Rounding-up the best comments in response to NYT’s latest hit piece on natural gas

Rounding-up the best and most colorful comments in response to NYT’s latest hit piece on natural gas

WASHINGTON, DC – Say this about The New York Times and its ongoing attack series targeting natural gas: These guys sure know how to elicit a reaction. In his latest piece, Times reporter Ian Urbina turns the page over to well-known opponents of the industry, who argue that shale is too expensive to produce and will therefore disappoint investors. Urbina targets the Barnett, Haynesville, and Fayeteville shales in particular – but forgets to mention that natural gas production from each continue to defy even the most optimistic expectations, even with fewer rigs in service and historically low natural gas prices.

The first reactions to The Times’ story started rolling in about 18 seconds after it was posted. EID’s rebuttal was sent around the next day. Thirty-six hours after first contact, here’s just a brief sampling of what folks are saying about the piece:

U.S. Energy Information Administration (EIA): Agency’s Perspective on Shale Gas “Differs Significantly” from NYT report. From the EIA press release: “EIA was contacted by a Times reporter in advance of the story, and provided a response that described the agency’s approach to developing its shale gas projections. Those interested in EIA’s views on shale gas, which differ in significant respects from those outlined in the June 27 article, may want to review the EIA response to the inquiry from the Times, the Issues in Focus discussion of shale gas included in the Annual Energy Outlook 2011, and a recent presentation on domestic and international shale gas.

Director of the Oklahoma Geological Survey: NYT’s Article is a “Hatchet Job”: “[Keller] was particularly incensed by Times quotes from unnamed industry insiders and analysts that compared shale plays to Ponzi schemes and said some were questioning whether companies were ‘intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves.’ “It sure had an awful lot of hatchet job to it and was a little short on what I would consider facts.’ … ‘There are promoters in every business and I know somebody somewhere has overstated something, but to suggest this is a big problem is crazy,’ he said. (The Oklahoman, 6/28/11)

John Hanger, former secretary of Pennsylvania Department of Environmental Protection (DEP): “This reporter puts sensationalism ahead of fairness or truth“: “The same reporter for the NYT that wrote the February 27th, 2011 hit piece falsely suggesting Pennsylvania’s drinking waters were poisoned with radionuclides is back at it. He has another NYT front page, Sunday story attacking shale gas as a Ponzi scheme and the industry as filled with Enrons. He just about calls for FBI raids. … Reader beware. This reporter puts sensationalism ahead of fairness or truth. Pennsylvania’s drinking waters are not poisoned with radionuclides, as substantial testing has verified, and the reading public should drink from this journalistic cup with great caution. Could anyone imagine more sensationalistic narratives than Radiation, Ponzi, and Enron? Consistent with this reporter’s method, today’s article uses often anonymous statements to paint a sensational narrative and leaves out or underplays critical information that is inconvenient to establishing the credibility of the dominant anti-gas narrative.” (Facts of the Day blog, 6/26/11)

Kenneth B. Medlock III, Ph.D., Rice University professor: Despite NYT’s Baseless Claims, “Barnett Shale Still Has Lots of Life”: “At the Dallas Fed workshop [cited in the NYT story], I remember two questions specifically related to the Barnett shale because there was obvious concern related to the Texas economy. After all, the Barnett shale had been a great source of wealth expansion for the previous five or six years and was generally viewed as an important part of the economic base in the area. I explained in my answer the points made above. This has of course been exacerbated by the recent recession and the shift of production activity to shale plays with higher liquids content – such as the Eagle Ford shale in South Texas – due to the large differences in natural gas prices and oil prices. Again, these are economic forces, not geologic ones. In fact, our recent work indicates that as demand for natural gas continues to increase, particularly in Texas, the Barnett shale will remain an important contributor to the overall natural gas market balance. The full presentation I gave at the Dallas Fed is available online. (Houston Chronicle’s Fuel Fix, 6/27/11)

