On December 3, 2014, Nature published “Natural Gas: The Fracking Fallacy”, which suggested that the forecasts of the Energy Information Administration (EIA) for four major U.S. shale gas plays were wildly optimistic, based on a comparison to forecasts for the same plays by the University of Texas Bureau of Economic Geology (UT/BEG). This was followed by a formal denunciation of the article both by the EIA and UT/BEG, despite the fact that the substance of the article was correct. Arthur Berman provided an excellent overview of the merits—or in this case the lack thereof—of the attack by both of these agencies on what is essentially the reality behind the shale revolution.
The Nature piece steered clear of any discussion of my recent Drilling Deeper report (published by Post Carbon Institute), which looked at twelve major shale gas and tight oil plays accounting for most of U.S. shale production, and which also came to the conclusion that the EIA’s projections were extremely optimistic. Nature focused instead on the four plays described in two published and two unpublished studies by UT/BEG. The Nature article sparked a lot of media attention, which prompted the EIA and UT/BEG to issue rebuttals.
- Development of LNG capacity to export the perceived shale gas bounty and monetize it at higher international prices.
- Development of gas-fired generation capacity on the assumption of low long term prices and abundant supply, in preference to other alternatives.
- Development of industrial capacity on the assumption of low prices and abundant supply for the foreseeable future. Industrial users are justifiably concerned about the impact of LNG exports on domestic prices.
- Development of pipeline infrastructure to distribute the projected bounty.