forecasting an average EUR of 5.5 bcf, with a possible upside case to 8 EUR, and a possible downside case of 3 bcf. You also realize that Marcellus wells have shown an average EUR of around 6.2bcf, which is very much in line with what UKOOG has estimated, right (I have shown you this data before, so I know that you are aware of it)? Yet disclosing this information wouldn’t help you convince your readers of the conspiracy you are trying to sell so you just omit it, right Refracktion? http://www.gswindell.com/marcellus_eur_study.pdf

You then move on to criticize the industry for proposing 4 hectare sites for pads consisting of 40 wells each. This is enormously hypocritical because you would turn around and push for wind farms that would take up 5,800 hectares to generate the same amount of energy, and would be visible for thousands of hectares beyond that.

Now that you have your audience lathered up you move in for the kill, saying: “Perhaps the most questionable claim in the whole report though is that their modelling shows “Net gas imports being almost eliminated in the early 2030s,improving the balance of payments by around £8billion a year.” You assume that none of your readers would bother reading the UKOOG report which has this to say about the scenario, “This section takes the central scenario presented above, of 5.5 bcf production per lateral, and asks how many 40-lateral pads would be required to reduce import dependency by half in the early 2030s. It then describes the various benefits that would be realised from this more modest level of national development.”

Rather than making a claim of eliminating imports, the UKOOG report is running an analysis to determine how much development would be required to reduce import dependency to a given level. It’s a completely different story than the one that you spin, but you don’t want your audience to know that do you, Refracktion?

You note that production from these wells would ramp up, but then it would decline. You want your audience to believe that’s the end of the story. You don’t want your readers to realize that this is simply a small scenario UKOOG has run to demonstrate how much development it would require to cut imports for a short period, right? Industry could maintain that production level for many years by continuing to develop more wells, right Refracktion? You omit the point that UKOOG plainly state in their report that “It is worth noting that the central scenario of 22 trillion cubic feet (tcf) of cumulative production represents just 1.7% of the gas in place in the Bowland shale, and the high scenario of 32 tcf just 2.4% of the resource.” You want your readers to think you’ve caught UKOOG in some sort of lie, so you mislead your audience into thinking that the scenario outlined comprises all the gas that can be developed. This despite the fact that, according to the MIT study (and many others as well), approximately 10x this amount of gas is likely to be recoverable. Talk about deceptive! Who’s being duped, Refracktion?

You then go on to claim that developing between 187 and 500 well pads in Cuadrillas PEDL would be “remarkable.” Yet in places where gas is extracted today that fuels your home in the winter, these numbers are not at all “remarkable.” You see, Refracktion, in some parts of the world we get things done rather than sitting on our thumbs, wailing away about infinitesimal perceived threats. And you want your audience to think that those ~300 well pads would have to all go in at once, but that’s not true at all is it? Of course not, but shhhhhhh!

You then go on to counterintuitively argue that producing domestic gas wouldn’t reduce GHG emissions by replacing LNG imports. Since obvious logic stands in the way of your argument, you try to sidetrack your audience by citing a court ruling which allowed a judicial review of gov’t policy despite the government’s objections and their reliance on a study done by Mackay which showed that locally produced gas produces far fewer GHG emissions than LNG gas. You suggest that the Mackay work should be given less weight because of the court’s decision despite the fact that the ruling did not pass any judgment on the validity of the study or the GHG profile of domestic vs. LNG gas. How far will you go to deceive your audience?

Instead you make this point, “What they fail to admit here is that in the absence of any means of guaranteeing that the LNG concerned will not simply be burned elsewhere the savings are more likely not to exist and the effect to be negative. In other words UK shale gas is simply going to add to the world’s total emissions and not save anything.” This argument may fly in the world of the fuzzy-headed and misinformed, but it is so wrong as to be almost criminal. Creating lower carbon gas in the UK doesn’t lead to the creation of new gas demand. It replaces incoming higher-carbon LNG with lower carbon domestic gas – end of story. There is no logic to your argument, Refracktion. And if we add gas supply without impacting demand, what happens? Price is the mediator, Refracktion, so price declines. Lower prices means that gas that costs more to produce gets shut-in by producers who will wait until prices rebound to re-open wells. Yes, less gas is produced as commodity prices fall.

We all kindly suggest that you improve your research and critical thinking skills before writing another blog post and linking it to this site. Your pal, Bohara14