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Guest Post: Shale Gas Will Be The Next Bubble To Pop

Tyler Durden's picture


Submitted by James Stafford of,

The “shale revolution” has been grabbing a great deal of headlines for some time now. A favourite topic of investors, sector commentators and analysts – many of whom claim we are about to enter a new energy era with cheap and abundant shale gas leading the charge. But on closer examination the incredible claims and figures behind many of the plays just don’t add up. To help us to look past the hype and take a critical look at whether shale really is the golden goose many believe it to be or just another over-hyped bubble that is about to pop, we were fortunate to speak with energy expert Arthur Berman.

Arthur is a geological consultant with thirty-four years of experience in petroleum exploration and production. He is currently consulting for several E&P companies and capital groups in the energy sector. He frequently gives keynote addresses for investment conferences and is interviewed about energy topics on television, radio, and national print and web publications including CNBC, CNN, Platt’s Energy Week, BNN, Bloomberg, Platt’s, Financial Times, and New York Times. You can find out more about Arthur by visiting his website:

In the interview Arthur talks about:

•         Why shale gas will be the next bubble to pop
•         Why Japan can’t afford to abandon nuclear power
•         Why the United States shouldn’t turn its back on Canada’s tar sands
•         Why renewables won’t make a meaningful impact for many years
•         Why the shale boom will not have a big impact on foreign policy
•         Why Romney and Obama know next to nothing about fossil fuel energy

Interview conducted by James Stafford of How do you see the shale boom impacting U.S. foreign policy?

Arthur Berman: Well, not very much is my simple answer.

A lot of investors from other parts of the world, particularly the oil-rich parts have been making somewhat high-risk investments in the United States for many years and, for a long time, those investments were in real estate.

Now these people have shifted their focus and are putting cash into shale. There are two important things going on here, one is that the capital isn't going to last forever, especially since shale gas is a commercial failure. Shale gas has lost hundreds of billions of dollars and investors will not keep on pumping money into something that doesn’t generate a return.

The second thing that nobody thinks very much about is the decline rates shale reservoirs experience. Well, I've looked at this. The decline rates are incredibly high. In the Eagleford shale, which is supposed to be the mother of all shale oil plays, the annual decline rate is higher than 42%.

They're going to have to drill hundreds, almost 1000 wells in the Eagleford shale, every year, to keep production flat. Just for one play, we're talking about $10 or $12 billion a year just to replace supply. I add all these things up and it starts to approach the amount of money needed to bail out the banking industry. Where is that money going to come from? Do you see what I'm saying? You've been noted suggesting that shale gas will be the next bubble to collapse. How do you think this will occur and what will the effects be?

Arthur Berman: Well, it depends, as with all collapses, on how quickly the collapse occurs. I guess the worst-case scenario would be that several large companies find themselves in financial distress.

Chesapeake Energy recently had a very close call. They had to sell, I don't know how many, billions of dollars worth of assets just to maintain paying their obligations, and that's the kind of scenario I'm talking about. You may have a couple of big bankruptcies or takeovers and everybody pulls back, all the money evaporates, all the capital goes away. That's the worst-case scenario. Energy became a big part of the election race, but what did you make of the energy policies and promises that were being made by both candidates?

Arthur Berman: Mitt Romney, particularly, talked about how the United States would be able to achieve energy independence in five years. Well, that's garbage.

Anybody who knows anything about oil, gas and coal, knows that that's absurd. We were producing a little over 6 million barrels a day thanks to an all-out effort in the shale oil play. We consume 15 million barrels of oil a day and that leaves the gap of 9 million barrels per day. At the peak of U.S. production, in 1970, the U.S. produced 10.6 million barrels per day. Like I said, either the guy doesn't know what he's talking about, or is making a big joke of it.

Obama didn’t talk so much . . . He's a hugely green agenda kind of president and I'm not opposed to that, but he's certainly not for the oil and gas business. It wasn't until he got serious about thinking about his re-election that he decided to take credit for what really happened. Japan recently announced that they are going to be phasing out nuclear power. What are your views on nuclear? Are we in a position to abandon this energy source?

Arthur Berman: No. Japan is a special case. The disaster at Fukushima, the nuclear reactor, was right on top of a major fault. So, that was a dumb place to put it.

To wholesale abandon nuclear power because one reactor was incredibly stupidly planned, to me seems like a bit of a . . . well, I can't tell people how they should react, but if I were a Japanese citizen, and the truth was that we have no oil, we have no coal, we have no natural gas, the next question is, "Well, if we get rid of nuclear, what are we going to do?"

It's a really good question to ask. If you don't have anything of your own, how are you going to get what you need? The answer is that they have to import LNG and that's very expensive.

Right now, natural gas is selling in Japan for $17 per million BTUs. You can buy the same BTUs in Europe for $9 today, or in the US for $3.25 What about Germany’s decision to also phase out nuclear power?

Arthur Berman: For Germany to abandon nuclear… that decision is truly delusional because they haven't had any problems over there. Nor is Germany particularly earthquake prone or tsunami prone. They have forced themselves into a love relationship with Russia. What are your views on Canada's tar sands? Are they a rich source of oil that the U.S. needs to exploit? Or do you think they're a carbon bomb, which could do irreparable damage to the climate?

Arthur Berman: Well, that's a very good question. I suppose they're both, as are virtually all things that burn. Right? They're a very rich source of oil. And they're dirty. It requires a lot of natural gas heating to convert them into some usable form, a lot of processing, but here's the thing, if the United States doesn't buy that oil from Canada, do you think Canada's just going to say, "Oh. Okay. Nevermind. We'll forget about all this."

No. They're going to sell it somewhere else. They'll probably sell it to Asia. So, the issue of the carbon bomb doesn't get resolved by the United States not taking the oil.

So, to me, that's off the table. Yes. I think it's an incredibly sensible play to get your oil from a neighbour, and a neighbour who you trust, and it doesn't require overseas transport and probably getting involved in periodic revolutions and civil uprisings. Is there any technology, any development you see coming in the future that can help us get where we need to be? Is conservation really the only answer or do you have any hopes for some of the alternative energy technologies, such as solar or, even, some of these more advanced technologies such as Andrea Rossi’s E-cat machine?

