Two stories about what amounts to the same subject shows the issue of shale natural gas from two widely-divergent perspectives.
At the annual meeting of the American Association for the Study of Peak Oil in Sacramento this week, several participants who spoke to Platts' editor Richard Rubin were dismissive of the bullish claims of Chesapeake Energy CEO Aubrey McLendon. He has been touting widely expanded use of natural gas in the US, supplied to a large degree by abundant new supplies of natural gas from various shale plays, such as the Barnett, freed from the earth through recently-developed technologies.
David Summers, a professor of mining engineering at the Missouri University of Science and Technology, summed up an oft-heard view at the meeting about shale gas. "They could be drilling it today and next year you are in high production and the year after that we're declining and the year after that it's almost all gone," he said. "We've gone from gas fields that last a long time to having gas fields that produce almost in real-time."
Meanwhile, Jim Buckee, the former president and CEO of Canada's Talisman Enerlgy conceded that there is a significant amount of gas in the shale, with a caveat. "Certainly, thousands of small wells add up to quite a lot of gas. But whether you are changing the whole energy picture is a different question."
The reference to "quite a lot of gas" seemed particularly apt when Chesapeake announced this week that it was shutting in some production because of excessive supply in the market.
Chesapeake Energy said Monday that it is going to "temporarily curtail" 100,000 Mcf/d of mid-Continent natural gas production because of wellhead price levels that have sunk to betwee $3 to $5/Mcf. The price for gas delivered at the Henry Hub in Louisiana stands at approximately $7.65/Mcf.
These developments are not necessarily in conflict. The peak oil crowd is saying that the shale plays can get a lot of gas out relatively quickly, and the prolific Barnett Shale near Fort Worth, TX is certainly a factor in the outright natural gas decline. But the contrast of the two developments - the skepticism in Sacramento, and the market weakness seen by Chesapeake -- is certainly entertaining, if nothing else.
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