By RUSSELL GOLD
production will accelerate over the next three decades, new
research indicates, providing the strongest evidence yet that
the energy boom remaking America will last for a
The most exhaustive study to date of a key natural-gas field
in Texas, combined with related research under way elsewhere,
shows that US shale-rock formations will provide a growing
source of moderately priced natural gas through 2040, and
decline only slowly after that. A report on the Texas field, to
be released Thursday, was reviewed by The Wall Street
The research provides substantial evidence that there are
large quantities of gas available that can be drilled
profitably at a market price of $4 per million British thermal
units, a relatively small increase from the current price of
The study, funded by the nonpartisan Alfred P. Sloan
Foundation and performed by the University of Texas, examined
15,000 wells drilled in the Barnett Shale formation in northern
Texas, mostly over the past decade. It is among the first to
examine the geology
and economics of shale drilling, a relatively recent
development made possible by hydraulic fracturing, or fracking,
in which a mixture of water, sand and chemicals is pumped at
high pressure into rocks to release gas.
Looking at data from actual wells rather than relying on
estimates and extrapolations, the study broadly confirms
conclusions by the energy industry and the US government, which
in December forecast increasing gas production.
"We are looking at multi, multi decades of growth," said
Scott Tinker, director of the Bureau of Economic Geology at the
university and a leader of the study.
The shale-gas boom has led to a reorientation of the US
energy economy. This has led to a steep decline in coal
consumption for electric generation and prompted companies to
announce or consider multibillion-dollar investments to export
gas and build chemical, steel and fertilizer plants that will
consume enormous quantities of gas.
If these investments go forward, but gas production were to
slip, higher prices for the fuel -- which now accounts for 30%
of electricity production and heats half of US homes -- are
Art Berman, a petroleum geologist and consultant who has
been a leading critic of what he says are overly optimistic projections of shale production,
said the research "is probably the most comprehensive study of
the Barnett shale that will ever be done." But he said it
bolsters his view that only a quarter of Barnett wells generate
an economic return. The question for the industry, he said, is,
"why didn't they identify the sweet spots initially, before
spending $40 billion on land and wells?"
The study does show that many of the wells drilled in the
Barnett have been poor performers. And while the gas-bearing
rock covers 8,000 square miles in and around Fort Worth, Texas,
the study suggests it can be economically developed in an area
only half that size. Some of the energy companies that spent
enormous sums to lease thousands of acres in far-flung parts of
the Barnett may be sitting on acreage of little value.
Mr. Tinker agrees that the study shows the Barnett is highly
variable, with some areas producing enough gas to make the
wells profitable and other areas generating duds.
Even so, the study concludes that 44 trillion cubic feet of
natural gas will be recovered from the Barnett--more than three
times what has been produced so far and about two year's worth
of US consumption at current rates.
The university also is examining shale formations in
Pennsylvania, Louisiana and Arkansas, work that has led
investigators to conclude that US natural gas production won't
plateau until 2040. Reports on these are expected to be
released next year.
One reason there has been a dispute over shale production is
that much of the research, even inside universities, has been
funded by groups with either pro- or anti- energy-development
agendas, with many of the latter having strong views about the
environmental impact of fracking on
the air and groundwater.
The University of Texas study was funded by the Sloan
Foundation of New York, which focuses on science and technology research. The co-lead
investigator, Mr. Tinker, is paid to serve on the technical
advisory boards of BP and two smaller energy companies. He also
receives speaking fees a few times a year for appearances
before industry groups and private companies.
The Bureau of Economic Geology receives research funding
from government, industry and the university. The other lead
investigator, Svetlana Ikonnikova, didn't disclose any
potential conflicts to the university.
The Sloan Foundation said it looked into whether the
researchers were unduly influenced and was satisfied that
"potential conflicts of interest or sources of bias have not
influenced the research."
Scott Anderson, who researches shale development for the Environmental Defense Fund, which is
working on lowering the environmental impact of gas drilling,
reviewed some of the preliminary results. He praised the report
as "robust" and "sophisticated."
To get at all this gas will require tens of thousands of new
wells, spread throughout rural and some urban parts of the
country. Even in the Barnett formation, which has been drilled
intensively for a decade, there still may be room for 13,000
more wells, said Mr. Tinker.
The giant Marcellus Shale in Pennsylvania and neighboring
states likely contains enough gas to support the drilling of
tens of thousands more wells. This likely will heighten growing
concerns about fracking, and calls for increased government
oversight of the practice.
"There are health risks that we don't have our arms around
and that's a problem, " said Paul Gallay, president of
Riverkeeper, a New York state environmental group critical of
fracking. "We're out ahead of our science and we need to be
concerned about that."
Dow Jones Newswires