Arthur Berman: Oh. I have all the enthusiasm for technology that you could ask for. I'm a scientist and I love technology but I heard a very good presentation several years ago on your exact question and the man who gave a talk said, "I'm going to give you a rule to live by. If it's not on the shelf today, then a solution is no sooner than ten years in the future." So, when you talk about E-cat and you talk about algae and all this kind of stuff, it's not on the shelf today. So, that means it's in some sort of pilot stage of testing.

Work harder guys. Work harder and faster because you've got a lot of work to do. So, yes, I'm enthusiastic. I think there are some great ideas out there but I don't see any of them helping us in the coming five to ten-year period. Environmentalists talk about the evil of fossil fuels, but have they really done their research to see how vital it is to pretty much everything that we base our modern lives upon?

Arthur Berman: Well, that's exactly right. My oldest son and his family until recently lived in California, and in California people think electricity comes from the wall. They don't have any idea that most of their electricity comes from horrible coal-fired power plants in New Mexico and Arizona. As long as they don't have to see it, they don't have a problem.

But, in this world, and in this life, we're all connected and if you see something you don't like, there's a good possibility that whatever they're doing there has something to do with something you're using. So, this is an issue. Arthur, thank you for taking the time to speak with us. For those readers who may be interested in contacting Arthur please take a moment to visit his website:


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Sat, 11/17/2012 - 19:07 | 2992441 bank guy in Brussels
bank guy in Brussels's picture

Thorium reactors bitchez

Sat, 11/17/2012 - 19:16 | 2992457's picture

I hope the shale gas bubble burst soon. Drillers are poisoning my neighbors with the assistance of state regulators. Isn't government marvelous?


The Pennsylvania Department of Environmental Protection produces incomplete lab reports and uses them to dismiss complaints that Marcellus Shale gas development operations have contaminated residential water supplies and made people sick, according to court documents.

Sat, 11/17/2012 - 21:27 | 2992680 10mm
10mm's picture

That's because there is a PRO Shale administration in Harrisburg who is full steam ahead regardless of the ramifications.

Sat, 11/17/2012 - 22:29 | 2992777 Ginsengbull
Ginsengbull's picture

Meanwhile, Harrisburg is bankrupt.

Sat, 11/17/2012 - 23:37 | 2992895 goldfish1
goldfish1's picture

Arthur Berman doesn't mention Diablo Canyon nuclear reactor in San Luis Obispo, California is built on a major fault. Why not?

Sun, 11/18/2012 - 11:06 | 2993463 AGuy
AGuy's picture

Nor what to do with the Million+ tons of spent fuel rods still sitting in virtual every major population center. Every spent fuel pool is a load gun, especially considering the NRC only mandates three days of backup generator diesel fuel to keep the SFP cool. An Earthquake does need to destroy the reactor to create a disaster. It just needs to disable the infrastructure in the region that prevents refueling for the backup generators. While the majority of CA residents will probably survive a big quake. They may not survive if the SPF start cooking off and they can't be evacuated because of damage to the roads and bridges.



Sun, 11/18/2012 - 04:20 | 2993222 10mm
10mm's picture

Comment is in regards to the State,not the city.State Capitol is in Harrisburg.

Sat, 11/17/2012 - 22:32 | 2992781's picture

That's because we live under a system in which a pro whatever administration can rule over all others. It's not as if some administrations are owned and others are not. They are all owned by someone. The problem is government.

Sat, 11/17/2012 - 21:29 | 2992682 kaiserhoff
kaiserhoff's picture

Shale gas is the answer. It's Barry Hussein and his all commie-faggot band who are the problems.

Sat, 11/17/2012 - 22:37 | 2992792's picture

It is the answer to the question, "Why is my well contaminated with lithium, cobalt, chromium, boron and titanium?"

Sun, 11/18/2012 - 00:07 | 2992958 Ginsengbull
Ginsengbull's picture

Lithium makes people happy.

Sun, 11/18/2012 - 09:19 | 2993345 This just in
This just in's picture

Some people happen to like their water crunchy.  

Sun, 11/18/2012 - 10:40 | 2993413 Metalredneck
Metalredneck's picture

And flammable.

Sat, 11/17/2012 - 22:04 | 2992733 Ignatius
Ignatius's picture

"Why the United States shouldn’t turn its back on Canada’s tar sands"

I'm sure as long as Canada will allow Alberta to be turned into one huge tailing pond that the U.S. will continue to buy their oil and gas.

Sat, 11/17/2012 - 22:23 | 2992761 itchy166
itchy166's picture

Clueless comment

Sun, 11/18/2012 - 09:20 | 2993346 This just in
This just in's picture

Spot on!

Sat, 11/17/2012 - 22:27 | 2992770 Matt
Matt's picture

The Obama Administration blocked the Keystone XL pipeline and seems to be resisting allowing more pipes to carry more oil down, so instead pipes are being built to send oil, and possibly LNG, to Asia.

Sat, 11/17/2012 - 22:51 | 2992820 CrazyCooter
CrazyCooter's picture

And, don't forget the subtle detail, the XL pipeline from Cushing to the gulf coast. Fast tracked by Obama. Hah!

Do the math.



Sat, 11/17/2012 - 22:27 | 2992772 Ginsengbull
Ginsengbull's picture

Remember the pcb's in the trout?


The Commonwealth knew exactly where that was coming from, but feigned ignorance.


Remember 3 mile island, and Centralia mine fire?

Sat, 11/17/2012 - 22:39 | 2992794's picture

Yes I do.

Sat, 11/17/2012 - 22:52 | 2992822 sun tzu
sun tzu's picture

remember whale oil and kerosene lamps?

Sat, 11/17/2012 - 23:11 | 2992849's picture

Remember that no one has aright to pollute the property of others.

Sun, 11/18/2012 - 00:05 | 2992949 Ginsengbull
Ginsengbull's picture

Not so much in Pennsylvania.


But I still have a carbide miners lamp.

