Tweet
The other side:
ExxonMobil response
The New York Times and natural gas: Don’t facts matter any more?
excerpts:
Chesapeake Energy Corporation Comments on Inaccurate and Misleading New York Times Article
excerpt
Quicksilver CEO Glenn Darden’s open letter to NYT:
excerpt:
Kenneth B. Medlock III, the James A. Baker, III, and Susan G. Baker Fellow in Energy and Resource Economics at the Baker Institute Energy Forum
excerpt
Here’s the full presentation:
Anyway, it’ll go back and forth for a while but IMO the NYT is full of shit and they owe the O&G industry an apology for this.
ExxonMobil response
The New York Times and natural gas: Don’t facts matter any more?
excerpts:
Ironically, author Ian Urbina did not call ExxonMobil, the largest natural gas producer in the United States, for comment. You would think an investigative journalist for one of the world’s great newspapers would have been curious to know why the world’s largest publicly traded energy company has invested billions of dollars in a so-called “Ponzi scheme.” Of course we’re doing no such thing, no matter how hard the article works to imply otherwise.
Though he did not bother talking to us, the writer did seem to put a lot of weight on the word of a retired geologist who just two years ago wrote that it was “difficult to imagine” that the “Haynesville Shale can become commercial.” Ironically, the Haynesville Shale is now the largest gas producer in the United States.
The writer also invokes the Federal Reserve to try to lend credibility to his premise that the shale gas revolution is a flash in the pan like the dot-com bubble and built upon misleading or even illegal accounting practices – in this case reserves reporting – like the Enron scandal.
A closer read and a quick Google search shows that the person he is quoting from the Fed was appointed to the Dallas Fed’s advisory committee and is a long-time shale gas opponent. The writer conveniently omits a report issued last year by economists who actually work for the Dallas Fed that notes that “the Texas experiment in the Barnett Shale proved the technical feasibility of shale gas development and brought costs within bounds that promise to give shale gas an important role in global energy supplies for decades to come.”
Though he did not bother talking to us, the writer did seem to put a lot of weight on the word of a retired geologist who just two years ago wrote that it was “difficult to imagine” that the “Haynesville Shale can become commercial.” Ironically, the Haynesville Shale is now the largest gas producer in the United States.
The writer also invokes the Federal Reserve to try to lend credibility to his premise that the shale gas revolution is a flash in the pan like the dot-com bubble and built upon misleading or even illegal accounting practices – in this case reserves reporting – like the Enron scandal.
A closer read and a quick Google search shows that the person he is quoting from the Fed was appointed to the Dallas Fed’s advisory committee and is a long-time shale gas opponent. The writer conveniently omits a report issued last year by economists who actually work for the Dallas Fed that notes that “the Texas experiment in the Barnett Shale proved the technical feasibility of shale gas development and brought costs within bounds that promise to give shale gas an important role in global energy supplies for decades to come.”
Chesapeake Energy Corporation Comments on Inaccurate and Misleading New York Times Article
excerpt
"The Times story was obviously motivated by an anti-natural gas agenda. It is telling that the reporter chose not to interview a single reliable source and instead selectively quoted emails from unnamed sources or well-known industry critics dating back to as early as 2007 to invent a series of inaccurate and misleading allegations. If the Times was interested in reporting the facts and advancing the debate about the prospective benefits of natural gas usage to energy consumers, it could easily have contacted respected independent reservoir evaluation and consulting firms that annually provide reserve certifications to the U.S. Securities and Exchange Commission or contacted experts at the U.S. Energy Information Administration, the Colorado School of Mines' Potential Gas Committee, the Massachusetts Institute of Technology, Navigant Consulting and others who would gladly have gone on record to confirm the abundant resources that have been made available thanks to the horizontal drilling and hydraulic fracturing techniques that Chesapeake and other industry peers have pioneered in deep shale formations across the U.S.
Quicksilver CEO Glenn Darden’s open letter to NYT:
excerpt:
Natural gas reserves are by definition “economic.” If wells are not economic, those wells don’t make it into the reserve category. The parameters for booking reserves are set out in strict terms under the Society of Petroleum Engineers guidelines. For publicly traded companies reserves must also follow rules set out by the Securities and Exchange Commission (SEC).
At Quicksilver our reserves are calculated by independent third party reservoir engineers. Reserves are also reviewed by the staffs of each of the 24 banks that comprise our existing credit facility, and further reviewed by the credit rating agencies and by the SEC. On top of that currently 23 investment analysts representing investment banks provide research coverage on the company.
At year end 2010 (the last reporting period) Quicksilver had 2.6 trillion cubic feet equivalent (TCFe) of gas booked in the Barnett Shale, the field highlighted in your article. The single well reserves ranged from less than one billion cubic feet equivalent (BCFe) per well to greater that 5 BCFe per well. These facts were misstated in your article. Quicksilver has never represented that it has 4.5 BCFe per well across our entire acreage position. Furthermore it is disturbing that we were never contacted by your staff or your sources for confirmation or supporting data.
