Shale Gas Map

Assembly of peak oil experts look at shale gas

New finds are a 'game-changer' or overrated

DENVER – As a boy in Arizona, Randy Udall did a “science experiment” by putting a tarantula and a scorpion together in a Mason jar to see what would happen.

Peter Dea

He did the same kind of experiment Monday, pitting energy executives against each other in a debate over a large new source of natural gas.

Udall is a co-founder of the Association for the Study of Peak Oil-USA and the brother of U.S. Sen. Mark Udall, D-Colo. At Monday’s national peak oil conference in Denver, he tried to make sense of major changes in the gas industry the last few years.

The Potential Gas Committee at the Colorado School of Mines made national news this summer when it announced that, largely because of shale gas, the United States has a 100-year supply of domestic natural gas. Shale-gas deposits lie under parts of Southwest Colorado that have never been drilled, including Montezuma, Dolores and western La Plata counties.

Gas executives have seized on the study to push for a much greater role for their product in electricity generation, especially as the Senate prepares to debate a climate-change bill.

“I truly believe that natural gas is the common thread of the economy, the environment and energy security,” said Peter Dea, former president of the Colorado Oil and Gas Association.

Art Berman of Labyrinth Consulting Services struck out at Dea and other natural-gas optimists. His study of the Barnett shale field in Texas – the only mature shale play in the country – showed that the wells decline much faster than companies like to admit, and less than a third of the wells drilled will produce enough gas to break even.

“There are lots of opinions about shale gas. What we’ve done is not an opinion. It’s an observation,” Berman said.

But companies continue to tout shale gas as a “game changer” because of pressure from Wall Street, Berman said.

“In the midst of a boom, it’s hard to sit on the sidelines. Because a CEO is responsible for his company’s stock price, and if you’re not in one of these plays, Wall Street says, ‘Come on, guys,’” Berman said.

That is too pessimistic a view for Edward Warner, who played a role in two previous game-changers in the gas industry. He was an Amoco geologist who helped unlock coal-bed methane in Southwest Colorado, and later he was one of the first people to recognize the potential of Wyoming’s Jonah field, the most concentrated deposit of natural gas in the United States.

To Warner, the American gas supply is limited only by technology and innovation.

“You don’t look for it, you don’t find it. So I’m absolutely thrilled with the shale plays,” Warner said.

Bill Barrett Corp. of Denver is leading the exploration of shale gas in Southwest Colorado. The company has drilled test wells just south of McPhee Reservoir in Montezuma County, and early results have been mixed. The wells are producing too much salt, and Bill Barrett hasn’t yet said whether it thinks a large-scale shale-gas industry will work locally.

The shale-gas debate was just one part of the three-day conference on peak oil.

Udall and other organizers talked about how to change the public perception of their movement, which remains out of the mainstream. Jeremy Gilbert, a retired BP executive, titled his talk “Why Aren’t They Listening to Us?”

Most peak oil theorists do not say the world is running out of oil, but they do think it is running out of cheap oil, and that future production rates will be capped by prices and by the lack of investment in the oil industry.

“I think some of the messaging of the peak oil movement is shot full of dread,” Udall said.

Denver Mayor John Hickenlooper echoed the comment, saying he believes the world will adapt to diminishing supplies of oil. However, it’s a question of who gets hurt in the transition, he said.

Hickenlooper founded Wyn-koop Brewing Co., Colorado’s first microbrewery, after he was laid off as a petroleum geologist.

“The beer we were selling was between $600 and $1,000 a barrel. If the price of oil was one-tenth that, I would still be a geologist,” Hickenlooper said.

The conference concludes today. Gov. Bill Ritter will address the group tonight.

jhanel@durangoherald.com

http://durangoherald.com/