Michael Levi, Ph.D., Council on Foreign Relations: “The New York Times’ war on shale gas continues”: “I hate to say it, but on the whole, both pieces are of pretty poor quality. That’s a shame, because both – particularly the first one – had the potential to raise some important issues for debate. The first bit of context worth noting is that the story relies heavily on geologists’ concerns about shale gas economics. That should be a red flag. There are very few emails from industry accountants or economists in the story. The Times descriptions of the emails (not just in the article, but in the document database) also betray a serious lack of understanding of the industry. (Council on Foreign Relations, 6/27/11)

PSU geologist Terry Engelder: “The Reporters Didn’t Talk to Me in Person”: “One of the Times stories quotes Terry Engelder, a professor of geosciences at Pennsylvania State University. Engelder told Platts that the newspaper took his quotations from an email he wrote on shale economics, and that email did not express the full range of his views on the subject.’The reporters didn’t talk to me in person,’ Engelder said, adding that his email had ‘a lot of nuance in it. The reporters could have learned something from the nuance.’” (Platts’ Gas Daily by Jim Magill, 6/28/11)

Melanie Kenderdine, executive director of MIT’s Energy Initiative: “Her group currently projects that roughly 500 tcf of shale gas are recoverable at costs of less than $7/thousand cubic feet”: “Costs vary greatly from one geological formation to another and even within the same geological formation, she said. “Even with uncertainty, there is a substantial amount of shale gas in the U.S. at relatively affordable costs,” she said.” (The Oklahoman, 6/28/11)

Leading Global Energy Consultancy, IHS CERA: “This article does not reflect the IHS position on shale gas.” … “E-mail messages referenced in the article were written in 2008 and 2009, early in the understanding of the performance metrics for shale gas, and the information they contain has been proven completely wrong by events. Unconventional technologies and resources have moved with great speed. There is much more information about the performance and potential of shale resources available today than in the past. Shale gas supplies have built up very rapidly and now account for 25 percent of total US gas supply, as costs have come down dramatically and experience and knowledge have progressed. If there has been any surprise about shale gas, it has been the speed at which its output has grown.” (IHS CERA Alert, 6/27/11)

William Featherston, Managing Director, UBS: NYT Claims “Overstated and Misleading”: “Amongst publications written by research analysts, the article included findings made in a study done by Art Berman, who alleged that shale producers overstated recoverable resources per well. We do not consider research from Mr. Berman new as he has been crusading against data supporting vast shale gas resources for years, despite supply and productivity continuing to exceed expectations. … We believe the allegations and inferences made in the NYT article were exaggerated and offer no specific or credible source and context. We believe the article ignored the substantial growth in proved reserves and production as verified by independent reservoir engineers, Energy Information Administration data, and numerous independent organizations outlined below. Moreover, the article does not address how the rise of shale gas reversed the trend of last decade’s sharply rising natural gas price, sending gas prices plummeting in 2008-10 under the weight of much greater than expected production growth . . . despite a lower than expected rig count.” (NYT Shale Gas Allegations Seem Exaggerated, 6/27/11)

JP Morgan note to investors: “We fail to see how [The Times] article breaks new ground.” From the note: “An article published in the New York Times this past Sunday is causing a buzz in the natural gas community, as well as on Wall Street in general. … We fail to see how this or other articles on the same topic are breaking any new ground, as the ultimate 5,000 recovery from shale wells and initial decline rates have long been the point of contention between those evaluating shale producers’ equity and those defending the entire business of unconventional production. … We believe that with current production rates, cost reductions from increased efficiencies in extraction methodologies (i.e. horizontal drilling and hydraulic fracturing) and joint venture contracts with international companies that have carried up to 75% of costs for domestic producers in many of these shale plays in some cases, increased focus on liquids-rich plays, and vigilant hedging (seen during any price spike in the intermediate and deferred tenors) have made drilling for natural gas economic for many of these producers at the current time. And while decline rates will become increasingly apparent as time goes on, as long as we continue to find new points of extraction of gas (i.e. the Utica Shale, located underneath the Marcellus Shale), the US natural gas market will likely remain in an oversupplied state until demand can meet this production.”

