How Much Natural Gas Remains in the USA? 93 comments
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A number of sources claim that we have hundreds of years worth of natural gas reserves remaining in the USA. Is that really so?
The most authoratative natural gas information is available from EIA.
Based on data from EIA, the annual US consumption of natural gas is about 23 TCF (23 trillion cubic feet). The proven natural gas reserve, as shown here, is 237.726 TCF.
So that's roughly 10 years worth of natural gas left in the USA.
Where did the claims of hundreds of years worth natural gas come from? One such claim is from NaturalGas.org.
They claim, based on EIA data, the US natural gas reserve estimate is 1747.47 TCF. So if you divide that number by annual usage of 23 TCF, you have 76 years worth of natural gas.
Funny I just came back from the EIA web site. All I saw was 237.726 TCF proven reserve, as of the end of 2007. Where did the 1747.47 TCF number come from? Let's scrutinize the NaturalGas.org number a little bit closer:
| Natural Gas Technically Recoverable Resources | |
| Natural Gas Resource Category (Trillion Cubic Feet) | As of January 1, 2007 |
Nonassociated Gas | |
| Undiscovered | 373.20 |
| Onshore | 113.61 |
| Offshore | 259.59 |
| Inferred Reserves | 220.14 |
| Onshore | 171.05 |
| Offshore | 49.09 |
| Unconventional Gas Recovery | 644.92 |
| Tight Gas | 309.58 |
| Shale Gas | 267.26 |
| Coalbed Methane | 68.09 |
| Associated-Dissolved Gas | 128.69 |
| Total Lower 48 Unproved | 1366.96 |
| Alaska | 169.43 |
| Total U.S. Unproved | 1536.38 |
| Proved Reserves | 211.09 |
| Total Natural Gas | 1747.47 |
| Source: Energy Information Administration - Annual Energy Outlook 2009 |
Notice the last three lines? Total natural gas reserve is 1747.47 TCF. But only 211.09 TCF is proven reserve. The other 1536.38 TCF is unproven and undiscovered natural gas.
How do you even know that part of undiscovered natural gas reserves even actually exist in the first place? Even if it does exist, which could be a long stretch, undiscovered natural gas reserves are irrelevent until they are actually discovered and actually produced.
I believe we are facing a looming North American natural gas crisis. The currently known reserve is going to run out in 10 years. The "undiscovered" reserves of natural gas, assuming they do exist, have not been discovered in more than half a century of North American natural gas exploration activities. What are the odds that they could be discovered in the next 10 years? The odds don't looking very good. Look at the pace of new natural gas field discoveries in recent years, it surely does not look encouraging at all.
Full Disclosure: I hold significant long positions in UNG, which is relevant to the discussion here. I hold other positions unrelated to natural gas.
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This article has 93 comments:
In new areas that are just now coming into financial reality such as animal waste and land fill recovery are not even being counted.
I also hold positions in both transportation of nat. gas as well as production.
It's my understanding that "proven reserves" is somewhat of a floating number.
As the price of the commodity rises, the reserves rise as once unprofitable developments become feasible.
Correct me if I'm wrong, but I'm pretty sure that's how the accounting is done.
What's your latest quote on a gram of Tellurium?
seekingalpha.com/artic...
i have not heard many credible experts say we have "hundreds of years worth of natural gas reserves" (key there is the "s" on the end of hundreds), but i have heard 100 years worth, and would agree with that estimate. further, considering the haynesville shale may well turn out to be the 4th largest nat gas field in the world, and the economic recovery of many other shale regions, and that nat gas production is dominated by small independents (and therefore cannot be controlled as easily as oil), i don't think you'll see big runs in nat gas prices (inflation adjusted) for quite some time. i add "inflation adjusted" to that comment because, at the rate the fed and treasury are working (unconstitutionally) to print US dollars as fast as they can, we're guaranteed to see prices of EVERY commodity go higher in the years to come. all this aside, you won't see natural gas prices off a boom-bust yo-yo until the US does what it should so obviously do to solve the economic, environmental, and national security issues as a result of its 60% addiction to foreign oil: adopt natural gas transportation.
in 1994 when i was working in west virginia coalbed methane was being produced & entered the commercial NG stream & was therefore considered a source of NG.
> jack
In the exploration for oil, we learned these lessons. The resulting natural gas flow has been huge, and we have quit exploring because of over-supply.
If we ever learned how to economically extract oil from shale, we would have a 500 years supply. Unfortunately this has not occurred.
We have learned how to economically extract gas from shale, and that is the origin of the 100 years estimate.
First: shale gas is economical at somewhere between $5 and $7 per mcf. There is an ever-decreasing amount of risk to these resource volumes in the shales. So discount the shale gas at your own peril. Even if only half of it is actually recoverable, then we still have a large volume of reserves to transition us to another source.
Second: someone earlier pointed out excatly that proven reserves are dependent on price. Push the price of gas up to $10 and you'll see an increase in proven reserves and you'll also find exploration activity picking up. Those "undiscovered" resources are based on past experience and geological studies of new basins. Start drilling and you will see these resources discovered.
Again, at today's prices, no there is not 75 years of reserves. But let the price rise a bit to that $7 range, and you'll see a bunch of new reserves. Get the goofy government off of our backs and you'll see even more.
One thing I do agree with you on: there is a "crisis" looming. But "crisis" needs to be defined: I view the crisis as gas prices rising to maybe $10 or more for a short period of time, but then drilling will rapidly increase, supply will outstrip demand and prices will decline. We'll constantly be in this up and down tug of war but at a reasonable price (less than $15/mmBtu) there is plenty of gas!
1) Remaining proven global conventional NG reserves are currently 6,400 TcF
2) The potential global reserves of non-associated NG(unconventional NG, shale gas, tight gas, chalk gas, etc.) are in the 30,0000 to 40,000 TcF range.
3) He quotes USGS methyl hydrates reserve numbers at 100,000 to 300 million TcF worldwide.
seekingalpha.com/artic...
Let me quote this from your article, which I presume must overwhelmed you but it completely underwhelmed me:
"In 1969 GHK, and its partners drilled a well over 24,000 feet deep in the Anadarko Basin. The well has produced 21 Bcf of natural gas (the equivalent of 3.6 million barrels of oil) and is still producing today. "
That's an very expensive well to drill, 24000 feet deep. Over the 40 years what investment return did it bring to the investor? 21 BCF natural gas is 21 million TCF, at roughly $2 or less per TCF averaged over the past 40 years, it brings in a revenue of $42M. The oil equivalent of 3.6M barrel, if averaged at about $15 per barrel in the 40 years, is roughly $54M. The initial drilling cost, inflation adjusted, plus the maintenance and operation cost over the 40 years, must far exceed the product revenue over the 40 years. This is an absolutely losing investment.
