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New York Times: US shale a "giant Ponzi scheme"

by Patrick Osgood on Jun 26, 2011

Shale wells have become a common sight in many US states. But are they to stay? GETTY IMAGES
Shale wells have become a common sight in many US states. But are they to stay? GETTY IMAGES

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.


Sirs, This is typical 'hysterical news reporting' designed to sell newspapers, not report the truth. The statement th


Readers' Comments

Pickard Trepess (Jun 27, 2011)

New York Times: US shale a
Sirs, This is typical 'hysterical news reporting' designed to sell newspapers, not report the truth. The statement that "public perception of shale gas does not match reality" is the really true statement - The reality is well known in the petroleum industry - the economics are tight, but can be profitable. We are learning the areas where the wells can be made profitable, and as with any O&G exploration, not all wells are successful. We are also reducing the costs of extracting the shale gas, and know well that the production declines are fast - that is part of the equation. Anyone who says differently is misinformed or deliberately trying to mislead. As for damaging the water table - I fail to see how a frac treatment conducted at several thousand feet, and designed to radiate about 300 feet from the wellbore can damage water producing zones less that 300 feet from the surface - gas in tapwater is a function of the owner's leaking septic tank or natural seepage of gas from a few hundred feet depth, not activity several thousands or tens of thousands of feet lower. Oil companies are very wary of spending hard cash, and analyse everything down to the cent, so do not invest in Ponzi type schemes. I've been fracturing since 1979, and know well that it can be done safely, without environmental damage, and with great results - many times it is the only was a gas well can be made profitable. It works, and it doesn't use enormous amounts of poisonous chemicals - most are safe to eat, and those that are not, are used in tiny amounts, and very carefully controlled. The amounts of water used are getting larger, but are still only a fraction of the water used for public and farming use. We tend to use non-potable water, and will recycle it where possible. Blaming fracturing for causing earthquakes is another case of scandal mongers trying to blame the oil industry for any natural event that they think can further their cause, best we take away their access to modern technology - electricity & gas, and send them back to caves to live - at least we can enjoy some peaceful existance without having to entertain lunatics. The industry has performed over 2 million frac treatments in shales, and had there been serious problems, evidence of such would easily be found. The mere fact that no evidence has surfaced is more than proof that the activity is safe and risks and damage minimal.

Tariq AlBetairi (Jun 27, 2011)
Saudi Arabia

shale gas
giant Ponzi schemes or not, the big corporations (like Dow) are putting their money where their mouths are talking!


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