America's vast shale oil and natural gas reserves are predicted to soon meet our energy needs, propel it to energy independence and even transform it into a major energy exporter — the Saudi Arabia of shale.
But those rosy predictions are all hype, according to Arthur Berman, an oil analyst with Labyrinth Consulting Services.
The amount of energy that can be produced from shale gas and oil is greatly overestimated, the geologist argues. Reserves thought to be in the ground do not equal new energy supply. There's typically a huge gap between estimates of recoverable shale energy and what is actually recovered.
Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.
The shale gas energy boom has contributed relatively little to overall consumption, according to Berman, who says there's a gap of 9 million gallons a day between U.S. oil consumption and oil production.
Shale wells typically don't last for more than a couple years, and they're very expensive to drill, he says.
For instance, production in the Bakken shale in North Dakota has increased to 573,000 barrels a day from 4,874 wells, according to his presentation at an industry conference. That sounds good, but with a 38 percent annual decline rate, the wells don't keep producing for long. In fact, very little production comes from wells more than a few years old.
And drilling didn't get any more efficient over time, he says. Sometimes it takes more and more wells to get the same amount of oil.
“Shale plays depend on constant drilling, and most current production is from wells drilled yesterday,” Berman stated. “The decline rates are breath-taking.”
Therefore, he said, “It is unlikely that oil from shale plays will result in energy independence.”
Not surprisingly, oil companies criticize Berman, who has a record of attacking forecasts of shale oil and gas production.
Berman has been proven wrong in the past, oil companies say. For instance, Berman once questioned if the Haynesville field in the South would be ever be commercially viable, but it became the top-producing natural gas field in the country, according to Chesapeake Energy.
“For years, Mr. Berman has been underestimating natural gas reserves and the promise presented by the industry,” the company stated.
“The reality of at least 100 years’ worth of shale gas abundance has been supported by virtually every credible third-party expert.”
Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.
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