Sun, 11/18/2012 - 00:02 | 2992943 SoCalBusted
SoCalBusted's picture

poor well design, mainly casing between ground level and below aquifer

Sun, 11/18/2012 - 11:11 | 2993471 AGuy
AGuy's picture

No such thing as a safe casing. Perhaps a correctly designed casing will last decades. Unfortunately casing must last "Forever". If they don't cause containmation for 20 years its still someone problems 20, 30, or 40 years from now. A study done a about a year ago. shows that all cases fail over time, no matter how robust they are built.


Sat, 11/17/2012 - 20:13 | 2992558 Gully Foyle
Gully Foyle's picture

Hmm, nukes are bad, gas is bad and a bubble, middle east war threatens oil.

Wind and solar fails.

Anyone notice a pattern here?

How every energy route is being closed or at the very least tightened.

Wonder why that is?

(Biden 2016 rise my minions we have dark work to do)

Sat, 11/17/2012 - 21:24 | 2992673 Bicycle Repairman
Bicycle Repairman's picture

Mr. Berman appears to be talking his book.  His nuclear power comments are particularly naive.

Sat, 11/17/2012 - 22:49 | 2992817 Pinto Currency
Pinto Currency's picture


Now why would a country abandon nuclear power just because it realizes that a single failure like Fukushima can not only wipe out that entire country but also put a serious dent in the population of the entire northern hemisphere?  Those Japanese are entirely irrational.


Sat, 11/17/2012 - 22:52 | 2992823 CrazyCooter
CrazyCooter's picture

Those Japanese are entirely broke.

Fixed it for you.



Sun, 11/18/2012 - 14:40 | 2993928 ShrNfr
ShrNfr's picture

Oddly, the population of the world has increased greatly since the open air testing of all sorts of nukes in the 1950/60s. I am glad we don't do that any more, but "a serious dent in the population" is not a serious threat. If so, social security and medicare would not be in the deep shit it is at the moment. Nuke safety is very, very important, don't misunderstand me. It is just that your statement is incorrect.

Sun, 11/18/2012 - 14:40 | 2993929 ShrNfr
ShrNfr's picture

Oddly, the population of the world has increased greatly since the open air testing of all sorts of nukes in the 1950/60s. I am glad we don't do that any more, but "a serious dent in the population" is not a serious threat. If so, social security and medicare would not be in the deep shit it is at the moment. Nuke safety is very, very important, don't misunderstand me. It is just that your statement is incorrect.

Sat, 11/17/2012 - 21:00 | 2992645 archon
archon's picture

Obviously, the only responsible thing to do for the sake of the planet, is to live in the stone age, and cook our meat over open flames.  Oops, sorry, I mean eat our meat raw, since open flames will cause global warming...

Sat, 11/17/2012 - 22:47 | 2992799's picture

It is not responsible to pollute residential water wells owned by other people.

Sun, 11/18/2012 - 00:03 | 2992946 Ginsengbull
Ginsengbull's picture

No meat, strained soy bean curds.

Sun, 11/18/2012 - 01:26 | 2993090 jballz
jballz's picture

No soybeans. Monsanto GMO frankenfood doused with pertrochemicals.

Sun dried soylent green. Organic only.

Sat, 11/17/2012 - 22:10 | 2992743 CrazyCooter
CrazyCooter's picture


I used to toot this horn for soooo long, and it seemed like no one ever listened. I rarely, if ever, see an elightened fellow that knows that the only way the human race will have high energy consumption, per capita, in 200+ years is precisely what you reccomended.

Folks need to get long plow mules or long Thorium MSRs!



Sun, 11/18/2012 - 00:09 | 2992961 ISEEIT
ISEEIT's picture

Space based solar bitchez.

But for all us guvmint nigga's.......?

It's whatever they find us worthy of.

Sun, 11/18/2012 - 11:15 | 2993479 AGuy
AGuy's picture

"Space based solar bitchez."

Not going to work. Not only is getting mass to Low earth orbit astronomically expensive ($10K per pound). Large arrays are vunerable to micro-meteors. Micro-meteors mostly orignate from outgassing of comets. These micro-meteors travel at 10's KM/s, and will smash up an large solar arrays in a short time.


Sun, 11/18/2012 - 13:31 | 2993743 Meremortal
Meremortal's picture

So, we can look forward to more people sitting at computers made from oil and griping about oil, while turning on heat from nat gas and griping about gas, driving cars full of parts made from oil and running on fuel made from oil, while griping about oil.


OK, nothing new then.

Sun, 11/18/2012 - 15:56 | 2994147 Errol
Errol's picture

Is there a pilot plant-sized thorium reactor in operation anywhere in the world?  If not, you won't see any in commercial operation in 10 years, either.

Sat, 11/17/2012 - 19:11 | 2992443 ZFiNX
ZFiNX's picture

I can't believe you can write this as the Middle East goes off. Israel is doing exactly what they do before every war and you think the gas bubble is going to POP. If you ask me the industry is still feigning injury while insiders load up. Get ready for WWIII and natural gas MFers.


Sat, 11/17/2012 - 19:46 | 2992511's picture

If the gas isn't there it isn't there.

Sat, 11/17/2012 - 20:10 | 2992540 forexskin
forexskin's picture

chesapeake has been taking production off line - they can't make a living with NG at $3 - $4. There is lots of NG here, but its not profitable just now. their solution? go deeply into debt to bring cheaper production on line - but the money people f**ked up and missed the downside, which is the very high rate of production decline. thus CHK is having a more and more difficult time servicing its debt.

they'll probably go BK within a year, and another major will step in to buy their assets for pennies on the dollar - once again, the energy cartel will add to their strong position on CHK's carcass.

Sat, 11/17/2012 - 20:30 | 2992594's picture

Thanks for the insight.

Sat, 11/17/2012 - 22:18 | 2992749 CrazyCooter
CrazyCooter's picture

A'yup. If you google " CrazyCooter gas" you will find a fair number of posts, back when I had time, that say what was said upthread.

NOTE: GoogleTip: when you google and do "" plus some phrase, your search results will only be from that site. THE BEST way to find what you want on ZH archives.

Anyway, the article and comment is 100% true.

To quickly restate, these companies (e.g. Cheasapeak) were simply the classic stock vehicle to suck in the idiots, fund big infrastructure build out/asset aquisition/etc, only to be blown up so the real players can buy on the cheap.

