Presidents, policies, prices and production

Michael Giberson

Robert Rapier posts this chart:

U.S. Oil Production under Bush and Obama [Chart]

Via Robert Rapier and R-Squared Energy Blog

Rapier noted that last week Obama observed the energy production trends:

“Under my administration, domestic oil and natural gas production is up, while imports of foreign oil are down,” Obama added in his statement. “In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security … even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas.”

Notice that Obama doesn’t directly claim credit – he just observes the correlation without asserting causation. (I imagine the phrase “we will continue to look for new ways to partner with the oil and gas industry” generated a few eye rolls among energy producers.)

It takes four to six years, Rapier says, for policies or higher oil prices to bear fruit. So Carter saw a boost in domestic oil production largely due to the Nixon’s push for an Alaskan oil pipeline and the sustained oil price increases that began in 1973. Similarly, he said, current increases in production are largely due to higher prices over the last several years which led companies to green light projects that were sub-marginal at lower prices. (I’d only add to the story a brief nod to technological improvements that are bringing down the cost of drilling and enhancing recovery.)

Does a public good argument justify subsidizing private energy production?

Michael Giberson

Yesterday I disputed the analysis by which the Breakthough Institute wanted to claim credit on behalf of the federal government for the shale gas boom; today I dispute their claimed broader implications for federal energy R&D policy.

Late in their op-ed, the Breakthrough folks shift emphasis from a narrow drilling technology story to a broader examination of energy R&D policy:

Giving the federal government credit where it is due takes nothing away from Mitchell, who was determined and tenacious. But the lesson of the shale gas revolution is that we should not be so quick to judge government investments in energy technology. Between 1978 and 2007, the Energy Department spent $24 billion on fossil energy research. Billions more were spent through the Gas Research Institute and non-conventional gas tax credits. Those investments were widely panned as a failure during the ’80s and early ’90s, when gas was plentiful and cheap.

Whatever one thinks about shale gas today — we worry about its environmental consequences — there’s no denying the extraordinary economic return on taxpayer investments.

This last point is interesting, but undeveloped in the article. If one were to calculate the “economic return on taxpayer investments,” would one have to conclude they were extraordinary?

The essay ultimately wants to argue against claims that the Solyndra episode proves governments can’t pick winners and the shale gas boom proves private enterprise can. Defenders of subsidies for solar power projects claim critics are too focused on a single failure, Solyndra, when reasonably critics should be assessing the overall portfolio of projects supported. It is a fair observation, but it may turn against their conclusion. If we are to consider the return on “taxpayer investments” in energy R&D, we’d reasonably need to survey the full portfolio of energy technology concepts funded by the federal government. We’d have to count the winners and losers both, based on the best current understanding, and again (as yesterday) we’d want to work out some idea of what would have happened in the energy technology space without federal government intervention. Further, we wouldn’t just worry about the environmental consequences, we’d have to compute some estimate of the costs and include it in the analysis.

The article goes nowhere close to presenting the relevant case. Near the end of the article they claim federal credit for “nuclear power, natural gas turbines, solar panels, and wind turbines — pretty much every significant energy technology since World War II.” Hmmm, notice they don’t mention the other big selectively-cited-by-critics failure: the Carter-era launch of an$88 billion effort to make oil from coal. Like the Solyndra and Synfuels Corp. complainers, the Breakthrough Institute wants to draw policy implications for an uncertain future based on a selective invocation of history.

It is further a kind of mistake to invoke Solyndra in an essay all about energy R&D policy. Much recent taxpayer-extracted support for energy shows up in the production tax credit, the investment tax credits, the Section 1603 Treasury grants and miscellaneous other subsidies that are directed to help promote the fortunes of companies building renewable power components or producing power via renewable sources. While some of these companies are pursuing technological developments, these subsidies are not tied to research in any substantial way and yield very little in the way of publicly available research results. Try gathering detailed data on production from a wind farm or solar power plant benefiting from millions of dollars in taxpayer-supported subsidies – their lawyers will likely tell you it is commercially-sensitive information and not publicly available. And by the way it isn’t just renewable energy, the lawyers for subsidized production from low-output oil and gas wells will likely say the same thing.

