Former Shale Gas CEO Says Fracking Revolution Has Been ‘A Disaster’ For Drillers, Investors | DeSmogBlog
He noted that the at-the-wellhead price of natural gas in the Marcellus region was around $8/MMBtu back in 2008, and had plunged to less than $2/MMBtu today.
That price plunge was caused by a massive glut of shale gas production as drillers raced first to hold acreage by producing gas, then competed to see who could make individual wells produce at higher rates by using tactics like drilling longer horizontal well bores and experimenting with the proppants used during fracking.
“And at $2 even the mighty Marcellus does not make economic sense,” he said, later clarifying that that included both “dry” gas wells, which produce mostly methane, and “wet” gas wells, which also produce the natural gas liquids (NGLs) that can be used by the petrochemical industry as raw materials for making plastic and chemicals. “Wet gas is better, but nobody’s making money at $2 gas.”
“Over the past year or so, most of the producers have shifted away from the phenomenal growth rates of the past to more moderate growth projections,” Schlotterbeck said. “The market is clearly telling them that they haven’t slowed down enough.”
“Now I tell you all this because I think it has long-term implications for the end users of natural gas. This situation cannot continue indefinitely,” Schlotterbeck continued. “There will be a reckoning and the only questions is whether it happens in a controlled manner or whether it comes as an unexpected shock to the system.”