At Quicksilver our reserves are calculated by independent third party reservoir engineers. Reserves are also reviewed by the staffs of each of the 24 banks that comprise our existing credit facility, and further reviewed by the credit rating agencies and by the SEC. On top of that currently 23 investment analysts representing investment banks provide research coverage on the company.
At year end 2010 (the last reporting period) Quicksilver had 2.6 trillion cubic feet equivalent (TCFe) of gas booked in the Barnett Shale, the field highlighted in your article. The single well reserves ranged from less than one billion cubic feet equivalent (BCFe) per well to greater that 5 BCFe per well. These facts were misstated in your article. Quicksilver has never represented that it has 4.5 BCFe per well across our entire acreage position. Furthermore it is disturbing that we were never contacted by your staff or your sources for confirmation or supporting data.
Kenneth B. Medlock III, the James A. Baker, III, and Susan G. Baker Fellow in Energy and Resource Economics at the Baker Institute Energy Forum
excerpt
On June 25th, the New York Times published a story regarding the viability of shale gas as a domestic source of supply for the U.S. A presentation I made at the Federal Reserve Bank of Dallas in May 2010 was cited in that story. The Baker Institute is a non-partisan public policy institute at Rice University. Our research is publicly available and intended to inform the public and policy makers about important issues of public policy related to important trends that influence the quantity and security of energy supply. The Dallas Fed presentation is in line with this activity.
During the presentation at the Dallas Federal Reserve Bank, I showed a projection for U.S. shale production by region that indicated production from the Barnett shale would decline slightly for a period of time as investors temporarily shifted priority to larger and less costly plays in places like the Haynesville and Marcellus shales. This shift, as I explained, was a matter of economics, not geology, since all of the plays have large resource potential but different production costs and proximity to market. It is the assessment of the relative development costs, as well as the proximity to end-use market, that leads to a prediction of a flattening of Barnett production (see Figure 1) against a backdrop of stronger growth in other large shale regions. Again, this is not related to the size of geologic resources or their geological performance. As opportunities have emerged to produce natural gas from shales that are closer to end-user markets, such as the Haynesville and Marcellus, emphasis has moved away from the Barnett region. However, as the Figure 1 shows, the projection is not one of sharply declining production in the Barnett, just a flattening profile for a period of time as investors shift attention to plays that offer better profitability.
More recent geologic and economic data about emerging technologies and the relative size and costs of resources in various parts of the United States has allowed us to update our projections. As seen below in Figure 2 (used in a more recent presentation I gave at the annual meeting of the American Association of Petroleum Geologists (AAPG) in Houston), Barnett production actually rebounds later this decade as demand grows. In both Figures 1 and 2, production in the Barnett shale is ultimately surpassed by production from the Haynesville and Marcellus shales, which are assessed to be much larger resource plays with a substantial amount of resource available at low cost. Thus, the relative economics of the shale gas plays is a critical part of the projected trends.
During the presentation at the Dallas Federal Reserve Bank, I showed a projection for U.S. shale production by region that indicated production from the Barnett shale would decline slightly for a period of time as investors temporarily shifted priority to larger and less costly plays in places like the Haynesville and Marcellus shales. This shift, as I explained, was a matter of economics, not geology, since all of the plays have large resource potential but different production costs and proximity to market. It is the assessment of the relative development costs, as well as the proximity to end-use market, that leads to a prediction of a flattening of Barnett production (see Figure 1) against a backdrop of stronger growth in other large shale regions. Again, this is not related to the size of geologic resources or their geological performance. As opportunities have emerged to produce natural gas from shales that are closer to end-user markets, such as the Haynesville and Marcellus, emphasis has moved away from the Barnett region. However, as the Figure 1 shows, the projection is not one of sharply declining production in the Barnett, just a flattening profile for a period of time as investors shift attention to plays that offer better profitability.
More recent geologic and economic data about emerging technologies and the relative size and costs of resources in various parts of the United States has allowed us to update our projections. As seen below in Figure 2 (used in a more recent presentation I gave at the annual meeting of the American Association of Petroleum Geologists (AAPG) in Houston), Barnett production actually rebounds later this decade as demand grows. In both Figures 1 and 2, production in the Barnett shale is ultimately surpassed by production from the Haynesville and Marcellus shales, which are assessed to be much larger resource plays with a substantial amount of resource available at low cost. Thus, the relative economics of the shale gas plays is a critical part of the projected trends.
Anyway, it’ll go back and forth for a while but IMO the NYT is full of shit and they owe the O&G industry an apology for this.
Comment