Home > Shale Hype > The Revolution That Wasn’t: Why the Fracking Phenomenon Will Leave Us High and Dry

The Revolution That Wasn’t: Why the Fracking Phenomenon Will Leave Us High and Dry

October 28, 2014


A new, landmark report shows that hopes of a long-term golden era in American oil & gas production are unfounded.

America’s energy landscape has undergone a dramatic shift over the last decade—literally and figuratively—as a result of the widespread use of horizontal drilling and hydraulic fracturing (“fracking”). Whole areas of the country have been transformed in a matter of months, while the fossil fuel industry has reversed the decades-long decline in crude oil production and increased natural gas production to record highs. Thanks to shale gas and tight oil (“shale oil”), by 2013 annual crude oil production was 24% higher and natural gas was 20% higher compared to just ten years earlier.

While this achievement is impressive, it pales in comparison to the sea change that has been triggered in “conventional wisdom” about our energy future. In a few short years we have gone from President Bush warning that the U.S. was addicted to oil and dangerously reliant on Middle East imports to fears of a production glut, as a recent New York Times article stated:

With domestic oil production growing month after month, many oil experts predict that the country’s output will rise to as much as 12 million barrels a day over the next decade, which would mean the country will be swimming in oil the way it is currently dealing with a surplus of natural gas.

Analysts at Turner, Mason & Company, a Dallas engineering consulting firm, say the country could hit a saturation point when production hits 10 million to 10.5 million barrels a day, at which point large exports will become necessary or drilling and production may have to slow.

Running Down a Dream

While the so-called “shale revolution” came as a complete surprise to most analysts and government forecasters, the conventional wisdom now appears to be that this is the beginning of a long-term transformation. Production of shale gas and tight oil in the U.S. is expected to grow at breakneck speeds throughout the decade, with natural gas production increasing for the next 25 years while domestic oil production peaks by the end of this decade and slowly declines to near current levels by 2040. Not only will supplies expand, according to conventional wisdom, but oil and natural gas prices will remain stable and relatively low for decades to come.

Far from being an academic exercise, the implications of this shift in conventional wisdom are profound and far ranging—influencing geopolitics, climate policy, domestic manufacturing and jobs, investments in renewable energy, and the health and well-being being of communities across the country. In fact, the perception of a long-term oil and gas boom has led to:

Putting aside important questions about the validity of these claims (for example, that shale gas is better for the climate than coal), assumptions that the “shale revolution” is a long-term game changer are undeniably transforming energy policy in the U.S. and abroad. But what are these assumptions based on?

Fool Me Once, Shame On You. Fool Me Twice…

While oil and gas companies and energy market analysts regularly come out with their own estimates, the U.S. Department of Energy (DOE) is universally viewed as the preeminent source of unbiased projections of future U.S. energy supplies. Each year the DOE’s Energy Information Administration (EIA) releases its Annual Energy Outlook (AEO), which provides a range of forecasts for energy production, consumption, and prices.

Policymakers, the media, investors—almost all receive the EIA’s estimates with little to no skepticism, despite the agency’s poor track record. A quick glance at what the EIA was forecasting just ten years ago is illustrative. In its 2004 AEO Reference Case, the EIA forecast oil prices to be $23.61 per barrel in 2010 and $26.72 per barrel in 2025. In reality, oil prices in 2010 were three times higher than forecasted and persistently remained over $100 a barrel until just a few months ago.

More recently with shale gas and tight oil, the EIA has had to significantly correct for previously optimistic estimates. In 2011, the EIA was forced to cut its estimates of technically recoverable shale gas in the Marcellus Play by 80% and Poland by 99%, after the United States Geological Survey came out with much lower numbers. At the time of the Marcellus downgrade, an EIA spokesperson said, “We consider the USGS to be the experts in this matter… They’re geologists, we’re not. We’re going to be taking this number and using it in our model.”

Earlier this year, the EIA slashed its estimate of technically recoverable tight oil from California’s Monterey Formation—which just three years previously had been estimated to hold two-thirds of all U.S. tight oil—by a whopping 96%. The author of the original EIA estimate, INTEK Inc., admitted that it had been derived from oil company presentations rather than hard data. The downgrade occurred a few months after Post Carbon Institute published an analysis that showed—using actual production data from the Monterey Formation—that the federal government’s estimates were wildly optimistic. But during the three years when the EIA’s initial estimates were rolling off the tongue of every oil and gas industry lobbyist in California, policy discussions in the Golden State were dominated by discussions of how to use the wealth from this soon-to-come bonanza.

In the Department of Energy’s defense, the EIA conducts regular retrospective reviews (which clearly show how badly they’ve missed the mark) and provides disclaimers to its estimates and forecasts.

Estimates of technically recoverable tight/shale crude oil and natural gas resources are particularly uncertain and change over time as new information is gained through drilling, production, and technology experimentation. Over the last decade, as more tight/shale formations have gone into production, the estimate of technically recoverable tight oil and shale gas resources has increased. However, these increases in technically recoverable resources embody many assumptions that might not prove to be true over the long term and over the entire tight/shale formation.

