2011-10-14

2011 October 14

The Master Resource Report  2011-10-14

Sensitivity to oil’s price. (page 1 )

There is no oversupply now. (page 2 )

Onshoring. (page 3 )

Speed will be a Peak Oil casualty. (page 3 )

Consumers and electric vehicles. (page 4 )

Water: Is there a limit?

The relationship between water and energy is very tight so when one or the other is in short supply both are squeezed. Therefore when this headline appeared on Upstream last week it was not a surprise.

“Texas imposing water limits on fracking”

This quote from the article helps to illustrate that in the world of energy and water only energy is priced. “Breitling recently trucked 3.5 million gallons of water 50 miles to a drilling site in North Texas’ Hemphill County to avoid having to obtain water locally. The $68,000 it paid was a fraction of the $3.5 million it cost for fracking the well, Faulkner said.”

Until the U.S. and world get a price on water this out of balance relationship between energy and water will continue. For now energy has drawn the ace card and only the possibility of contamination from energy production has been a point of contention. But how long will water be made available as in the example above for less than 2 cents per gallon? What happens to the economics of that fracked well at 5, 10 or 20 cents per gallon?

Of course students of the water situation know that the question asked above is bogus. That $68,000 paid for the water was really just the cost of transport. The water itself was essentially free. That is right, that water just like the water piped to your house is essentially free. You are really simply paying for its delivery when you pay your water bill. So in the case of Mr. Faulkner’s well he was really just paying for the diesel fuel and the truckers time to transport it to his well.

You are thinking no way. Consider the tanker truck is hauling something near 9,000 gallons per trip. Do some simple math and figure out how many trips are required to move 3.5 million gallons. 50 miles per trip with average fuel mileage of 5 mpg or probably lower since most likely they were not ideal roads (bet the driver didn’t turn the engine off at the end of each trip either). This also assumes that the 50 miles was roundtrip miles. If not it could be much worse if that is just the one way distance. Pay over $3.00/gallon for diesel. Add in something for the trucker who probably didn’t make much either and the water had to be free to bring the cost in near $68,000.

Using that volume of diesel fuel may blow a big hole in the well’s net energy just to haul a little water. Ok a lot of water.

In the “The Big Thirst” the author made it clear that when you begin to talk about people’s water you enter a new world of emotion and beliefs. So even in Texas where the oil and gas industry has been king for decades the throne and crown may ultimately belong to water.

Without nearly free water does fracking work? Given that cheap energy is necessary to provide the nearly free water how long can water remain essentially free in the face of escalating energy costs. In fact without nearly free water how many other things in our society don’t work? This is a question the world faces now; it is not one for tomorrow.