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rheinbergHere’s The Script, in four despicable acts:

Act 1. Fracking boom goes bust as production from shale gas and tight oil wells stalls out and lurches into decline.

Act 2. Oil and gas industry loudly blames anti-fracking environmentalists and restrictive regulations.

Act 3. Congress rolls back environmental laws.

Act 4. Loosened regulations do little to boost actual oil and gas production, which continues to tank, but the industry wins the right to exploit marginal resources a little more cheaply than would otherwise have been the case.

Photo courtesy of Shutterstock
Photo courtesy of Shutterstock
You can bet The Script is being written in operational detail right now at corporate headquarters in Oklahoma City and Houston, and in the offices of PR firms in New York and Boston. Each of its elements has the inevitability of events in a Shakespearean tragedy.
It’s fairly clear that the fracking bubble will burst soon—almost certainly within the decade. Our ongoing analysis at Post Carbon Institute documents the high per-well decline rates (a typical well’s production drops 70 percent during the first year), the high variability of production potential within geological formations being tapped and the dwindling number of remaining drilling sites in the few “sweet spots” that offer vaguely profitable drilling potential. Meanwhile, as the Energy Information Administration (EIA) has recently documented, the balance sheets of fracking companies are loaded with debt while surprisingly short on profits from sales of product—with real profits coming mostly from sales of assets (drilling leases).
eia-energy-companies-cash
The industry continues to claim that tight oil and shale gas are “game changers” and that these resources will last many decades if not centuries. Though the CEOs of companies engaged in shale gas and tight oil drilling are undoubtedly aware of what’s going on in their own balance sheets, hype is an essential part of their business model—which can be summarized as follows:

Step 1. Borrow money and use it to lease thousands of acres for drilling.

Step 2. Borrow more money and drill as many wells as you can, as quickly as you can.

Step 3. Tell everyone within shouting distance that this is just the beginning of a production boom that will continue for the remainder of our lives and the lives of our children and that everyone who invests will get rich.

Step 4. Sell drilling leases to other (gullible) companies at a profit, raise funds through Initial Public Offerings or bond sales, and use the proceeds to hide financial losses from your drilling and production operations.

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Comments

  • Well done. The sad thing is it was “environmentalists” who provided cover for nat gas and fracking to begin with. This was the bridge technology thingy deal done between O&G and environmental groups. Natural gas would fight climate change and put coal out of business. If it wasn’t for the larger environmental groups supporting natural gas development, via hydraulic fracking of tight formation like shale, O&G would have had to demonstrate lesser environmental impact to air, water and land with federally approved impact studies, fracking pilot programs, and baseline environmental monitoring. They didn’t have to do that. O&G simply went forward and played catch us if you can. Now that the shale plays are playing out faster than they hoped, its blame the environmentalists. This stuff needs to get nipped at the bud. That’s why environmentalists, environmental groups, and environmental bloggers need to get up to speed. Get ahead of the PR onslaught. Not just report on yet another thing happening impacting the environment. I don’t like playing environmentalist as doormat like some do. This post did a great job putting us ahead of the curve.

    • Kathy R. Selvage

      Michael, I think you’re right. At least one major green jumped on the bandwagon without the science. Without a lot of detail, we don’t win until we are out in front, and that has a lot of prequisites. It is hard to change anything once you have allowed an economy to grow up around it;

    • Wes_Scott

      It was not “environmentalists” per se who provided cover for the oil and gas industry – it was The Sierra Club, which took funding from the oil and gas company to use in its fight against coal. Under current director Michael Brune the Sierra Club is trying to walk back its own role in this fiasco, but we should not give them a free pass on this one. Sierra Club surrendered its objectivity and credibility by receiving funding from the oil and gas industry who is every bit as much their enemy as the coal industry.

      • Sorry to bring this up, but the list of “common sense” environmental groups working as ombudsmen between oil and gas and the people is pretty long. Environmental Defence Fund (EDF) has the daughter of hydraulic fracturing on its board. That would be George Mitchell’s daughter. EDF has spearheaded an effort to monitor methane emissions of natural gas exploitation from wellhead to distribution. The first report focused on wellhead and wellfield fugitive emissions. The report wasn’t very good. EDF also gave cover to academia and industry so the report was non actionable, but something to be used as a “road map” for oil and gas to volunteer its emissions reduction efforts. Environmental reports have to have agency authority for there to be much action for mitigation.

