New York Times and Energy Companies lock horns over natural gas talks

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Credit: Laurie Barr / CC BY-SA 3.0

Recent series of articles by The New York Times voiced scepticism on the shale natural gas boom, stating that companies greatly exaggerated the amount of natural gas they could actual get out of the ground. E-mails and documents collected by The New York Times also suggested that the natural gas industry bubble could be heading for a burst, raising concerns about the volatility of shale gas drilling.

However, these articles have angered big energy companies and government executives like ExxonMobil who feel that the New York Times are indiscriminately campaigning against domestically produced natural gas, which is undoubtedly a clean-burning fuel. Vice President Ken Cohen expressed in a blog on Monday that if Ian Urbina, the writer of these articles, had cared to approach the company, they would have explained its long-term goals and investment approach based on the long-term vision of the global market conditions. Exxon is presently enjoying its position as North America’s largest shale gas producer.

A spokesperson for Times has reported that it had hardly mentioned Exxon in the article. There were other industry sources as well who was quoted defending the natural gas rates.

The multiple series of article published on Times quoted various unidentified emails from industry consultants, government staffers and energy company executives inquiring whether natural gas production from shale rock is really what it is shown to be or instead is a bubble which could burst anytime in future.

The undated emails posted on Times said that the natural gas wells could be drying up much faster than expected, and companies could actually be losing money.

The articles suggest that companies are brainwashing the public by adopting the Enron theory of hiding the reality to boost their stock price. The story also further points fingers at Energy Information Administration (EIA), accusing them of relying too much on industry data to make its projections. Many of the undated emails are from EIA staffers.

EIA reciprocated by issuing an unusual statement saying that the agency’s views on shale gas were completely different from those described in the Times article. It also mentioned that shale gas production in the US has risen from 4% to 23% in just 5 years.

Michael Schaal, EIA’s petroleum, natural gas, and biofuels analysis director, noted that shale gas has clearly become a prime domestic natural gas supply source.

One more shale gas company, Chesapeake Energy, also reacted strongly to the article, saying that it was ridiculous to conclude that shale gas wells are not performing to the expected level while the truth is the country is still very much rich in natural gas reserves. The statement also says that third-party organizations verify the company’s production estimates. The recent decline in production was the direct effect of low natural gas prices.

In recent years, shale gas production has seen a favourable upswing as new technology allows the industry to unbolt enormous domestic fuel quantities. In fact, figures estimate that country has 100 years of natural gas reserves. Also, natural gas is a preferred renewable energy source to generate electricity as it burns twice cleanly as coal. Inadvertently, the boom has caused a sudden increase in investment and the stock price of concerned companies.

However, gas extraction from shale rock through hydraulic fracturing or fracking invites injecting large amounts of water, sand and chemicals far below the surface. The consequent spills of fracking liquid before it is injected into wells have polluted local water. Also, the disposal of the liquid and other infected water has been questioned. The seeping of natural gas into drinking water due to the drilling process is one of the profound fears.

Tighter regulations on the industry are advised, but these may turn the shale gas production unprofitable if the Times article holds some truth.

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