Tue. Dec 10th, 2019

Power Returned on Capital Invested: Ohio “Shale” vs Inexperienced “Schist”

Visitor useful resource economics by David Middleton

Ohio’s shale vitality trade attracts practically $78 billion in funding since 2011
11/20/2019

COLUMBUS, OHIO – Whole funding in Ohio’s useful resource wealthy shale vitality sector has reached $78 billion since monitoring started in 2011, based on a Cleveland State College (CSU) research.

Ready for JobsOhio, the report represents the latest information obtainable and covers shale funding by way of the second half of 2018. Earlier within the yr, IHS Markit launched estimates that by 2040, the Utica and Marcellus shale area, of which Ohio is a big half, will provide practically half of all U.S. pure fuel manufacturing.

The research from CSU’s Power Coverage Heart on the Maxine Goodman Levin Faculty of City Affairs, confirmed drilling investments have been barely down within the second half of 2018 in comparison with the primary half, however whole upstream investments have been up. Whole shale-related funding in Ohio for the second half of 2018, together with upstream, midstream and downstream, was round $three.82 billion. Whole funding from 2011-2018 totaled about $77.7 billion.

[…]

World Oil

Power Returned on Capital Invested (EROCI)

Are you able to say “hockey sticks”?

And people aren’t the one hockey sticks. Proved reserves of pure fuel have additionally hockey sticked…

From 2011-2017, Ohio’s proved pure fuel reserves grew from 758 to 26,123 billion cubic toes (Bcf). EIA’s 2018 reserve report comes out later this month. Nonetheless, the connection between manufacturing and proved reserves from 2011-2017 could be very linear (R² = zero.9555). This means that the 2018 proved reserves will probably be round 31,000 Bcf.

 Reserves (Bcf)  Manufacturing (Bcf)
2018                                     31,056                           
2,409
2017                                     26,123                           
1,791
2016                                     15,143                           
1,437
2015                                     12,104                           
1,007
2014                                       6,723                               
512
2013                                       three,161                               
166
2012                                       1,233                                  84
2011                                           758                                  79
2011-2019 Development                                     30,298  $75,744,713,509  Worth @ $2.50/mcf 

Utilizing a generic worth of $2.50 per thousand cubic toes (mcf), or million Btu (mmBtu). The estimated progress in proved reserves from 2011-2018 is value $75.7 billion. That’s simply pure fuel proved reserves. Proved reserves are the 90% likelihood case. Possible reserves, the almost definitely case(>50% likelihood), aren’t reported on the State stage; however they’re by definition considerably increased.

What’s that? A $77.7 billion funding in $75.7 billion value of pure fuel doesn’t sound like a winner? Nicely, there’s additionally the worth of the manufacturing, which incorporates some crude oil.

Click on to enlarge.

$75.7B + $30.5B = $106.2B

That’s a 37% return over eight years, a four.6% common annual return.

On high of that, solely $53.eight billion was upstream (exploration, drilling and manufacturing) funding. This works out to a discovering and growth (F&D) price of $1.42/mcf. The oil & fuel costs cited earlier have been wellhead costs (what the producer can count on to obtain). From 2011-2018, the wellhead spot worth for pure fuel averaged $three.27/mcf. The remainder of the $77.7 billion went to midstream (pipelines, processing crops, and so forth.) and downstream (energy crops, petrochemical crops and so forth.). Pure fuel costs escalate from upstream to downstream (a value-added course of). So, the whole worth of the $77.7 billion funding is way bigger than simply the worth of the oil & pure fuel.

Ohio’s Shale Financial system: What the Analysis Says

“All in”, $77.7 billion works out to $2.06/mcf (million Btu).

Relating to Inexperienced “Schist”

SUSTAINABLE BUSINESS NOVEMBER 25, 2019
New clear vitality funding in creating nations slipped sharply final yr: report
Nina Chestney

LONDON (Reuters) – New clear vitality funding slid by greater than a fifth in creating nations final yr on account of a slowdown in China, whereas the quantity of coal-fired energy era jumped to a brand new excessive, an annual survey confirmed on Monday.

Bloomberg New Power Finance (BNEF) surveyed 104 rising markets and located that creating nations have been transferring in direction of cleaner energy sources, however not quick sufficient to restrict carbon dioxide emissions or the results of local weather change.