Tudor, Pickering, Holt & Co.: “Disregard this as an unsubstantiated NYT hit piece” … Saying shale gas not easy/cheap to extract is cheap shot with no back up info and rehashing discredited arguments. But calling it Enron? Better back it up with more than this article does. Remember, Barnett shale production is currently at record levels, even with rig count one-half of peak levels. Shale gas is real. Disregard this as an unsubstantiated NYT hit piece. … Production doesn’t lie…natural gas production from the Barnett is now higher (at ~5.6 Bcf/d) than it was in 2008 (previous peak was ~5.3 Bcf/d in 2008) despite rig count being more than cut in half. If wells are declining faster than expected, the Barnett would not be at record production with reduced rig count. … The NYT has been consistent in their distaste for shale gas from their fear mongering about hydraulic fracture contamination of ground water (no basis) to concerns about water disposal in the Marcellus (an issue identified 3 yrs ago and is being addressed). We are sure the industry is touched by the NYT’s newfound concern for well economics and industry profitability. … “Actions by a myriad of companies, hundreds of executives and thousands of employees indicate the industry believes in both the short?term and long?term viability of shales. They are speaking with their capital budgets, their bonus pool, their acquisition budgets…not with their keyboards and chatroom postings. If there is any conspiracy or hidden agenda, it’s amongst those writing articles, not drilling gas shale.” (Energy Thoughts, 6/27, 6/28)

Darren Horowitz, Managing Director, Raymond James: “I think the article is very misleading”: “Long story short, Gary, I think the article was very misleading. I think a lot of what was in the article was unfounded. And I would really highlight the following three points: First and foremost, about 25 percent of U.S. natural gas production comes from the big shales, really the big five shale plays at this point. A lot of these wells have been online 20 or 30 years – some 7,000 or 8,000 – so this has been around for a long time. Second key point: This is a multi-billion-dollar investment and extrapolating the natural gas curve and the productive landscape. And this is not just a lot of the larger, independent companies – this is also from a global perspective the big integrateds; ExxonMobil, Shell, BP have spent multiple billions of dollars and also have the best geoscientists in the world looking at U.S. natural gas. Third and final point: This is an industry that follows best accounting practices, which are regulated by the SEC. Quite frankly, in our opinion, shale gas production is going to be a game-changer for the U.S.” (Horowitz comments on CNBC, 6/27/11)

Financial analyst with degree in Petroleum Engineering from Stanford: “The NYT suggests that maybe there isn’t as much natural gas as the industry says. Indeed, some wells will be less economic than others, driven both by rock characteristics and gas prices, so no, at $4 per mmbtu there isn’t as much gas as has been targeted by wells drilled assuming $6 long-term gas prices, a huge difference. But the fact is, shale wells are quite productive and applicable to gigantic areas that we wouldn’t have thought of drilling ten years ago. Challenged by lower prices, gas producers are innovating to reduce costs and improve recoveries, the way learning curve behaviors would predict. … Typically slower in making big moves, domestic majors including ExxonMobil and Chevron have also embraced gas and oil shales development in the U.S. Along with many of the top independent producers in the U.S., these are excellent technology companies with prudent risk management, and part of why 25% of today’s natural gas production comes from shales, and the driver of the large increase in U.S. gas production since 2005.” (Duane Grubert, Susquehanna Financial Group, 6/28/11)

