Shale Gas Doubters Speak Up

Steve Horn, via nc links:

In a recent interview, Powers said the "bubble" will end up looking a lot like the housing bubble that burst in 2008-2009, and that U.S. shale gas will last no longer than ten years. He told The Energy Report: My thesis is that the importance of shale gas has been grossly overstated; the U.S. has nowhere close to a 100-year supply. This myth has been perpetuated by self-interested industry, media and politicians...In the book, I take a very hard look at the facts. And I conclude that the U.S. has between a five- to seven-year supply of shale gas, and not 100 years. The hotly-anticipated book may explain why shale gas industry giants like Chesapeake Energy have behaved more like real estate companies, making more money flipping over land leases than they do producing actual gas.... Arthur Berman, another investment insider, echoed Powers in a recent interview with Oil Price, remarking that the decline rates in production in shale basins nationwide are "incredibly high." Berman is a petroleum geologist, Associate Editor of the American Association of Petroleum Geolgists Bulletin and Director of the Association for the Study of Peak Oil. He maintains the blog Petroleum Truth Report. "In the Eagleford shale, which is supposed to be the mother of all shale oil plays, the annual decline rate is higher than 42%," he stated. "They're going to have to drill hundreds, almost 1000 wells in the Eagleford shale, every year, to keep production flat. Just for one play, we're talking about $10 or $12 billion a year just to replace supply." Berman believes there's a possibility that this could lead to an economic crisis akin to which happened during the Big Bank bailouts of 2008.

I'm skeptical of the oil and gas industry's and most politicians' and businessmen's optimistic assessment of shale oil and gas.  These guys may be a little too pessimistic, but I guarantee that in 5 years (maybe two or three) we'll have a much clearer picture of the future.  Keep an eye on North Dakota and Texas oil production numbers from the EIA.  When those numbers peak, we are looking at the top of the hype for shale oil.  The shale gas is a little more opaque, but I think the hype will become apparent soon enough.  I'm guessing we aren't on the cusp of an energy revolution.  If somebody comes along selling you an investment in mineral rights, I'd pass.