        Breakthrough Institute plays the field. NRDC even seems to go back and forth between environmental advocate and corporate pulling guard. NRDC in Illinois was in the closed room discussion on the New Albany shale regulations. In this role, they were acting as environmentalists.

        I could go further into the list of big green organization. Some have more involvement than others in the natural gas as a bridge technology game. There’s also media involvement such as New York Times as a promoter of fracking. Bloomberg, the billionaire, and his media outlet are also promoters. It was Bloomberg who gave EDF $9 million for the study I mentioned above.

        Environmentalists come in many shapes and sizes. An environmentalists could be the alley scrapper who picks through your recyclables for aluminum cans or it could be an engineer with 30 years of experience in cleaning up hazardous waste sites. Environmental is environmental. There’s really no purity measurement. One of the problems is that funding for environmental work, that is protecting the environment and cleaning up messes, comes from industry and government. Capping a landfill and cleaning up the groundwater costs millions. It also takes a lot of environmental science and engineering to get it done right.

        Environmentalists who moved into nonprofits throughout their careers probably changed their enthusiasm. One doesn’t make much being an independent environmentalists. Some call it environmental capitalism. Some call it environmental pragmatism. Whatever it’s called, it’s important to ask oneself, is the environment getting cleaner? The answer is no. This is mostly due to the reduction in regulation over the past 25 years. Much of it the fault of republicans. Blue Dog Democrats and the democratic leadership council didn’t help at all. They let regulations laps and defanged much of the criteria in the spirit of triangulation and outright ignorance of what environmental protection requires.

        • Wes_Scott

          I cannot argue with you about the big environmental organizations, all of which have been a total failure on what should the core of their advocacy. I support none of them because their first order of business is always securing enough money to pay their corporate executives.

          I also put no faith in ANY political party – they all operate solely for their own survival.

          • I’ve worked in environmental protection (pollution control) and remediation (cleanup) for over 25 years and never heard of these groups until recently. I’m redirecting my interest towards environmentalism so I’ve had to get up to speed on these groups. I don’t want to become cynical. And won’t. Gotta vote. Make sure the campsite is cleaner when your leave than it was when you came. (That’s a life on earth metaphor, I’m trying to use.)

            My issue is with this new philosophy of environmental protection without governmental agency. It’s environmental protection without regulation and compliance requirements, under the assumption that people and corporations will do what best for shareholders and the environment. And it doesn’t work. Many of the larger environmental groups have positioned themselves as extra-regulators, working outside of traditional governmental agency to write policy and monitor industry’s operations. These efforts have traditionally been carried out by fed and state agencies, acting as agents for residents and citizens on issues relating to human health and the environment. I’m seeing policy getting ghost written by nonprofits. And monitoring spearheaded by nonprofits. Not cool.

            Environmental protection policy has eroded over the past 25 to 30 years. However, industry still complains about environmentalists ruining the economy. The days of too much environmental regulation are long gone. Many environmental groups see a market in becoming conciliator between industry and environmentalists. The problem is the middle or a practical approach to environmental protection has been moved pretty much over to the wishes and desires of industry. Not the environment.

    • VAppalachia1

      With the exception of Food and Water Watch, EarthFirst and Greenpeace, it seems like all the other environmental groups are testing the winds before fully committing to public advocacy for what is really needed: a full-out ban on fracking unless this sleazy industry proves it can do it safely (an impossibility, of course, as the impact studies, pilot programs and baseline monitoring you mention would have provided proof to the contrary, had they been undertaken and not scuttled by the Energy Policy Act of 2005).

      Although many environmental NGOs are involved in this fight in various states, they all seem afraid to put pressure on various relationships they have cultivated within the interwoven political and foundation communities.

      So who is leading (and gradually winning) this fight? The myriad amazing, dedicated local grassroots organizations and independent bloggers, filmmakers, networkers, scientists, leaders and caring individuals who continue to work and to tell the truth, tirelessly and mostly on a volunteer basis, out of pure human compassion for people, creatures and the world’s water supplies in harm’s way.

      It may come naturally to the gas industry to demonize large enviro groups, but they’ll have a tougher time bullying individuals and tarring these opponents environmental advocates. They’ll soon learn that, on the ground, the people opposing the fracking madness are not necessarily doing so out of purely environmental concerns. They are average, taxpaying citizens who have been backed into a corner by industry colonizing their communities. Those who have lost or stand to lose health, property and livelihoods have little else to do but fight.

      And we will.

