The New York Times has a big scoop today on shale gas exploration and production. Natural gas from the shale formations in the U.S. has been hawked to be the nation's newest form of cheap energy. Concerns with the environmental impact of hydraulic fracturing to extract natural gas are well known. The Times reveals there are also serious concerns with the economics of shale gas production.
But the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells.
It appears the Times was tipped to this story by a person or persons worried with the major push toward natural gas production.
The e-mails were obtained through open-records requests or provided to The New York Times by industry consultants and analysts who say they believe that the public perception of shale gas does not match reality; names and identifying information were redacted to protect these people, who were not authorized to communicate publicly. In the e-mails, some people within the industry voice grave concerns.“And now these corporate giants are having an Enron moment,” a retired geologist from a major oil and gas company wrote in a February e-mail about other companies invested in shale gas. “They want to bend light to hide the truth.”
Enron and ponzi scheme?
The e-mails do not explicitly accuse any companies of breaking the law. But the number of e-mails, the seniority of the people writing them, the variety of positions they hold and the language they use — including comparisons to Ponzi schemes and attempts to “con” Wall Street — suggest that questions about the shale gas industry exist in many corners....
A former Enron executive wrote in 2009 while working at an energy company: “I wonder when they will start telling people these wells are just not what they thought they were going to be?” He added that the behavior of shale gas companies reminded him of what he saw when he worked at Enron.
I hope our federal and state regulators see this bit of reporting as a call to carefully consider pushes toward subsidizing natural gas exploration with taxpayer money. The SEC may want to consider a little investigation too. The last thing our struggling economy needs is another major financial fraud scandal to blow things up again.
Source: Insiders Sound an Alarm Amid a Natural Gas Rush
By Ian Urbina
The New York Times, June 26, 2011