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Interview: Energy Investor Bill Powers Discusses Looming Shale Gas Bubble

1:43 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Cold Hungry and in the Dark cover

Bill Powers latest book looks at the mythology of the natural gas industry.

On Sat., April 27, I met up with energy investor Bill Powers at Prairie Moon Restaurant in Evanston, IL for a mid-afternoon lunch to discuss his forthcoming book set to hit bookstores on June 18.

The book’s title – Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth - pokes fun at the statement made by former Chesapeake Energy CEO Aubrey McClendon at the 2011 Shale Gas Insight conference in Philadelphia, PA.

“What a glorious vision of the future: It’s cold, it’s dark and we’re all hungry,” Powers said in response to the fact that there were activists outside of the city’s convention center. ”I have no interest in turning the clock back to the dark ages like our opponents do.”

What Powers unpacks in his book, though, is that McClendon and his fellow “shale promoters,” as he puts it in his book, aren’t quite as “visionary” as they would lead us all to believe.

Indeed, the well production data that Powers picked through on a state-by-state basis demonstrates a “drilling treadmill.” That means each time an area is fracked, after the frackers find the “sweet spot,” that area yields diminishing returns on gas production on a monthly and annual basis.

It’s an argument regular readers of DeSmogBlog are familiar with because of our recent coverage of the Post Carbon Institute‘s “Drill Baby, Drill” report by J. David Hughes.

Powers posits this could lead to a domestic gas crisis akin to the one faced in the 1970′s.

We discuss these issues and far more in the interview below.

SH: Tell me more about the premise of your book, why you wrote it, and what you think some of the biggest findings were from your book.

BP: What I really take a look at and show is that shale gas, while it’s an important resource, it’s importance has been vastly over-stated. We do not have a 100-year supply of shale gas.

The increasing demand, which has been brought about by the low prices of the last few years, is going to lead to another 1970’s-style gas crisis. That will happen sometime between 2013 and 2015. We are seeing gas – while there’s been a lot of promotion of the 100-year supply myth – the facts simply just do not support it. That’s the premise of the book.

SH: Why and how is gas such an important resource in the US to begin with that a crisis akin to that which happened in the 1970′s could happen here again?

BP: Well, the US produces over 60 billion cubic feet per day, which is the energy equivalent of 10 million barrels of oil per day.

We’ve already seen a major move away from coal-fired power plants towards increased reliance on gas, we’re seeing legislation come in such as MATS that would be implemented by 2015 and would shut down many coal-fired power plants. We’re seeing increased consumption not just from the electrical power industry but also from the industrial sector. We’re seeing a big fertilizer plant being built in Iowa right now that will consume huge amounts of natural gas. We’re seeing a pick-up of natural gas consumption in manufacturing after more than a decade of decline, and we’ve seen an increasing number of homes in the U.S. that are heated by natural gas.

SH: Increasingly so because of the increase in gas power plants and the switch-over, right?

BP: We’ve seen more homes in the Northeast switch away from heating oil to gas and we’ve seen many homes for decades in the Midwest heated with gas, so that is something that I think is going to have a very big impact on the rise of gas prices and a very big impact on a lot of Americans. That’s going to lead to higher electricity prices, higher home heating costs, as well as higher food costs, because the natural gas component of fertilizer is so significant.

SH: Do you think that there will be a switch back to coal then because of the gas crisis? Or is it a broader problem than just a simple switch-over?

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Shale Gas Bubble About to Burst: Art Berman, Bill Powers

4:55 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Food and Water Watch recently demonstrated that the dominant narrative, “100 years” of unconventional oil and gas in the United States, is false. At most, some 50 years of this dirty energy resource may exist beneath our feet.

Bill Powers, editor of Powers Energy Investor, has a new book set for publication in May 2013 titled, “Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth.”

Powers’ book will reveal that production rates in all of the shale basins are far lower than the oil and gas industry is claiming and are actually in alarmingly steep decline. In short, the “shale gas bubble” is about to burst.

In a recent interview, Powers said the “bubble” will end up looking a lot like the housing bubble that burst in 2008-2009, and that U.S. shale gas will last no longer than ten years. He told The Energy Report:

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…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.

The hotly-anticipated book may explain why shale gas industry giants like Chesapeake Energy have behaved more like real estate companies, making more money flipping over land leases than they do producing actual gas.

Powers told The Energy Report:

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.

Powers believes we are quickly approaching a gas crisis akin to what occured in the 1970′s and because of that, prices will soon skyrocket.

Art Berman Also Sounds the “Shale Gas Bubble” Alarm

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