The recent catastrophic oil spills and President Obama's decision to tap into the oil reserves still fresh on the everyone's minds, the natural gas companies are boasting about the wells they are drilling, although many experts in the field are not buying into their talk. The natural gas companies are promising to deliver big profits and provide a vast new source of energy for the United States (Urbina). .
Hundreds of industry emails and internal documents and an extensive analysis of data from thousands of wells lead industry experts to question those claims. According to them, natural gas companies are forging how easy and cheap it is to extract from shale formations deep underground. Companies may even be intentionally overstating the productivity of their wells and the size of their reserves even though doing so would defy the law. Furthermore, experts have noticed a drastic difference between the claims made in the emails and the statements made by the industry in public (Urbina).
"Money is pouring in" from investors even though shale gas is "inherently unprofitable," an analyst from PNC Wealth Management, an investment company, wrote to a contractor in an email. "Reminds you of dot-coms" (Urbina). .
An analyst from IHS Drilling Data, an energy research company, wrote in an email, "The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work" (Urbina). .
Experts believe that there is a lot of gas to be extracted from shale formations, but they question whether companies can extract it for as little money as they are claiming. There are currently many active wells, but they are often surrounded by less-productive wells that typically cost more to drill than the gas they produce is worth. Furthermore, the gas from the successful wells is falling much faster than energy companies originally thought, reducing their profits in the long run (Urbina).