There is a respectable public good argument that can be made in support of subsidizing at least some research. The “extraordinary economic return” that the Breakthrough Institute wants to claim on behalf of government subsidized research into oil and gas drilling technology is this kind of an argument. If Breakthrough wants to drag Solyndra and the full range of energy production subsidies into this argument, an economist looking for a respectable public good argument has got to ask: where is the public good in subsidizing private energy production from projects that hide publicly useful information from public review?

A good non-technical introduction to shale gas

Michael Giberson

Paul M. Barrett, for Bloomberg, has written up a pretty good introduction to natural gas from shale. The article delves a bit into the history and geology of the subject, but focuses more on the business efforts that turned a modestly interesting rock into a significant economic resource and the environmental politics that have risen in response. Highly recommended if you want to know where the natural gas that is changing the world’s energy outlook has come from.

A few things are left out of this “introduction.” Of course we could dig deeper into each of the topics mentioned. The next step in the story is the international angle – shale gas is being developed in Argentina, the United Kingdom, Poland and elsewhere – with significant implications for national and international trade and public policy. Among other things, as examples, central and western Europe will likely become less reliant on Russian gas supplies, and the United States and Canada probably don’t build a natural gas pipeline from Alaska through Canada and into the Midwestern U.S. for at least thirty or forty years.

The complete story of shale gas would also delve a bit into the controversy over the size of the the resource, would go a little deeper into the particular efforts of Devon Energy, and talk about the spillover of the shale gas boom into a boost for unconventional oil. One might wrap up the story by casting it into the big picture “cornucopians vs. Malthusians” debate.

So Bloomberg doesn’t do everything in this introduction, but it is a pretty good introduction to the shale gas issue.

NOTE ALSO: For a bit more on the environmental politics of shale gas, in September the journal Nature carried a pair of articles under the heading “Should Fracking Stop?” The case for stopping was written by Robert Howarth and Anthony Ingraffea, both of Cornell University; the case for continuing was written by Terry Englander of Penn State University. Neither piece gets very close to a complete policy analysis, but both highlight a bunch of the relevant issues.


Praise for a New York Times article on natural gas fracking (Or, How property rights help mitigate potential environmental harms)

Michael Giberson

I’m writing in praise of a New York Times article on natural gas fracking. Yes, really! Even more surprising, I’m writing in praise of a New York Times on fracking written by Ian Urbina. Yes, really!

What is this marvel, you ask? I answer, “Rush to Drill for Natural Gas Creates Conflicts With Mortgages.”

What is so marvelous about this article? I answer, the way it highlights how property and contract laws can serve to regulate potential environmental harms from gas drilling and hydraulic fracturing.

Of course, as the headline suggests, the focus of the article concerns mortgage restrictions which may be violated if a property owner leases part or all of the property for oil or gas development. Mortgage lenders usually include such limiting provisions in loan contracts to help ensure protection of the property, which typically serves as collateral for the loan. Obviously mortgage contracts differ and the article notes that only sometimes will leasing violate a mortgage. The article further notes that lenders who don’t secure such restrictions in their mortgages, or who fail to closely police compliance with such restrictions, may find it difficult to resell their mortgages in the secondary market.

But here is the deal: almost all of the well-documented environmental harms from natural gas drilling and hydraulic fracturing happen within a few hundred feet of an active well: cases of methane in groundwater, spills from holding ponds filled with produced water from fracking, and so on. If the landowner owns the surface and mineral rights free and clear, and owns a large enough piece of property that effects on neighbors are unlikely, then most of the potential hazards from drilling and fracking are faced by the property owner who can weigh the trade-offs between the costs and benefits and negotiate reasonable protections within the lease with a developer. Actions taken by the developer in response to such a contract to mitigate the likely harm to the property-owner will also almost inherently serve to mitigate any possible harm to neighboring properties. If methane doesn’t migrate from the well into the groundwater immediately around the well, it can’t subsequently migrate across a property line some tens or hundreds of feet distant.