However, like most fine print, these are hardly ever read or noted and seem to have no impact whatsoever in tempering optimism—either within the EIA or amongst the policymakers, media, investors, and general public who rely upon it.

Drill Deeper and What Do You Find?

Considering the EIA’s poor track record and the enormous implications that result from its forecasts, we at Post Carbon Institute felt it critical to closely examine the EIA’s most recent Annual Energy Outlook. Using actual production data from over 80,000 wells, and coupled with an understanding of geology and trends in technological advances, we analyzed the production potential of the top twelve shale gas and tight oil plays in the U.S. Together these plays account for 89% and 88%, respectively, of current shale gas and tight oil production. (These same twelve plays also account for 82% and 88% of the EIA’s reference case forecasts.)

The result of our analysis—Drilling Deeper: A Reality Check on the US Government’s Forecasts for a Lasting Shale Boom—was just released.

What did we find? That the so-called “shale revolution” has more in common with the California Gold Rush and the Dot-Com Bubble than a new golden age of energy abundance. The implications of this are profound. If the “shale revolution” is nothing more than a temporary respite from the inevitable decline in US oil and gas production, then why are we rushing to rewrite our domestic and foreign policy as if we’re going to be “Saudi America” for the rest of the century?

And it raises painful questions about whether all of this—the tens (potentially hundreds) of thousands of wells drilled across the landscape; the billons of tons of fresh water used and contaminated; the millions of truck trips and damaged infrastructure; the NOx pollution and methane emissions; the flaring wells in North Dakota that can be seen as brightly at night as Minneapolis from space; the social impacts of booms and busts on communities across the country; the hundreds of billions of dollars invested in fracking rather than renewables; etc.—is worth it.

It’s not too late to choose a different path, but first we have to recognize that the yellow brick road we’ve been walking isn’t what it’s fracked up to be.

29 Comments, RSS

  • well done, hard, necessary truths and my essay in support: What’s not to like about Fracking?
    I admit to extreme prejudice concerning the multiple dangers
    of fracking.

    What’s not to like about Fracking? You could like the danger
    to human health and all life forms. You could like the environmental threat to
    water, air and soil. You could like the earthquakes. You could enjoy the cost in money and
    disruption to local communities. Of the
    cost to the states .You could like the media hype or the credit bubble. Or you could like the actual energy drain
    because it has poor Energy Return on Energy Invested. So much to enjoy, so
    little time.

    Read more at: http://sunweber.blogspot.com/2014/05/whats-not-to-like-about-fracking.html

  • Thank you, Post Carbon Institute, for publishing these fact filled reports. There are so many Fox News talking points out there it is nice to point to these as references. Keep up the great work!

  • The EIA’s estimates are always wrong, and most smart people don’t give them much attention.
    Their actual data of what has happened is indisputable.
    The Marcellus field has been downgraded because Calif. has banned fracking. so the recoverable oil estimate had to be lowered. It’s not that there’s less oil there, it because it’s now unrecoverable.

    They always make a big deal about the decline rate with charts, but they never show a chart of the average conventional well and a shale well together.

    It’s such a surprise that THIS site would come to the conclusion that fracking is bad. 😉

  • No, California has most definitely not banned fracking. And the Marcellus shale is in Pennsylvania. Nice try though!

  • Sorry I meant the Monterey, I was doing 2 things at once.
    And Calif has effectively banned fracking.

  • This is an industry website where companies can self-report fracked wells, and there are over 2000 entries in California: http://www.fracfocus.org/

    Again, that’s just what the industry has self-reported, because until recently there wasn’t even a law in California that companies had to disclose where they were fracking.

    So no, the state has not “effectively” banned fracking either.

  • So I went to your link and there’s no wells for Calif. sense 2011.


  • there’s 100 pages of results. go to the end. here’s the most recent one, for instance:

    04-030-52555-00-00 9/8/20149/8/2014 California Kern – 30 Aera Energy LLC 7359E-235.433321-119.684498NAD83

  • No one said there was no drilling, but the horizontal fracking has been effectively banned !

  • But it’s not a horizontal frack well !

  • If you have any proof of this, feel free to provide it at any point.

    Meanwhile, here’s more proof that fracking has not been “effectively banned” in California: It was recently confirmed that billions of gallons of fracking wastewater contaminated Cali aquifers (http://www.biologicaldiversity.org/news/press_releases/2014/fracking-10-06-2014.html). Where’d that come from, then?

  • Your link didn’t say it was from fracking fluid !
    All oil wells produce waste-water. Calif. has been conventionally fracking wells sense the 50’s.

  • This is excellent. Thank you for this work and the report. Just one (not insignificant) omission from the your list of things the belief in a boom as led to: an explosion in pipeline infrastructure projects to transport all of that oil and gas, projects that disrupt lives, trample property rights, erode local authority, divide communities, and threaten natural resources.


