Truth and myth about shale gas reserves

(, accessed in Sept 2013)

Truth and myth about shale gas reserves


100 Year Shale Gas reserves

With the recent increase in shale gas extractions it would seem that the USA no longer needs to fear fossil fuel depletion for a long time to come.

Thanks to new applications of a technology called ‘fracking’ and horizontal drilling, which allows for the development of new sources of shale gas, US estimated “proven” natural gas reserves have increased by 61 percent in only four years. It has been speculated that at today’s natural gas consumption rate there might be enough natural gas in the United States to last 100 years.

But not everyone agrees with this optimistic projection of reserves.

How could there be a doubt about ‘proven’ reserves? Aren’t they proven?

We have to keep in mind the meaning of a ‘proven’ reserve. This is not simply all the fuel that’s in the ground. In order to be a proven reserve it must be possible to extract the fuel using current technologies and in such a way that companies are sure they can make a profit.

A June 2011 New York Times investigation found that companies have intentionally overstated the productivity of their wells. Bill Powers, editor of Powers Energy Investor, agrees with their findings. If wells are less productive than they are said to be, if gas will therefore be harder to extract than projected, it may well be that ‘proven’ reserves are not as high as we’ve been told.

So, how long will shale gas reserves really last?

According to Bill Powers the facts show that the U.S. only has between a five- to seven-year supply of shale gas. Powers says self-interested industry, media and politicians have been grossly overstating the importance of shale gas supplies. In his book, set to be published later this year, he reveals that production rates in all of the shale basins are far lower than the oil and gas industry are claiming, and are actually in alarmingly steep decline. In short, the “shale gas bubble” is about to burst, like the housing bubble that burst in 2008-2009.

Arthur Berman, who is a geological consultant with thirty-four years of experience in petroleum exploration and production, Associate Editor of the American Association of Petroleum Geolgists Bulletin and Director of the Association for the Study of Peak Oil, also remarks that decline rates in production in shale basins nationwide are “incredibly high.”
According to Berman hundreds of wells will need to be drilled every year, just to keep producing shale gas at the current rate. This would cost billions of dollars just to replace supply. He wonders who would be willing to finance these wells.

Only a large increase in the price of gas would make such an investment profitable. And that’s exactly what Powers fears. He believes we are quickly approaching a gas crisis akin to what occurred in the 1970’s and because of that, prices will soon skyrocket.

So it is possible that gas reserves may indeed proof to be a lot smaller than has been hinted at, and that the current low gas prices may not last much longer. Unless of course the development of a greatly improved drilling technique suddenly makes the extraction of shale gas a whole lot cheaper than it is today.

Financial Times
De Smog Blog
The Energy Report
Oil Price

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