When a landowner borrows against the land, the lender naturally gains an interest in protecting the land’s valueas a tool to help ensure the loan’s repayment. In may be the case, as the article mentions, that the a lease enhances the value of a property and the resulting income makes loan repayment more likely. On the other hand, gas drilling and fracking may reduce the value of the surface property. The point is that – working in the context of contracts and property law –  landowners, lenders, and gas development companies have a natural interest in trying to work out these issues in an way that should naturally reflect most of the potential costs and benefits from exploitation of the shale resource.

Not every potential hazard will be well contained within a mortgage contract and a mineral lease. For example, the landowner may not care too much what the developer does with produced water from fracking operations so long as it is safely removed from her property. Other issues may depend on rights to surface water crossing a property or the contribution to any local air pollution hazards. In such cases liability rules and potential litigation by neighbors might be the efficient regulator, but government-provided regulation is also sometimes the efficient response.

I praise the New York Times article for highlighting (even if only indirectly) the way that decentralized decision making in the context of the rights and responsibilities attendant to property and contract law can serve to regulate environmental harm. The next step, from the view of government policy, is to refocus the efforts of government regulators on just those harms that are not well addressed within the scope of voluntary decentralized decisions.

[NOTE: For additional commentary on Urbina's NYT reporting on natural gas fracking, none of it laudatory, see this search of the KP archives.]

Energy industry continues to reshape itself to fit the new world of oil and gas resources

Michael Giberson

Two multi-billion dollar deals in the news this weekend provide additional evidence of how advances in drilling technology have unlocked vast new energy resources and are reshaping the energy industry. Norwegian oil company Statoil is paying about $4.4 billion for Brigham Exploration, getting “a stronger foothold in unconventional resources” according to the Wall Street Journal. The Brigham deal will gain Statoil a significant footprint in the Williston Basin, a so-called “tight oil” formation that includes the wildly productive Bakken Formation in North Dakota and Montana. Statoil had previously invested in the Eagle Ford Shale in Texas, another unconventional oil and gas resource that has been a source of new reserves.

WSJ graphic shows the pipeline footprints of Kinder Morgan and El Paso Corp.

WSJ graphic shows the pipeline footprints of Kinder Morgan and El Paso Corp.

Separately, pipeline company Kinder Morgan has offered to buy El Paso Corporation for $21.1 billion (and assuming 17 million in debt, raising the cost of the deal to $38 billion). The WSJ says Kinder Morgan is “making a big bet that natural gas blasted from shale rocks around the country will become a huge force in America’s energy future.”

Brett Clanton and Purva Patel offer a similar assessment in the Houston Chronicle:

Kinder Morgan on Sunday made a huge bet in the future of natural gas, with word it will buy El Paso Corp. for $21.1 billion in a deal that will make it the largest operator of natural gas pipelines in the country, as well as the fourth-largest energy company in North America.

The cash-and-stock deal combines two of Houston’s biggest companies into a single industry titan, with …  access to virtually every natural gas field and consuming market in the country.

It comes as pipeline companies are repositioning themselves amid a recent surge in U.S. natural gas and crude oil production from shales and other so-called unconventional formations from Texas to North Dakota, and it finds another major energy company signaling its belief that the trend is more than hype.

At $21.1 billion, that’s a mighty expensive signal.

Admittedly, there is a lot of hype. Some people believe the large resource and reserve additions are almost all hype. Others – and I put myself in this category – believe there is a lot of new very real access to and production from reserves that could not have been legitimately booked as resources five or ten years ago. The trend is more than hype.

Don’t Peak: On ill-considered peak oil debates

Michael Giberson

Daniel Yergin’s peak oil commentary in last Saturday’s Wall Street Journal has set the econoblogosphere to chattering, or at least those of us in the energy corner. In addition to the clash of the titans, i.e. James Hamilton’s “More thoughts on peak oil” rejoinder to Yergin, the mere mortals are going at it, too.