If you like to short stocks, do your homework, but this is a watermellon getting ripe!

The business models never worked, it was all fueled on debt and 8 bucks per million cubic feet is required to break even (it's under 2 bucks right now). There is enough production history now where some assets are going to get bid and others will not.

Fracking will be around, and so will shale gas, but only after the idiot investors have been bled dry. Oh, and at much higher prices. Places that moved infrastructure over to this energy source are going to get HAMMERED with utility costs.

Oh, and know one saw it coming.



Sun, 11/18/2012 - 11:45 | 2993540 kekekekekekeke
kekekekekekeke's picture

Ugh this is sad I am in the OKC area I think about getting a job at Chesapeake sometimes but I think I missed the glory days 

Sat, 11/17/2012 - 19:12 | 2992452 sangell
sangell's picture

If this guy is right then coal companies should be the place to be. Funny no one who is putting their noney where their opinion is seems to believe him.

Sat, 11/17/2012 - 22:20 | 2992753 CrazyCooter
CrazyCooter's picture

Um, like the Powder River Basin?

Translation: almost 30% of US coal supply. One location. Why?

Why is a big question, takes you down the rabbit hole ...



Sun, 11/18/2012 - 00:06 | 2992951 SoCalBusted
SoCalBusted's picture

Coal is dead in the US (export market should be fine).  With current administration, more and more coal fired power plants are going to go off line or converted to nat gas.

Sun, 11/18/2012 - 11:25 | 2993500 AGuy
AGuy's picture

"With current administration, more and more coal fired power plants are going to go off line or converted to nat gas."

Yup. All this will lead to a major electricity shortage in the future. Perhaps permanent rolling black outs

1. Power companies take on debt to build new gas fire plants and assume that the cost of Ngas remains below $4 mmbu.

2. Shale gas play collapses. Price of Ngas rises to $12-18 mmbtu with in 6 months of the Shale gas collapse.

3. Power companies first experience margin collapse, and press regulators for rate hikes

4. Power Companies only get a partial rate hike, not enough to offset higher Ngas prices. They shutdown there Ngas because they can't afford to operate them.

5. With Coal Plants shutdown and may Ngas plants offline because of Ngas Prices, Rolling blackouts occur. Espeically during the summer months.



Sat, 11/17/2012 - 19:14 | 2992455 TheGreenManalishi
TheGreenManalishi's picture

Bubbles are the next Bubble

Sat, 11/17/2012 - 19:52 | 2992518's picture

But what about Don Ho?

Sat, 11/17/2012 - 19:58 | 2992531 DaveyJones
DaveyJones's picture

clearly the safest

Sat, 11/17/2012 - 20:03 | 2992543 Caviar Emptor
Caviar Emptor's picture

Ah luvs me some Don Ho

Sat, 11/17/2012 - 19:15 | 2992459 Yen Cross
Yen Cross's picture

 Is it true that "sideways drilling" isn't profitable under $85bbl?  If that's the case, then we are screwed sideways...

Sat, 11/17/2012 - 19:28 | 2992484 literarybeer
literarybeer's picture

sideways if you dont know what the hell you are talking about then please dont bother. thanks!

Sat, 11/17/2012 - 19:35 | 2992495 hmmtellmemore
hmmtellmemore's picture


Sat, 11/17/2012 - 19:54 | 2992522's picture

That's what I use for sideways drilling.

Sat, 11/17/2012 - 20:00 | 2992535 Yen Cross
Yen Cross's picture

 Ok, no need to create a 'blow out'...

Sat, 11/17/2012 - 19:43 | 2992510 Yen Cross
Yen Cross's picture

 Easy there TEX. I might have to frack your wisdom teeth. Lay off those " Lone Stars", it was just a question.

Sat, 11/17/2012 - 22:23 | 2992760 CrazyCooter
CrazyCooter's picture

I think break even in the Bakken (liquids fracking) is lower than that. So are tar sands.

The problem with gas is that is it much cheaper on the market than oil/liquids, which are cheap and easy to transport.

But, all that aside, we are screwed regardless. Just a process of time. So, the real haggling is on now, soon, a little later, later, etc.

And the answer to that depends on your disposable income and income security.



Sat, 11/17/2012 - 19:18 | 2992467 The Gooch
The Gooch's picture

Long, potable water.

Sat, 11/17/2012 - 19:35 | 2992493 Jack Burton
Jack Burton's picture

Water is indeed a large concern. I am not up on all that goes into the fracking process, but fracking is seen as the great American energy play, and I understand fracking is very water intensive. I heard reports this summer that the big drought in the US midsection actually caused a slow down in fracking well drilling. Water in some places was hard to come by for the fracking process. Could we see more of this?

Also, I think the slow collapse of the Middle East into war is going to make US energy sources highly profitable no matter production costs. When the bombers head for Iran, and they WILL, then US energy will be as good as solid gold. The gas bubble ain't going to pop when the Middle East is in flames and NATO attacks Syria, Israel bombs Iran and destroys Gaza, Hoezbolla opens a missle campaign against Israel. Iraq fragments into Sunnis versus Shia versus Kurds. Other Mid East oil nations like Saudi Arabia and Qatar are sitting on social time bombs.

Any energy that is USA based is going to have a bright future when the Middle East is one vast war zone, it is half way there already!

Sat, 11/17/2012 - 19:55 | 2992525 Major Major Major
Major Major Major's picture

On the first part… Hydraulic fracturing can use a lot of water, which then has to be disposed of / stored.  However, you can also “frack” with hydrogen, which uses practically no water.  I doubt a drought would have an impact on fracking, at this time.  Slowdown more likely due to low nat gas prices given there would be limited demand due to the economics of drilling.

Sat, 11/17/2012 - 19:59 | 2992532 falak pema
falak pema's picture

Oh hydrogen is not at all "combustible" right? Why not use Nitrogen.

Sat, 11/17/2012 - 22:02 | 2992730 Matt
Matt's picture

What exactly do you think happens during a frack? What do you think "frack" is short for?

From what I've seen, it sounds like propane may be the way to go, but I'm sure whatever is most economical is what will be used, eventually.