New funding in wind, photo voltaic and different clear vitality initiatives dropped to $133 billion final yr from $169 billion a yr earlier, primarily on account of a stoop in Chinese language funding, the analysis confirmed.

China’s clear vitality funding fell to $86 billion from $122 billion a yr earlier. Funding by India and Brazil additionally declined, primarily on account of decrease prices for photo voltaic and wind.

Nonetheless, the amount of coal-fired energy era produced and consumed in creating nations elevated to a brand new excessive of 6,900 terrawatt hours (TWh) final yr, from 6,400 TWh in 2017.

The rise of 500 TWh is equal to the facility consumed within the U.S. state of Texas in a single yr. Coal accounted for 47% of all energy era throughout the 104 nations.

[…]

Reuters

Based on BP’s 2019 Statistical Evaluate of World Power, the “world” generated 15.9 billion mmBtu (transformed from TWh) of vitality from renewable sources from 2017-2018. This works out to $19.05/mmBtu, about 10 occasions the price of pure fuel.

mmBtu Invested ($) $/mmBtu
2018        eight,463,089,501  $       133,000,000,000  $  15.72
2017        7,392,040,238  $       169,000,000,000  $  22.86
2017-2018      15,855,129,739  $       302,000,000,000  $  19.05

Some might take subject with this comparability, as a result of it doesn’t account for the warmth loss in producing electrical energy from pure fuel. The common mixed cycle pure fuel energy plant generated 1 kWh per 7,627 Btu. A 100% environment friendly energy plant would solely require three,412 Btu to generate 1 kWh.

Whereas it’s true that a few of the vitality is misplaced within the technique of producing electrical energy and heating our houses, superior mixed cycle pure fuel energy crops can obtain >60% effectivity in changing warmth into electrical energy, the 2018 common was about 45%. Trendy pure fuel furnaces can obtain 90-97% effectivity.

Power Returned on Capital Invested $/mmBtu
Ohio “Shale” 2011-2018  $       2.06
Ohio “Shale” @60% effectivity  $       three.43
Ohio “Shale” @45% effectivity  $       four.58
World Renewables 2017-2018  $    19.05

And, not like renewables, pure fuel can exchange coal on a megawatt for megawatt foundation. So, if saving the planet from carbon dioxide was the true goal, the greenie weenies could be all on-board the pure fuel bandwagon.

Glossary

bbl = barrel, barrels. Every barrel consists of 42 US gallons. 1 bbl of crude oil incorporates roughly 5.eight million Btu of vitality.

Bcf = 1 billion commonplace cubic toes (scf) of pure fuel.

Btu = British thermal unit.

mbbl = 1,000 barrels.

mcf = 1,000 commonplace cubic toes (scf) of pure fuel, typically equal to 1 million Btu. Technically it’s normally extra like 1,zero20,000 Btu; however mcf and mmBtu are normally handled as being interchangeable. Pure fuel costs are typically listed as $/mcf or $/mmBtu.

mmBtu = 1,000,000 Btu.

mmcf = 1,000,000 commonplace cubic toes (scf) of pure fuel.

scf = Customary cubic foot (toes) of pure fuel, measured at 60 °F at sea stage (14.7 psi). Usually equal to 1,zero20 Btu.

Shale = “Shale is laminated, indurated (consolidated) rock with > 67% clay-sized supplies.” Jackson, J.A. (1997). Glossary of Geology, 4th Ed., American Geological Institute. Most “shale” performs aren’t technically shale.

Schist = 1) A foliated metamorphic rock, typically ensuing from the deformation of shale and different kinds of mudstone. 2) A scatological euphemism, as in “inexperienced schist.” As an expert geologist, I make in depth use of geological euphemisms… And I don’t care if you happen to suppose it’s infantile.

Knowledge Sources

Ohio Pure Gasoline Marketed Manufacturing

Ohio Area Manufacturing of Crude Oil

Ohio Pure Gasoline Proved Reserves

Cushing, OK WTI Spot Value FOB (Dollars per Barrel)

Henry Hub Pure Gasoline Spot Value (Dollars per Million Btu)

BP Statistical Evaluate of World Power

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