Transcript Projected Unit Costs of Selected Conventional Fossil Fuels Over the Period 2009-2030 in NYS. Fuel Type Projected Changes in Fuel Cost, 2009-2030 (2009 dollars/MMBTU) Percent Change Gasoline.

1
Projected Unit Costs of Selected Conventional Fossil Fuels
Over the Period 2009-2030 in NYS.
Fuel Type
Projected Changes in Fuel
Cost, 2009-2030
(2009 dollars/MMBTU)
2009
2030
Percent Change
Gasoline – all grades
$19.30
$40.39
109%
Natural Gas - Electric
Natural Gas – Residential
Natural Gas – Commercial
Natural Gas – Industrial
$6.30
$13.58
$10.27
$8.73
$10.14
$16.19
$13.06
$11.98
27%
19%
27%
37%
Source: NYSEPB (2009), Energy Price and Demand Long-Term Forecast (2009-2028). Annual
growth rate factors provided in reference document have been extrapolated for the period 2029-2030.
2
Externality Costs for Fossil Fuel Generation
The hidden costs of:
• Air pollution morbidity and mortality
• Water pollution costs
• Global warming damage. e.g. coastline loss,
agricultural and fish losses, human heat stress
mortality, increases in severe weather and air
pollution
• Worker health
3
Approximate fully annualized generation and short-distance
transmission costs for WWS and new conventional power
(2007 U.S. cents/kWh-delivered), including externality costs.
Energy Technology
Wind Onshore
Wind Offshore
Wave
Geothermal
Hydroelectric
CSP
Solar PV (Utility)
Solar PV (Commercial Rooftop)
Solar PV (Residential Rooftop)
Tidal
New conventional (plus externalities )f
2005-2012*
2020-2030*
4a -10.5b
11.3c -16.5b
>11.0a
9.9-15.2b
4.0-6.0d
14.1-22.6b
11.1-15.9b
14.9-20.4b
16.5-22.7e
>11.0a
9.6-9.8 (+5.3) =
14.9-15.1
≤4a
7b-10.9c
4-11a
5.5 -8.8g
4a
7 -8a
5.5g
7.1-7.4h
7.9-8.2h
5-7a
12.1-15.0 (+5.7) =
17.8-20.7
4
NO to HVHF, YES to a Much Better Plan
The plan would:
• Reduce NYS’s end-use power demand ~37%.
• Stabilize energy prices since fuel costs would be zero.
• Create more jobs than lost because nearly all NYS energy would
now be produced in-state, ~58,000 new, permanent, full-time jobs by
2025.
• Reduce NYS air pollution mortality and its costs by ~4000/yr,
and ~$33 billion/yr (3% of 2010 NYS GDP), respectively, repaying
the 271 GW installed power needed within ~17 y.
• NYS’s own emission decreases would reduce 2050 U.S. climate
costs by ~$3.2 billion/yr.
5
100% of electric capacity added in U.S. last month
was renewable
The Federal Energy Regulatory Commission, the agency that announced that almost
half of all new electricity generating capacity added in the U.S. in 2012 was renewable,
has released its data for the month of January.
http://www.ferc.gov/legal/staff-reports/2013/jan-energy-infrastructure.pdf
6
The Industry/Regulator/Legislator
Merry-go-Round
Former Pa. counsel to handle Range's legislative, regulatory affairs
Feb 21, 2013 - Range Resources Corp. has selected Terry Bossert as vice
president of legislative and regulatory affairs for its Appalachia division, the
company announced yesterday. Bossert is the former senior vice president of
regulatory and government affairs for Chief Oil & Gas LLC and ex-counsel to
the Pennsylvania Department of Environmental Protection. He will report
to Scott Roy, former deputy chief of staff to Pennsylvania Gov. Ed Rendell
(D), who left office in 2009.
