Sounding Off on the Economy of Natural Gas from Shale Development


Last month, two New York Times articles turned heads and bruised egos by questioning the long-term profitability of natural gas extraction from shale deposits. Now, energy companies, the federal government and the Times itself are pushing back against the assertion that the burgeoning shale gas industry is uneconomical.

The articles, part of a series on the effects of hydraulic fracturing (fracking) and drilling for shale gas, cited anonymous internal emails and documents from the Energy Information Administration (EIA), a division of the Department of Energy that estimates increasingly large stockpiles of domestic natural gas. In the communications, employees remarked that these estimates vastly overstated the amount of gas that companies could economically produce from shale. One of the articles by Times Reporter Ian Urbina implied that the EIA, whose reports are supposed to be independent, relied heavily on research from consultants who parroted energy company data. While energy company CEOs were touting the promise of shale gas investment, the articles asserted, geologists and analysts were quietly analogizing to the dot-com and real estate bubbles.

Energy companies were quick to return fire. Chesapeake Energy CEO Aubrey McClendon sent an email to employees panning the articles. "How can shale wells be underperforming if shale gas companies are beating their production forecasts and as U.S. natural gas production has recently surged to record highs?" McClendon asked. ExxonMobil, the largest natural gas producer in the United States, bristled at the Times' failure to contact it for comment and dismissed the assertions as baseless. The company's vice president of public and government affairs noted that ExxonMobil acquired XTO and other shale gas ventures with an eye toward long-term investment, not instant profit from the day-to-day fluctuation of gas prices.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sedgwick LLP | Attorney Advertising

Written by:


Sedgwick LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.