Front page story in Sunday 6/26/2011 NY TImes: http://www.nytimes.com/2011/06/26/us/26gas.html?_r=2&hp=&pagewanted=all NOTE: Check back daily with www.nytimes.com This is the first of a series of articles on Natural Gas and its unfufilled promises.
Sadly, we cannot trust this type of article. It is light on facts and based largely on some anonymous emails and a few isolated observers who could be crackpots. The NY Times has no journalistic integrity, and like the rest of the mainstream media, is more interested in pursuing leftwing agenda than reporting fact. Here we have to take into account the fact that the NYT is fully invested in climate change hysteria. Burning fossil fuel therefore is something to be discouraged, from their perspective. Likewise, environmentalists, always on the lookout to spoil extractive industries, have worked themselves up about fracking, which is a key to shale gas production. I know there is some controversy among reputable oil and gas people about the economics of shale plays. Oil wells in the bakken shale(ie, North Dakota,etc) pay for themselves in about 1 1/2 years at current prices. So they are highly profitable, even though the decline is fairly rapid. I'm not familiar with the economics of the gas shales like the Haynesville. I believe they are only marginally profitable if at all at $4 gas. At $8 gas, I would think they are highly profitable, no matter how fast they decline. One problem in the NYT article is the way they shifted between talking about profitability and long term recoverability, as if the two are synonymous. Of course they are related, but price is far more important to profitability.
The prices mentioned don't seem to take into account liquids extraction, the highly profitable part. Just listening to some of the CC from EPD and companies alike will make you aware that this $4+ nat gas price isn't really what is driving the exploration. It is more like the equivalent to $7+ when you add NGL (propane and ethane).