Michael Levi did a quick round-up of reactions at his Council on Foreign Relations-based blog, then added his views. He expressed some exasperation about the “muddled, often faith based” arguing that goes on when peak oil is the topic.

I think he’s right: ideas often get muddled when peak oil is the topic. A big part of the problem is how the term “peak oil” frames the debate.

The problem with peaks

The term “peak oil” draws attention to the wrong issue. Try an analogy: During any given football game, there will be a point at which the football reaches its maximum height. Call it “peak ball.” Two things are obvious: first, after peak ball, the football will never again be that high; and second, the peak ball moment has almost nothing to do with the overall game. If you want to understand the football game, don’t worry about peak ball. People who frame the discussion in terms of peak ball will miss the point; the game’s real action is elsewhere.

Even experienced analysts get thrown off track. Consider Hamilton’s “More thoughts” rejoinder to Yergin.  Hamilton begins by trying to clarify just what he wants to discuss, stating three propositions as the “core claims that need to be evaluated.” Oddly, he then dismisses the first two propositions as so obvious as to not require additional thought (so what was it about the first two “core claims” that needed evaluation?) In any case, he thinks he is going to evaluate his third core claim: “This peak in global production will be reached relatively soon.”

But look at what he actually writes about in the rest of his essay. Beyond some swipes at Yergin’s peak oil discussion, Hamilton’s evaluation focuses on the slow supply response to increasing world demand for oil over the last few years, what economists’ call the price elasticity of supply. Hamilton said:

I was not among those who claimed that the peak would arrive by Thanksgiving 2005, nor 2007, nor 2011. But I am among those who did claim, and still believe, that the slow rate of increase in annual oil production over the last 5 years has caused significant economic problems for countries like the United States.

And he concluded:

I submit that meeting the growing global demand for crude oil over the last five years has posed significant challenges for the world economy. And those who worry that the next 5-10 years might be like the last should not be dismissed as crackpots.

In both claims, Hamilton draws attention to the slow rate of the supply response relative to demand growth. He is right, this is where the action is with respect to understanding recent oil market developments … and nothing about what he said depends upon whether the peak in world oil production did happen in 2005 or 2007, or will happen in 2011, or won’t happen until 2100 … and framing remarks as about peak oil distracts attention from the real issues.

Hamilton framed his article as if it were about peak oil, he titled his article “More thoughts on peak oil,” but when he gets down to explaining what he thinks is important, none of his article depends on peak anything.

Supply and demand: Boring and relevant

The underlying issue remains that the short run price elasticity of both supply and demand for crude oil are low, which means shifts in the supply or demand relationships become manifest mostly in changing price. Over the last several decades, most oil price shocks have been precipitated by supply interruptions. The duration of historic supply shocks has mostly depended upon the Saudi government’s willingness to use its spare productive capacity to fill the gap until the interrupted producer recovers.

When readily available spare capacity can fix an oil shock, there is little reason for significant investments by other producers to expand their own supply capability. When significant increases in supply appeared called for, they take years. The great non-OPEC supply boom of the early 1980s was mostly a delayed supply response to higher oil prices of the 1970s. Given the inherent years-long delays in any substantial supply response, it isn’t surprising that the price increases of 2005-2008 didn’t bring an immediate outpouring of new supplies.

The oil price run-up of 2005-2008 was mostly driven by a demand-side shock: increasing demand resulting from rising incomes in developing nations, especially China. Saudi production dipped a little rather than increased as post-2005 oil prices continued higher, and that response may have set the stage for the sharp price spike of 2008. All of these developments are well analyzed in Hamilton’s 2009 paper, “Causes and Consequences of the Oil Shock of 2007-08.” (Ungated version here.)

Conceivably, Saudi reluctance to increase production revealed the exhaustion of its spare capacity. Over the last few years there has been a lot of speculation about Saudi Arabian reserves, and not a lot of real information available publicly. But an alternative interpretation was that the demand-side shock – rapidly increasing world demand for oil – led the Saudi’s to reevaluate the reserve price they put on their spare capacity. In any case, the spare capacity seems to be back: in 2011 Saudi production reached a 30-year high after it increased production in response to Libyan supply interruptions.