Ken Cohen, Vice President of Public and Government Affairs, ExxonMobil: “The New York Times and Natural Gas: Don’t Facts Matter Any More?” … You really have to wonder why the New York Times is campaigning against cleaner-burning, domestically produced natural gas. In the latest installment, the Times questions the value of our country’s vast shale gas resources with little more than anonymous sourcing, two-year-old emails and analysis unsupported by fact. Ironically, author Ian Urbina did not call ExxonMobil, the largest natural gas producer in the United States, for comment. … [O]ur net unit development cost in the [Barnett] shale play is about $1 per thousand cubic feet equivalent, a 50 percent improvement in the last five years, which is yielding attractive drilling program returns. … It is unfortunate that the words ‘rigorous’ and ‘methodical’ can’t be applied to the New York Times’ recent articles. Understanding the facts surrounding the potential for development of our nation’s energy resources is every American’s business. Our economic recovery, environmental progress and energy security depends in part on a sound, stable and sensible policy and regulatory framework informed by honest, fact-filled debate. The Times’ current campaign undermines this debate and is a disservice to its readers. (ExxonMobil’s Perspectives blog, 6/27/11)

Aubrey McClendon, CEO, Chesapeake Energy: “The Times story was obviously motivated by an anti-natural gas agenda”: “It is telling that the reporter chose not to interview a single reliable source and instead selectively quoted emails from unnamed sources or well-known industry critics dating back to as early as 2007 to invent a series of inaccurate and misleading allegations. If the Times was interested in reporting the facts and advancing the debate about the prospective benefits of natural gas usage to energy consumers, it could easily have contacted respected independent reservoir evaluation and consulting firms that annually provide reserve certifications to the U.S. Securities and Exchange Commission … It is also absurd to conclude that shale gas wells are underperforming while America is awash in natural gas and benefiting from natural gas prices less than half of what they averaged in 2008. I also note that Chesapeake and other shale gas producers are routinely beating natural gas production forecasts. In fact, in 2009, thanks to shale gas, the U.S. passed Russia as the largest natural gas producer in the world. Today shale gas production represents approximately 25% of total U.S. natural gas production. How can shale gas wells be underperforming if shale gas companies are beating their production forecasts, natural gas prices remain low and U.S. natural gas demand is at a record high?” (Chesapeake Energy, 6/27/11)

Jeff Ventura, COO, Range Resources: “You Look at the Barnett … You Have 20 Years of History”: “The natural gas industry on Monday slammed New York Times stories on the future of the fossil fuel. On Sunday and yesterday, the Times published stories critical of how production and reserves are reported, quoting analysts who call shale gas a “Ponzi scheme” with tactics similar to Enron’s. Jeff Ventura, COO of Range Resources Corp, tells Gas Business Briefing, “You look at the Barnett play and vertical wells; you have 20 years of history. Even with horizontal wells, you have eight to 10 years of history. So you have plenty of history, plenty of wells concerning production and reserves.” John Pinkerton, Range’s CEO, was more blunt, calling the stories “absolutely ridiculous.” “You have to look at the science,” Pinkerton tells GBB. (Gas Business Briefing, 6/27/11)

Don Briggs, President, Louisiana Oil & Gas Association (LOGA): “New York Times Misses the Mark on Shale Gas Story”: “The New York Times reporter points to a decrease in production in the Barnett Shale region. However, production and rig activity reports do not seem to support this claim. Today, the Barnett Shale produces 5.6 billion cubic feet of gas per day. Two years ago, the Barnett was producing 5.3 billion cubic feet per day. With over half of the rigs that were in operation a year ago now gone, the statement that production is declining is simply not true. The assertion that the Haynesville Shale has not lived up to its expectations is a bold and outlandish statement. … The article also makes claim that the hydraulic fracturing process is a threat to the environment. Contrary to the reporter’s claims, hydraulic fracturing is essential to the development and production of shale gas resources. The process is well-regulated by the states and conducted safely, with a proven track record. … It is fair to say that the New York Times missed the mark with this story. (LOGA.la, 6/27/11)

Kyle Isakower, vice president of regulatory and economic policy, American Petroleum Institute (API): Companies “don’t invest billions of dollars in non- profitable ventures. The resource estimates that have been used come from the government, and I can’t see any reason why EIA would have any incentive to not give their very best estimate based on the technical information that’s available to them.” (Bloomberg, 6/27/11)