Sat, 11/17/2012 - 22:19 | 2992752 Ginsengbull
Ginsengbull's picture

Liquid carbon dioxide is only 0 degrees farenheit at 300 psi, and that stuff gasses off with explosive force when the pressure drops below 60 psi.

CO2 is a dirty word to the greenies, but most industrial CO2 comes from natural gas wells anyway, so you can easily reclaim it and sell it to beverage producers, fire extinguisher manufacturers, and processed food freezers.

Sat, 11/17/2012 - 22:25 | 2992766 CrazyCooter
CrazyCooter's picture

Um, please provide a reliable technical citation where any one in actual industry uses anything OTHER than H2O for fracking before hijacking the thread.



Sat, 11/17/2012 - 22:41 | 2992801 Matt
Matt's picture

Wow, bit sensitive there? I would hardly call discussing non-hydrualic fracking to be an off-topic thread-jack on a thread about shale gas. You should spend a few hundred hours posting your complaints on all the other threads about all the far-more off topic posts.

Here's the company that claims to be using propane gel for fracking; patents pending so GL on finding technical informaiton on it:

Sat, 11/17/2012 - 23:00 | 2992835 CrazyCooter
CrazyCooter's picture


Ok, so millions of gallons of H2O, PER FRAC, can be replaced with ... something as cheap as water per volume (and a gas, not a liquid).

By all means sir, buy it! Oh, right, you are selling. Perhaps I should buy 2!



Sat, 11/17/2012 - 23:19 | 2992856 Matt
Matt's picture

Here's a fun, educational video from the ad firm:

EDIT: and holy crap, if chesapeake's numbers of 65,000 to 600,000 for a shale gas well, and 4.5 million gallons for a horizontal frac, and this ad's numbers of 800,000 existing wells is accurate, we're talking trillions of gallons of water.

Sat, 11/17/2012 - 23:42 | 2992903 Ginsengbull
Ginsengbull's picture

I used to work for the Liquid Carbonic Acid Manufacturing Corporation.


That reliable and technical enough for you?

Sun, 11/18/2012 - 00:20 | 2992981 SoCalBusted
SoCalBusted's picture

CO2 may be a may be a dirty word to the greenies, but google "carbon sequestration" - most of these processes in fact pump it underground at high pressure.

Sun, 11/18/2012 - 11:28 | 2993507 falak pema
falak pema's picture

its high pressure liquid pumped into horizontal pipes @ 9000 lbs used to crack shale layers, its not in-situ HC burning. 

Sun, 11/18/2012 - 11:32 | 2993494 falak pema
falak pema's picture

Look how the energy lobby now howls about frack potential all over USA : First they say LA Santa Barbara is bigger than Bakken now this from San Antonio : Forget North Dakota — There's A New Shale Oil Boom State In Town - Business Insider

If the depletion rate is the same in side ways gaseous nirvana all over, we will have an investment bubble as they drill completion to depletion so fast they will have more wells in San Antnio than cactuses in the desert. 

With a 3-4 $/MMBTU price in USA its means no ROI on investment. Bubble trouble bigtime apart from frack pollution hell.

correction : south texas may only be liquids production. This is not clear if the ratio to gas is significant, although many wells show hi gas/oil ratio. 


Sat, 11/17/2012 - 19:59 | 2992533 CunnyFunt
CunnyFunt's picture

It's not only the volume of water withdrawals, but contamination of water wells with nat gas and chemicals used to facilitate extraction. The public doesn't know what these chemicals are since they are "proprietary" information. It's a farce.

Sat, 11/17/2012 - 22:13 | 2992745 Ginsengbull
Ginsengbull's picture

Invest in activated carbon filtration.

Sun, 11/18/2012 - 00:01 | 2992941 CunnyFunt
CunnyFunt's picture

Will I get an ObamaFilter when my water is contaminated on account of a convoluted reading of eminent domain?

Sat, 11/17/2012 - 20:01 | 2992537 DaveyJones
DaveyJones's picture

that and the fact that we are drawing down our water tables faster than relpenishment all over the world makes this a great combo

Sat, 11/17/2012 - 20:05 | 2992547 Caviar Emptor
Caviar Emptor's picture

I'll have Spam with that combo

Sat, 11/17/2012 - 20:08 | 2992546 falak pema
falak pema's picture

Jack learn to count, without ME the whole world is fukked. For the 21 st century.

So you don't play games around it for silly Israel. 

There is only one meme allowing Pax Americana and its NWO to exist : ME OIL MUST FLOW TO ALL ITS CLIENTS AS THEY ARE PART OF THE GLOBAL OLIGARCHY. That is non negotiable to US supremacy hawks. As, if it loses ME oil the world economy and USD hegemony die.

This thing is about global Oligarchy power and it is NOT US centric. Not today, not for another 30 years. The US oligarchs jointly OWN that oil with Saud and surrogates who have ALL their assets in west. Its totally incestuous.

Sat, 11/17/2012 - 20:08 | 2992552 Caviar Emptor
Caviar Emptor's picture

I'm as much of an oligarch as the next guy.

And I agree ME oil must flow. US Nat Gas : still got to store, distribute and retail it on a mass scale which current infrastructure does not support. To get to where we are currently with ease of liquid hydrocarbon use would take years for gas to catch up

Sat, 11/17/2012 - 21:08 | 2992653 archon
archon's picture

I agree... the demise of oil shale is greatly exaggerated, especially in an energy-starved world.  Besides, once the Arabs and Israelis are done killing each other, they'll be more than willing to sell as much oil as they have so they can pay for the clean-up.

Sat, 11/17/2012 - 22:29 | 2992776 CrazyCooter
CrazyCooter's picture


Population has already outstripped supply. To clarify, infants today are adults tomorrow, with energy needs by modern standards.

You drive your car by looking through the windshield. I suggest you comment on ZH by not seeing the world through your rear view mirror.



Sat, 11/17/2012 - 19:31 | 2992476 falak pema
falak pema's picture

to think the Oil lobby is proposing this sidesways drilling in France like every where else...sideways reasoning at its best?

