An article in Slate is throwing the brakes on the shale train. University of Chicago Professor Raymond T. Pierrehumbert is critical of bullish predictions of America’s bright energy future:
[T]he days are long gone when you could stick a pitchfork in the ground and get a gusher that would produce for years. The new wells are expensive (on the order of $10 million each in the Bakken) but give out rapidly…. Tight oil is headed for a Red Queen’s race, where you have to keep drilling and drilling and drilling just to keep your production in the same place. At several million dollars a pop, that adds up to a big annual investment, and eventually you run out of places to put new wells.
Rising costs and declining yields are causes for concern, and these trends underscore the need for smart policy to keep U.S. oil prices competitive internationally.
But let’s not sound the alarm bells just yet. The estimates graphically displayed in the article are based on current technologies. The projections mean little because they can’t account for future innovations. Technology will continue to increase efficiencies in drilling, making more oil and gas economically recoverable.
Pierrehumbert is most concerned about the opportunity cost of pursuing shale oil and gas:
It will be hard to muster the resources to develop replacements for fossil fuel energy if we wait until both the economy and climate are in ruins. We are in for a hard landing if we don’t use our current prosperity to pave the way for a secure energy and climate future.
But it is possible to invest in and develop multiple energy sources simultaneously. Green and brown energy aren’t mutually exclusive. The shale boom has bought researchers more time to figure out how to make renewable energy a commercially viable alternative. According to an Energy Information Administration report, in 2010 just 8 percent of federal subsidies went to the oil and gas industry, while 39 percent went toward renewables.While Pierrehumbert is more pessimistic than we are about the future of shale, he reminds us that this energy revolution isn’t some magical fix to all of the country’s resource problems. Shale isn’t some low-hanging fruit that conveniently falls off the tree and into our hands. There are both technological and environmental issues to be considered. But the rewards of shale, both geopolitical and economic, are so great that it should be a major national priority.Source: 2012 North Dakota Department of Mineral Resources WBPC Presentation.