The same reporter for the NYT that wrote the February 27th, 2011 hit piece falsely suggesting Pennsylvania's drinking waters were poisoned with radionuclides is back at it. He has another NYT front page, sunday story attacking shale gas as a ponzi scheme and the industry as filled with Enrons. He just about calls for FBI raids.
The piece is already rocketing around facebook sites and the internet.
Reader beware. This reporter puts sensationalism ahead of fairness or truth. Pennsylvania's drinking waters are not poisoned with radionuclides, as substantial testing has verified, and the reading public should drink from this journalistic cup with great caution.
Could anyone imagine more sensationalistic narratives than Radiation, Ponzi, and Enron?
Consistent with this reporter's method, today's article uses often anonymous statements to paint a sensational narrative and leaves out or underplays critical information that is inconvenient to establishing the credibility of the dominant anti-gas narrative.
For example, the reader will not learn the following:
1. That 2010 natural gas production in the United States reached the highest levels since 1973 and neared record levels. Nor will the reader be told that the US produces more natural gas than any nation.
2. The reader will be told that natural gas prices fell by 66% due to the 2008 near depression, but the reader will not be told that US GDP in 2010 returned to 2007 size or that GDP has grown for 7 quarters.
3. The reader will not be told that actual large shale production has been the primary cause of low gas prices in 2010 and 2011, and the 2008 near depression has not been a factor in 2010 and 2011 pricing.
4. The reader will not be told that actual large shale gas production has shattered the historic pricing link between oil and gas and now oil prices have gone up while gas prices have gone down
5. The reader will not be told that, while oil prices have spiked up due to supply straining to meet demand, actual shale gas production has caused gas prices to decline.
6. The reader will be told that the alleged shale ponzi scheme could harm consumers, but the reader will not learn that actual shale gas production so far has saved a consumer heating with natural gas about $5 to $8 per thousand cubic feet or conservatively $500 per year.
7. The reader will again be warned that consumers could be hurt by the alleged ponzi scheme, but the reader will also not be told that actual shale gas production has lowered the wholesale price of electricity about 5 cents per kilowatt-hour and saved a residential electric consumer using 10,000 kilowatt-hours per year another $500 per year.
8. Though Pennsylvania and Marcellus had a starring role in the February 27th piece, the NYT reporter this time has just a couple sentences about the Marcellus. It is an interesting near exclusion.
9. All the reader is told about the Marcellus is that a Penn State professor reports well production is meeting or exceeding expectations in the Marcellus. No charts or bar graphs. No data. Nothing. Why? Very inconvenient facts for the ponzi, enron narrative is the answer.
10. The reader is not told that the well production data for the Marcellus is posted on the Pennsylvania Department of Environmental Protection. It is transparent and available to anyone.
11. The reader is told that liquids that can be produced with the natural gas can be valuable but no details. How valuable? Getting into this detail would be inconvenient to the ponzi, enron narrative.
12. The reader is told that improvements in shale gas drilling are lowering costs but no details. The details are impressive and in a separate posting we will discuss them. Again getting into this detail would be inconvenient to the ponzi, enron narrative.
And who are among the victims of the alleged Ponzi scheme? Exxon, Chevron, Shell, Statoil who all have made substantial investments in the Marcellus shale plays. They could be wrong. They could be victims of a crime. But they are incredibly sophisticated companies that engage in massive due diligence before making big investments.
The truth I suspect is something like this:
Substantial real and actual shale gas production has been a boon for consumers by driving down substantially the price of gas, saving them $1,000 or more in gas and electric bills.
Substantial, real actual shale gas production has prevented a broad energy shock by keeping gas and electricity bills stable in the United States when oil prices jumped this spring.
But booming shale gas production has been a mixed blessing for investors in gas because the success of the industry has caused the price of gas to fall sharply.
As the price of gas has fallen from $13 per thousand cubic feet in 2008 to $4.30 today, investors have not fared as well as they had expected, because returns on investment of some shale gas plays are lower than had gas been priced at the predicted $8.
Indeed at today's $4 gas, recent improvements that reduce substantially the cost of shale gas drilling and the revenues from gas liquids are vital to keeping gas wells economic.
If gas prices fall below $4, some shale gas wells will be shut in until prices return to profitable levels.
The Marcellus shale play remains the most attractive gas reserve for investors since its wells are meeting or exceeding production estimates; it has comparatively low-costs; it is located near areas consuming large amounts of gas; and portions of it are producing significant amounts of valuable liquids.
Now that is not a radioactive, ponzi, enron story. It is not sensationalistic. Why bother writing a story with that as the dominant narrative?