7
Regulations Without Strict Enforcement Are
Just Words on Paper
Feb 22, 2013 - In the third day of budget hearings Thursday, …Sen. Jim Ferlo, D38, voiced surprise that nine of every 10 violations cited by DEP inspectors at
Marcellus Shale gas wells in 2011 resulted in no fines. “How do you reconcile
that?” the Pittsburgh lawmaker asked. “The idea of an issuance of a notice of
violation is not to issue a fine. The idea is to bring conduct which is potentially
volatile to the attention of the operator so the operator can do something about
it,” Krancer said.
But that wasn’t enough for Ferlo, who is a member of the Senate Environmental
Resources & Energy Committee. “You’re the secretary of DEP and the citizens
are demanding that there be proper enforcement and proper citations to correct
the behavior of an industry that, in my opinion, has run amok, despite your
perception of the industry. Citizens feel very shortchanged right now,” Ferlo
said. “I’m sorry for that perception on your part. I think it’s an incorrect
perception,” Krancer responded.
http://www.phillyburbs.com/news/local/courier_times_news/dep-secretary-krancer-hit-on-marcellus-shale-smallmouthbass/article_446821c4-2d21-55d3-a497-d995674c994a.html
8
A Dispassionate View of the Industry.
“…oil and gas companies are not in business to steward the environment, save the
family farm or pull depressed areas out of economic decline. If these things should
by chance happen, they are merely peripheral to the primary mission of the
companies and certainly were never considered in corporate exploration and
production plans. Further, given shales’ steep declines and thus limited lives, such
benefits will be short-lived as well. It would be the height of naïveté to assume that
such companies have altruistic intent towards a region or its residents. They do
not. Oil and gas companies are in business to extract hydrocarbons as
cheaply and efficiently as possible and get them to the customer that will
pay the highest price. If they can shave dollars off already thin margins by
refusing to use pollution control devices then that is precisely what they will do if it
is not mandated, regardless of whether this will increase costs for a region due to
pollution or negatively impact other industries. Even though pollution and
degradation involve real costs, they are not borne by the industry that perpetrates
them in today's economic accounting. This is especially true of the oil and gas
industry as they are exempt from federal environmental protection statutes.”
Rodgers, Energy Policy Forum, February 2103
9
Why Is High-Volume Fracing from Long Laterals
in Shales a Higher Risk to Public Health?
• Requires much higher well density, many wells per square
mile.
• Requires much more industrial development over large areas,
heavy equipment operating 24/7/365.
• Requires much higher volumes of fracing fluid, millions of
gallons per well.
• Produces much higher volumes of waste fluids and solids
containing hazardous materials: frac fluid chemicals, heavy
metals, NORMS, NOx, VOC’s.
• Produces higher volumes of fugitive emissions of methane.
10
Why Is Slickwater, High-Volume Fracing from
Long Laterals a Higher Risk to Public Health?
• As number of wells and volumes of waste increase,
probability of accidental releases of hazardous
materials into air and groundwater increases.
• Cumulative effects on air and water and health from
these and from purposeful emissions into the
atmosphere and releases into groundwater are
unknown.
• Increased production, processing, storage,
transportation and burning of natural gas and its liquid
companions (e.g. ethane, propane, butane) increases
emission of GHG’s, exacerbates climate change
11
GOOD MECHANICAL INTEGRITY
CONDUCTOR PIPE
FRESH WATER AQUIFER ZONE
SURFACE CASING
PRODUCTION CASING
SHALLOW PRODUCING ZONE
INTERMEDIATE PRODUCING ZONE
12
TARGET PRODUCING ZONE
CEMENT CHANNELING
CONDUCTOR PIPE
PRESSURE
BUILDS UP
FRESH WATER AQUIFER ZONE
SURFACE CASING
CEMENT
CASING
FORMATION
PRODUCTION CASING
SHALLOW PRODUCING ZONE
INTERMEDIATE PRODUCING ZONE
13
TARGET PRODUCING ZONE
LEAK THROUGH CASING
CONDUCTOR PIPE
PRESSURE
BUILDS UP
FRESH WATER AQUIFER ZONE
SURFACE CASING
FORMATION
CASING
PRODUCTION CASING
SHALLOW PRODUCING ZONE
INTERMEDIATE PRODUCING ZONE
14
TARGET PRODUCING ZONE
INSUFFICIENT CEMENT COVERAGE
CONDUCTOR PIPE
PRESSURE
BUILDS UP
FRESH WATER AQUIFER ZONE
SURFACE CASING
PRODUCTION CASING
SHALLOW PRODUCING ZONE
INTERMEDIATE PRODUCING ZONE
15
TARGET PRODUCING ZONE
Surface Impacts on Health/Environmental: Pads, Pipelines.
