NY Times: Natural Gas -- Another "Enron" Scam? Nope. It Looks LIke NY Times/MSNBC Blew It

Update

July 8, 2018: update here. 

August 21, 2017: at 75 mn t/y, US LNG exports will soon rival Qatar's at 77 mn t/y. The competition will get intense. 

October 6, 2016: the Utica and the Marcellus continue to defy skeptics. 

October 29, 2011: Rigzone -- Musings on the NYT story on natural gas.  This story refuses to die.

October 29, 2011: US to export LNG.

September 15, 2011: Rosy outlook for natural gas.

July 31, 2011: The New York Times trying to walk back the shoddy reporting they did on this story. 

July 29, 2011: the New York Times folks need to read the 2Q11 CHK conference call transcript.

June 27, 2011: Here is the "source" for the article that started this whole thing. 

The numbers on major shale companies financial statements do not add up, said Deborah Rogers, advisory council member for the Federal Reserve Bank of Dallas.

"I have to say that after all the work I've done I think there is some sleight of hand in the balance sheets," said Rodgers in a CNBC interview.

Rogers, a former stock broker for Merrill Lynch, started questioning shale companies' financial statements after listening to a speech in 2009 by Aubrey McClendon, CEO of Chesapeake Energy, one of the largest shale gas companies.

June 26, 2011: I think I was scammed! See "original post" below. Here's the real story, with dateline of June 26, 2011 (today):

Two unexpected gushers in northeastern Pennsylvania are helping to illustrate the enormous potential of the Marcellus Shale natural gas field.

Each of the Cabot Oil & Gas Corp. wells in Susquehanna County is capable of producing 30 million cubic feet per day -- believed to be a record for the Marcellus and enough gas to supply nearly 1,000 homes for a year. The landowners attached to the wells, who leased the well access, numbering fewer than 25, are splitting hundreds of thousands of dollars in monthly royalties.

"There was definitely excitement among the team that planned out these wells and executed their completion," said Cabot spokesman George Stark.

Drilling companies knew the Marcellus held a lot of gas. They just had to figure out a way to get it out, and they say they're getting better at it all the time.

June 26, 2011: At the link below, look at the dates of the e-mails referenced (2009). In addition, the article is undated. It appears that the NY Times / MSNBC was completely off target. It appears this article was written back in 2009; since then the natural gas industry has exploded (no pun intended) and doing very, very well. It's also possible the entire article was a hoax. A big thank you to "Anon 1" for noting the dates on the e-mails that were the basis of this article.

Original Post

Natural gas drilling may not be all that it is fracked up to be -- [update: at least according to an outdated article in the NY Times. The industry has proven the NY Times wrong.]

Link here. (Update, August 30, 2015: this is so interesting. The NY Times has removed this article.)

Natural gas companies have been placing enormous bets on the wells they are drilling, saying they will deliver big profits and provide a vast new source of energy for the United States. 

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.

In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles.

“Money is pouring in” from investors even though shale gas is “inherently unprofitable,” an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February e-mail. “Reminds you of dot-coms.” 

This story is definitely an "out-lier," a story that does not mesh with the vast number of articles suggesting the opposite.

Then I looked at the source of the article: the New York Times and MSNBC.

There are two facts that cannot be overlooked: a) the industry is finding more and more natural gas everywhere they look around the world; and, b) there is such a glut of natural gas in the US right now, the country is getting ready to export it overseas.

But maybe the Times and MSNBC are correct, and that's why the coal industry continues to thrive.

A big thank you to "Gary" for sending me the link.