      • Call me naive and hopelessly old school, but US EPA and state environmental agencies are suppose to be act as agent for citizens and residents. I realize that is becoming less the case year after year. A significant number of educated and active individuals would probably realize that that’s what those agencies are suppose to do. And demand government agencies act in such a role. My fear is that republicans/tea partiers/libertarians will shutter US EPA and many state environmental agencies, leaving a vacuum of representation. A group of individuals can work only so effectively against a well coordinated group interesting in exploitation of natural resources and unfettered pollution discharge. Can enviro NGOs step up to the role of people’s agent? Do they even want to?

        • VAppalachia1

          With you on all concerns, and those questions are important ones. Especially at a time when venues for good journalism are shrinking and underfunded.

          I hate to think how much more knowledgeable we, as a country would be, if the NYT had not pulled Ian Urbina off the fracking story. What a disappointment it is that a respected journalistic source could fall under the spell of the fracker state.

          Would like to talk EPA with the libertarian mayor who happens to be responsible for the only municipal fracking ban in the state of Maryland. Not sure if he’d have all the answers, but it would be an interesting conversation.

        • Margie Vicknair-Pray

          You are naive. They stopped working for the people a long time ago; right around the time Dick Cheney started up the power ladder in the late 1970s. He has worked at destroying the U.S. for profit (his and his billionaire buddies) ever since. He and his evangelical-oriented friends, the Bushes, believe that it is their duty to destroy the Earth, start a war in the Middle East, and so bring on Armageddon asap. James Watt, Bush Sr’s Secretary of the Interior, admitted it and eventually had to be removed, so since then they work at it a little more behind closed doors – usually fund-raising dinners for their shill pseudo-religious groups that want to end the Earth now! These fools actually believe that the rest of us will be “left behind” to suffer and die horrible deaths as they rise up to their sick idea of heaven. You would think that these Judas imitators would have learned from their namesake – it’s not wise to try to force God’s hand.

  • joseph_hempfling

    a familiar script all under the guise of RUSH FOR PROFITS AND NATIONAL SECURITY ! AND A BIG LIE that they can no longer sustain. REMEMBER; YOU CANNOT FOOL ALL THE PEOPLE ALL THE TIME !

  • 801ncary

    This Script is being acted out in North Carolina every day! The ALEC-dominated leadership in the legislature and a Governor with a 25-year career with Duke Energy have just enacted a bill to begin Fracking permits early next year BEFORE the rules and regs have been reviewed and approved. The regs are in a review period now, but the the Department of Environment and Natural Resources (DENR) — the agency charged with preserving public health and safety re all things environmental — is led by appointees from the oil and gas and ancillary industries. Moreover, the commission charged with writing the regs was comprised of appointees with flagrant financial conflicts of interest, I.e., owning thousands of acres of land in the target Fracking areas. So, the so-called review process is a sham! Worse still, the Fracking bill is mainly a ruse so that the oil and gas proponents can initiate what they really want — offshore drilling.

    • darkmark

      every time i see Duke Energy mentioned i remember that the board of directors of Nature Conservancy has this man on it:

      Vice Chair of Nature Conservancy
      James E. Rogers
      Chairman, President and CEO, Retired
      Duke Energy
      Charlotte, North Carolina
      Term: February 2012 – October 2021

      then there’s:

      Board Chairman of Nature Conservancy
      Craig O. McCaw
      Chairman & CEO, Eagle River Inc.
      Santa Barbara, California
      Term: October 2010 – October 2019

      Eagle River Investments LLC is a venture capital firm. The firm typically invests in telecommunications and technology companies.

      we know what great ethical people run Duke Energy, here’s news on Eagle River Inc:

      Crest Financial Limited filed a complaint in the Court of Chancery here against Sprint Nextel Corporation, Sprint Holdco LLC, Eagle River Investments LLC, Clearwire Corporation and the members of the board of directors of Clearwire. The lawsuit alleges that Clearwire abetted and the other defendants breached their fiduciary duties by allowing Sprint to extract for itself the value of Clearwire’s high-speed, broadband spectrum to the detriment of Clearwire’s minority shareholders.

      i know this is kind of off topic but i used to own some of DUK stocks. until i found out their relationship with ALEC, tight. now i ding them whenever i can. what are these people doing at nature conservancy. we used to donate to that outfit too.

