Industry didn’t waste any time with a counter-punch.
Aubrey McClendon, CEO of Chesapeake Energy, wrote a letter to company employees over the weekend refuting the articles’ claims and saying it is “… the handiwork of the same group of environmental activists who have been the driving force behind the NYT’s ongoing series of negative articles about the use of fracking …”
John Hanger, a Pennsylvania attorney with some deep energy background provides an impassioned foil to the New York Times pieces, pointing out good things about shale gas the stories don’t get into.
Nick Grealy of No Hot Air says the article is not the Wiki Leaks of shale that it purports to be.
The analysts at investment bank Tudor Pickering & Holt say the stories cherry pick information from “peripheral industry observers (not shale gas experts)”:
“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 (see below) 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.“
Kyle Isakower, the American Petroleum Institute’s vice president of regulatory and economic policy, said in a conference call Monday the organization was “doing some fact checking ourselves.”
“Our members are very astute business people they don’t invest billions of dollars in non-profitable ventures,” Isakower said. “The resource estimates that have been used come from the government. I can’t see any reason that EIA would not have any incentive to not give their very best estimate.”
Not surprisingly, the piece is stirring other kinds of reaction.
Congressman Maurice Hinchey (D-NY) called for the Securities and Exchange Commission to look into gas producers’ accounting”
“We already knew shale gas drillers were misleading the public about hydrofracking’s environmental risks. Now we are learning that these companies may be cooking the books and using Enron-like tactics to paint a rosy and unrealistic picture for investors, policymakers and local communities.”
Like clockwork, U.S. Rep. Ed Markey (D-Mass.) has also weighed in on the NYT series. In a letter to Energy Information Administrator Richard Newell, Markey asked that the methodology behind the ploclamations of shale gas reserves be reviewed:
“It’s one thing to see the prospects for American natural gas through rose-colored glasses. It’s another thing for the natural gas industry and regulators to put blinders on the American people,. “We don’t need near-sighted industry optimism. Instead, let’s discover the reality of our domestic natural gas reserves, and plan our energy future accordingly.”
This notion that the economics of many gas wells is questionable has been around for a while. For some it makes for some inside baseball kind of humor.
And there has been a bit of a froth forming on the deal front for shale acreage acquisitions and joint ventures. Marathon Oil recently dropped a heck of a lot of money in the Eagle Ford shale, for prices that come somewhere around $21,000 per acre.
But having The Times write about it in such a way certainly will give those already opposed to natural gas drilling for environment reasons another hook to hang their arguments on — even if these same people neither understand a income statement or have ever read a stock prospectus.
Is industry going to respond to these claims the same way it reacted to the first mainstream challenges to the environmental safety of fracking — namely by saying there are no risks and environmentalists were just creating problems where there were none?
Judging from the weekend response, it appears that’s the case.
It also appears that the rebuttal will be one aiming at discrediting individuals tied to the stories (as Hanger did above by denegrating previous stories by the reporter and as it appears may have happened in the past when well-known Houston shale skeptic Art Berman wrote some columns in World Oil).
The initial attack mode on the environmental issue doesn’t appear to have worked too well, at least from the standpoint of winning the hearts and minds of the vast majority of Americans and lawmakers, however.
True, the shale boom is continuing, but opposition to the practice, particularly in the Northeast, is growing.
Unless companies come up with a different tactic (something akin to agreeing to frac fluid disclosure laws) fence-sitters or those new to the debate may prove difficult to win over.