Ed Ireland, executive director of the Barnett Shale Energy Education Council (BSEEC): “In 2008 ‘there were 197 rigs running, and now there are about 70,’ Ireland said. Yet at the end of 2010, Barnett Shale production ‘was right at 5.1 Bcf/d’ and has been on the increase this year. ‘We are seeing more and more monster wells, wells that are just orders of magnitude larger than previous wells,’ Ireland said. While the average Barnett well typically sees initial production of 4,000 Mcf/d to 5,000 Mcf/d, in recent months several wells in the play have recorded initial production of 12,000 Mcf/d to 15,000 Mcf/d, he said.” (as quoted in Platts’ Gas Daily by Jim Magill, 6/28/11)

EID: “We were as surprised as anyone to see how concerned the Times is about the profitability of our members”: “Several critics of the Times’ reporting pointed out that much the research was based on the work of Art Berman, a geologist who has devoted part of his career to trying to disprove the economic viability of shale gas. Many industry insiders strongly disagree with Berman’s theories; Berman did not return Platts’ calls for comment ‘We were as surprised as anyone to see how concerned the Times is about the profitability of our members,’ quipped Chris Tucker, a spokesman for Energy in Depth. ‘But we’re happy to report that shale gas can be developed economically. In support of that contention, we’ve got actual data. Unfortunately, all the Times has are Art Berman’s old emails.’” (as quoted in Platts’ Gas Daily by Jim Magill, 6/28/11)

Regina Hopper, President and CEO of America’s Natural Gas Alliance (ANGA): “Deeply Flawed, Inaccurate and Misleading”: “Recent New York Times reporting on natural gas has been deeply flawed, inaccurate and misleading. The paper has apparently chosen to ignore important facts that would have presented Times’ readers with a more balanced perspective. The Times’ articles have used out-of-context quotes by people the reporter appears never to have interviewed, have quoted unnamed sources with no account of their expertise or potential bias, and have disregarded specific and substantive information supplied to the reporter that ran counter to his story line. This selective use of facts implies a clear bias and continues the reporter’s demonstrated pattern of telling one-sided stories without providing readers with any sense of context, nuance or balance. (ANGA release, 6/28/11)

“Natural gas industry strikes back at New York Times article”: “Weekend New York Times articles that questioned whether the productivity and economic potential of shale gas has been overhyped by industry officials created a furor Monday among oil and gas executives as well as academic officials who study the industry. “Are you telling me some reporter at The New York Times knows more about the natural gas business than 25 companies and their engineers? I don’t think so,” said Texas billionaire T. Boone Pickens, who has amassed much of his fortune through his ability to analyze and predict developments and price movements in the oil and gas industry. (The Oklahoman, 6/28/11)

Christopher Helman, Forbes.com: “New York Times Is All Hot Air On Shale Gas”:Most of [the NYT’s] argument is absurd on its face. The United States is currently producing more natural gas than at any time in history, on track for 27 trillion cubic feet this year. This is thanks in large part to the breakthroughs in drilling shale formations. And development of these shales has only just begun. … I don’t always see eye-to-eye with [CHK’s Aubrey] McClendon, but he’s dead on with this response: “Today gas shale production represents 25% of US natural gas production, if it were underperforming, how come gas prices are so low when US gas demand is at a record high?” … As for the criticism of the million-plus gallons of water required to frack a well–that’s nothing compared with the estimated 476 billion gallons a year used to irrigate golf courses. That’s about 150 million gallons per course per year. What’s more important to you? Green fairways or affordable electricity?” (Forbes.com, 6/27/11)

