American Gas: Between Truth, Fiction and Conspiracy
Published in Al-Eqtisadia
(Saudi Arabia) on 12 July 2011
by Dr. Anas bin Faisal al-Haji (link to
original)
There is a “gas” revolution in the United States: Its protagonists are thousands of producers and hundreds of small- and medium-sized companies that extract gas from shale rock layers and compacted sand. The revolution also has opponents and skeptics, just as in any revolution. The difference is that “the rebels” are working while the activists only talk. The problem is that this talk may have an effect if it finds the ears of decision makers.
Did you know, dear reader, that the gas industry’s contribution to the U.S. GDP is more than three times the budget of Saudi Arabia, the largest economy in the Middle East? Did you know that the number of jobs created by this industry exceeds the populations of several Gulf states combined? Did you know that this industry was started by more than 2,000 millionaires over the past five years? Indeed this revolution has resulted in an increase in gas production of over 40 percent since 2006, a doubling of reserves and the start of America’s self-sufficiency and serious consideration of exporting gas to various parts of the world to be converted to liquefied gas. It is a revolution because the U.S. was experiencing a shortage of gas supplies and started building dozens of terminals to import LNG from Qatar and elsewhere and gas prices rose to $14 per million BTUs. However, combining horizontal drilling and hydraulic fracturing technologies has led to a dawn of the gas revolution and turned things upside town, increasing production instead of decreasing production. This turned a deficit into a surplus and a drop in imports. Now they have begun to convert plants to export terminals instead of import terminals, and prices have fallen to about four dollars per unit. Productivity has doubled several times in recent years. Suffice it to say that the single piece of evidence is that the number of rigs needed to maintain gas production in the United States was in the area of 1,300 three years ago; now you only need about 700 excavators to maintain this level of production in the United States. In other words, the productivity of each wall has increased tremendously.
The Campaign of Skepticism
The series of articles finally published in The New York Times about shale gas in the United States was not the first of its kind in terms of highlighting disadvantages or questioning the reserves or the economic feasibility of extracting this type of gas. Earlier newspaper articles and a famous documentary considered themselves a bomb that would explode in the face of the American gas industry. According to The New York Times articles, this was an echo of the Arab world, as exploited by enemies of the United States, and whoever believes in peak oil production and in the conspiracy theory in order to confirm the validity of their ideas is forced thousands of miles away from the scene and from the truth.
This reaction has obviously reminded me of the senior officials in the Gulf oil companies about a year and a half ago at the company headquarters, when some of them raised doubts about U.S. shale gas and began to address some of the evidence like a drowning person clinging to any straw. What moved me was that some of them said that what the United States says about shale gas is a big lie and a desperate attempt to reduce dependence on Arab oil. This conspiracy theory came from people who hold degrees from American universities and hold important positions in the national oil company. Without a word being said, the attack on shale gas intensified. Some of those present began to drown in the conspiracy theory until someone asked me for my opinion on the subject. My answer was quite brief: The gas that they say is under my house in North Texas, I own this gas. The company takes control of production and gets the proceeds! You read the newspapers and I sign a contract. As you say, it is a plot to get rid of the dependence on Arab oil, but gas is not a substitute for oil. About 97 percent of the electricity generated in the United States comes from natural gas, coal and nuclear power, while only 3 percent comes from oil.
Anyone who follows the gas industry will conclude easily that most of the information in The New York Times was wrong. Some of the statements from officials and specialists were placed within a framework to serve the newspaper’s point of view. It was skewed to the extent that one specialist whose name was mentioned had to release a statement to the media criticizing The New York Times because it took advantage of his mistake. The paper also used this method to suggest the grotesque, such as the article on shale gas and the profitability of companies operating in this field. In this context, readers are reminded of the bankruptcy of Enron in 2011 and of Shell, which admitted in 2004 that it overstated the size of its oil reserves and thus reduced its reserves. This revelation suggests that gas companies like Enron and Shell undertaking the work are destined to bankruptcy or reduced reserves. These facts show that this method is within the realm of yellow journalism.
Several organizations and companies responded to The New York Times with scathing criticism questioning its professionalism, especially that the reporter mentioned emails by an official at the Energy Information Administration without mentioning any name. It also deliberately hid the year the emails were sent, contrary to the standards of journalism. This calls into question the credibility of the coverage and the professionalism of the journalist. It appears that these emails are old, some from as early as 2007, while it is suggested that they are from April of last year. A letter to the media from IHS, a company that was named in the article, says that the newspaper used old emails and that developments in recent years disproved some of the emails that did not have enough information about shale gas. The letter referred to a press statement attributed to an employee at IHS that said they were investing in the gas installations, pointing out that the “Ponzi scheme” is not true, because this person left the company long ago. The same applies to the official, supposedly from the central bank as portrayed by environmentalists and anti-gas industry activists. He was later appointed as an official of the central bank branch in Dallas, the same branch that issued a study praising the effects of shale gas and its economic contribution. In other words, there was no relationship to the central bank’s statement! Exxon-Mobil has said that no journalist contacted them, the largest gas producer in the United States. The bottom line is that the press played a positive role in society, but the lack of commitment to journalistic norms is like a double-edged sword: It often falls back on the owner. We all have to remember that this is the reason for the closing of the largest British newspaper on Sunday.
