Deborah Rogers, an expert in the economics of shale gas and advisor to the Obama administration, told the 2030 Vision conference in Carrick last week the shale gas industry in the US is now in trouble.
The basic reason is that initially it was assumed that shale gas wells would behave much like conventional wells with a lifetime of 20 years but the average productive shale gas well has a lifetime of 3 - 5 years only.
Drilling companies went into huge debt. Although initially easily accessible gas was produced, the wells started drying up far sooner than anticipated and the companies continued to drill more and more wells to meet their production targets, motivated by the cost of loans taken out.
The selling price of gas at present is roughly half the cost of production, so all shale gas companies are losing money.
“The whole thing doesn’t make sense”, said Ms Rogers. “Many of the big players have written down their assets, including BP, Encana and Chesapeake. The Marcellus shale gas reserve estimates are down by 80%.
“In the meantime, the drilling frenzy continues with collateral damage in the form of air pollution, ground water depletion, road damages and potential aquifer ruination”, she said.
“Profits are to be privatized while costs and negative impacts will be borne by the people,” she concluded.