The Next Ponzi Bubble to Burst,,,,,,

[benld74]

Natural gas companies have been placing enormous bets on the wells they are drilling, saying they will deliver big profits and provide a vast new source of energy for the United States.

In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles.

“Money is pouring in” from investors even though shale gas is “inherently unprofitable,” an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February e-mail. “Reminds you of dot-coms.”

“The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work,” an analyst from IHS Drilling Data, an energy research company, wrote in an e-mail on Aug. 28, 2009
The data show that while there are some very active wells, they are often surrounded by vast zones of less-productive wells that in some cases cost more to drill and operate than the gas they produce is worth. Also, the amount of gas produced by many of the successful wells is falling much faster than initially predicted by energy companies, making it more difficult for them to turn a profit over the long run.

If the industry does not live up to expectations, the impact will be felt widely. Federal and state lawmakers are considering drastically increasing subsidies for the natural gas business in the hope that it will provide low-cost energy for decades to come.

But if natural gas ultimately proves more expensive to extract from the ground than has been predicted, landowners, investors and lenders could see their investments falter, while consumers will pay a price in higher electricity and home heating bills.

There are implications for the environment, too. The technology used to get gas flowing out of the ground — called hydraulic fracturing, or hydrofracking — can require over a million gallons of water per well, and some of that water must be disposed of because it becomes contaminated by the process. If shale gas wells fade faster than expected, energy companies will have to drill more wells or hydrofrack them more often, resulting in more toxic waste.



http://www.nytimes.com/2011/06/26/us/26gas.html

[dkf]

1. Why invest money in a depleting resource when you can use it to invest in a never ending one?

It doesn't make any sense at all.

[Vincardog]

2. Gee who would a guessed it? ANOTHER Fossil fuel requiring MASSIVE contamination and ready to receive

Massive subsides from our Federal and Local Governments.

[RKP5637]

3. The gas company ads here are non-ending, like they were the saviors of

the universe riding in ... I found this article interesting as I've been remarking for some time now WTF is going on. I'm always suspicious of those that advertise and promote IMO way way way too much.

[Wounded Bear]

4. 2011 and we're still using stone age technology....

Face it, in spite of all the improvements over the centuries, we're still burning things to extract the energy in it. That is stone age technology.

:shrug:

[RKP5637]

5. Well said!!! n/t

[Cresent City Kid]

6. And the ground water will be contaminated

whether they find gas or not.