Impoundments, Flares
Photo Courtesy of Bob Donnan
16
Surface Impacts on Health/Environmental: Pads and Pipelines
…and these will be located wherever permission is given
Photo Courtesy of Bob Donnan
17
Surface Impacts on Health/Environmental: Pads, Pipelines.
Impoundments
Photo Courtesy of Bob Donnan
18
Surface Impacts on Health/Environmental: Waste Impoundments
Are needed even
with “recycling”
Photos Courtesy of
Bob Donnan
CARTER IMPOUNDMENT, PA Marcellus
19
Surface Impacts on Health/Environmental:
Pipelines and Compressor Stations
Buffalo, Pa, Compressor Station
Photo Courtesy of Bob Donnan
20
Observation: What Does This All Look Like
“Downhole”?
Laboratory-Scale Experiment:
• A Block of Real Rock
• Apply earth-like pressure to all 6 sides
• Drill It, Right Down the Middle
• Case It
• Cement It
• Perforate it
• Frac It, with Red Dye in the Frac Fluid
• Break Open the Block
• See What Happened
One Can See Perforations and Hydraulic Fractures
4 in.
22
Nobel Winner F. Sherwood Rowland:
On The Responsibility of Scientists
“Is it enough for a scientist simply to publish a paper? Isn’t it a
responsibility of scientists, if you believe that you have found
something that can affect the environment, isn’t it your responsibility
to actually do something about it, enough so that action actually takes
place?”
“If not us, who? If not now, when?”
Rowland, at a White House climate change roundtable in 1997.
http://thinkprogress.org/romm/2012/03/12/442296/sherry-rowland-sounded-alarm-ozone-layer/#more-442296
23
Key Data for Estimation of Well
Productivity and Economics: PA
From: Chesapeake Energy (CHK) published pro forma data
24
Blowout Through Nearby, Unknown, Abandoned Well
MYTH:
You should not worry about mistakenly stimulating
an abandoned well.
➣ "There are approximately 4,000
abandoned or unreported wells on
DEC's priority plugging list."
Pearsall,
Texas35,000
➣ "There are
approximately
wells forNovember,
which DEC has2010
no records.“
NYS DEC, October 5, 2011
25
MYTH: Fracs in shales stay in shale
~1500 ft
~1800 ft
Thickness of shale layer: 100-300 ft
26
Difficult to Keep Un-Natural Fractures “In Pay Zone”
Hydrofracture Intersects
Existing Fault
Base Image Courtesy of Southwestern Energy
27
Horn River Area, NE British Columbia
28
PA DEP Waste Production Database:
38 % of Frac Fluid Recycled in 2011
Industry claims of “nearly 100% recycling”
are not supported by DEP data
29
Jan-10
Sep-08
Apr-07
Date
Mar-14
Oct-12
Jun-11
# of Rigs Operating in PA
Drilling Rig Count in PA
140
120
100
80
60
40
20
0
30
Drilling Rig Count in Ohio
24
22
# of Rigs Operating in Ohio
20
18
16
14
12
10
8
6
4
Jul-09
Nov-10
Apr-12
Date
Aug-13
31
New Scientific Data on Methane Contamination of Water Wells
www.pnas.org/cgi/doi/10.1073/pnas.1100682108
32
The “New” Intermediate Casing Myth
Additional Well Casing to Prevent Gas Migration: In most cases, an
additional third, cemented well casing is required around each well to prevent
the migration of gas. The three required casings are the surface casing, the
new intermediate casing and the production casing. The depths of both
surface and intermediate casings will be determined by site-specific conditions.
