Energy Boom or Bubble? Conflicting Reports

Hughes mainly targets three forms of unconventional fossil fuels: shale oil, also called 'tight oil' and shale gas that are produced from hydraulic fracturing and horizontal drilling, and bitumen derived from Alberta's oil sands.

Andrew Nikiforuk, author and oil and gas reporter for The Tyee of British Columbia writes on Hughes' "meticulous 181 page study for the Post Carbon Institute."

To Hughes, shale gas and shale oil represent a temporary bubble in production that will soon burst due to rapid depletion rates that have only recently been tallied.

Exuberant projections by the media and energy pundits that claim that hydraulic fracturing and horizontal drilling "can provide endless growth heralding a new era of 'energy independence,' in which the U.S. will become a substantial net exporter of energy, are entirely unwarranted based on the fundamentals," adds Hughes in a companion article (paywall protected) for the science journal Nature.

In an accompanying article, "The Making of a Natural Gas Glut", Nikiforuk writes about a related, "startling new report for the Energy Policy Forum".

"Every region in the U.S. which has shale development provides a cautionary tale," says (Deborah Rogers, the report's author). "Economic stability has proved elusive. Environmental degradation and peripheral costs, however, have proved very real indeed."

Presenting the other side of the coin, that the "Gas Boom (is) Projected To Grow For Decades", Russell Gold writes on a new University of Texas report, funded by the nonpartisan Alfred P. Sloan Foundation based on an extensive examination of the thousands of well drilled in the Barnett Shale formation in northern Texas.

So what should a discerning reader believe?

Gold provides some insight as to why extensive reports can present have such opposite findings.

One reason there has been a dispute over projections of shale-gas production is that much of the research, even inside universities, has been funded by groups with either pro- or anti- energy-development agendas. Many of the latter have strong views about the environmental impact of fracking on the air and groundwater.

Gold notes that one of the co-leaders of the report "is paid to serve on the technical advisory boards of BP PLC and two smaller energy companies".

However, the report was praised as "robust and sophisticated" by Scott Anderson, "who researches shale development for the Environmental Defense Fund."

Note: Wall Street Journal article is accessible without subscription until March 6.