I am less optimistic than you about the capacity to continuously drill while ensuring all environmental risks are properly addressed. We have seen fracking trigger minor earthquakes in relatively low incident earthquake zones in the Midwest. While I’m pretty confident that we have the means to ensure that we can eliminate potential groundwater contamination issues by selecting drilling sites that geologically separate shale oil and gas from aquifer-bearing rocks above, I’m not sure that those doing the drilling can be trusted to do the right thing every time so that accidents don’t happen.

The drop offs that occur in shale gas fields are not comparable to what happens in more conventional oil and gas formations. The yield decline when compared is dramatic because what occurs in decades in conventional fields occurs in months with fracked sites. So this self-sufficiency drive may turn into a “drill baby drill” engagement that leads to diminishing returns.

And here is my rant in response to your comment. By far the better approach to meeting energy demand involves improvements in the technology we use to meet our lifestyle needs so that our devices use less energy. And very much at the top of the list of ways to become more energy self-sufficient, is conservation, ending our throw away mentality once and for all. If we can set a goal to eliminate for lack of a better word, the “entropy” that condemns our modern technology into endlessly pursuing new energy sources, we would have a self-sustaining world that gives us the biosphere we have never attained even on microscopic level. I know you know what I am talking about because you have made this point yourself when talking about the challenges we face in sending humans into space. Well the Earth is in the same boat, it is our spaceship.

The only “bubble” I see is rising drilling/completion costs because of the limited capacity. The drilling /completion capacity is unlikely to expand much because the logical forecast for the next several years is overproduction will glut the market and drive prices down below breakeven, at which point drilling will either greatly diminish, or else drilling/completion cost must fall dramatically so that lower NG prices will be high enough to create breakeven revenues. Drilling/completion companies aren’t going to make major capex commitments with the expectation that drilling demand is going to fall off. Looks like traditional supply/demand market forces will do a fairly even job of regulating both prices and production of shale gas.

I don’t believe that the argument about shale gas is that it is temporary. The argument is that shale gas extracted from fracking provides diminishing returns from each well that is drilled after a very short period of time, which means more drilling and fracking to maintain total volumes delivered to the market.

http://services.lib.mtu.edu/etd/THESIS/2012/Business&Economics/duman/thesis.pdf

This study shows NG gas prices as low as $3/mcf produce on average at least 10% returns/annum for 20-years on fractured shale gas wells. That would seem sufficient inducement for the NG industry to keep on drilling new wells as long as prices are at or above $3/mcf. The study also shows the well operators get a $0.70 “administration” fee on every mcf produced. Since the average well might produce over 5-million mcf over its 20-year lifespan, the “administration” fee alone eventually rewards the operators with $3.5-million for each well completed. Most of that comes in the first few years.

Solar doesn’t seem very economical for true off-grid applications, even if the panels are free. That’s because energy storage costs are still mostly too expensive. But, when a utility power grid absorbs all excess output and the panel owners get credit or cash for the energy pumped into the grid, free or low-cost panels could be real moneymakers. Not only would the owners get free electricity, they would get free money to purchase grid power after sunset and to install more cheap panels. The key to solar power feasibility is cheap “storage,” which a utility grid provides.

Private off-grid power is a completely different condition. I stumbled across a fascinating hydro-power blog site last week that seems dedicated to selling for $1.8-million a 400 kW (rated nameplate capacity) hydropower plant, 50-acres of land, and 4000 square feet of underground “residence” located near Spokane in NE Washington state. Apparently the utility grid must purchase any and all excess power at a price near a nickel kWh. If enough water flow is available, the two hydro turbine generators produce $20/hour. Since a year has 8,760 hours, the site could in principle produce $175,000 worth of power income annually. I’m guessing not nearly enough water flow is available to keep both turbines humming 24/7/365, but often a lot of surplus flow must bypass the installed turbines. Pictures of the site show lots of “wasted” water cascading down a scenic waterfall upstream of the turbines. The service factor of the 400 kW of installed generators may be as low as 10% of nameplate capacity due to seasonal water flow variations. See: http://deepcreekhydro.blog.com/2010/01/17/hydroelectric-plant-for-sale/

There are loads of great color pictures of the hydropower site at: https://plus.google.com/photos/106788585722120874733/albums/5419718005012461377?banner=pwa&gpsrc=pwrd1#photos/106788585722120874733/albums/5419718005012461377?banner=pwa&gpsrc=pwrd1

It takes a lot of water to produce a single kWh of energy. For example if a 75% efficient hydroturbine generator has a 60-foot head of water (~25 psi), ~ 1,000 cubic feet of water must discharge through the turbine to produce one kWh of electricity. Seems doubtful that an individual would find it feasible to dam a stream and “store” significant hydropower in his own private reservoir. Like private solar panels that use the utility grid as the “storage” mechanism, private hydroturbines must harvest the waterpower when it’s available, and immediately transfer the excess power into the utility grid. But just for residential usage, a small stream might flow 24/7/365. The linked Deep Creek Hydropower blog shows two turbine generators. One is rated 250 kW; the other is 150 kW. Apparently the smaller generator runs constantly to supply the residence; when excess water flow is available, the larger 250 kW hydroturbine generator starts up to provide an additional $300/day income. One wonders if many such potential sites are scattered about the country. Do the utility regulations in Canada require the utilities to purchase electricity from private hydropower?

I’d like to see your tech blog give us a numerate treatment of small private hydroelectric systems. How much do small turbines and generators cost? How many feasible sites are there? Can cheap centrifugal pumps serve as low-efficiency low-cost “turbines?”

Hi Tom, I wrote about V3 Solar last week. See http://www.21stcentech.com/headlines-at-21st-century-tech-for-october-12-2012/. The weekly headline reads “Energy Update” Rotating Solar Panels – Net Result Lots More Energy Yield – Who Would Have “Thunk” It?”

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