33
As-Built Casing Layouts for
2 PA Marcellus Wells That
Contaminated Water Wells
34
35
36
Natural Gas Price is Volatile
$3.96 Today
37
MIT Study On Economics of Shale Gas
$3.96 Today
Jacoby et al., Economics of Energy & Environmental Policy, Vol. 1, No. 1, pp. 37-51, 2011
38
MIT Study on Economics of Shale Gas Wells
Jacoby et al., Economics of Energy & Environmental Policy, Vol. 1, No. 1, pp. 37-51, 2011
39
40
Comparison of Modeling Assumptions and Key Results
Time scale
(years)
GWP
Howarth et al.
20 / 100
33 / 105
Hughes
20 / 100
Skone
Methane
from gas
(gC/MJ)
Methane
from coal
(gC/MJ)
both
0.56 – 1.3
0.045 – 0.14
33 / 105
both
0.56 – 1.3
0.045 – 0.14
100
25
electr.
0.34
0.17
Jiang et al.
100
25
electr.
0.40
Not reported
Worldwatch
100
25
electr.
0.34
0.094
0 – 200
n/a
electr.
0.34 – 1.4
0.107
n/a
n/a
n/a
0.75
0.04
Wigley
U.S. EPA (2011)
heat/
electricity
41
Many Reports/Papers Since April, 2011
1. Howarth R W, Santoro R, Ingraffea A. Clim. Change 106, 679–690 (2011).*
2. Skone T.
http://cce.cornell.edu/EnergyClimateChange/NaturalGasDev/Documents/PDFs/SKONE_NG_L
C_GHG_Profile_Cornell_12MAY11_Final.pdf
3. Hughes D. Post Carbon Institute, 2011; http://go.nature.com/gkboqm
4. Osborn S G et al. Proc. Natl Acad. Sci. USA, 108, 8172–8176 (2011). *
5. Kumar S. WorldWatch Institute, http://www.worldwatch.org/despite-methane-emissionsupstream-natural-gas-cleaner-coal-life-cycle-basi.s
5. Jiang M et al. Environ. Res. Lett. 6: 034014 (2011).*
6. Wigley T. Clim. Change (2011). DOI 10.1007/s10584-011-0217-3.*
7. Hultman N et al. (2011). Environ. Res. Lett. 6: 044008,doi:10.1088/1748-9326/6/4/044008*
8. Cathles LM et al. Clim. Change (2012) DOI 10.1007/s10584-011-0333-0. *
9. Howarth R W, Santoro R, Ingraffea A. Clim. Change, In press, 2012. *
* = Peer Reviewed
42
43
The Cathles et al. Paper:
Our Cornell Colleagues’ Criticisms of Our 1st Paper
1) a physical argument that large flows of gas are not possible
while frac fluids fill the well;
2) an assertion that venting of methane to the atmosphere
would be unsafe;
3) a statement that we incorrectly used data on methane
capture during flowback to estimate venting;
4) an assertion that venting of methane is not in the economic
interests of industry.
44
Our 2nd Paper Refutes These Arguments,
And Provides New Supporting Data
1) a physical argument that large flows of gas are
not possible while frac fluids fill the well.
Large flows do occur because flowback is twophase, not dissolved gas; and there is 10 to 100
times more flowback from shale wells than
from conventional wells.
45
Our 2nd Paper Refutes These Arguments,
And Provides New Supporting Data
2) an assertion that venting of methane to the atmosphere
would be unsafe.
