Anyone that reads the New York Times knows the paper has really been beating the drum against natural gas and fracking, the controversial procedure energy producers use to extract natural gas and oil from shale rock formations. The paper has written numerous pieces on the subject over the past year, few of them favorable, but most of them have at least been worth the read if for no reason than to get a sense for some of the hurdles this country faces in terms of increasing domestic energy production.
A Times piece published on June 25 skewers the industry, citing emails from ''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.''
One source quoted in the Times story makes an comparison between today's natural gas industry and the dotcom era. Another calls shale plays ''Ponzi schemes'' and still another drummed up an Enron analogy.
Alright, so it is not too shocking to learn the Times is no fan of the energy business, but there are two sides of every story and the other side is quite compelling. One of the sources quoted by the Times is Deborah Rogers, a member of the advisory committee of the Federal Reserve Bank of Dallas. Ms. Rogers says in the Times story that some wells are rapidly depleting and that it could have a negative impact on local economies.
The paper neglects to mention Ms. Rogers also has a relationship with an anti-fracking organization. There is also little to substantiate that shale gas supplies in the U.S. are in danger of disappearing anytime soon. Shale gas now accounts for a quarter of U.S. nat gas supplies.
From the Wall Street Journal: ''Prior to the shale breakthrough, U.S. natural gas reserves were in decline, prices exceeded $15 per million British thermal units, and investors were building ports to import liquid natural gas. Today, proven reserves are the highest since 1971, prices have fallen close to $4 and ports are being retrofitted for LNG exports.''
Of course, the shale boom has been good for job growth in the areas that choose to embrace it. New York has the luxury of being able to say its 7.9% unemployment rate is below the national average and that it can go along blocking fracking in its area of the Marcellus Shale. That is fine and that is the state's prerogative. That said, North Dakota's 3.2% unemployment rate sure sounds a lot better, does it not?
Something else the Times piece does not address: If shale plays really do hold less gas than previously thought, how did the U.S. pass Russia in 2009 to become the world's top nat gas producer? That is actually a question posed by Aubrey McClendon, CEO of Chesapeake Energy, the second-largest U.S. nat gas producer, in a statement rebutting the Times article.
McClendon sums up the holes in the Times piece quite well and I will leave you with that.
''In addition to Chesapeake, the list of large companies now active in shale gas development in the U.S. includes such world class energy companies as Anadarko, BG, BHP, BP, Chevron, CNOOC, Conoco, Devon, EnCana, ENI, EOG, ExxonMobil, KNOC, Marathon, Mitsubishi, Mitsui, PetroChina, Reliance, Shell, Statoil, Talisman, and Total, among others. Consider whether it could really be possible that all of these well-respected energy leaders, with a combined market cap of almost $2 trillion, know less about the economics of shale gas production than a single New York Times reporter, a few environmental activists and a handful of shale gas doubters?''