If that's the best Robert Hefner can brag about in his book, then he does not have much credibility. The US natural gas consumption in one day would be 62 BCF, three times higher than the accumulative production of that one deep well you cited.
On Oct 04 10:16 AM Michael Fitzsimmons wrote:
> a much better source of information on this subject is Robert Hefner
> III"s book, "The Grand Energy Transition". i won't repeat the data
> and logical arguments presented in that book, or refute the lack
> of same in this article, other than to say natural gas is abundant
> - in the U.S. and in the world.
But, if you were to cap the 50 state capitols and the big one in Washington DC, and if you were to capture all that natural gas, the entire world could be supplied forever.
The company has improved its initial production rate on wells here from 1.261 million cubic feet per day in 2007, to 3.611 million in the second quarter of 2009. It has done this with longer laterals on multi stage hydraulic fracturing operations. Southwestern Energy has seen its finding and development costs fall from $2.55 per Mcfe in 2007 to $1.53 per Mcfe in 2008.
Similar finding costs have been reported for gas in the various shales. It is economical way below 5 bucks, even assuming the need for total costs to = 3x finding costs.
CHK CEO Aubrey McClendon has said that they will increase drilling and production at 2 to 3x finding costs .
XTO just hedged 55% of their 2010 natgas production at 7.49 per mcf. I think that is a great bit of hedging.
Undiscovered resources are those deposits that have not been pinpointed, but are generally expected to exist based on geologic conditions. They are not just creating a wild guess. Drill down on your links a bit further next time.
Recent American technological breakthroughs, horizontal drilling and multi-stage fracture stimulation of reservoirs, have made the drilling and completing of natural gas wells much more efficient and productive and vast new reserves new of natural gas accessible here within our borders.
if we start using NG for transportation, it's price will increase dramatically and become more volatile-- how will that effect utuility electricity prices? stupid!
Proven reserves refers to natural gas that can be extracted economically at current market prices. So proven reserves vary as a function of market prices AND production costs.
In the US their appears to be a lot of environmental considerations surfacing with respect to extraction of natural gas through the use of hydraulic fracturing. Treatment of toxic materials involves costs. Costs to build pre-processing facilities (used to reduce toxic transport volume) costs to transport toxic materials, costs to build final toxic waste processing capacity, costs to process the waste materials, costs for storing highly condensed secondary toxic waste products, costs for environmental reports.
How will the increasing awareness of environmental concerns effect the cost structure of gas produced using hydraulic fracturing? Will environmental safe gas using hydraulic fracturing be less expensive than transported gas where recovery processes are not subject to environmental concerns? Effects of increased environmental based regulations could have a marked effect on the amount of natural gas that can be considered as Economically Recoverable Proven Reserves.
The following contains a more detailed description of the environmental concerns related to hydraulic fracturing. Its from these materials that I developed the preceding summarization. I do not take a position pro or con on the need for environmental protection. My central theme is that environmental protection is a reality in the United States, and as a consequence data concerning so called "proven reserves" needs to be considered in light of the economic costs of producing environmentally safe natural gas locally, or importing it at the lowest price irrespective of environmental consequences. The only way this economic reality can be suspended is through removal of environmental protections (not likely), or trade barriers (also not likely).
______________________
Hydraulic Fracturing:
With respect to amount of gas available, one of the major reasons gas reserve figures in the United States have recently increased concerns the use of new drilling techniques (hydraulic fracturing) to extract natural gas in shale formations. It's hydraulic fracturing that has made the Marcellus Shale and other difficult-to-reach deposits of gas accessible to drillers. Hydraulic fracturing shoots millions of gallons of water, sand and CHEMICALS underground at high pressure to break up rock and release gas. Hydraulic fracturing a Marcellus gas well can require more then three million gallons and a single well can be fractured as many as eight times (24 million gallons per well?).
www.heralddeparis.com/...
When the DEC’s (New York's Department of Environmental Conservation) last impact statement was released in 1992, a typical well required only about 80,000 gallons of water. So hydraulic fracturing increases the amount of water needed by between 37.5 to 300 times. In addition, when the water is sucked back out of a well, it can contain NATURAL toxins dredged up during drilling, including cadmium and benzene, which both carry cancer risks.
Finally, water pumped in to perform the hydraulic fracturing contains CHEMICALS. One of the things that the new DEC's guidelines establishes is that the drillers MUST DISCLOSE THE CHEMICALS ADDED TO THE WATER USED IN THE PROCESS. Something that drillers have refused to do in the past! That refusal raises all kinds of red flags.
So there are at least five issues here:
1) Where do they get the water to work the wells?
2) What do they do with the pumped out waste solution?
3) What is the make-up of that waste solution?
4) How much of the chemicals in solution remain in the ground?
5) How will the remaining chemicals disperse in the ground? The toxic plume question.
Are these just "Academic" concerns?
New York's Marcellus Shale is mined within New York City's watershed, a central Catskill Mountain area that supplies drinking water to nine million people. Hence there is concern among New York City residents and politicians. For example, consider the following statement (extracted from the above link) from Manhattan Borough president Scott Stringer:
"The State’s mitigation proposals are half measures. I believe the choice is simple: we either correct this error and ban drilling now, or soon enough the officials entrusted with protecting our environment will be asked to explain why they were asleep at the switch when it mattered most.”
I see no reason why the mining of Marcellus shale gas in Pennsylvania or the mining of shale gas anywhere else in the US will not raise similar concerns among the public.
How are waste by-products handled?
Many kinds of waste pits, which have been responsible for water contamination in other parts of New York, are prohibited inside the New York City watershed and limited elsewhere in the state. This means that drillers are going to be required to store their waste in steel tanks. So each well is going to need "temporary" storage capacity for between 3 to 24 million gallons of contaminated water.
In 2008, ProPublica (which describes itself as an independent, non-profit newsroom) reported that New York was unprepared to treat the wastewater itself and the DEC said drillers would have to ship it to neighbouring Pennsylvania. But ProPublica found that Pennsylvania’s specialized treatment plants don’t have the capacity for it either. Of course there is also the question of how people in both states are going to tolerate the transportation of large amounts of toxic materials over their public roads. Even if a pipeline is built the movement of Hazardous Materials will involve Federal Hazardous Materials Regulations.
