Shale and its Discontents

[Geee]

National Review:


The shale-gas (and shale-oil) revolution is the single most important development in the North American energy sector since the discovery of the East Texas Field in 1930. But you won’t get that story by reading the New York Times.

Instead, two recent articles by Ian Urbina, the Times’ designated reporter on shale development, claim that the shale business is overhyped. On Sunday, June 25, the paper ran a front-page story that relied largely on anonymous sources who used phrases such as “giant Ponzi schemes,” “inherently unprofitable,” and “an Enron moment” to describe the last few years of shale development in the U.S. The story ended with yet another unattributed quote, which discussed a rather lackluster well that had been drilled into a shale bed in Europe. An employee of an oil-field-services company said the well “looked like crap” and that it would likely be sold to another company. According to the anonymous source, there’s “always a greater sucker.”But who’s the sucker here?

Believing Urbina’s story entails believing that the industry’s top management and financial analysts — at ExxonMobil and several other major energy companies — are chumps. In late 2009, ExxonMobil paid $41 billion for XTO Energy, a Houston-based company that was sitting atop huge shale-gas assets. According to the president of Shell US, Marvin Odum, the company has invested some $17 billion in shale drilling over the past few years. During a recent presentation at the Aspen Institute, Odum said, “We wouldn’t be doing it if it wasn’t real.” Numerous companies are building huge pipelines into the Eagle Ford shale in South Texas.

Believing Urbina also requires even the most casual observers of the energy industry to disregard the billions of dollars that consumers have saved over the past couple of years due to the reduced price of natural gas — a price drop made possible by a boost in production. The latest spot price for natural gas at the Henry Hub in Louisiana is about $4.40. To make the math easy, let’s call it $4. Over the four-year period from 2005 to 2008, U.S. natural-gas prices averaged about $7 per thousand cubic feet. That price reduction is now saving American consumers about $60 billion per year, or about $180 million per day.

[Casino67]

Lot's of stories about this. The tree-huggers have their panties in a wad.

[Valin]

Lot's of stories about this. The tree-huggers have their panties in a wad.

 

 

When don't they have their panties in a wad?