Jim Cramer, CNBC.com: NYT hit piece “totally untrue and completely outrageous”:“It is hard for me to grasp. It is suggested by Urbina — OK, Urbina’s unnamed sources — that it is in the interests of the oil companies to boost reserves to make them more attractive to Wall Streeters. That’s cool, except that the biggest buyers have been state-owned companies. The Chinese have done several huge deals with U.S. shale gas companies, including a gigantic deal, $2.2 billion, to buy one-third of Chesapeake’s Eagle Ford holdings. Do the Chinese want to mark up their reserves? Why bother? Nor would the Korean state run company. Plus, I don’t think that Statoil (STO) , Total (TOT) and Enersis (ENI) , big companies closely associated with their own nations’ governments, have that much interest in hyping their reserves. Why would Mitsui, a trading company, want to inflate its reserves? Or BHP Billiton (BHP) , the mineral company? Makes no sense. They want long-lived assets, and they want the U.S. technology. … I get Gasland. I get this reporter. They are telling good stories, both. But we need balance and we need realism about how to cleaner, domestic energy to be used more than foreign, dirty energy.” (Jim Cramer, TheStreet.com, 6/27/11)

No Future for Shale Gas: Voice of Russia. “Even though the shale gas story was very successful in the United States, it has no big future at that particular moment, because the shale gas production involves physic and ecological risks…” “And the second issue is that the production itself is very expensive at the moment compared to the production of natural gas, it costs times more. When you produce natural gas, you drill a well, and you use it during 5, 7, 10 years, however if you start to drill and produce shale gas, this well that you drilled gets depleted very fast, roughly within a year or maybe a year and a half. You have to drill a lot of wells to produce a lot of gas, and again, every single well costs a lot.” (The Voice of Russia, 6/27/11)

Enlightening responses to the NY Times hit piece on shale gas. The Times pieces are deliberate distortions of reality - and this comes from an onslaught of reactions from all those involved in shale gas from government, academia, industry and the financial world.

Where does the Times deception stem from?

Are they run by green extremists who don't want to see anymore fossil fuels being developed - so they propagandize to that purpose? Are they really afraid the price of natural gas will fall and stay at historic lows, postponing the use of very expensive renewable energy including solar and wind? Do they care that the poor will now heat their homes at half the cost of previous years?

Do they hate America and would rather see us beholden to Middle Eastern terrorist states as a cosmic payback for our supposed historical crimes - plus a bonus redistribution of our wealth? (Obama-Rev Wright Model)

Do they genuinely think that shale gas is a gigantic ponzi scheme, and comparisons to Enron are fully justified? The production numbers do not jive with their propaganda? If it was a falsehood, the prices would be going higher? Is that part of the Times conspiracy theory?

Also - they had used quotes from government officials, redacted emails, and one turned out to be an intern that the Times had eluded to the man as a high official. This reporting is shoddy and disinformative. Ian Urbina has some questions to answer.

...well-known opponents of the industry, who argue that shale is too expensive to produce and will therefore disappoint investors

Since when did they ever give a damn about 'investors'? If, in fact, it is 'too expensive' the market will decide, not some lazy good for nothing environazi living in his mother's basement. And when will social programs that have failed time and time again, trillions of dollars down the toilet, be deemed 'too expensive'?...................

The Times is, has been, and always will be a liberal hack publication and as such has little use for facts that run contrary to the liberal narrative . . . hydrocarbons bad, profit bad, conservatism evil, etc., etc.

Why is the Times misrepresenting shale gas E&P? Because they are a commie rag that lies consistently and without shame. Why? Because they are liberal.

This story surprises me about as much as the sun rising in the morning.

the dems are de-industrializing this country to rid us of the what they call evil capitalism.

without oil, gas, water etc our country would return to a primitive state.

libtards worship primitivism a la rousseau.

1 - Are they run by green extremists 2- Do they hate America 3- Do they genuinely think that shale gas is a gigantic ponzi scheme

I'm going with a 60%/40% split between 1 & 2. Actually members of 1 are simply an important subset of 1.

What a remarkable set of rebuttals to what should be a major embarassment to even a small town free weekly.

Shaleionaires :)

In terms of energy independence, SW PA is the Saudi Arabia of natural gas w/our Marcellus shale reserves.

Forget the stupid electric cars; instead money should be fuding CNG as auto fuel. Again, Western PA, NY, parts of MD, OH and most of WVA are abundantly ‘rich’ and the US could (and should be) energy independent (which profoundly upsets the NWOists).

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