Rubber Stamp Actions:
The ProPublica investigation found that the DEC had told state legislators that hydraulic fracturing was safe, even though the agency had NOT studied or discussed the sometimes dangerous chemicals that it uses and that later wind up in its waste. How can any agency declare a process is safe if they don't know all aspects of the process under consideration?
The behaviour of New York's DEC seems to be out of touch with the political realities of the "Greening" of America. This conclusion appears to have appeared on the radar of local politicians, and that suggests changes will be forthcoming with respect to the regulatory environment governing hydraulic fracturing. The effects of increased regulation should drive production costs of natural gas using hydraulic fracturing higher, and that could decrease the amount of natural gas in the US considered as Economically Recoverable Proven Reserves.
www.blm.gov/wo/st/en/p...
Also consider its not very likely states will encourage onerous requirements for hydraulic fracturing anytime soon - they don't want to lose any revenue from state leases considering the financial hardship most states are going through these days - they nee every dime they can get.
Plenty of volatile hydrocarbone being released every day from many industries in the US - coal, oil, nat gas, refining and industrial chemical production - not to mention the typical automobile - the EPA will not be allowed to regulate everything, andthe thresholds right now are pretty incredible, especially for benzene;
www.earthjustice.org/n...
Natural gas will still be the better choice for transportation in the short run, especially for fleet vehicles;
www.cngvp.org/News/new...
we'll drill for more, and LNG will be a largr play during cycles of lower domestic production and higher usage, even if it gets expensive.
I agree with all the posters about the boom & bust cycles - we'll see lots more.
BDO
so nevermind,
anyone know why this happens, or how to beat this system?
On Oct 04 10:29 PM blanco-dee wrote:
> User 283977 - you should look over Onshore Oil & Gas Order #1
> for US gas from federal leases,
>
> www.blm.gov/wo/st/en/p...
>
>
> Also consider its not very likely states will encourage onerous requirements
> for hydraulic fracturing anytime soon - they don't want to lose any
> revenue from state leases considering the financial hardship most
> states are going through these days - they nee every dime they can
> get.
>
> Plenty of volatile hydrocarbone being released every day from many
> industries in the US - coal, oil, nat gas, refining and industrial
> chemical production - not to mention the typical automobile - the
> EPA will not be allowed to regulate everything, andthe thresholds
> right now are pretty incredible, especially for benzene;
>
> www.earthjustice.org/n...
>
>
> Natural gas will still be the better choice for transportation in
> the short run, especially for fleet vehicles;
>
> www.cngvp.org/News/new...
>
> we'll drill for more, and LNG will be a largr play during cycles
> of lower domestic production and higher usage, even if it gets expensive.
>
>
> I agree with all the posters about the boom & bust cycles - we'll
> see lots more.
>
> BDO
To claim "unproven reserves" are meaningless simply because they haven't been verified directly is like claiming Pluto doesn't exist because you've never visited it. In actuality, a large amount of the unproven reserves will eventually be "proven" and the amount of total reserves will probably increase in the future.
I don't know if we have a 100 years' supply of gas, but it's probably much closer to that your 10 years worth of gas claim. There is no natural gas "crisis" and while there will certain be boom and bust cycles in the future, your argument seems to go to an extreme and claim that natural gas will completely run out soon.
The only thing slowing new natural gas exploration and production right now is extremely low prices.
Care to explain that?
On Oct 05 12:33 AM Camden wrote:
> Re: "21 BCF natural gas is 21 million TCF"
>
> Care to explain that?
Prices will jump and supply will again ramp up to meet demand.
Whether it will include a jump in Shale Gas production is Moot. The Environmental Lobby can has proven time after time that it can put a hole in any Bucket it choses with one hand tied behind its back.
It did so in the 70's with the Snail Darter and Billions spent on curbing Air Pollution then (when a Billion meant something), its far more powerful now and Now it is dealing with Water Pollution.
BTW, I see Mr. Fitzsimmons is back promoting himself, his website and his article.
"i am of course biased, but i believe a much better treatment of this subject can be found in this article:" His Article, of course.
Less than two months ago MF had this to say about the Swine Flu:
"newamericanow: just got around to watching the video you referenced. and yeah, i should have mentioned the vaccination scam too as yet another bush/obamination plan gaining momentum...." Aug 12th 2009."
Basically, he says "Believes" he knows better than Anthony about Nat. Gas supplies and at the same time he "Believes" Bush is involved in the "vaccination scam".
I'm waiting for the reappearance of Old Wizard, ART005 and Ozarker.
Thanks for everyone's response.
brad
Why are you long UNG? You're going to get killed on the forward roll every month and trading costs every month. It is not appropriate for a long term investment, which you seem to be using it as. Why not just invest in one of the big natural gas producers?
Before the Horn River Basin was drilled, geologists thought there was probably gas there, but it was uneconomical to produce due to low potential reserves. Then the first exploratory wells came in and, low and behold, there was an estimated 100 Tcf in unproven reserves, then more wells were drilled and by this spring, Horn River was up to 250 Tcf, now some estimates say over 500 Tcf.
Worrying about when we're going to run out of natural gas is much like worrying about when the Sun is going to go super nova..............why does it matter; we'll all have been dead for generations.
If you go back into the 60's and 70's or even further back you will find proved reserves have always been 10 to 20 years of consumption. No reason to think that 40 years from now the number will not continue to be more or less the same. However I really believe that shale production is a major game changer going forward that insures ample gas supply in North America for the proverbial 100 years or so. Anybody that thinks we are out of gas in 10 years, I've a got some bridges in NYC to sell you.
The explosion of NG discovery and production over the last 10 years proves how uncertain the business of predicting can be. Mention of government bungling and green lobby tunnel vision is certainly applicable as well.
On balance, it appears we will see increasing NG consumption in transportation, either directly, or via electric production for hybrids. I personally believe the reserves will increase dramatically with price.
Common sense says use all energy in the most efficient and responsible manner which means getting more people with common sense involved - especially as voters.
$.02
Keep in mind that in terms of total energy gas yields less "work" per unit of volume than oil, so if we need an increasing amount of Btu's we will need more gas proportionately than we did oil to do the same amount of work. There are really no simple answers to the energy equation.
