Fracking Doubters Get Some Press

There have been a couple of fracking pessimists in the news the last few days.  First, David Hughes makes an appearance in this piece at the Financial Times, even though he appears to be in there for the "world is flat" perspective.  Then we get the story of Andrew John Hall, who has a history of scoring big in crude oil trading, who's betting big that shale oil will peak and crude prices will skyrocket:

“When you believe something, facts become inconvenient obstacles,” Hall wrote in April, taking issue with an analyst who predicted a shale renaissance could result in $75-a-barrel oil over the next five years.
Hall is going all in on a bet that the shale-oil boom will play out far sooner than many analysts expect, resulting in a steady increase in prices to as much as $150 a barrel in five years or less.
Investing ever-larger sums of his own money, he’s buying contracts for so-called long-dated oil, to be delivered as far out as 2019, according to interviews with two dozen current and former employees and advisers who are familiar with Hall’s trading but aren’t authorized to speak on the record. To attract buyers, the sellers of these long-dated contracts -- typically shale companies that have financed the boom with mounds of debt -- need to offer them at a discount to existing prices.....
The U.S. Energy Information Administration is now predicting domestic production will reach an all-time high by 2016. Such projections don’t move Hall, a man who owns most of a town in Vermont and a castle in Germany and is featured nude with his wife, Christine, in a painting by American artist Eric Fischl, whose work the Halls collect.
In his counterarguments, he digs deep, delving into the minutiae of how Texas discloses oil production, the tendency of some shale wells to play out quickly and the degree to which the boom has relied on debt. The simplest of his reasons, though, is that producers have already drilled in many of the best areas, or sweet spots. Hall predicts that growth in shale output will begin to moderate this year and U.S. production will peak as soon as 2016.
“Once those areas have been drilled out, operators will have to move to more-marginal locations and well productivity will fall,” Hall wrote in March. “Far from continuing to grow, production will start to decline.”
So far this year, there are signs that he may be on the right track. In North Dakota’s Bakken and Texas’ Eagle Ford formations, which have accounted for almost all of the jump in U.S. output, the combined year-over-year growth in production in July fell below 30 percent for the first time since February 2010.
Two central questions about technology and shale will likely determine the outcome for Hall: how many wells producers will be able to drill in a finite amount of land that sits atop oil-bearing layers of rock and whether the U.S. renaissance will be repeatable abroad. Hall is betting no on both counts. Morse, and many in the energy world, are betting yes.

Hughes also predicts a peak in the current shale plays in the next two years.  Even though these guys are portrayed as crackpots, I tend to agree with them.  There is so much work involved in developing the shale wells, and the production levels are so low, with such rapid depletion, that I think a peak in production isn't too far off, especially considering drillers always concentrate on the sweet spots first.  But the fact the optimists don't want to address is that all resource plays peak out eventually, and the time to peak, at least in the United States seems to decrease as new fields decrease in quality and greater resources are poured into each new play.  These guys may be off by a couple of years, but the optimists will be wrong soon enough.  Expect the peak.