Wednesday, September 21, 2011

Extraordinary Shale Production Growth Rates Smackdown Ponzi Charge

At some point shale gas production numbers--drilled, produced, consumed--end the Ponzi scheme story advanced by the NYT and a few others. Consider extraordinary production shale data from the Energy Information Administration that suggest that point has arrived.

Shale gas production increased by on average 17% per year from 2000 to 2006. Those strong gains meant shale production doubled every 4 years. But the 2000 to 2006 production gains were just a preview of production growth ahead.

From 2007 to 2010 shale gas production increased by 48% per year or it doubled about every 18 months.

Shale gas today accounts for 30% of all gas consumed. That's quite a reality for a fraud or Ponzi scheme.

The USA has now had 10 years of shale gas production that have featured explosive annual growth rates and added up to massive total annual production. These production numbers alone should drive a stake through the Ponzi diversionary charge.


  1. Let the children play, John; no need to play ball with folks who don't play fair.

    Ponzi accusations aside, I think postings like this still fail to grasp the potential that shale may not be as cheap and easily accessible in the long run as industry is indicating.

    Sure, it is huge now. Sure, it may be huge for a number of years, or even decades, but in the end, it is an exhaustible fossil fuel with significant uncertainty in terms of true resource potential. It does not have to be a Ponzi for those statements to be true. If you believe those statements, then you must consider them when considering long term economic and social viability. Looking at forward break even costs alone offers an incomplete picture.

    I'm not suggesting don't develop it; however, I will suggest that when margins are tight, companies are less likely to support anything that undermines the bottom line. There are still major issues to address (water, air, traffic, regulatory compensation, etc) that will vary with every shale play. Properly managing those issues might erode profit margins in the short term if industry takes the appropriate steps and spends money to reduce risk to the public, but will enhance long term viability and public support.

    The question is, "Will the various companies be willing and able to come together to properly address these issues, or will they just continue their general denial for the sake of the short term bottom line?" The unified facade of see no, hear no, do no evil seems to have started to crumble.

    Just saw your interview with Energy Now; thought it was great coverage compared to Gas Land/NY Times.

  2. Good points. Economics matter to how much gas gets produced and when it gets produced.

    Substantial, even overwhelming evidence exists for the proposition that huge shale production will occur with prices even up to just $6 per thousand cubic feet.

    At prices of up to $8 or $10 per thousand cubic feet, the production numbers would be greater still.

    Thanks for the mention of the Energy Now piece. I have not seen it myself yet.

  3. John, I highly recommend you and your followers see the movie, A Crude Awakening, and learn what "Peak Oil" is.

  4. I promise that I know a great deal about Peak Oil. Thanks for the movie recommendation.

    Oil prices will go up due to demand that is rising faster than supply. But actual global production of oil is still increasing. Oil production today is 5 times greater than in 1957, when I was born.

    Absent a global depression, Chinese and Indian demand for oil however will strain the ability to keep oil markets from clearing at high prices.

    It is for this reason than others that I believe US must reduce to zero foreign oil imports.