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New York Times: US shale a "giant Ponzi scheme"by Patrick Osgood on Jun 26, 2011
The New York Times disclosures follow an announcement that the US Government's Environmental Protection Agency is sending agents to shale wells to evaluate the effects of hydraulic fracturing on drinking water. Interim results of the field work are expected by the end of 2012.
Numerous concerns over the environmental impact of hydrofracking, including damage to the water table, have been raised since the advent of shale in 2005.
Evidence of pollution to the water table will be extremely bad news for the shale industry, which lobbied hard to win an exemption from the Clean Water Act.
Environmental concerns aside, according to the New York Times, the data show that while there are some very active wells, they are often surrounded by vast zones of less-productive wells that in some cases cost more to drill and operate than the gas they produce is worth.
Also, the amount of gas produced by many of the successful wells is falling much faster than initially predicted by energy companies, making it more difficult for them to turn a profit over the long run.
The e-mails were obtained by the New York Times through open-records requests or provided by industry consultants and analysts who say they believe that the public perception of shale gas does not match reality. In some cases, shale investment is compared to the late 1990s dot com bubble that burst spectacularly in March 2000.
In three major shale formations — the Barnett in Texas, the Haynesville in East Texas and Louisiana and the Fayetteville, across Arkansas — less than 20 percent of the area heralded by companies as productive is emerging as likely to be profitable under current market conditions, according to the data and industry analysts, reports the New York Times.
Tariq AlBetairi (Jun 27, 2011)
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- New York Times: US shale a "giant Ponzi scheme"