If you pour 40% of this fluid out of a cup and then turn the cup back up, the fluid will flow back into the cup. It's good for ghostbusters slime and fake snot too.
IMHO, much Nat. Gas is only a bi-product of oil production and it only gets in the way - flared off as waste. This gas has an economic value of zero! Much Nat. Gas in the world has no value at all at the well head. The only value is derived is from infrastructure/investment to capture it and pipe it to a demad point. With low interest rates and a positive value for this fuel to be a viable energy source at the point of use, much new production will come on line keeping the price low.
I believe interest rates are more of a factor than the numbers being quoted on storage, reserves, etc. As long as interest rates remain low - gas prices will stay low as users lock in low prices to cap an investment return for the supplier.
The existing technology for its use as an automotive fuel would be the pivotal factor. Currently its not economically viable for the majority of motorists.
"Cap and Trade" legislation on the price of oil/gas, etc.
From my viewpoint; I can see volitility.........
Recovery? Double Dip? Alternative Energy Promotions?
Taxes on fossil fuels, etc.
In the spirit of Seeking Alpha.......... I see potential profits!!!!!!!
Second, all these "nasty's" you talk about are found in your grocery store in things like Formula 409 cleaner.
The good folks of New York don't want anyone drilling for natural gas but will be the same people screaming when their natural gas costs them $15/mcf or when they are beholden to Middle Eastern Countries for the import of LNG. Oh, yeah, they won't allow that either. Maybe we should let them freeze in the winter a while.
On Oct 04 10:46 AM Michael Fitzsimmons wrote:
> i am of course biased, but i believe a much better treatment of this
> subject can be found in this article:
>
> seekingalpha.com/artic...
>
>
> i have not heard many credible experts say we have "hundreds of years
> worth of natural gas reserves" (key there is the "s" on the end of
> hundreds), but i have heard 100 years worth, and would agree with
> that estimate. further, considering the haynesville shale may well
> turn out to be the 4th largest nat gas field in the world, and the
> economic recovery of many other shale regions, and that nat gas production
> is dominated by small independents (and therefore cannot be controlled
> as easily as oil), i don't think you'll see big runs in nat gas prices
> (inflation adjusted) for quite some time. i add "inflation adjusted"
> to that comment because, at the rate the fed and treasury are working
> (unconstitutionally) to print US dollars as fast as they can, we're
> guaranteed to see prices of EVERY commodity go higher in the years
> to come. all this aside, you won't see natural gas prices off a boom-bust
> yo-yo until the US does what it should so obviously do to solve the
> economic, environmental, and national security issues as a result
> of its 60% addiction to foreign oil: adopt natural gas transportation.
Next, you might be well served to talk to a geologist with approx 25 to 30 years experience to see how the gas reserve figures have changed just in the past 10 years ---- non-conventional gas/shale-gas is the key to getting to the 1,700 TCF, along with price increases of up to approx $5-7 per kcfg. 1,700 TCF is a very realistic number.
If you would have asked a geologist back 20 plus years ago, it would not have been, but now, it is pretty much a no brainer. regards
On Oct 04 12:54 PM Mark Anthony wrote:
> Thanks for mentioning Robert Hefner's book. I knew about his name
> but never paid much attention. I find an early article you wrote
> about his book:
>
> seekingalpha.com/artic...
>
>
> Let me quote this from your article, which I presume must overwhelmed
> you but it completely underwhelmed me:
>
> "In 1969 GHK, and its partners drilled a well over 24,000 feet deep
> in the Anadarko Basin. The well has produced 21 Bcf of natural gas
> (the equivalent of 3.6 million barrels of oil) and is still producing
> today. "
>
> That's an very expensive well to drill, 24000 feet deep. Over the
> 40 years what investment return did it bring to the investor? 21
> BCF natural gas is 21 million TCF, at roughly $2 or less per TCF
> averaged over the past 40 years, it brings in a revenue of $42M.
> The oil equivalent of 3.6M barrel, if averaged at about $15 per barrel
> in the 40 years, is roughly $54M. The initial drilling cost, inflation
> adjusted, plus the maintenance and operation cost over the 40 years,
> must far exceed the product revenue over the 40 years. This is an
> absolutely losing investment.
>
> If that's the best Robert Hefner can brag about in his book, then
> he does not have much credibility. The US natural gas consumption
> in one day would be 62 BCF, three times higher than the accumulative
> production of that one deep well you cited.
>
> On Oct 04 10:16 AM Michael Fitzsimmons wrote:
Two points, if I may. First, I submit it's a trees and forest scenario. What's proven and/or unproven is moot. If we all agree there is ten years established, that's a lifetime in oil exploration and NG as well.
In addition, the toxicity regards fracturing pales compared to the problems existing today with coal burning residues. At issue is state regulation verses the EPA. There are no standards similar, for example, to OHSA in the workplace. Think about it. Nuclear waste, Coal Ash, Oil Spills, and Shale Fracturing. All contamination issues and a landscape of the countries Energy Policy, or lack thereof.
The real question should be are the proven reserves declining year on year or increasing. What is the trend?
I live in Oklahoma and know a lot of people and leaders in the oil and gas business. I'll bet you $1000 that we have 100's of year's worth of gas left in the U.S.
Next time, do your homework. Your "10 year" number is a bunch of cow patties.
T. Boone is the real voice of reason when he says "we need it all"
Check out some Mega picks for Q4 > tinyurl.com/yas5lon
Natural gas, like oil and coal, is a savings account for solar energy. To test the theory of unlimited withdrawals from natural gas fields, try running a control by withdrawing more from your savings account than you contribute to it. Those who live outside New York and Hollywood may learn something, and those who live in New York or Hollywood probably are incapable of learning anything.
On Oct 04 04:22 PM User 283977 wrote:
> Summary:
> Proven reserves refers to natural gas that can be extracted economically
> at current market prices.
Huh? Proven is proven, period. Either you proved the reserves exist, or they do not. Proven reserves only change with the amount of depletion plus new proven reserves. How can this be otherwise? How can you say that X amount will be proven at a price but that Y amount will be proven at a different price?
So whether the reserves are 30 years or 130 an investment that depends on a permanent increase in prices is likely to fail over a 5 to 7 year horizon.
On Oct 04 04:04 PM Wisdom vs. Information wrote:
> captain ccs hits the nail on the head that so many of you do not
> even realize exists: energy is energy. you can argue about this stuff
> and make stats lie but you are wasting your time in the long run.
