Today Daniel Yergin, author of the seminal oil industry tome ‘The Prize’, wrote in the Wall Street Journal that shale gas is a game changer for US energy. Those who follow natgas will have heard it all before: more advanced and affordable technology, mainly hydraulic fracturing or fracking, has opened up an abundant supply of gas that could satisfy US needs for many, many decades to come. Yergin’s point that this has happened with ‘no great fanfare,’ however, probably stands true for the average person who isn’t an avid follower of energy news.
Shale gas not only promises to relieve the US of a potential energy security headache, but there’s the oft-quoted environmental angle, too: as a source of electricity, natural gas can give off 50 per less CO2 than coal, when burnt in the modern plants. It’s not just for the US, either: suggestions are that Europe and Asia might have huge supplies of shale gas, too (although Yergin notes that development of such resources could be some way off).
But there’s a persistent bunch of doubters about the shale gas story. The explosion in shale gas is new, and the horizontal wells that are being drilled furiously by Chesapeake are widely known to decline in output fairly rapidly after the first 12 months. This has led some respected resource watchers, including Matt Simmons, to voice scepticism that the shale gas is really about to revolutionise supply.
Art Berman is another expert who has argued vociferously that the decline rates used by the industry under-play the true rates of decline at the average shale gas well. His presentation at a peak oil conference last month and consequent online spat with consultants at Tudor, Pickering and Holt, drew attention (including ours) to the debate.
Now, Berman writes on his blog that World Oil magazine have cancelled his regular monthly column – he claims under pressure from an executive at Petrohawk, another company big on shale gas.
Berman is by not exactly a lone or unorthodox voice in the gas industry, as FTfm columnist John Dizard noted yesterday:
Ben Dell, of Bernstein Research in New York, whose work is respected by both sides in the debate, says: “The average well deteriorates more in quality, and more wells fail, than people believe. Still, I think a rise in prices would make more (shale prospects) economic. Plenty of plays work at $9 per mcf [1,000 cubic feet].”
We don’t of course know the reasons for World Oil cancelling Berman’s contract. But Berman’s latest blog post suggests the debate is only going to become more heated.