Don’t be distracted

Yergin, not Hamilton, may be to blame for this latest round of peak oil debate. But the thrust of Yergin’s WSJ article was to undermine any focus on peak oil and to suggest the interesting action is elsewhere. Obviously I agree with Yergin on this point. It is perhaps a bit ironic, given the peak oiler-based anti-Yergin outrage that has erupted, that Yergin accepts the basic idea of a peak. He just believes the peak is at least 20 or so years away and will be long and flat and lacking in much social drama. Yergin’s error, to the peak oil crowd, is not being alarmed.

I also agree with Hamilton: the slow supply response to higher prices over the last few years have contributed to significant economic problems in the world economy. It seems quite reasonable to worry about how these issues will continue to play out over the next five or ten years.

Sure, it is possible to frame the explanation of crude oil prices over the last few years or the next ten as a “peak oil” story, but whether we are or are not at peak world oil production is essentially irrelevant. The question of peaking distracts from examination of the real action.

My advice to oil industry analysts: Use some other approach to understanding and explaining oil industry developments.

Don’t peak.

Devon Energy’s bet on Barnett Shale, made 10 years ago, has paid off

Michael Giberson

Yesterday, August 14, 2011, was the ten-year anniversary of the announcement by Oklahoma City-based Devon Energy of its intention to acquire Houston-based Mitchell Energy and Development for $3.5 billion. The prime target of interest lay about halfway between the two company headquarters, in the Barnett Shale surrounding Fort Worth, Texas. Mitchell had figured out how to use hydraulic fracturing to produce gas from shale formations, and was beginning to add horizontal drilling to its mix.

As Jack Smith explains in the Fort Worth Star-Telegram‘s Barnett Shale blog:

At the time, it had drilled about 400 wells in the Barnett, and executives saw the potential for 1,200.

But over the decade, Devon would advance the ball significantly with improved horizontal drilling and an expansion of drilling far beyond areas north of Fort Worth where Mitchell Energy had focused. The result would be a drilling boom that by 2008 would draw numerous rivals into the field and make the Barnett the biggest gas-producing area in the U.S. Tarrant and Johnson counties would emerge as the top two gas-producing counties in Texas.

Contrary to reports by some people that shale gas production is economically doomed, Devon says things are looking up:

In the Barnett, “our drilling costs are down, our production is up and our efficiencies are increasing,” said Brad Foster, senior vice president of Devon’s Central Division, which includes Barnett operations.

Devon has achieved, or is on the verge of, several Barnett milestones:

It posted record production in this year’s second quarter, averaging the equivalent of 1.28 billion cubic feet of gas per day, even while keeping only 12 drilling rigs busy. That’s less than a third as many as it ran in 2008, before gas prices cratered.

Devon’s total Barnett production since the Mitchell acquisition is expected to hit the equivalent of 3 trillion cubic feet by year’s end, spokesman Chip Minty said. It’s at 2.8 trillion now.

Despite weak gas prices, now about $4 per 1,000 cubic feet, Devon is realizing solid returns from the Barnett because “our ability to drill wells economically just gets better every year,” said Chairman Larry Nichols, who was CEO during the Mitchell acquisition.

The story continues with some details that help make sense of various claims made by the industry. On the one hand the industry claims that hydraulic fracturing is an old, frequently-used technology that has been time-tested and proved safe. On the other hand, companies assert they are rapidly improving methods to cut cost and need trade secret protections for their hydraulic fracturing fluids.

The truth is hydraulic fracturing has been around for a long time, but its combination with horizontal drilling techniques and application in development of oil and gas from shale is much more recent. As the immense economic potential of shale-based production has become clear, many companies have sought out ways to do the job better.

More from Smith:

When Devon began drilling in the Barnett in 2002, it took three to six weeks to drill a single horizontal well, said David Fortenberry, Devon vice president of technology.

