POWER December 2012 - 71

THE FUTURE OF NATURAL GAS
Is Shale Gas Shallow or the
Real Deal?
The de facto U.S. energy policy is to burn more gas, much of it produced using
" fracking " technology. Huge volumes of low-priced natural gas have
caused coal plant shutdowns, slowed renewable development, and undercut
new nuclear plant development. Using more gas has also sent the
nation's carbon dioxide emissions into a downward spiral. Is the glut of
natural gas too good to be true?
By Kennedy Maize
N
ow that an abundance of natural gas
has become a seeming fact of everyday
life, it's time for the contrarian view to
appear. Is the optimism over shale gas cockeyed
and bound for a crash? Or is the methane
ebullience an accurate reflection of new energy
realities? There are no simple answers.
Recently, an arcane dispute among geologists
became public, revealing an important
rift over views about the future of natural gas.
The geological flap raises questions about just
how durable the shale gas boom will be and
whether a long regime of low-cost gas can
continue to fuel a dash to gas among electric
generators that is clobbering coal, wrecking
renewables, and negating the long-awaited
nuclear renaissance. Unlike the earlier disputes
over environmental issues related to hydraulic
fracturing or " fracking, " which largely
proved marginal and manageable, the current
kerfuffle is over the performance of the wells
themselves in delivering natural gas. Experienced
geologists are wrangling over the rate
at which wells in shale formations, created by
horizontal drilling and fracking the gas-rich
strata, run out of methane.
Some experts argue that shale gas wells
decline rapidly, producing copious amounts of
natural gas early and then quickly drying out,
suggesting that the current glut of gas will decline
just as steeply as it rose (Figure 1). Others
respond that shale gas wells' decline rates
are nothing special and that fears of the gas
running out are overblown. There is so much
gas available, they argue, and the horizontal
wells deliver for so long, that low-cost fossil
fuel is guaranteed far into the future.
Gas Skeptic
One major voice on the skeptical side of the
emerging debate is that of Arthur Berman, a
Houston-based petroleum geologist who is
also a leading figure in the " Peak Oil " posse,
a group of analysts who argue the U.S. has
66
reached the bottom of its crude oil bucket and
the rest of the world will soon follow. Berman
writes frequently for " The Oil Drum, " a
leading peak oil publication. Looking at U.S.
shale gas, Berman says he sees a precipitous
production decline coming as the need to
drill new gas wells to replace rapidly declining
production vastly outpaces the capacity
of industry to deploy the rigs needed to drill.
In an interview with POWER, Berman argued
that the boom in drilling shale gas wells
has obscured a long-term decline in conventional
gas supply. But a coming rapid decline in
shale production, he said, will soon reveal the
overall limits to the gas boom, and volatility and
upward pressure could return to natural gas prices.
" It's not a problem for today or tomorrow, "
Berman said, " but it is coming. Once we work
through the current oversupply, if capital is not
forthcoming, " prices will spike. The gas supply
bubble will burst.
Because of the current gas glut, with long
prices in the range of $3 per million cubic feet
(mcf), drilling shale gas wells has tanked, noted
Berman. Chesapeake Energy, the most bullish of
the shale gas players, is selling assets and shifting
rigs to drilling for oil because the company
just can't make money on $3 gas. " I can see a
time not too many months away when we could
see gas supply in rather serious decline, " Ber1.
Steep well decline rates. Average production profiles for shale gas wells in major
U.S. shale plays by years of operation. Source: Fig 54 EIA Annual Energy Outlook 2012, released
June 25, 2012
Marcellus
1,800
1,600
1,400
1,200
1,000
800
600
400
200
Haynesville
Eagle Ford
Fayetteville Woodford
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Years
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POWER | December 2012
Million cubic feet per year

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POWER December 2012

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