> energy prices will rise and fall as supply and demand for the various
> sources change; if oil and gas become too expensive to use for transportation,
> we will start using something else, yawn.
>
> if we start using NG for transportation, it's price will increase
> dramatically and become more volatile-- how will that effect utuility
> electricity prices? stupid!
These reserve figures place the US as the world's number 1 nation in the world gas reserves game.
Of course it's reasonable to suggest that higher gas prices will likely result in additional reserves. As several commentators have stated, natural gas exploration is a highly technical endeavor and hardly the willy nilly, hit or miss "wild catting" many people seem to believe it is. E and P companies---CHK, XTO, COG, DVN, ECA, etc have publicly stated that their drilling success rates aproximate 100 percent; ie,100 wells drilled and 100 wells commercially successful. This is a direct reflection of very sophisticated technology. With 3 D seismic surveys those operators KNOW what is down there prior to committing the 3.5 to 7 or 8 million dollars of BORROWED money on a gas well. In the oil/gas "patch" a true adage is: "If I drill, I hit". If anyone doubts this they might want to check the Texas Railroad Commission's website that recently noted 0 dry holes during the most recent reporting year. Fathom that. Not a single dry hole in the thousands of wells drilled in Texas.
The primary limiting factor in the exploration and production game is the cost and availability of capital in this capital-intensive industry. Like many say, "It takes money to make money". That is especially true in the exploration and production industry.
No one that has seriously studied the natural gas industry thinks that it represents a long term solution to our energy dilemma. However, it does afford us the opportunity to maintain our national mobility while solar, wind, wave, geothermal, hydrogen, etc overcome the problems that make those technologies available and economical. The inescapable fact is that natural gas is far and away the most superior fossil fuel we have.Whether we have 50 or 100 years reserves either way this ought to give our scientists and engineers the time they need to develop true renewable energy sources.
This nation can halve the tons of toxic pollutants belched into the atmosphere each day simply and quickly by transitioning the country to compressed natural gas. Natural gas is truly a national treasure.
before he takes these topics up again:
Natural resources have been linked to a physical object (barrels of oil, tons of copper) that has some utility within the production structure. In Austrian capital theory the production structure is the name given to the set of relationships that organize land, labor, and capital to transform sets of inputs into more highly valued sets of outputs. In this sense natural resources are a subset of these inputs. For a given production structure the value of a particular resource (as with a capital good) is determined by its contribution to the subjectively determined output array value. The basis of a structure's production value derives from the intersection of
consumer value scales and the output array put before them. These resources are not valued as something would be in isolation (as gold might approximate) but rather as a functional part of the given production structure.
It is the function that is valued and not the thing in itself.
This result becomes obvious when a change to the production structure occurs. Both new and old functions within the new structure will almost certainly promote and demote the value statuses of the various capital goods and natural things. Hence it is likely that the act of resource conservation for posterity's sake will be counterproductive if it impedes the structure's evolution to an advanced configuration where the conserved "resource" loses its functionality. The same logic can be applied to the use of a polluting resource: the greater use of it today can hasten the day when the "resource" is no longer vital, and this would most likely be well before it could be exhausted physically.
The idea of Resourceship elevates the concept of a natural resource to that of a capital good, i.e. something that is generated by the production structure to further the satisfaction of consumer value scales. Because all capital goods are finite in an absolute sense the distinction of resource limitation vanishes. Human action (in this case the act of saving) places the practical limit on the productions structure's use of capital goods. Natural resources are not simply retrieved in some finished state; they are produced subject to their own evolving structure within the larger production structure. The amount of available minerals/coal/oil is unknowable because such knowledge would assume that the capabilities of future technologies be known. These technologies would do more than just increase particular recovery rates: they would likely redistribute the value assigned to all possible available resources.
Without known limits mineral extraction is economically equivalent to mineral synthesis. When the growth of human knowledge, the ultimate resource, is expressed through technological innovation, the promise of ever-expanding physical resources will be provided.
It's not too early to think about these alternatives.
www.afdc.energy.gov/af.../
www.consumerenergycent...
If you're perfectly happy buying Persian Gulf oil, don't let me disturb your reckless abandon.
1. Chesapeake Energy CEO McClellan doesn't just say the Haynesville shale will eventually produce 250 TCF of gas, he's actually guessing the thing will eventually churn out 1.5 quadrillion cubic feet;
www.rigzone.com/news/a...
>> "We think in time it will become the largest gas field in the world at 1.5 quadrillion cubic feet," he added. <<
I have reason to believe that. Somewhere recently I saw a log of a well drilled all the way down in southern Mississippi or Southern Alabama (I forget which) which encountered the Haynesville formation. It was quite deep down there (IIRC it was around 18k feet down), and there's no guarantee it will be as gas-prone as the area in NW Louisiana and NE Texas. Nonetheless, the fact that this thing extends much farther to the south and east than everyone is currently assuming tells me its reserve sizes are likely to get bigger over time.
2. There will be other Haynesville shales. Petrohawk is now telling us the Eagleford (or Eagle Ford) shale in southern Texas is looking as good as the Haynesville:
www.ogj.com/display_ar...
And like the Haynesville, the Eagleford extends a lot farther than these localized areas these companies are talking about. In Louisiana this shale - an Upper Cretaceous shale - is also called the Eutaw shale. Yes that's correct, this shale goes all the way over to Louisiana, and Mississippi too. My evidence can be found on the stratigraphic chart of page 4 of the following document:
www.lgs.lsu.edu/deploy...
3. Forget about the methane (natural gas) hydrates. While nice, what's more interesting is what's *below* the methane hydrates - usually lots of methane (natural gas) and often oil too. Methane hydrates are often formed by methane gases in undersea formations seeping to the surface where they solidify upon encountering cold waters. There is a large collection of methane hydrates in an area off the coast of the Carolinas:
marine.usgs.gov/fact-s...
^
"A pair of relatively small areas, each about the size of the State of Rhode Island, shows intense concentrations of gas hydrates. USGS scientists estimate that these areas contain more than 1,300 trillion cubic feet of methane gas, an amount representing more than 70 times the 1989 gas consumption of the United States. Some of the gas was formed by bacteria in the sediments, but some may be derived from deep strata of the Carolina Trough. The Carolina Trough is a significant offshore oil and gas frontier area where no wells have been drilled. It is a very large basin, about the size of the State of South Carolina, that has accumulated a great thickness of sediment, perhaps more than 13 kilometers. Salt diapirs, reefs, and faults, in addition to hydrate gas, may provide greater potential for conventional oil and gas traps than is present in other east coast basins."
