Energy Industry Expert Says Shale Gas Will Last <10 Years

say whatHere’s a contrary view if ever we’ve seen one: Bill Powers, editor and writer of the Powers Energy Investor newsletter and someone who has sat on the board of three oil and gas companies and has been an active investor for 25 years, says shale gas supplies in the U.S. have been vastly overhyped. Over the past three years Powers researched and next spring will publish a new book called: Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth. In the book he argues that contrary to the popular belief that the U.S. has a 100-year supply of natural gas due to shale gas fracking, he believes it’s more on the order of 5-7 years. Say what??

Powers was interviewed by The Energy Report and the interview was posted on the Seeking Alpha website. Here’s a brief excerpt:

The shale gas "miracle" is overhyped and bound to disappoint. That’s what energy expert Bill Powers argues in his upcoming book, "Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth." But Powers, who is also the editor of Powers Energy Investor, tells The Energy Report that this could be a very good thing for oil and gas companies and their shareholders, and he is placing his bets accordingly.

The Energy Report: Bill, you have a new book coming out next spring entitled "Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth." What is your basic argument?

Bill Powers: My thesis is that the importance of shale gas has been grossly overstated; the U.S. has nowhere close to a 100-year supply. This myth has been perpetuated by self-interested industry, media and politicians. Their mantra is that exploiting shale gas resources will promote untold economic growth, new jobs and lead us toward energy independence.

In the book, I take a very hard look at the facts. And I conclude that the U.S. has between a five- to seven-year supply of shale gas, and not 100 years. That is far lower than the rosy estimates put out by the U.S. Energy Information Administration and others. In the real world, many companies are taking write-downs of their reserves.

Importantly, I give examples of how certain people and institutions are promoting the shale gas myth even as they benefit from it economically. This book will change a lot of opinions about how large the shale gas resources really are in the U.S. and around the planet.

TER: How did you obtain your information?

BP: I spent three years doggedly researching this book. Most of the information came from publicly available sources. I used a fair amount of work done by Art Berman, who has written the forward for the book. Art is a leading expert on determining the productivity of shale gas plays. I contacted a lot of other geologists and petroleum engineering professionals and had them review my conclusions about declining production.

Put simply: There is production decline in the Haynesville and Barnett shales. Output is declining in the Woodford Shale in Oklahoma. Some of the older shale plays, such as the Fayetteville Shale, are starting to roll over. As these shale plays reverse direction and the Marcellus Shale slows down its production growth, overall U.S. production will fall. At the same time, Canadian production is falling. And Canada has historically been the main natural gas import source for the U.S. In fact, Canada has already experienced a significant decline in gas production-about 25%, since a peak in 2002-and has dramatically slowed its exports to the United States.*

Read the rest of this interesting and controversial interview by clicking the link below.

*Seeking Alpha (Nov 8, 2012) – U.S. Shale Gas Won’t Last 10 Years: Bill Powers