  • Yes, take down all the infrastructure ! That’s the answer !

  • Well if infrastructure just “disrupt lives, trample property rights, erode local authority, divide communities, and threaten natural resources” then it needs to go !

  • sigh.

  • Shows how silly your original comment was !

    Have a nice infrastructure free day.

  • Right. You go ahead and keep telling yourself that.

  • Here are the facts about the state of California fracking regulations:

    Draft Fracking Regulations

    The emergency California fracking regulations that went into effect on January 1, 2014 require that DOGGR begin to collect basic information about fracking, including where and when it is happening, what chemicals are being used, how much water is being used and where well operators are obtaining it. The emergency regulations also require groundwater testing before and after operations and neighbor notification before well stimulation takes place. Further, it provides the neighbors an opportunity to get their wells or surface waters tested before and after, which would be paid for by industry. DOGGR has until January 1, 2015 to develop more detailed final fracking regulations, and oversee the completion of an independent scientific study of well stimulation and the associated risks.2The regulations will begin on July 1, 2015. The deadline was pushed back in order to allow better coordination between DOGGR and the State Water Board.”


    So, fracking has not been banned and is being critizised for not being strict enough. Fracking can be and is being used throughout the state.

  • Come to calif. and try to get a permit for a new horizontally drilled fracked well.
    It will take you a ton of money and in about 5 to 10 years you may get through the permit process to start drilling.
    Or you could take the your money to another state and be drilling and making money within a year or year and a half. Where do you think the smart money is going ?
    The state can effectively ban something without coming out and banning it.

    Have a nice day.

  • No, Dennis, humans just go after the best resources first and then climb higher on the tree branches. We humans are going to burn everything, everywhere and kill everything in an attempt to keep BAU. We will ultimately fail but you are living in a dream world if you think some regulations are going to stop humans from getting any energy source that just might make their SUVs go a few more miles.

    As the report states, the regulations are mild and many want far more strict regulations. That may come in the future but, again, that will not matter. The regulations will be meaningless if Americans are starving to death due to a lack of energy. Do you understand?

    The California shale formations that were going to save the world are just much harder to get to, because of the crumpled up geology. That is why they were degraded more than 90%, not because of the regulations. That is just silly!

  • I have to side with Mike in the disagreement below: It’s obvious there’s fracking going on in California. Real obvious.

    Leaders of environmental organizations, Indian Tribes and fishing groups
    strongly criticized Brown for signing Senator Fran Pavley’s Senate Bill
    4, the green light for fracking bill that clears the path for expanded
    fracking in California, in September 2013. The bill made California
    Environmental Quality Act (CEQA) review of fracking permits optional and
    prevented the imposition of a moratorium on fracking for 15 months.


    ‘Massive Dumping of Fracking Wastewater into Aquifers Shows Big Oil’s Power in California’
    October 15, 2014
    As the oil industry spent record amounts on lobbying in Sacramento and
    made record profits, documents obtained by the Center for Biological
    Diversity reveal that almost 3 billion gallons of oil industry
    wastewater were illegally dumped into Central California aquifers that
    supply drinking water and irrigation water for farms.


  • Cosima Krueger-Cunningham

    Thank you! This report is welcome here in Colorado. It’s very important that the COGA, the COGCC and Governor Hickenlooper’s ongoing task force on fracking see this report and, more importantly, be required to respond publicly to its findings.

  • I was somewhat surprised at the following form the Institute:
    “A tempering of investments in renewable energy and nuclear power”
    Nuclear ?
    What about the dangers? I think this one is up for debate.
    SGR in the UK:
    Other links:
    Scientists for Global Responsibility (SGR) UK:
    “A knock-on effect from large amounts of funding going into hi-tech
    R&D is that we can get what is known as ‘technology lock-in’. This
    is where society becomes so reliant on particular technologies that it
    becomes very difficult and expensive to change direction if they are
    found to be problematic. One classic example is nuclear power. Political
    decisions over the last half-century have meant that the lion’s share
    of R&D funding for energy in industrialised countries has been
    directed towards this technology, while alternatives like renewables
    have seen much lower levels of investment. Figures from the
    International Energy Agency show that R&D on renewables has rarely
    reached 25% of that spent on nuclear fission during the last 25 years13.
    The consequence now is that attempts to phase out the technology due to
    concerns about, for example, links to nuclear weapons, vulnerability to
    terrorism or the dangers of nuclear waste are countered by the argument
    that we cannot afford to do without it because alternatives (eg
    renewable energy) are not sufficiently developed.”

  • Hi Theresa, we are not advocating for tempering or extending investments in this article – we’re simply referring to consequences of a perceived long-term oil and gas boom in the US.

  • Thank you. Keep up the great work!

  • Absolutely will do.

  • You’re most welcome, EVHappy. Would it be crass to mention to everyone that it’s a good time to support the work of Post Carbon Institute (www.PostCarbon.org/donate)?