Insiders Sound an Alarm Amid a Natural Gas Rush

[underpants]

Source: NY Times

In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles.

“The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work,” an analyst from IHS Drilling Data, an energy research company, wrote in an e-mail on Aug. 28, 2009.

“Our engineers here project these wells out to 20-30 years of production and in my mind that has yet to be proven as viable,” wrote a geologist at Chesapeake in a March 17 e-mail to a federal energy analyst. “In fact I’m quite skeptical of it myself when you see the % decline in the first year of production.”


A review of more than 9,000 wells, using data from 2003 to 2009, shows that — based on widely used industry assumptions about the market price of gas and the cost of drilling and operating a well — less than 10 percent of the wells had recouped their estimated costs by the time they were seven years old.



Read more: http://www.nytimes.com/2011/06/26/us/26gas.html?pagewanted=1&_r=1&hp

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Great article. Culled from internal emails - natural gas simply isn't profitable even with subsidies and not paying for the actually costs created by hydrofracking.

[wordpix]

1. and actual costs include polluting people's drinking water & legal costs

sue them!

[underpants]

2. Also from the article - churches signed leases and may lose their non-profit status

The impact of the downturn was immediate for many.

“Ruinous, that’s how I’d describe it,” said the Rev. Kyev Tatum, president of the Fort Worth chapter of the Southern Christian Leadership Conference.

Mr. Tatum explained that dozens of black churches in Fort Worth signed leases on the promise of big money. Instead, some churches were told that their land may no longer be tax exempt even though they had yet to make any royalties on the wells, he said.

[Hubert Flottz]

9. You play with snakes and you get bitten.

Church people, of all people, should know that.

[enough]

3. This is fascinating reading. I recommend looking around in the documents. (nt)

[Hestia]

7. They definitely are fascinating. Everybody should read them.

[Strelnikov_]

4. The Pusher Man has to tell the nascent addicts that supply is limitless and cheap

Once the addicts have gone over to the Pusher Man, converted their machines from the product sold by the TexOil Street gang to those on natural gas, the squeeze begins.

[DURHAM D]

5. Thanks for posting. Have forwarded to several friends.

All of the prior articles from the NY Times are a must read.

Thanks again.

[underpants]

6. I have heard so much about how Natural Gas is that I sat down today to look it up

sounded too good to be true and I was admitted under-informed on it.

I always run by the NYT to see what the main story of the day is (the Times still does have that influence) and BAM! here was this article.

Fracking - I immediately realized that I knew a bit about that. This article shows the NG praisers to indeed be nothing but sycophants.

[DURHAM D]

8. Today I need to review a contract (30 pages) received from a company

that says they want to lease my farmland in the midwest for possible wind farm development. I already know we don't get enough wind.

I have no intention of agreeing to this for a variety of reasons but as I read it it seems like this is really a cover pitch for the possibility of sub-surface rights for fracking.

I have known all of my life that on any issue - If they are oil and gas people (now wind) and their mouths are moving - they are lying.

[SOS]

10. Another Enronesque scam

It seems our economy is increasingly based on scams, Ponzi schemes and corporate hustles.
The Oakland Bridge is being built in China while unemployed, desperate Americans are hustled by frackers.

Hopefully the shorts and sellers will be out in force on Monday.
Since environmental protest is routinely squashed and ignored, the only way to stop these crooks is to bring their stock price down to 50 cents.

[underpants]

11. Yep- the bridge story is also NYT front page today -- sadly amazing

http://www.nytimes.com/2011/06/26/business/global/26bridge.html?_r=1&hp

[L. Coyote]

12. The cost to the public welfare for fracking is not in the equations and probably inestimable!!!!!