John Hanger reports the shale gas news too good to print in the New York Times

Michael Giberson

John Hanger is former head of the Pennsylvania Department of Environmental Protection and former member of the Pennsylvania Public Utility Commission, among other public positions. He was founding president of the group Citizens for Pennsylvania’s Future (PennFuture) which carefully tracked energy and environmental issues in the state. Hanger knows a few things about energy and the environment.

He also knows a cheap, sensationalist, newspaper smear job when he sees one, and on Sunday he read the New York Times article highlighting various shale gas skeptics claims. On his blog Facts of the Day Hanger shot back:

Could anyone imagine more sensationalistic narratives than Radiation, Ponzi, and Enron?

Consistent with this reporter’s method, today’s article uses often anonymous statements to paint a sensational narrative and leaves out or underplays critical information that is inconvenient to establishing the credibility of the dominant anti-gas narrative.

For example, the reader will not learn the following:

1. That 2010 natural gas production in the United States reached the highest levels since 1973 and neared record levels.  Nor will the reader be told that the US produces more natural gas than any nation.

4. The reader will not be told that actual large shale gas production has shattered the historic pricing link between oil and gas and now oil prices have gone up while gas prices have gone down

5. The reader will not be told that, while oil prices have spiked up due to supply straining to meet demand, actual shale gas production has caused gas prices to decline.

6. The reader will be told that the alleged shale ponzi scheme could harm consumers, but the reader will not learn that actual shale gas production so far has saved a consumer heating with natural gas about $5 to $8 per thousand cubic feet or conservatively $500 per year.

7. The reader will again be warned that consumers could be hurt by the alleged ponzi scheme, but the reader will also not be told that actual shale gas production has lowered the wholesale price of electricity about 5 cents per kilowatt-hour and saved a residential electric consumer using 10,000 kilowatt-hours per year another $500 per year.

9. All the reader is told about the Marcellus is that a Penn State professor reports well production is meeting or exceeding expectations in the Marcellus.  No charts or bar graphs.  No data. Nothing. Why? Very inconvenient facts for the ponzi, enron narrative is the answer.

12. The reader is told that improvements in shale gas drilling are lowering costs but no details. The details are impressive and in a separate posting we will discuss them. Again getting into this detail would be inconvenient to the ponzi, enron narrative.

And who are among the victims of the alleged Ponzi scheme?  Exxon, Chevron, Shell, Statoil who all have made substantial investments in the Marcellus shale plays.  They could be wrong.  They could be victims of a crime.  But they are incredibly sophisticated companies that engage in massive due diligence before making big investments.

Hanger continues his post with his view of current industry conditions. Following his Sunday riposte, Hanger has been furiously blogging the shale gas news “not fit to print” in the New York Times because it would undermine their sensationalist tale-telling:

This morning Hanger appeared with the New York Times writer, Ian Urbina, and others on the Diane Rhehm show, a public radio show broadcast in Washington, DC. Podcast available here.

Additional reactions to the New York Times articles documenting shale gas skepticism; More on fracking

Michael Giberson

As a follow-on to my post on the recent New York Times articles on shale gas skepticism, here’s a collection of other reactions:

  1. The most thoughtful response appears to come from Michael Levi at the Council on Foreign Relations, Is Shale Gas a Ponzi Scheme?: “The New York Times’ war on shale gas continues with two more big stories by Ian Urbina. … Both articles are based primarily on piles of emails, the first from industry sources and the second from EIA staff. I hate to say it, but on the whole, both pieces are of pretty poor quality. That’s a shame, because both – particularly the first one – had the potential to raise some important issues for debate.” Levi continues, “I’m going to focus on the Sunday story here, because it’s much more interesting, and because some of its sources raise some genuinely important issues…. In contrast, today’s story is mostly a mix of some frustrated EIA analysts’ complaints and some healthy internal EIA debate taken wildly out of context.”  Levi’s commentary continues with a cogent and somewhat damning analysis of the Times article. Worth reading the whole thing.
  2. Also thoughtful is Michael Lynch posting at MasterResource: “Two specific issues raised in the article are important: the profitability of shale gas wells and their long-term production profiles.” But also, “A careful reading of the articles, however, suggests that it is more smoke than fire.” The post includes addition examination of the relevant issues. The remaining items are not as good as these first two, but for more reactions read on!
  3. Dallas Morning News editorial: “This newspaper isn’t ready to give up on the enormous promise of ‘abundant, clean and cheap’ that natural gas may hold for America’s energy future. Still, a disturbing pattern of unfulfilled claims justifies the public’s increased skepticism.”
  4. Fort Worth Star-Telegram‘s Barnett Shale Blog: “Chesapeake Energy and its high-profile CEO Aubrey McClendon issued a blistering response to a Sunday New York Times article …. Meanwhile, U.S. Rep. Edward Markey, D-Mass., citing a related Times article published Monday, said he wants the U.S. Energy Information Administration to justify ‘optimistic estimates’ for shale-gas production. The Star-Telegram published versions of both articles.”
  5. Chesapeake Energy’s statement: the aforementioned “blistering response.”
  6. Grist writer David Roberts: “If the WSJ editorial board says it, it’s probably wrong.” Chesapeake Energy CEO Aubrey McClendon’s response to the NYT stories, “… is chock full of logically flawed arguments and right-wing talking points. Indeed, it sounds like it could have been written by the WSJ editorial board!” (HT to Roberts for mentioning the great Levi commentary noted above.)
  7. MarketNewsVideo.com reported that some of the companies mentioned in the articles were trading lower on Monday, but the effect appears small. Not mentioned by MarketNewsVideo.com was that some companies mentioned in the articles outperformed the market on Monday. I’d say no real market effect.
  8. The blogger at Early Warning speculates on the two-headed editorial sensibilities at the New York Times, sometimes publishing cheery resource reports that seem to reflect oil company PR claimes and other times publishing highly critical analyses.
  9. At FuturePundit, Randall Parker wonders whether the electric power industry and transportation policies may get burned by big investments predicated on the shale gas boom story, if it turns out the skeptics are right.