Yes one point is very clear : the German nuclear option plus its all-in into renewables makes it very dependent in future to :

a) Gazprom

b) French nuclear electricity at peak loads. 

This will be an option that makes German Ost politik a vital necessity and it takes the whole of Euro group eastwards, and club med southwards, with Algeria/Libya/West Africa in coming years for its energy needs, leaving ME for Far East.

Sat, 11/17/2012 - 19:35 | 2992497 magpie
magpie's picture

Mind the solar panels in Morocco lol

Sat, 11/17/2012 - 19:57 | 2992528 falak pema
falak pema's picture

they use it to green house hashish. Big business.

Sat, 11/17/2012 - 20:13 | 2992557 magpie
magpie's picture

Free electricity from the Sahara, to power hash plantation s by infrared in downtown Amsterdam ! Better watch out, if France ever has to apply for a bailout, Mutti Merkel might order those fast breeders shut down in exchange.

Sat, 11/17/2012 - 20:37 | 2992608 gould's fisker
gould's fisker's picture

If you smoke enough hash none of this matters.

Sat, 11/17/2012 - 19:31 | 2992487 Tsar Pointless
Tsar Pointless's picture

There are two big lies that the big energy companies have tried to sell (and have been somewhat successful in so doing) where I live, in Western Pennsylvania:

1) There is such a thing as "clean" coal; and,

2) Marcellus Shale=The Golden Grail.

I lived in Derry for more years than I care to claim. There is a lot of stupid in Derry - prime for the picking by smooth-talking shysters spouting promises of stacks and stacks of money.

Now, that area is replete with half-completed wells and decimated land. Stupid is, as stupid does, I s'pose.

Sat, 11/17/2012 - 19:35 | 2992491 Vint Slugs
Vint Slugs's picture

He frequently gives keynote addresses for investment conferences and is interviewed about energy topics -- almost stopped there because that says it all about Mr. Berman but decided to read further.  This interview is long of one man's opinions and short of actual facts.

Sat, 11/17/2012 - 19:44 | 2992513 CrashisOptimistic
CrashisOptimistic's picture

Berman knows his stuff.  He has to dumb it down in interviews.

The most important part is early in the interview.  EVERYONE needs to understand that the media only covers "new discoveries".  They do not cover decline rates.  You probably have never heard of an oil well being "P&Aed", which is Plugged and Abandoned.  

But it happens hundreds of times every day globally.  

You never hear about it, but you really do need to understand that DECLINE RATE defines everything.  Not new discovery or new production.

It's a diabolical reality.  Oil is not measured in barrels.  It's measured in barrels per day.  The day you start a new well producing, it's all downhill from there.  The production rate will fall.  Every new well you drill ADDS to the decline rate that you must overcome with new drilling.

It becomes frantic.  It becomes desperate.  And it eventually fails -- just like the young kid running up a down escalator.

Sat, 11/17/2012 - 19:49 | 2992517 Tsar Pointless
Tsar Pointless's picture

You mean sorta kinda like this?

I agree with everything you say, BTW.

Sat, 11/17/2012 - 22:31 | 2992784 CrazyCooter
CrazyCooter's picture

Visit and in that light vet Berman versus the others.

He is widely recognized as not having his head up his ass or being a shill.

Thus, you should at least consider his ideas/opinions and vet them against facts/reality you know to be true/reliable.



Sat, 11/17/2012 - 22:49 | 2992814 Augustus
Augustus's picture

First nonsense error was in stating that Romney promised "US energy independence."  The comment was actually referring to North American energy independence, including the Canadian surpluses that will be marketed somewhere.

Then he carries on to infer that the shale gas is somehow not there to be produced.  Of course it is there, just not at $3 prices.  Note that price in Japan is $17 and that Gazprom is glad to supply Europe at $9.  If US NG price is $6, it can displace Gazprom in Europe and make a very large profit selling to Asian markets.  US consumer would still be getting energy at a discount to world prices as $6 NG = oil at somewhere in the range of $50 to $60 a bbl.  Obummer has delayed the integration of the Canadian market and the construction of the LNG facilities that would lead to NG production increases.  Note also that at $6 NG price coal is very price competitive for electric generation.

This incompetent has created more bums than any other President in the history of the country.

Sat, 11/17/2012 - 19:54 | 2992523 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Good interview from the illustrious Lauren Lyster with the Chief Energy Investment Strategist at Casey Research:

Sat, 11/17/2012 - 22:49 | 2992816 CrazyCooter
CrazyCooter's picture

Good stuff, just watched it (first half).

Thanks for sharing.



Sat, 11/17/2012 - 19:56 | 2992526 Tsar Pointless
Tsar Pointless's picture

“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 2009 email. “Reminds you of dot-coms.”

Dot-coms, you say? Well, then, what could possibly go wrong?

Sat, 11/17/2012 - 20:25 | 2992578 ShrNfr
ShrNfr's picture

Actually quite an interesting read. Many thanks. Looking at the source documents is an interesting exercise. Aubrey just sold a pile of his shale plays. CHK may not be as dumb as folks make them out to be.

Sat, 11/17/2012 - 20:03 | 2992544 ShrNfr
ShrNfr's picture

I thought his decline rates to be high, but on further investigation find that they are within reason. Some stuff that may be relatively easy in ND will be a real pain in more populated areas over shale. I suppose we will find out.

Sat, 11/17/2012 - 20:14 | 2992562 ComeAndTakeIt
ComeAndTakeIt's picture

I'm concerned Obama will go after oil and gas as aggresivley as he's gone after coal. There's really nothing out of the realm of possibilty with these psychopath's in DC...At the very least, I could see them trying to nationalize all oil and gas production eventually...It would appear to be nearly impossible to do that in this country, but if they attempted it, I wouldn't be shocked.

Sat, 11/17/2012 - 21:08 | 2992563 Yen Cross
Yen Cross's picture

 The premise of my original question, was based on the profitability of "shale oil extraction" via high pressure "sideways extrusion".

  There is a floor/cost on this type of energy extraction. I'm sure it was known 30 years ago, and cost effective.That form of extraction, has created an energy policy base of  $85-90bbl.