    • Evan Alfred E. Jones

      I went to the Capital several years ago to lobby against the bill and it was already decided it was a go a head beforehand. The politicians had the “open” meeting held in a small room and limited space and time for citizen address. The night of the bill the legislators “debated” all night and the deciding vote was made by someone who thought they were voting against it but actually voted for the measure here in North Carolina.
      We ae no better than crack addicts when it comes to fossil carbon fuel energy

  • John Rumpler

    Richard,

    Your column is a good antidote to the regular investor pitches we see that the fracking boom is about to make real profits, any day now. Here is the latest one.

    http://www.accesswire.com/viewarticle.aspx?id=418815

    John Rumpler,
    Environment America

  • Thomas DeSoto

    Scam artist like the Oil and Gas profiteers such as Dick Cheney and the Kock Brothers are slowly becoming exposed for the criminals that they truly are as more people become negatively effected by their short sighted Ideology to destroy are environment before anyone finds out how destructive their methods of Fracking are to the public and our fresh water supplies through-out the world.

  • Margie Vicknair-Pray

    That is exactly the process they are trying (successfully most of the time) in Louisiana’s shale regions right now. They’ve already destroyed the state’s northern shale plays with thousands of horizontally fracked wells there, and are rushing to implement the same processes in southeast Louisiana – the area known as the Florida Parishes. They have paid off politicians (in Louisiana it seems to be more blatant than in some other states), and are now pushing the process into full speed. They expected to be drilling in St. Tammany already, but a more educated and better funded group of citizens has slowed them down and stalled the process, at least for a bit.
    It is a known fact that the oil and gas industry has collapsed aquifers in northwest Louisiana (and probably other places), and poisoned aquifers wherever they have completed fracking operations. How can this process be allowed? This should not be a battle for individuals! State agencies should be protecting us from rampant and toxic development.
    Our governor here was bought out by oil and gas long ago, and recently signed a law that stops our state agencies from suing corporations for destructive and illegal behaviors. “For the people,” right? He just doesn’t mention that the only people he’s for are the ones who donate huge sums to his PAC funds. Are other states similarly ham-stringed? Are every governor and state agency already owned by corporate interests? Is there any state out there that still has elected officials who work for the good of the state and its people?

    • Rex Trimm

      “Are other states similarly ham-stringed?” You would not believe Pennsylvania, West Virginia and Ohio. I could tell you about the corruption on the state, county and local levels within the commonwealth of Pennsylvania but it would be a horrible waste of both our time. Let me just say, these Texans and Okies come here and it’s the wild west. And while certain municipalities have shown they aren’t to be underestimated in terms of their legal acumen, money and promises of seems to corrupt representatives to violate our states constitution. It’s only going to be a matter of time now that our legal system will start to see public outrage and outright dissent in the courts and challenges against elected officials, city governments… The oil companies are hostile when they don’t get their way, they sue. They prefer to bribe.

      • Rex, sorry to take so long to respond, but I’ve been off tilting at windmills. You’re talking to someone from Louisiana, here… queen of the Third-World States of the U.S. We have politicians that have been bought for so long that there is hardly a soul left who remembers what it means to have the citizens represented in our political system!
        We’re the home of that super stand-up comedian, Edwin Edwards! (aka the Guv) So, needless to say, we are battling uphill all the way to keep more poisons (BP’s already killed most of the coast) out of our waters.
        Few of our politicians seem to remember that they live here, too. Apparently they plan on getting big enough kickbacks that they will be able to move all of their family and friends to Bermuda. Or maybe just them and their girlfriend – who knows? But either way, they must not intend to live here very much longer, or they are even more ignorant than I thought possible. How much money will it take to buy them? How much money will it take to find usable, non-toxic water? I wonder if at some point they’ll be smart enough to realize that what they’re being bought with isn’t drinkable?

  • JohnR

    Happy Monday!

    • Jeff

      A happier Monday to you!

  • Jeff

    The only solution is to engineer the economy to be sustainable and that includes reversing human population growth, by coercing people to create fewer people who already do not exist. Everything else is pure delusion. No fossil fuel is a bridge to anything else, only delusion. The economy is a figment of our minds while the physical world is reality. One cannot change reality, no matter how bad one believes in their preferred ideology.

    • The second an environmentalists mentions population diminution as the solution to pollution, an entire group of people concerned about the environment, that don’t feel that way, drops out of the conversation. I don’t have kids and don’t care about others interest in procreation. The fastest way to reduce the population is to not address climate change and reduce natural resources protection measures. Another way to reduce population is to not put so many of the worlds people under constant duress. Nature seems to magically increase production of seeds and offspring when environmental stresses and conflicts are applied. This is even more than case than religion or societal mores. Plus, too many times there’s one group harping about another group having too many babies. Only to find out that members of its own group have some of the largest families on the planet.

