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Related: About this forumCheap shale gas bubble 'will burst within 2-4 years'
The bubble is a result of sweet spots running out of drilling locations at which time drilling must move to progressively lower quality portions of the play, requiring ever more wells and ever higher prices to justify them, he said.
With the exception of the very best sweet spots, shale was not very profitable in Hughes view. His research found that large returns in the industry came from selling assets acquired at low prices early in the boom, and through joint ventures, and mergers and acquisitions.
The US shale boom then grew so fast because of held-by-production lease commitments - sold at values of up to $25,000 an acre - which amounted to an injunction: Drill or you lose your investment, Hughes argued.
After wells are drilled they are put on production to generate cash flow and maintain stock prices, even though they are unlikely to turn a profit, he said. Some analysts estimate this production decline at between 60%-90%.
http://www.euractiv.com/energy/expert-cheap-shale-gas-bubble-bu-news-519931
With the exception of the very best sweet spots, shale was not very profitable in Hughes view. His research found that large returns in the industry came from selling assets acquired at low prices early in the boom, and through joint ventures, and mergers and acquisitions.
The US shale boom then grew so fast because of held-by-production lease commitments - sold at values of up to $25,000 an acre - which amounted to an injunction: Drill or you lose your investment, Hughes argued.
After wells are drilled they are put on production to generate cash flow and maintain stock prices, even though they are unlikely to turn a profit, he said. Some analysts estimate this production decline at between 60%-90%.
http://www.euractiv.com/energy/expert-cheap-shale-gas-bubble-bu-news-519931
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Cheap shale gas bubble 'will burst within 2-4 years' (Original Post)
phantom power
May 2013
OP
CanonRay
(14,104 posts)1. This is what James Kunstler has been saying all along
cprise
(8,445 posts)2. Will be interesting to see if this plays out. n/t
NickB79
(19,253 posts)3. We can only hope this is true. nt
Champion Jack
(5,378 posts)4. +1,000
marions ghost
(19,841 posts)5. Let's hope so
--so misguided & stupid.