We now have more than enough data to know what has really happened in America. Shale has been hyped ("Saudi America") and investors have poured hundreds of billions of dollars into the shale sector. If you invest this much, you get a lot of wells, even though shale wells cost about twice as much as ordinary ones.Meanwhile, in April of this year, Japan Petroleum Exploration Co. (30% owned by the Japanese government; also invested in Canadian fracking) started fracking, with the expected poor results, in beautiful Akita.
If a huge number of wells come on stream in a short time, you get a lot of initial production. This is exactly what has happened in the US.
The key word here, though, is "initial". The big snag with shale wells is that output falls away very quickly indeed after production begins..
Faced with such rates of decline, the only way to keep production rates up (and to keep investors on side) is to drill yet more wells. This puts operators on a "drilling treadmill", which should worry local residents just as much as investors. Net cash flow from US shale has been negative year after year...
...The US is already littered with wells that have been abandoned, often without the site being cleaned up.
Meanwhile, recoverable reserves estimates for the Monterey shale – supposedly the biggest shale liquids play in the US – have been revised downwards by 96pc. In Poland, drilling 30-40 wells has so far produced virtually no worthwhile production...
Tim Morgan was global head of research at Tullett Prebon 2009-13 and is the author of 'Life After Growth.'
Fracking is a costly, toxic, wasteful losing game for investors, the natural environment (contaminating aquifers), and local communities. Fracking has a proven link to manmade earthquakes (called "frackquakes" in the US). Moreover, fracking development diverts attention and resources from implementing energy conservation policies and generating renewable energy investment.