Hughes report cited in Dissent Magazine
June 25, 2013
Post Carbon Fellow David Hughes work in PCI’s report Drill Baby Drill was cited in this article on unconventional oil and gas at Dissent Magazine.
From the article:
The decline rate in the Bakken Formation, the largest tight oil play in the United States, is 69 percent in the first year and 94 percent over the first five years, compared to 4 or 4.5 percent per year for conventional oil. As a result, producers must drill an estimated 6,000 new wells each year merely to maintain production, at a cost of almost $6 million per well.10 Add the cost of leasing the land, and the increasing number of wells needed as the most promising sites are drilled out and new wells become less productive, and one has an industry with an accelerating need for new capital.
The shale oil and gas producers depended on a further technology to develop the industry: not the technology of extracting energy but the means it developed for extracting funds from investors.11 With the collapse of the speculative home mortgage market in 2008, shale gas and tight oil offered Wall Street a new field in which to speculate and earn fees. The possibility of earning profits from fracking produced a boom in buying and selling on leases for drilling, and in the shares of companies projecting profits from the new reserves.
10 J. David Hughes, “Drill, Baby, Drill: Can Unconventional Fuels Usher in a New Era of Energy Abundance?” Post-Carbon Institute, February 2013, available at www.postcarbon.org.