Keep your fingers crossed that Obama and Salizer allow drilling off the coast of the Carolinas. I bet there's lots of goodies down there.
4. Finally, in addition to the Haynesville and Eagleford shales, there will be other large shales discovered that no one has poked any holes into yet. This is not just true of the US but also Canada, Mexico and the rest of the world for that matter. I have this one shale in mind in Utah and Nevada which, according to one thing I read, is a huge, thick shale with a very high organic content in parts. I'd be willing to bet this is another Haynesville, but no one's tested it yet.
In addition, there are many in Canada such as the aforementioned Horn River Shale, as well as many in the US yet to be explored extensively.
"I believe we are facing a looming North American natural gas crisis. The currently known reserve is going to run out in 10 years."
BTW, I'm not usually a betting man, and I'm even less so a person who would want to make a 10-year bet, but I will bet you $5,000 that prediction will turn out to be wrong.
As so many commentators have said here regarding this post: the problem appears to be not the lack of deposits, but a sustainable market price.
If the government was to follow the sensible ideas of T Boon Pickens regarding Natural Gas fueled transportation and help prime this energy pump by part financing Natural Gas Pumps at gas stations across America, I believe the substantial market generated for the fuel in this way would encourage a huge growth in prospecting and development of Natural Gas as a long term US fuel resource, and this would greatly ease our dependency on foreign oil.
How much did that well cost to drill and maintain?
How much would it cost to drill that well today?
I already know the answers to these questions, but you apparently do not. This well was very profitable. Check it out and get back to the readers.
Also, some people have already touched on this: I am more interested in the price at which it is profitable to explore for and produce natural gas. You left that out of your article and to me, it is the most important part. If some of these unproven and undiscovered reserves cost X, Y, and Z, and we are at A, this needs to be taken into account.
We need an article that shows how of the much of the unproven and undiscovered NG is profitable at $2.50, $5.00, $10.00, and $20.00. That would really be an article that is helpful.
In searching the Internet I came across a 2008 article by Allen Brooks, Managing Director of Parks Paton Hoepfl & Brown. In this article he tries to compare rig counts from the 1950s, 1970s, and 2000s. I never finished reading the article because I instantly found a hole in his thesis large enough to park a rig on:
You can't compare apples-to-apples rigs of 2009 with those of 1949 or even 1979.
We will never see the rig count numbers of the 1950s because one rig now can out drill and be moved faster than 10 of 1955. Mr. Brooks never even brings up the differences in technology that have occurred over the years. When comparing the past, people like Mr. Brooks and you, must take into account the changes that have occurred over the intervening period. There are things being done with drilling now that would have been laughed at in 1955 or even 1985 (especially offshore).
But, back to my other thought: How much will it cost to get it out of the ground and to my house. That is what I really want to know.
On Oct 04 12:54 PM Mark Anthony wrote:
> "In 1969 GHK, and its partners drilled a well over 24,000 feet deep
> in the Anadarko Basin. The well has produced 21 Bcf of natural gas
> (the equivalent of 3.6 million barrels of oil) and is still producing
> today. "
>
> That's an very expensive well to drill, 24000 feet deep. Over the
> 40 years what investment return did it bring to the investor? 21
> BCF natural gas is 21 million TCF, at roughly $2 or less per TCF
> averaged over the past 40 years, it brings in a revenue of $42M.
> The oil equivalent of 3.6M barrel, if averaged at about $15 per barrel
> in the 40 years, is roughly $54M. The initial drilling cost, inflation
> adjusted, plus the maintenance and operation cost over the 40 years,
> must far exceed the product revenue over the 40 years. This is an
> absolutely losing investment.
en.wikipedia.org/wiki/...
At $2.00 to $3.00 do we really want the District of Columbia opening up new areas of drilling?
I bet if you ask guys like Pickens they might say something different right now?
Even if Washington said that drilling would be allowed in offshore Carolina, at this price, would anybody do it?
Shouldn't we focus on demand right now and not supply?
On Oct 05 09:43 PM OilFinder wrote:
>Keep your fingers crossed that Obama and Salizer allow drilling off the coast of the Carolinas. I bet there's lots of goodies down there.
1) Lets get large government (federal, state, county, and city) fleets to mandate the use of CNG and LNG with electric first before looking at the general public's use of it. It is easier to install the fueling apparatus at a government yard than it will be for the retail consumer, both physically and through all of the red tape and discussions that it will cause. Then move to very large commercial fleets, like UPS and FedEx. Do this in steps please.
2) If you listen to or quote T. Boone Pickens, remember where he is coming from. He is self-serving and wants the price of NG to go to $25.00. If he didn't have an interest in NG or wind or water, I might take him more seriously. But, lets face it, he wants to make money, lots of it. And that is fine, but don't forget that part of it.
Companies bet big on South Texas gas find
By BRETT CLANTON Copyright 2009 Houston Chronicle
Oct. 6, 2009, 12:42AM
Jake Lacey For the Chronicle
Houston-based Petrohawk Energy is drilling in South Texas' McMullen County.
Last October, just as the economy was tilting into crisis, a small oil and gas company in Houston quietly announced the discovery of a mammoth natural gas field in South Texas that at any other time might have garnered bigger headlines.
Petrohawk Energy's find, however, did not go unnoticed in the oil and gas industry — and it didn't take long before oil companies large and small began making their moves.
Today, though the economy and natural gas prices remain weak, the Eagle Ford shale remains one of the hottest prospects in North America, and energy companies are moving forward there even as they're pulling back elsewhere.
That's because of what some companies suggest is a virtually recession-proof combination of highly productive wells and low drilling costs they say can yield profits even as natural gas prices hover near seven-year lows.
Also attractive: the flat South Texas ranch land, where obstacles are few and Gulf Coast oil and gas infrastructure is nearby; and landowners have grown comfortable with the industry after decades of oil drilling.
“You can certainly make more money from wells than cows,” said Joe Martin, whose family leased nearly 20,000 acres of land to Petrohawk in LaSalle County for drilling.
But it may still be a while before the full potential of the Eagle Ford shale is known. Though early results are promising, companies have been cautious about overstating what could be in the ground, especially since so few wells have been drilled so far.
