Berman On CBS Evening News With Scott Pelley

CBS anchor Scott Pelley did a story on Chesapeake Energy's meltdown Friday, May 12, 2012. I had a brief appearance commenting on the slow train wreck of the shale gas producers as they consciously destroyed their own product price by over production.

Berman To McClendon: Some Support From An Unexpected Source

This has been a tough period for Chesapeake Energy and Aubrey McClendon with his loans and losses on drilling investments. Despite these issues, I give him and his company credit for vision and leadership in the shale revolution.

He once described me as "a third-tier geologist who considers himself a reservoir engineer, that somehow [knows] more about the shale gas revolution in America than companies that have combined market caps of almost $2 trillion and have spent hundreds of billions of dollars to develop these new resources, I mean, it's ludicrous."

Nice.

The logic is that corporations that spend billions of dollars of shareholder money are inherently more knowledgeable and credible than industry professionals who have published dozens of technical papers on the questionable reserves and economics of shale gas.

What the revelations about McClendon's losses really mean is that what we have been saying for years is true: shale gas is an economic loser.

Still, McClendon has shown singular direction and foresight in an exploration and production industry commonly characterized by the herd mentality of late adopters.

Meet the man the shale gas industry hates

Dave Parkinson has written a good article in The Globe and Mail about me called "Meet the man the shale gas industry hates."

I could say a lot about some of the comments by industry people in the article, but I will focus on Devon Energy spokesman Chip Minty's statement that, "We kind of look at Arthur Berman as a dinosaur. With every day that goes by and these shale production numbers come in, the validity of Arthur Berman's claims becomes more questionable."

First of all, Chip, let's talk about grammar and proper English. "We kind of look" sounds like teenager speak. Do you have an opinion about me and my work or kind of an opinion?

What Chip Minty is really saying is that he dismisses the decades of industry experience that underlie the many technical articles that I and my colleagues have published on shale gas reserves and economics. If he had a technical rebuttal to our work, he would have presented it but his best shot is to say that I am a dinosaur. Touche, Chip. That really gets to the heart of the problem!

His company and the industry have recklessly over-produced large volumes of natural gas at a price that is not commercial for anyone. The headlines about Chesapeake Energy and its problems over the past week show that shale gas investments are not profitable.

I am used to the personal attacks by shale gas defenders. If they had anything to say about the real issues of lack of profit and shareholder equity, they would.

Who is the dinosaur in this debate?

To The Editor of The New York Times

“U.S. Inches Toward Goal Of Energy Independence” (news article, March 23) adds fuel to a growing but unfounded perception that recent increases in domestic oil production means we will someday be able to forgo imported oil altogether.

There is no question that production has increased. This, however, constitutes less than five percent of total U.S. consumption. While any reversal in production decline is encouraging, this is far from a cause for exuberance, let alone long-term confidence in our prospects for energy independence.

The current gap between U.S. crude oil production and consumption remains near nine million barrels per day. This is not a trivial obstacle: maximum U.S. production has declined from 10 million barrels in 1970 to 5.7 million barrels today.

Even assuming the most optimistic published estimates of U.S. crude oil production growth, we would be left with a gap of six million barrels per day. Those who predict energy independence need to demonstrate how this gap will be filled, particularly given the precipitous decline rate of wells that contribute to higher production.

Respectfully,

Arthur E. Berman

Petroleum Geologist, Managing Editor of TheOilDrum.Com, and Director, Association For The Study of Peak Oil and Gas USA

Sugar Land, Texas

Rolling Stone Responds to Chesapeake Energy on 'The Fracking Bubble'

Rolling Stone Contributing Editor Jeff Goodell has published a response on March 6, 2011 to Chesapeake Energy's rebuttal of his "The Big Fracking Bubble: The Scam Behind the Gas Boom" that was published on March 2, 2012.

The New York Post: Another Shale Gas Attack

On March 5, 2012, The New York Post featured a post called "Another Shale Gas Attack Full of Hot Air." The author, Abby W. Schachter, noted my dissatisfaction with being mis-quoted in the recent Rolling Stone article "The Big Fracking Bubble: The Scam Behind the Gas Boom."

She wrote, "Only trouble with the claim is the main person Goodell uses to substantiate this claim has now written that he was misquoted, that the reporter had a political agenda and that there is no truth to the reporter's claim."

She, apparently, has the same problem mis-quoting me as Goodell. I wrote that I was mis-quoted but never said that the author had a political agenda or that there was no truth to the reporter's claim.

The statements incorrectly attributed to me in Rolling Stone are "According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don't pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods."

What I wrote was "That may be what Goodell thinks but that is not what I said, think or imply."

The two quoted statements by me that follow in the same paragraph were accurately represented by Goodell.

I Was Mis-Represented in the Rolling Stone Article: The Big Fracking Bubble

"The Big Fracking Bubble: The Scam Behind the Gas Boom" by Jeff Goodell was published March 1, 2012 in Rolling Stone. I was interviewed by Goodell and was mentioned in the article. I sent the following rebuttal to the editors of Rolling Stone:

March 3, 2012

To the Editor:

I was interviewed by Jeff Goodell and mentioned in his recent Rolling Stone article "The Big Fracking Bubble: The Scam Behind the Gas Boom."

He wrote, "According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling."

I never said that Chesapeake or any other company involved in shale gas drilling is involved in or resembles a Ponzi scheme. That may be what Goodell thinks but that is not what I said, think or imply. I have expressed doubts about the viability of the shale gas business model used by some companies, but I do not question the legality of those business models. The term Ponzi scheme does not remotely apply to the way that exploration and production companies obtain capital and rationalize earnings.

Jeff Goodell may think that some shale gas companies are involved in Ponzi schemes, but such statements cannot be attributed to me.

Respectfully,

Arthur E. Berman