   That should imply a cost of 40-50 dollars a barrel of crude. Either consumption is going up, or the the United States will be a net exporter of your " SOVEREIGN WEALTH"! Based on demand in the United States...

Sat, 11/17/2012 - 20:29 | 2992591 css1971
css1971's picture

In the buy low sell high of things, I'll point out that nuclear is now getting low.

EDF for example.

Or Toshiba (Westinghouse)

Sat, 11/17/2012 - 20:37 | 2992611 A Humble Man
A Humble Man's picture

Long time lurker, first time poster.  I would just like to add my 2 cents worth.  What Berman says seems to be true but it needs to be taken in a different context.  Drilling/fracking for nat gas is profitable if there is enough nat gas liquids.  Profits come from the liquids, the gas is just a by-product that is sort of given away. 

Sat, 11/17/2012 - 21:28 | 2992681 Bicycle Repairman
Bicycle Repairman's picture

There is big money on all sides of the energy issue.  Lots of money, lots of BS and lots of war being spread around.  Especially BS.

Sat, 11/17/2012 - 21:29 | 2992684 MrPalladium
MrPalladium's picture

Where is the supporting data? Is this just a shill for shorts like Chanos?

Sat, 11/17/2012 - 21:52 | 2992711 TheBigTree
TheBigTree's picture

This author is hilarious. Does he really think that thousands upon thousands of shale wells have been drilled because they are subeconomic? Every single oil company on the planet takes into account the decline in production from the time they are drilled. My company drilled three utica shale wells this year. The first well paid back the cost to drill it in 65 days. The second well did the same. The third well is being tied into a pipeline but the initial test is extremely positive. At current oil and nat gas prices I will drill these all day long. These wells still have a positive npv down to $23/bbl. AND THAT ACCOUNTS FOR AN 80%first year decline. The decline is actually hyperbolic, so 5 years out the well will only decline 4%/year for perpetuity. The operating cost is almost nothing, so these wells will conceivably be producing 50 years from now.

Uneconomic? Hardly.

Bubble? Maybe in the money the publics are able to pull out of the national oil companies from around the world that are flush with petrodollars and nowhere to go with them.

Oil goes to $50 tomorrow...I'm still drilling like a house of fire.

And for all the people that claim there is no frack chemicals list out there, check out There is information on thousands of wells and what chemicals are involved.

Hate the oil industry all you want. But nobody hates the farmer when he plants corn and the corn is sold at all time high prices. Maybe we should hit farmers with a windfall profits tax when zirp runs food inflation through the roof. America should cheer the oil industry because every barrel of oil I make brings the price down incrementally for everyone else. And I'm producing it here in America. So not only does that make America richer by not exporting that wealth through additional trade deficit, but it also gives us additional national security by not having to bring our lifeblood across an ocean. And that money doesn't go to a country that supports terrorism.

As long as oil prices stay where they are we will be energy independent in North America. In just the USA, it's doubtful unless there is a strong push for nat gas as a transportation fuel.

Sat, 11/17/2012 - 22:09 | 2992731 CunnyFunt
CunnyFunt's picture

MSDSs are readily available for the non-proprietary chemicals. Proprietary chemicals are subject to gag orders, even by physicians.

I don't hate the industry. I just don't want my 20 GPM well contaminated with drilling byproducts or methane, especially not when eminent domain is being used against lease hold-outs to sieze their mineral rights.

Sat, 11/17/2012 - 22:22 | 2992758 Matt
Matt's picture

The article seems to be mainly talking about natural gas, not oil; If nat gas went down to $0.50 per million Btu, will you still be drilling it? Or is your company drilling mainly oil?

Take a look at the finances of Chesepeake, one of the big players in nat gas. The story seems to be that they are using borrowed money to drill, and keep borrowing more and more.

Sat, 11/17/2012 - 22:30 | 2992782 TheBigTree
TheBigTree's picture

Dry gas shale wells need anywhere from $4-$6 nat gas to be viable depending on the well. Chk's problem is they are 90% nat gas, over leveraged on a bet to buy a ton of leases, and they sold their nat gas hedges because they thought gas would go back up. It was obviously a bad bet.

We drill for both gas and oil. Oil is less likely to slowdown because it is a global commodity and gas is land locked in North America so to speak. The reason nat gas is low even though demand is up is because shale gas drilling has been too effective. If this author was correct they would decline so fast the market would be back to the old equilibrium very quickly and chk would be golden again. Obviously...that has not happened.

Sun, 11/18/2012 - 12:45 | 2993658 epwpixieq-1
Sun, 11/18/2012 - 12:56 | 2993674 Kayman
Kayman's picture

"Only one abbreviation EIOER:"

This is entirely meaningless until costs and revenues are attached.  One of the fundamentals to Oilsands ROI is that natgas is so cheap for heating bitumen at the source. 

Sat, 11/17/2012 - 22:24 | 2992763 TheBigTree
TheBigTree's picture

That law may exist, but the frack focus website has the full list and explanation of what they are. A lot of people in New York where fracking has been banned currently have methane in their well water. Underground coal seams are less permeable to water than the soil above, so people tend to put water wells there because the water filters down and gets stuck above the coal seam. Coal generates coal bed methane.

A mistake the oil industry made is that in Pennsylvania we did not initially do baseline samples of water wells to be able to prove water quality has not changed . I assure you in other states where shale drilling is beginning (Ohio) those base line samples are being taken.

As far as contamination goes, it's much much more likely that a truck flips on an icy road carrying oil or flowback water. Obviously, there are inherent dangers, but we try to mitigate those as much as possible. The other option is horse and buggy.

Underground contamination is highly unlikely for myriad reasons that I'm not going to go into here, but I would be much more concerned about surface spills than a water well being contaminated from underground.

In many of these areas where we drill, the coal companies already came in and turned the countryside upside down to get the coal out and then allow acid mine drainage to leach into the water supply, but the media has the general public up in arms over something far far less ecologically damaging.

Sat, 11/17/2012 - 23:18 | 2992862 CunnyFunt
CunnyFunt's picture

New York has NOT banned fracking. There is a drilling moratorium until the DEC completes its regulations (due Nov. 29). Cuomo has ambitions and he doesn't want to upset the wrong people.