“The rigs we used were really too small and underpowered for horizontal wells,” he said.

Now, with higher-efficiency rigs and much more experience, Devon averages only about 12 days to drill a Barnett well, and “we’ve actually drilled some wells down in southwest Johnson County in about six days,” Foster said.

Drilling-rig design “has improved dramatically in the past 10 years,” with rigs now “ideally suited to drill these horizontal wells,” Nichols said.

Devon uses a “walking rig” device to scoot a 156-foot-high rig between surface well bores at its southwest Tarrant pad site. If well bores are 20 feet apart, the rig can move that far in just an hour. Without the walking device, it could take two days to disassemble a rig and set it up 20 feet away.

The Barnett wells that Devon has drilled this year have provided “some of the best results we’ve ever gotten,” Nichols said.

Ample supplies from dramatic increases in U.S. shale-gas production have kept prices low, as the industry has become “in part … a victim of our own success,” Nichols said.

Devon has dropped to 12 drilling rigs because it can keep production at least flat at that level of activity and because “at this time, the country just doesn’t need any more natural gas,” Nichols said.

Production declines have been lower than expected in Barnett wells, he said. There will be “steep declines in the first year, but it flattens out a lot sooner than we originally thought” — often after 12 to 18 months of production, he said.

Natural gas consumers are not complaining. Even while oil prices have moved much higher post-2008, domestic U.S. natural gas prices remain held in the $4 to 5 MMBtu range. And with natural gas prices playing a significant role in competitive wholesale power prices, electric consumers are seeing some benefits, too.

ALSO: Another good story on Devon’s acquisition of Mitchell and development in the Barnett Shale appeared in The Oklahoman yesterday.

Open up bidding for oil and gas leases on federal lands

Michael Giberson

PERC’s Shawn Regan argues in favor of allowing environmental groups to bid in federal auctions for oil and gas development leases, a way to help ensure that use of federal lands reflects both the value of energy resource exploitation and the value of protecting those lands from development. The theory is that if environmental groups highly value the opportunity to prevent oil and gas development on a piece of federal land, they’ll put in a high bid. The project would only get leased for development if a resource developer submitted an even higher bid. Let the market decide!

I like the idea, a little more competition won’t hurt, but a few issues need cleaning up first.

Regan said current rules keep environmental groups from participating because of requirements that leaseholders develop the minerals or lose their lease. It isn’t clear from his short piece whether there are specific exclusions in Bureau of Land Management leases or in the auction rules that explicitly bar such participation, or whether he’s referring to relatively standard language in oil and gas leases under which the lease expires if the company doesn’t develop the resource within a set period. Typically, a mineral rights owner leases the development rights because they want the resources developed and the associated royalty payments. When a company holding the lease does not develop the property, the mineral owner wants to be able to shift the development rights to someone who will. If this kind of leasing restriction is the issue, then the leases may need to be rewritten to allow the leaseholder to hold the development rights by use of the environmental values. (Similar to holding water rights to protect in-stream flows rather than by consumption.)

A related issues comes up: If an oil and gas company secures the lease through auction, it has a few years to begin development and so long as development begins in time typically the lease continues for as long as the company continues operations. Operations may last 20 or 25 years, possibly longer, but not forever. So how long should a lease last if an environmental group wants to hold development rights by use of its environmental values?

NOTE: Regan’s piece was also posted at Grist. See also Regan’s earlier piece for PERC Reports, and our earlier comment here on that piece highlighting the possibility of an oil developer and environmental group working together on bidding and resource development.

Advisory committee’s fracking report spurs outpouring of spin

Michael Giberson

Even before the natural gas subcommittee to the Secretary of Energy Advisory Board released it’s “Ninety Day Report” on hydraulic fracking today, anti-fracking groups shifted their spin operations into high gear. On Monday, a letter to President Obama sponsored by 68 groups called on him to “employ any legal means to put a halt to hydraulic fracturing” in natural gas development. On Wednesday, the Environmental Working Group published a letter sent to Secretary of Energy Steven Chu expressing concern over a “lack of impartiality” on the natural gas subcommittee.

