THE FUTURE OF NATURAL GAS Is Shale Gas Shallow or the Real Deal? The de facto U.S. energy policy is to burn more gas, much of it produced using technology. Huge volumes of low-priced natural gas have caused coal plant shutdowns, slowed renewable development, and undercut new nuclear plant development. Using more gas has also sent the carbon dioxide emissions into a downward spiral. Is the glut of natural gas too good to be true? By Kennedy Maize reached the bottom of its crude oil bucket and the rest of the world will soon follow. Berman writes frequently for Oil a leading peak oil publication. Looking at U.S. shale gas, Berman says he sees a precipitous production decline coming as the need to drill new gas wells to replace rapidly declining production vastly outpaces the capacity of industry to deploy the rigs needed to drill. In an interview with POWER, Berman argued that the boom in drilling shale gas wells has obscured a long-term decline in conventional gas supply. But a coming rapid decline in shale production, he said, will soon reveal the overall limits to the gas boom, and volatility and Marcellus Haynesville Eagle Ford Fayetteville Woodford 1,800 1,600 1,400 1,200 1,000 Gas Skeptic One major voice on the skeptical side of the emerging debate is that of Arthur Berman, a Houston-based petroleum geologist who is also a leading figure in the posse, a group of analysts who argue the U.S. has upward pressure could return to natural gas prices. not a problem for today or Berman said, it is coming. Once we work through the current oversupply, if capital is not prices will spike. The gas supply bubble will burst. Because of the current gas glut, with long prices in the range of $3 per million cubic feet (mcf), drilling shale gas wells has tanked, noted Berman. Chesapeake Energy, the most bullish of the shale gas players, is selling assets and shifting rigs to drilling for oil because the company just make money on $3 gas. can see a time not too many months away when we could see gas supply in rather serious Ber- Steep well decline rates. Average production profiles for shale gas wells in major U.S. shale plays by years of operation. Source: Fig 54 EIA Annual Energy Outlook 2012, released June 25, 2012 Million cubic feet per year ow that an abundance of natural gas has become a seeming fact of everyday life, time for the contrarian view to appear. Is the optimism over shale gas cockeyed and bound for a crash? Or is the methane ebullience an accurate reflection of new energy realities? There are no simple answers. Recently, an arcane dispute among geologists became public, revealing an important rift over views about the future of natural gas. The geological flap raises questions about just how durable the shale gas boom will be and whether a long regime of low-cost gas can continue to fuel a dash to gas among electric generators that is clobbering coal, wrecking renewables, and negating the long-awaited nuclear renaissance. Unlike the earlier disputes over environmental issues related to hydraulic fracturing or which largely proved marginal and manageable, the current kerfuffle is over the performance of the wells themselves in delivering natural gas. Experienced geologists are wrangling over the rate at which wells in shale formations, created by horizontal drilling and fracking the gas-rich strata, run out of methane. Some experts argue that shale gas wells decline rapidly, producing copious amounts of natural gas early and then quickly drying out, suggesting that the current glut of gas will decline just as steeply as it rose (Figure 1). Others respond that shale gas decline rates are nothing special and that fears of the gas running out are overblown. There is so much gas available, they argue, and the horizontal wells deliver for so long, that low-cost fossil fuel is guaranteed far into the future. Years POWER December 2012