Wednesday, December 14, 2011

The Questionable Economics of Shale Gas

Photo: “American Gasland,” artwork by River Side (marcellusprotest/Flickr)
So is unconventional tight gas going to generate enormous profits?  Isn't that the message that we hear frequently?  This article by Chris Nelder ( casts serious doubt about the economic benefits of natural gas drilling. Nelder claims that, our shale gas resources, "while much ballyhooed in the press, are far from certain."  We have only an 11-year supply of gas on the books, but beyond that, the future of natural gas is only "probable, possible, and speculative."  The US, he writes, could become a net gas importer by 2035.  Admittedly, he says, we are producing a lot of gas for the moment, but it may come at the cost of profitability.

The article asserts that on an averaged annual basis, shale has been unprofitable since 2008.  As to why there is so much drilling activity, read the entire article.
The uncomfortable truth is that, at this point, we simply don't know how big our shale gas resources are, how much of the gas can be technically or economically produced, or how profitable producing the gas actually is.  And that should give us pause.

I'll say!   Don't believe everything you hear! 


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