I'm familiar with fracfocus. It is an amalgam of regulatory and industry interests. The rules vary from state to state. In Ohio, Michigan and Texas, proprietary chemical information is not provided to regulators or the public. In Pennsylvania, Arkansas, Colorado and Wyoming, the information is disclosed to regulators but not to the public. These chemicals are not disclosed in fracfocus, either.

Regarding contamination of water, I would urge readers to research what happened in Dimock, PA, and in Pavillion, WY.

What disturbs me most about the fracking is the hand-in-glove relationship between the executives, regulators and courts. They work out sweet deals among themselves and subvert existing laws and craft new provisions for their mutual benefit. If my water gets contaminated while there is drilling beneath my land (all made possible through eminent domain), then too fucking bad. Right?

Sun, 11/18/2012 - 08:45 | 2993324 overmedicatedun...
overmedicatedundersexed's picture

just a comment on ground water contamination..why do we have purification of drinking water in many areas where there is no drilling at all?? could one have a company based on taking methane out of potable water??

why that might create jobs, the by product could be useful as well NO?

water contamination is/has been an exciting area to solve and profitable.

Sat, 11/17/2012 - 22:36 | 2992790 Yellowhoard
Yellowhoard's picture

Can't wait for Matt Damon's fuck fracking movie paid for by the United Arab Imirites.

Sat, 11/17/2012 - 22:49 | 2992815 Lloyd_Xmas
Lloyd_Xmas's picture

I going long the hot air coming out of Washington

Sat, 11/17/2012 - 23:03 | 2992839 Yen Cross
Yen Cross's picture

 I like " yellow hard" . He gets it!

Sun, 11/18/2012 - 00:17 | 2992971 Kina
Kina's picture

you can frack with a propane gel nowadays, recover and reuse most of it.

Sun, 11/18/2012 - 00:54 | 2993043 tongue.stan
tongue.stan's picture

Decline rates are high everywhere for every well, and yes they will have to drill 1000's of wells to keep prod rates flat. So what? Thats the way it has always worked. When the price goes up, its economical to drill. <and when a well declines it is economical to refrac if prices are high enough.>

One of the bigger dangers to fracking, at least in the west, is when the fractures connect to faults, thus providing an easy path for hydrocarbons to contaminate.

Still, this post is another valuable contribution from ZH.

Sun, 11/18/2012 - 00:52 | 2993049 jonjon831983
jonjon831983's picture

"There Is A Shale Oil Field Under Santa Barbara Four-Times Bigger Than The Bakken"


What is the accessibility and decline rate dunno...

Sun, 11/18/2012 - 04:34 | 2993227 R_J
R_J's picture

-The U.S consume 15 million B, per day? (and the Military?)
-Because one reactor was incredibly stupidly planned (At least 200 are stupidly planned...)
-For Germany to abandon nuclear… that decision is truly delusional because they haven't had any problems...(Only One Problem is needed and Europa is Gone)

----As long as the Side-Product is one will abandon nuclear...

Sun, 11/18/2012 - 06:29 | 2993262 CEOoftheSOFA
CEOoftheSOFA's picture

I've already been through a bursted shale bubble (Devonian) in the '70's and '80's.  There are just enough good wells to keep you going for a while.  But the price softens and after while you realize you haven't been making much money.  The next thing you know the bottom falls out.  It happened before, it will happen again.  I stil think the best economics for shale wells was in the early 1900's.  Back then the Devonian Shale wells were completed with an open hole completion and stimulated by dropping a torpedo in the hole.   

Sun, 11/18/2012 - 08:10 | 2993305 slackrabbit
slackrabbit's picture

Like I said - take a look at this graph. From over a $3 high down to 13 cents


There is no way producers can make money at these prices.

Some producers will go bankrupt and prices must rise.


Short the producers and go long NGAS.

And if more and more trucks and car go over to natural gas then the only way is up!



Sun, 11/18/2012 - 09:54 | 2993372 klapper
klapper's picture

I don't quite agree with Mr Berman's take on Germany. Germany is building new coal-fired power plants which cost 1/4 the capital on a $/kWe basis of a nuclear plant and can be throttled up or down 50% in 15 minutes to smooth the irregular power production of renewables. Obviously these plants are facing serious headwinds from the public. However, they do have the effect of reducing reliance on Russian NG.

Sun, 11/18/2012 - 10:53 | 2993432 entropy93
entropy93's picture

The article completely ignores the revolutionary advances in solar panel efficiency and price. Its going to be far cheaper for Germany and Japan to switch to solar than to build a new generation of nuclear plants. 

Of course people will trot out the same lame old excuses:

"The sun doesn't shine all the time"

The answer was actually invented for the nuclear industry, reactors run all the time and are hard to throttle. They needed a way to store energy produced at night.

As far as energy output capacity, Germany has already demonstrated that solar can deliver gigawatts of power. We are no longer talking a percent or less. Combined with utility scale storage, Germany's cheapest and safest road forward is solar. This in a country far less suited for solar than the US or Japan.

Sun, 11/18/2012 - 15:33 | 2994061 klapper
klapper's picture

You sound like a salesman. However, give us some numbers we can check and run.

Sun, 11/18/2012 - 11:04 | 2993458 AU5K
AU5K's picture

This article is way off base.  I live in san antonio next to the eagle ford.  It is a complete boom.  EOG even has some mega wells, 5000 barrels/day run rate.  There's between 10 and 25 BILLION barrels here.


And guess what - there is another layer below eagle ford - much deeper but companies are going there to in the wells already drilled.


I'd ignore this Berman guy.

Sun, 11/18/2012 - 12:48 | 2993665 epwpixieq-1
epwpixieq-1's picture

The base is, and always will be, EIOER:

Sun, 11/18/2012 - 13:04 | 2993688 Kayman
Kayman's picture

As I stated above, without attaching costs and revenues to EIOER, the formula is meaningless.

Thu, 12/20/2012 - 03:03 | 3081796 cgagw
cgagw's picture

The bike purred between his legs and his pants succumbed to the whips of fresh wind,The ministries in good north face denali clearance warm enough pink and white went by, then a series of stores on Central street with brilliant shop windows.

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