This morning many newspapers are carrying stories on the report. The New York Times article by reporters Robbie Brown and Ian Urbina was noteworthy for the number of times it referred to earlier New York Times stories written by Ian Urbina. (Note especially the mid-article paragraph that begins, “After The New York Times published a series of articles … President Obama asked Steven Chu, the energy secretary, in May to produce an advisory report within 90 days on ways to improve the oversight of natural gas drilling.” To which I respond: After Knowledge Problem first made mention of shale gas production, Ian Urbina wrote several widely-criticized stories on natural gas drilling for the New York Times.)

The Washington Post story concluded with an inadvertently amusing pair of paragraphs relaying the views of Friends of the Earth:

But groups such as Friends of the Earth — which joined 67 other organizations in asking Obama on Monday to impose a moratorium on hydraulic fracturing — questioned why the panel would issue a report when the EPA was in the midst of a multi-year study.

“We’re talking about this 90-day rush to judgment that’s just inappropriate,” said Damon Moglen, who directs climate and energy policy for Friends of the Earth.

Apparently a 90-day “rush to judgment” is inappropriate, but by day 87 the Friends of the Earth had already concluded that fracking for natural gas should be stopped immediately.

The “Ninety Day Report” released today is presented as a “draft” document. The public can submit comments on the report, the full Secretary of Energy Advisory Board will review the draft prior to formally submitting it to the Secretary on August 18, and the final report will not be issued until November 18, 2011. See the US DOE website for details.

More internal review of the NYT shale gas skepticism articles, more dishonest journalism discovered

Michael Giberson

While I was vacationing in New Mexico and Arizona, New York Times public editor Arthur Brisbane continued his analysis of the pair of late June articles in the newspaper that suggested widespread insider skepticism over the size and significance of recent shale gas developments. A June 26 story suggested the presence of significant skepticism within the gas industry and a June 27 story suggested an active internal debate among officials at the U.S. Energy Information Administration. Both stories relied heavily on highly-selective anonymous comments taken from emails that had names and much other identifying information redacted. Both stories have been discredited by subsequent revelations.

See Brisbane’s review of the June 26 story here, and my comments on the episode here: “The energy industry insiders that didn’t bark.”

Brisbane’s article on the June 27 story begins with a disclosure by the EIA that the emails quoted in the story were “largely to and from a person who was hired by E.I.A. in 2009 as an intern and later developed into an entry-level position.” Nowhere in the June 27 story does it mention that some of the quotes presented as examples of EIA skepticism were by an intern or newly-hired college graduate. Instead, in the article the intern/entry-level employee was referred to variously as “one official” at the EIA, as an “energy analyst,” and finally as “one federal analyst.” Brisbane finds the presentation to be sloppy and misleading.

If the emails to and from the intern/new employee are eliminated, what remains in the story is some concern over the lack of independent EIA expertise on some petroleum geology topics and some probably healthy skepticism of early industry claims of a vast and newly-accessible gas resource.

In my view, by using multiple descriptors to mask the identity of a single emailer, then redacting any mention of internship or entry-level employment status in the original supporting documents presented with the story, the reporter of the June 27 article intentionally sought to mislead Times readers concerning the nature of internal debate at the EIA. It is just more dishonest journalism by reporter Ian Urbina. (Brisbane somewhat-more-mildly concluded that the story exhibited “some of the classic problems associated with anonymous sourcing” in journalism.)


The Times posted the unredacted emails, once they had been released publicly by the EIA, so readers are now in a better position to judge for themselves whether or not the emails constitute serious internal dissension at the agency.

Gas-industry website Energy In Depth – which has been quite critical of the Times natural gas reporting – seized upon the revelations with unsurprising glee. Their commentary noted that a key EIA official cited in the June 27 story was just an intern, and then drills deeper into the unredacted email to discover that the intern exchanged a number of emails on shale with the Natural Resources Defense Council and attempted to feature the NRDC’s shale gas criticisms on an EIA website on shale gas.