EPA (2011) reports 85% of flowback gas from
unconventional wells is vented, less than 15% flared or
captured; methane density only 58% that of air and is
extremely buoyant when vented (recall video); venting
is NOT illegal:“excess gas encountered during drilling,
completion or stimulation shall be flared, captured, or
diverted away from the drilling rig in a manner than
does not create a hazard to the public health or safety”
46
Our 2nd Paper Refutes These Arguments,
And Provides New Supporting Data
3) a statement that we incorrectly used data on methane
capture during flowback to estimate venting.
We used data on captured gas as a surrogate for vented
emissions, similar to EPA (2010) because industry does
not measure or estimate the gas that is vented during
flowback. Most data we used were reported to the EPA
as part of their “green completions” program, and they
provide some of the very few publicly available
quantitative estimates of methane flows at the time of
flowback. (Note new EPA regulations start in 2012).
47
Our 2nd Paper Refutes These Arguments,
And Provides New Supporting Data
4) an assertion that venting of methane is not in the economic
interests of industry.
According to EPA (2011b), break-even price at which the cost
of capturing flowback gas equals market value of captured gas
is slightly under $4/Mcf. See next slide.
48
49
Comparison of Modeling Assumptions and Key Results
Time scale
(years)
GWP
Howarth et al.
20 / 100
33 / 105
Hughes
20 / 100
Skone
Methane
from gas
(gC/MJ)
Methane
from coal
(gC/MJ)
both
0.56 – 1.3
0.045 – 0.14
33 / 105
both
0.56 – 1.3
0.045 – 0.14
100
25
electr.
0.34
0.17
Jiang et al.
100
25
electr.
0.40
Not reported
Worldwatch
100
25
electr.
0.34
0.094
0 – 200
n/a
electr.
0.34 – 1.4
0.107
n/a
n/a
n/a
0.75
0.04
Wigley
U.S. EPA (2011)
heat/
electricity
50
51
Horn River Area, NE British Columbia
52
53
Nobel Winner F. Sherwood Rowland:
On The Responsibility of Scientists
“Is it enough for a scientist simply to publish a paper? Isn’t it a
responsibility of scientists, if you believe that you have found
something that can affect the environment, isn’t it your responsibility
to actually do something about it, enough so that action actually takes
place?...If not us, who? If not now, when?”
Rowland, at a White House climate change roundtable in 1997.
This is called science-based advocacy
http://thinkprogress.org/romm/2012/03/12/442296/sherry-rowland-sounded-alarm-ozone-layer/#more-442296
54
Waste Injection Wells:
The Hidden Risks of Pumping Waste Underground
A ProPublica review of well records, case histories and government
summaries of more than 220,000 well inspections found that structural failures
inside injection wells are routine. From late 2007 to late 2010, one well
integrity violation was issued for every six deep injection wells examined —
more than 17,000 violations nationally. More than 7,000 wells showed signs
that their walls were leaking. Records also show wells are frequently operated
in violation of safety regulations and under conditions that greatly increase the
risk of fluid leakage and the threat of water contamination.
Structurally, a disposal well is the same as an oil or gas well. Tubes of
concrete and steel extend anywhere from a few hundred feet to two miles into
the earth.
Operators are required to do so-called "mechanical integrity" tests at regular
intervals, yearly for Class 1 wells and at least once every five years for
Class 2 wells. In 2010, the tests led to more than 7,500 violations nationally,
with more than 2,300 wells failing. In Texas, one violation was issued for
every three Class 2 wells examined in 2010.
http://www.propublica.org/article/injection-wells-the-poison-beneath-us
55
56
Industry Performance in NYS:
Plugging Abandoned Wells
“…of 48,000 abandoned oil and gas wells total,
13,000 were plugged and approximately
35,000 were not plugged as of 1994 …”
Bishop, HISTORICAL ANALYSIS OF OIL AND GAS WELL PLUGGING IN NEW YORK: IS THE
REGLATORY SYSTEM WORKING?, NEW SOLUTIONS, 23(1) 103-116, 2013
57
In the large U.S plays, shale gas
development has only just begun,
and it requires a large number of large,
multi-well, clustered pads and
significant ancillary infrastructure
58
Wellbore Integrity: Recent Operator
Performance in the Pennsylvania Marcellus Play
1,609 wells drilled in 2010.