“What we're going to find out, as with most shale plays, is there's going to be sweet spots,” said Bob Banks, chief operating officer at Swift Energy, a Houston-based oil company with nearly 90,000 acres leased in the Eagle Ford. “That's what we don't know yet, which areas are really going to work better than the others because it's pretty early days.”
Recently discovered U.S. shale plays, including the Haynesville in Louisiana and Marcellus in Pennsylvania, are expected to provide a major boost to U.S. natural gas supplies in coming years. The dense rock formations, once thought too difficult to explore, have been unlocked with the help of recent advances in drilling technology.
The core areas of the eight largest U.S. shale plays may contain 475 trillion cubic feet of recoverable resources, according to an estimate by Ross Smith Energy Group, an industry research firm in Calgary, Alberta. That's roughly ten times the size of Texas' famed Barnett shale play in the Dallas-Fort Worth area, which supplies nearly 10 percent of U.S. natural gas production, excluding Alaska.
$3.88 break-even point
While the Eagle Ford is among the smallest of the group, with some 19 trillion cubic feet of natural gas remaining, the economics is among the best, the firm said.
Producers in the Eagle Ford can break even when natural gas is priced as low as $3.88 per million British thermal units, the firm said, versus break-even prices of $5.18 in the Barnett, $3.74 in the Marcellus and $4.49 in the Haynesville.
Natural gas closed at $4.99 per million BTUs Monday in trading on the New York Mercantile Exchange, down from nearly $14 in summer of 2008, amid a recession-related drop in demand and bulging stockpiles. Consumption will fall by 2.4 percent this year and remain flat in 2010, according to the Energy Information Administration's most recent short-term forecast.
A potential boom
Yet that has not stopped companies from pushing ahead in the Eagle Ford play, which starts near the Mexican border and extends east below San Antonio across a string of counties including Webb, Dimmit, LaSalle, McMullen and Live Oak.
“It's got the potential of being a boom,” said Martin, whose family leased to Petrohawk, noting that land prices in the region have risen to $1,500 per acre in some places, 10 times what they were two years ago.
Houston's Petrohawk, with 210,000 acres in the Eagle Ford, has been the most active. It operates 17 wells in the Eagle Ford and aims to add another seven or eight by year-end, said Joan Dunlap, the company's head of investor relations. This month, the company said it will sell its properties in West Texas' oil-rich Permian Basin to an unidentified privately held company for $376 million to focus on its assets in the Eagle Ford and Haynesville shale plays.
Asked if the Eagle Ford could be as big as other major U.S. shale gas plays, like the Barnett shale, Dunlap said, “it's a big question mark.”
Other oil and gas companies including Pioneer Natural Resources, Swift Energy and Anadarko Petroleum Corp. also have drilled wells in the Eagle Ford or are planning to in coming months.
Less clear are the intentions of Houston-based ConocoPhillips and Irving-based Exxon Mobil Corp., each of which has large acreage positions in the Eagle Ford.
Houston's ConocoPhillips, with 300,000 acres, considers the region “one of the top resource plays in the lower 48” and will concentrate much of its 2009 exploration spending in the Eagle Ford and other North American unconventional resource plays, spokesman Charlie Rowton said. But he declined to elaborate.
Exxon Mobil confirmed it holds an interest in the Eagle Ford shale in La Salle and McMullen counties, but a spokesman said, “the details of the exploration program are considered confidential.”
Exxon Mobil confirmed it holds an interest in the Eagle Ford shale in La Salle and McMullen counties, but a spokesman said, “the details of the exploration program are considered confidential.”
Bob Fryklund, industry analyst with IHS-Cambridge Energy Research Associates in Houston, said highly diversified oil majors may not have the same urgency to act as independent oil and gas producers do.
“This is just one portion of their portfolio, while for a lot of the independents it's their whole portfolio,” he said.
But increasing moves by major international oil companies into U.S. shale plays, he said, suggest they may see more potential there than they once did.
brett.clanton@chron.com
www.truebluenaturalgas...
You didn't reply to my outline in our last exchange. So here you are changing what was said, Again.
Your Quote: "Freya, I wouldn't want to disappoint you. This article sounds like still another sky is falling. I have ben followin the price of UNG for a while, since I considered it for an investment. Recent history shows a glut of natural gas with storage capacity almost exhausted. There was even a Seeking Alpha article that cautioned people to not invest. Since then at least one new source has been discovered off Norway. I can't vouch for specific numbers, but believe that the 100 year number is more likely."
What part of my comment are you referring to?
"If the rate of drilling decreases and stays low because of low NG prices, then we will run out of NG sooner than Later.
Prices will jump and supply will again ramp up to meet demand.
Whether it will include a jump in Shale Gas production is Moot. The Environmental Lobby can has proven time after time that it can put a hole in any Bucket it choses with one hand tied behind its back."
I do not have a Clue as to what you are referring to. My Statement stands on its Own:
"If the rate of drilling decreases and stays low because of low NG prices, then we will run out of NG sooner than Later"
What Part of the Above, didn't you understand?
Another way to look at the reserves is historical. As I recall, 25 years ago, we had 11 years of NG reserves remaining. Now, after 25 years of consumption, we still have 11 years of proved reserves.
People looking only at proved reserves thought we'd have run out of NG nearly two decades ago.
____________
The Fracturing Responsibility and Awareness of Chemicals Act (H.R. 2766), (S. 1215) -- dubbed the FRAC Act -- was introduced to both houses of the United States Congress on June 9th, 2009, and aims to REPEAL THE EXEMPTION for hydraulic fracturing in the Safe Drinking Water Act. It would require the energy industry to disclose the chemicals it mixes with the water and sand it pumps underground in the hydraulic fracturing process (also known as fracking), information that has largely been protected as trade secrets. Controversy surrounds the practice of hydraulic fracturing as a threat to drinking water supplies.[1] The gas industry opposes the exemption.[2] The House bill was introduced by representatives Diana DeGette, D-Colo., Maurice Hinchey D-N.Y., and Jared Polis, D-Colo. The Senate version was introduced by senators Bob Casey, D-Pa., and Chuck Schumer, D-N.Y.
____________
My guess is the prospects of this passing under the current Democratic controlled Congress with a Democratic as president are pretty good. I think its safe to interpret this bill as a signal of an increasingly intrusive regulatory environment for US mining and drilling activities, and that will result in increased production costs. In some instances, those increased costs due to US environmental / regulatory requirements could exceed the transport costs to import the same materials from countries not so burdened.