Did you know, dear reader, that the gas industry’s contribution to the U.S. GDP is more than three times the budget of Saudi Arabia, the largest economy in the Middle East? Did you know that the number of jobs created by this industry exceeds the populations of several Gulf states combined? Did you know that this industry was started by more than 2,000 millionaires over the past five years? Indeed this revolution has resulted in an increase in gas production of over 40 percent since 2006, a doubling of reserves and the start of America’s self-sufficiency and serious consideration of exporting gas to various parts of the world to be converted to liquefied gas. It is a revolution because the U.S. was experiencing a shortage of gas supplies and started building dozens of terminals to import LNG from Qatar and elsewhere and gas prices rose to $14 per million BTUs. However, combining horizontal drilling and hydraulic fracturing technologies has led to a dawn of the gas revolution and turned things upside town, increasing production instead of decreasing production. This turned a deficit into a surplus and a drop in imports. Now they have begun to convert plants to export terminals instead of import terminals, and prices have fallen to about four dollars per unit. Productivity has doubled several times in recent years. Suffice it to say that the single piece of evidence is that the number of rigs needed to maintain gas production in the United States was in the area of 1,300 three years ago; now you only need about 700 excavators to maintain this level of production in the United States. In other words, the productivity of each wall has increased tremendously.
The Campaign of Skepticism
The series of articles finally published in The New York Times about shale gas in the United States was not the first of its kind in terms of highlighting disadvantages or questioning the reserves or the economic feasibility of extracting this type of gas. Earlier newspaper articles and a famous documentary considered themselves a bomb that would explode in the face of the American gas industry. According to The New York Times articles, this was an echo of the Arab world, as exploited by enemies of the United States, and whoever believes in peak oil production and in the conspiracy theory in order to confirm the validity of their ideas is forced thousands of miles away from the scene and from the truth.
This reaction has obviously reminded me of the senior officials in the Gulf oil companies about a year and a half ago at the company headquarters, when some of them raised doubts about U.S. shale gas and began to address some of the evidence like a drowning person clinging to any straw. What moved me was that some of them said that what the United States says about shale gas is a big lie and a desperate attempt to reduce dependence on Arab oil. This conspiracy theory came from people who hold degrees from American universities and hold important positions in the national oil company. Without a word being said, the attack on shale gas intensified. Some of those present began to drown in the conspiracy theory until someone asked me for my opinion on the subject. My answer was quite brief: The gas that they say is under my house in North Texas, I own this gas. The company takes control of production and gets the proceeds! You read the newspapers and I sign a contract. As you say, it is a plot to get rid of the dependence on Arab oil, but gas is not a substitute for oil. About 97 percent of the electricity generated in the United States comes from natural gas, coal and nuclear power, while only 3 percent comes from oil.
Anyone who follows the gas industry will conclude easily that most of the information in The New York Times was wrong. Some of the statements from officials and specialists were placed within a framework to serve the newspaper’s point of view. It was skewed to the extent that one specialist whose name was mentioned had to release a statement to the media criticizing The New York Times because it took advantage of his mistake. The paper also used this method to suggest the grotesque, such as the article on shale gas and the profitability of companies operating in this field. In this context, readers are reminded of the bankruptcy of Enron in 2011 and of Shell, which admitted in 2004 that it overstated the size of its oil reserves and thus reduced its reserves. This revelation suggests that gas companies like Enron and Shell undertaking the work are destined to bankruptcy or reduced reserves. These facts show that this method is within the realm of yellow journalism.
Several organizations and companies responded to The New York Times with scathing criticism questioning its professionalism, especially that the reporter mentioned emails by an official at the Energy Information Administration without mentioning any name. It also deliberately hid the year the emails were sent, contrary to the standards of journalism. This calls into question the credibility of the coverage and the professionalism of the journalist. It appears that these emails are old, some from as early as 2007, while it is suggested that they are from April of last year. A letter to the media from IHS, a company that was named in the article, says that the newspaper used old emails and that developments in recent years disproved some of the emails that did not have enough information about shale gas. The letter referred to a press statement attributed to an employee at IHS that said they were investing in the gas installations, pointing out that the “Ponzi scheme” is not true, because this person left the company long ago. The same applies to the official, supposedly from the central bank as portrayed by environmentalists and anti-gas industry activists. He was later appointed as an official of the central bank branch in Dallas, the same branch that issued a study praising the effects of shale gas and its economic contribution. In other words, there was no relationship to the central bank’s statement! Exxon-Mobil has said that no journalist contacted them, the largest gas producer in the United States. The bottom line is that the press played a positive role in society, but the lack of commitment to journalistic norms is like a double-edged sword: It often falls back on the owner. We all have to remember that this is the reason for the closing of the largest British newspaper on Sunday.
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