97 well failures.
6% rate of failure.
1,972 wells drilled in 2011.
140 well failures.
7.1% rate of failure.
Palepko data
1346 wells drilled in 2012
120 well failures.
8.9% rate of failure.
Consistent with previous industry
data, and not improving.
59
What Are the Implications of
Leaking Wells?
Each leaking well has the potential for contamination of one
or more private or public water sources, and will leak volatile
organic compounds into the atmosphere.
60
High Volume Hydraulic Fracturing Proposed Regulations
6 NYCRR Parts 550-556, 560
Among My Comments and Recommendations
Recommendation: As a minimum, DEC should perform and publish its own
statistical analysis of documented incidents of hydrocarbon migration into
underground sources of drinking water in the Marcellus play in Pennsylvania,
and develop its own prediction of immediate and long-term rate of well failures
for shale gas development in New York.
Recommendation: It is not possible to perform a rational cost-benefit
analysis of shale gas development in New York without a science-based,
probabilistic estimate of the number of expected well contamination incidents
due to faulty wells. DEC should estimate the cost associated with mitigation of
such contamination in its economic analysis of shale gas development. Each
leaking well will, unless completely stopped from leaking natural gas, contribute
to methane emissions and exacerbation of climate change. DEC should estimate
the impact of such emissions on NYS goals for reduction of CO2eq .
61
Our Energy Plan for New York State
Jacobson et al., Energy Policy, Feb. 2013
62
Natural Gas Price is Volatile and
Will Inevitably Rise, As Will the Price of Oil
$3.96 Today
63
We Own the Wind, the Sun, the
Water: Their Fuel Cost is Zero.
Wind, water and solar energy will provide a stable, renewable
source of electric power not subject to the same fuel supply
limitations as fossil fuels and nuclear power. Due to the
eventual depletion of coal, oil, natural gas, and uranium
resources, their prices will continue to rise.
We Own the Wind, the Sun, the
Water: They Make Us Energy
Secure and Independent
64
Projected Unit Costs of Selected Conventional Fossil Fuels
Over the Period 2009-2030 in NYS.
Fuel Type
Projected Changes in Fuel
Cost, 2009-2030
(2009 dollars/MMBTU)
2009
2030
Percent Change
Gasoline – all grades
$19.30
$40.39
109%
Natural Gas - Electric
Natural Gas – Residential
Natural Gas – Commercial
Natural Gas – Industrial
$6.30
$13.58
$10.27
$8.73
$10.14
$16.19
$13.06
$11.98
27%
19%
27%
37%
Source: NYSEPB (2009), Energy Price and Demand Long-Term Forecast (2009-2028). Annual
growth rate factors provided in reference document have been extrapolated for the period 2029-2030.
65
Externality Costs for Fossil Fuel Generation
The hidden costs of:
• Air pollution morbidity and mortality
• Water pollution costs
• Global warming damage. e.g. coastline loss,
agricultural and fish losses, human heat stress
mortality, increases in severe weather and air
pollution
• Worker health
66
Approximate fully annualized generation and short-distance
transmission costs for WWS and new conventional power
(2007 U.S. cents/kWh-delivered), including externality costs.
