End of the Boom: The True State of the Shale Gas Industry

Kurt Cobb
Oil Price
February 10, 2012

… What ought to be acutely troubling is that the history of revisions to oil and gas resources has heretofore been one of increases. For the first time, we are now seeing not just downward revisions in estimated natural gas resources, but drastic downward revisions. That should tell us that the era of unlimited horizons for fossil fuels has come to a close. All the advanced technology that was supposed to bring unending plenty in the form of fossil fuels is now giving us better estimates of what will be available, namely, not nearly so much as we thought.

Meanwhile, in other areas of the world the hype surrounding shale gas is also being deflated. Exxon Mobil Corp. recently announced that two exploratory wells that it drilled in Poland–a country thought to be rich in shale gas–were duds. The company had already abandoned a $75 million investment in Hungary in 2009 after drilling in so-called tight sands yielded more water than gas.

Shale gas drilling in Europe is now revealing what was earlier revealed in the United States. The industry’s so-called “manufacturing model”–the idea that one could sink a well virtually anywhere in a shale gas deposit and get economically viable flows–is being discredited all over again. Former U.S. Speaker of the House Tip O’Neill once said, “All politics is local.” It turns out that all shale gas drilling is local as well. Shale gas fields have sweet spots worth exploiting, but also contain vast areas that will likely never be economical to produce.

… As new wells in the world’s shale gas fields continue to disappoint, prepare for even more outrageous claims about future natural gas supplies–measured perhaps not in centuries, but millennia–and designed to obscure the failure of shale gas exploration results to match the industry’s persistently optimistic forecasts.

Read full report here

This article was posted: Friday, February 10, 2012 at 9:22 am

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