[ADDED: At FuelFix, Tom Fowler collects other reactions to the NYT articles, including a sharp blast from John Hanger, a former Pennsylvania regulator.]

While I’m at it, there have been a spate of other fracking related pieces lately, including:

  1. Wall Street Journal, The Facts About Fracking: “The U.S. is in the midst of an energy revolution, and we don’t mean solar panels or wind turbines. A new gusher of natural gas from shale has the potential to transform U.S. energy production—that is, unless politicians, greens and the industry mess it up.”
  2. Kathleen White in the National Review, The Fracus About Fracking (link goes to a summary, full article req. subscription at NR, NR link here): “Human ingenuity, catalyzed by market dynamics, has foiled predictions of irreversible decline in domestic oil and natural-gas resources. Official estimates of the amount of recoverable oil and natural gas have soared.”
  3. The Economist, Fracking Heaven: Other Europeans fear fracking, Poland is steaming ahead: “The rewards could be vast. Shale gas could free the country from its dependence on coal, a dirtier fuel, which currently accounts for 95% of Polish power generation. It could also mean that Poland no longer has to rely on Russia, the neighbourhood bully, for most of its natural gas.”
  4. At the Huffington Post, Kevis Begos reports Sportsmen Alliance for Marcellus Conservation: Fisherman, Hunters Take on Fracking: “A new coalition of outdoors groups is emerging as a potent force in the debate over natural gas drilling. The Sportsmen Alliance for Marcellus Conservation isn’t against the process of fracking for gas, but its members want to make sure the rush to cash in on the valuable resource doesn’t damage streams, forests, and the various creatures that call those places home.”
  5. And for something different, at Cycles, Trends, & Vibrations Mike Aucott offers a preliminary but well documented estimate of the shale gas energy return on energy invested (EROEI) along with a discussion of related issues. The EROEI he comes up with, in the range of 70 – 100, seems shockingly high.

New York Times devotes front page stories to various skeptical remarks made about shale gas resources from over the past few years

Michael Giberson

The New York Times has prominently published two articles highlighting skeptical views about the amount of natural gas that will be produced from shale. On Sunday’s front page industry is featured: “Insiders Sound an Alarm Amid a Natural Gas Rush.” On Monday’s front page, skepticism in the U.S. Department of Energy is revealed: “Behind Veneer, Doubt on Future of Natural Gas.”

Shale gas skepticism has been discussed here at KP before and I’ve made clear that I’m with the optimists. After reading these articles, I’m still with the optimists. I believe that advances in drilling technologies and associated business practices over the last decade have turned vast amounts of natural gas in shale formations into recoverable resources.

I further believe the environmental concerns surrounding hydraulic fracturing are significantly overblown in the press. Hundreds of thousands of wells have been fracked and relatively few have been the object of complaints. The worst potential harms are to the landowner leasing the minerals and nearby neighbors. These parties should monitor well performance and take legal action if necessary to protect their rights. There has been essentially no demonstrated harm to people living more than about 1,000 feet from active well sites, so the rest of us can calm down and enjoy the energy supply.

The New York Times articles appear as if the paper had acquired a large collection of shale gas skeptic email and a smattering of skeptic reports, combed through the material for the potentially damning sound bites, and then interviewed a few people to fill in the gaps. The articles are not (and don’t try to be) balanced assessments of whether the skeptics are right. The articles simply document skepticism voiced by people in industry and at the Energy department over the last several years.

That “last several years” bit is important. If you watch the dates of the various emails and reports cited, you’ll notice the story bounces around from 2009 to 2007 to 2011, etc. No real sense is provided in the article of whether, over the past four years, people in industry are becoming more or less concerned. We don’t know whether 2007’s skeptics remain skeptical or have their concerned addressed. We don’t know if more and more optimists are become skeptical over time.

All we really see in the articles is that it was possible to find skeptics in 2007 and four years later it is still possible to find skeptics. The articles present an impressive collection of shale skeptic sound bites, but not much more.