Energy Technology
Wind Onshore
Wind Offshore
Wave
Geothermal
Hydroelectric
CSP
Solar PV (Utility)
Solar PV (Commercial Rooftop)
Solar PV (Residential Rooftop)
Tidal
New conventional (plus externalities )f
2005-2012*
2020-2030*
4a -10.5b
11.3c -16.5b
>11.0a
9.9-15.2b
4.0-6.0d
14.1-22.6b
11.1-15.9b
14.9-20.4b
16.5-22.7e
>11.0a
9.6-9.8 (+5.3) =
14.9-15.1
≤4a
7b-10.9c
4-11a
5.5 -8.8g
4a
7 -8a
5.5g
7.1-7.4h
7.9-8.2h
5-7a
12.1-15.0 (+5.7) =
17.8-20.7
67
Not Much Respect for You
from EXXON Mobil CEO
“Now, with these new technologies that evolve always come a lot of
questions. Ours is an industry that is built on technology, it's built on
science, it's built on engineering, and because we have a society that
by and large is illiterate in these areas, science, math and engineering,
what we do is a mystery to them and they find it scary. And because of
that, it creates easy opportunities for opponents of development, activist
organizations, to manufacture fear.”
Rex W. Tillerson, Chairman and CEO,
Exxon Mobil Corporation
June 27, 2012
Council on Foreign Relations
68
Easy for Him to Say
“…And as long as we as an industry follow good engineering practices and
standards, these risks are entirely manageable. And the consequences
of a misstep by any member of our industry -- and I'm speaking again about
the shale revolution -- the consequences of a misstep in a well, while large
to the immediate people that live around that well, in the great scheme of
things are pretty small….”
Rex W. Tillerson, Chairman and CEO,
Exxon Mobil Corporation
June 27, 2012
Council on Foreign Relations
69
EXXON Mobil CEO on Global Warming
“…And as human beings as a -- as a -- as a species, that's why we're all still
here. We have spent our entire existence adapting, OK? So we will adapt
to this. Changes to weather patterns that move crop production areas
around -- we'll adapt to that. It's an engineering problem, and it has
engineering solutions. And so I don't -- the fear factor that people want to
throw out there to say we just have to stop this, I do not accept. I do believe
we have to -- we have to be efficient and we have to manage it, but we also
need to look at the other side of the engineering solution, which is how are
we going to adapt to it. And there are solutions. It's not a problem that we
can't solve.”
Rex W. Tillerson, Chairman and CEO,
Exxon Mobil Corporation
June 27, 2012
Council on Foreign Relations
70
EXXON Mobil CEO on Journalists
“…But this is an ongoing dialogue I've been having with people in your
profession now for some time; that for whatever reason, a large number of
people in the journalism profession simply are unwilling to do their work.
They're unwilling to do the homework. And so they get something delivered
to them from the manufacturers of fear; it makes a great story. I mean, it –
I mean, it does. It makes a great story. People love that kind of stuff. The
consuming public loves it, because it goes to what, you know, their fears are.”
Rex W. Tillerson, Chairman and CEO,
Exxon Mobil Corporation
June 27, 2012
Council on Foreign Relations
71
Exxon Mobil CEO: Farmer Joe Is a Liar
“…There are a lot of sources of science-based information. There are a lot of
sources that can debunk claims that are made specific -- you know, specific
examples. Farmer Joe lit his faucet on fire, and that's because there was
gas drilling going on, you know, in his back porch. And we can go out there
and we can prove with science that that is biogenic gas; it's been in the
water table for millions of years; it finally made its way Farmer Jones'
faucet, it had nothing to do with any oil and gas activities. And part of when
you're dealing with the subsurface strata is you've got to -- you got to understand
that Mother Nature has done a lot of things in the subsurface that have nothing
to do with anything man has done. And it changes. It moves around all the
time. So what once was will change.”
Rex W. Tillerson, Chairman and CEO,
Exxon Mobil Corporation
June 27, 2012
Council on Foreign Relations
72
EXXON Mobil CEO Correct on
Shale Gas Economics
“…And what I can tell you is the cost to supply is not $2.50. We are all
losing our shirts today. You know, we're making no money. It's all in the
red.”
“The higher volumes are not only the result of drilling in the higher Btu
area, but are also the result of drilling longer laterals and
completing them with more frac stages. We’ve also experimented
with reduced cluster spacing, decreasing the frac interval from 300
feet to 150 to 200 feet, all of this looks very promising.” Once we
extract ethane beginning late next year, this will further enhance the
economics.”
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