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Guest Column

September 28, 2013

Some considerations on shale gas

We have been told that it is not economically profitable to extract natural gas from shale deposits, be they Marcellus, Utica, Bakken, or any others, unless the market price is at least $5 to $6 per thousand cubic feet (Mcf).

The U.S. Market wellhead prices for natural gas since February of 2002 had ranged from a low of $2.19 per thousand cubic feet (Mcf) to as high as $10.79 in July of 2008. However, since that peak a little over five years ago, about when high volume horizontal hydraulic fracturing started in earnest, it dropped even lower to $1.89 in April of 2012 and was last reported by the U.S. Department of Energy’s Energy Information Administration to still be stubbornly low at $3.35 as of December 2012.

We were told that this new technology, still in its beginning stages, now enabled us to access deposits that couldn’t otherwise have been reached before. We were also told that it would enable our country to be energy independent and energy secure.

Initially, drilling operators and the companies that supply them with the chemicals they use said their information was proprietary. However New York State has required that they be disclosed. The initial chemical count was somewhere between 600 and 700 different chemicals however that list has now grown to over 900.

The industry suggests that they are not substantially different than what almost any household has under their kitchen sink or in their garage. While this may be true, that doesn’t mean that I would choose to gargle with them or ingest them.

U.S. companies, recognizing that the prevailing market prices would afford them a less-expensive source of energy, started waxing enthusiastic at the prospect of being able to reinvigorate domestic production instead of off-shoring it to locations where other costs of production (i.e., labor) were lower.

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