Separating quantities of a resource in the ground from the economic / environmental/ political realities associated with extracting those resource in an unfavourable regulatory setting are likely to lead to less than optimal decisions.
On Oct 04 10:40 AM GMiki1 wrote:
> I agree with Mark. We tend to exaggerate. I'm long UNG. Shale gas
> is more expensive to extract and won't be extracted at low futures
> prices. The reason industry production hasn't fallen off more at
> the low prices offered is that producers have hedged and actual production
> is being sold at higher prices. I'd look for higher prices as fall
> deepens and winter approaches.
I doubt that we will, or can, ever "run out" of petroleum energy. At some future point, however, the real costs in terms of human labor and technology requirements will reduce the amount that is affordably available per person.
>" MAMMOTH DISCOVERY
> Companies bet big on South Texas gas find
> By BRETT CLANTON Copyright 2009 Houston Chronicle
> Oct. 6, 2009, 12:42AM
>"Houston's ConocoPhillips, with 300,000 acres, considers the
> region "one of the top resource plays in the lower 48” and will
> concentrate much of its 2009 exploration spending in the Eagle
> Ford and other North American unconventional resource plays,
> spokesman Charlie Rowton said. But he declined to elaborate.
> Exxon Mobil confirmed it holds an interest in the Eagle Ford shale
> in La Salle and McMullen counties, but a spokesman said, “the
> details of the exploration program are considered confidential.”
> Exxon Mobil confirmed it holds an interest in the Eagle Ford shale
> in La Salle and McMullen counties, but a spokesman said, “the
> details of the exploration program are considered confidential.”
> Bob Fryklund, industry analyst with IHS-Cambridge Energy
> Research Associates in Houston, said highly diversified oil majors
> may not have the same urgency to act as independent oil and gas
> producers do.
> “This is just one portion of their portfolio, while for a lot of
> the independents it's their whole portfolio,” he said.
> But increasing moves by major international oil companies into
> U.S. shale plays, he said, suggest they may see more potential
> there than they once did."
Just to flush this out a little, with oil at $70 and NG at $3 the majors like ExxonMobil and ConocoPhillips, and even players like Apache, will invest their capital in search for oil in places like Africa, and not NG in the U.S. The players like Devon, Chesapeake, and Petrohawk, that are primarily North American NG players do not have that luxury, they must compete for leases and then act on those leases and keep drilling to maintain cash flow. If NG goes to $6-$7, then the majors will re-evaluate their cap-ex spending. Does that sound right?
> Are you sure that is what you want?
>
> At $2.00 to $3.00 do we really want the District of Columbia
> opening up new areas of drilling?
>
> I bet if you ask guys like Pickens they might say something
> different right now?
>
> Even if Washington said that drilling would be allowed in offshore
> Carolina, at this price, would anybody do it?
>
> Shouldn't we focus on demand right now and not supply?
I agree. If we don't raise demand for NG, we shouldn't go around looking for new supply.
Renewables are the long term answer. But in the mean time NG can help us over the next 25-years or so to get off Middle Eastern oil as we transition to those renewables. We need Capitol Hill and the White House to really push to use NG (CNG/LNG) as the transition fuel from oil to renews.
Also, wouldn't it be better to get California to let their existing offshore wells be re-worked with modern drilling technology than to drill new wells in places like the Carolinas that don't have those wells? California could sure use the royalties right now, and the "environmental/ecological sell" seems like it would be easier?
I get pounced on by Old Wizard, but as usual, he doesn't respond. Sometime in the Future, I will be pounced on again.
If I don't respond, he will hound me. If I respond, he will not reply. And the Cycle will repeat. Check Old Wizard's Comment stream. You'll get the Gist right away.
NG will play an increasingly important role in our future energy supplies. If Mark was to look further into EIA's estimates of the role of NG he would notice in their AEO 2009 updated release (see pages 76-78 and Tables A13-A14: (www.eia.doe.gov/oiaf/a...) that NG continues to expand its use for the next 20+ years. We don't run out in ten and NG prices don't jump in anticipation of a shortfall.
Full disclosure, I consult with the EIA in its modeling of future energy supplies. While forecasting price is fraught with error, they have been pretty good on capturing the relative quantities of supply of the various energy resources.
> jack
don;t forget the sizable quantities believed to be trapped under the permafrost in canada, AK, russia -
the permafrost is melting, better hurry.
> jack
I guess it raises a serious questions that every one wants to see answered: The difference between DISCOVERED and PROVEN natural gas reserves, and the UNDISCOVERED and UNPROVEN reserves.
The DISCOVERED and PROVEN natural gas reserve remains at roughly 10 years worth of US consumption. You can speculate all you want and expand your estimate of undiscovered reserves all you want.
But people do want to ask how much can you trust the estimate of the "undiscovered" reserves. How likely that they do exist? How likely that they can be discovered within the next 10 years. And how much of that gas is actually recoverable, and at what cost?
Until any speculative undiscovered reserve is actually discovered, measured, proven, and produces, they do not enter the supply / demand equation. I honestly believe the speculative numbers are nothing more than just speculations. Proven reserve is the only non-speculative number we can rely on.
Don't forget:
1) We now have LNG import terminals and gas coming from places like Qatar and Trinidad and Tobago.
2) We have a neighbor to the north that as a little NG to sell us.
3) We have a neighbor to the south that wants to start producing NG in the Gulf of Mexico and ship it to us.
4) Our friends in Alaska want to build a pipeline and ship us North Slope gas (at $3 or less why bother).
When looking at supply or potential supply, you have to include all North American and Caribbean gas, plus what we are able to import via LNG. Remember all those applications for new LNG terminals? Where did most of them go? Isn't Thunder Horse supposed to be just one of the largest gas bubbles ever? No, I am not worried about the supply side of North American natural gas. And anyway, by 2020 I hope to have some solar panels up on the roof.
Over the last five years, production of gas from shale has spread across wide swaths of Texas, Louisiana, and Pennsylvania. All the new production has produced a glut of gas in the United States, helping to drive down gas prices and utility costs.
Sounds to me like her ignorant remarks in Rome a few years ago, when she compared my oil predictions unfavorably with...with...those of Mike Lynch.
Great work, author. Even if you are wrong you would get an A from this teacher.