      I live in a working class area of Chicago. Many are not really into specific environmental issues, but our concerned about their health and wellbeing. They do, however, think that when environmentalists talk about population explosion and the need to cull people, environmentalists are talking about culling them. Not the world at large. There’s also a history of very smart and seemingly elite people interested in reducing the population of others who are less fortunate. Margaret Sanger, the nice Irish Catholic girl, got her ideas on family planning from the crowded Irish immigrant slums of Tammany Hall. Environmentalism still to this day has a reputation for being populated with elites. That’s got to stop.

  • rolandjames_318

    About 5 years ago, I was approached by anti-mountaintop removal activists to help sponsor anti-MTR meetings in my part of the country. I said i would do it if Global Climate Change was also part of the program. The reply was no. In 2010, anti-MTR activists appeared on NPR and Colbert and said that coal was fine as long as it wasn’t done with MTR.
    Last year, a similar situation with fracking.

  • SEAN THOMAS

    It seemed like there were good reasons to link the poisoning of Toledo’s water supply to Fracking, but nobody pursued it.

  • Briget Shields

    It wasn’t the “Big Greens” or the so called “Environmentalists” that have exposed this toxic industry. It’s been the Grassroots, concerned citizens that became active in the name of saving our lives, property, environment and our democracy.

    If this industrial process was good for the country and the world people would be embarrassing it as a way to save the planet for the generations that will follow us. Instead people are sick, animals are dieing, air, water and soil is contaminated along with greedy politicians who instead of protecting the people who elected them are promoting this toxic industry all for $$.

    When you have thousands of people living without potable water in PA and everywhere else fracking is happening it’s only a matter of time before the people start to take action. What has happened in the Shale-fields is criminal. It’s been the citizen journalists, neighbors and decent tax paying citizens who have been at the forefront of stopping this toxic industrial process. We will not give up until it is stopped. How can we when everything that matters in life is at stake. The wealthy CEOs don’t have water so contaminated you can’t even bath in it. They don’t have toxic air seeping into their homes. If this process was safe there are many other things we would rather be doing than fighting the industry that controls the worlds economy. But we can’t drink money and our property is all we have.
    When all that is gone there is nothing left but to fight to stop it before it’s too late for those that will come after us. We have truth on our side and that’s what we’re now seeing in the scientific evidence that is being released. It’s now time for the world to stop and realize this is not the answer to our energy needs. Gas isn’t cleaner than coal and we need to move to plan B. The grassroots will not stop until the fracking stops and we live in a world with renewable, sustainable energy sources. Give it to the O&G industry to promote. All they care about is the money and at least we will have a healthier environment to live in.

    • Frank Chernega

      Animals are dying, our pets heads are falling off, the sky is falling!! Why have 33 states permitted drilling and not one has stopped? Why aren’t there waves of Pa residents pouring over the NY/PA border fleeing all this devastation to frack – free NY? Why are PA land values so
      healthy and robust contrary to all the lies being promulgated by the anti – driller pro 1%ers? – http://www.realtor.com/realestateandhomes-search/Montrose_PA?source=web Why did former NY DOH commissioner Dr. Nirav Shah move to a state that just recently passed drilling regs, California? He could have moved to one of the 17 states that have not passed regs primarily
      because they have no gas bearing shale but he didn’t. That drilling must really be terrible for Dr. Shah to have moved to California…lol! I suspect that you may be on the payroll of the New York Public Interest Research Group (NYPIRG) – http://www.nypirg.org/outreach/ $8,000 from a “grassroots” organization to steal the mineral rights from impoverished farmers and landowners…….despicable.

      • Jake Jackson

        You’ve been drinking from the Frack Pitts I see. Really, what do we have to gain by making any of this stuff up. Just do some research and see what’s happening in the Shale fields across the country. It’s all the same and people are getting more active with every contaminated well, sickened animal and worried communities the truth is coming out. This is bad business and it needs to stop!

        • Frank Chernega

          You have nothing to gain, but these folks have A LOT to gain……cheap land as more and more farms go belly up due to foreclosure – http://nypost.com/2013/03/19/blueblood-agenda/ Here’s a news article to prove the op – ed from the NY POST – http://polhudson.lohudblogs.com/2014/07/21/when-nyc-residents-move-its-more-often-to-upstate-ny/ Here’s a picture of some of the vultures who have been buying up NY upstate properties to build their summer mansions on farm land that was in upstate families for generations – http://i2.wp.com/inhabitat.com/nyc/wp-content/blogs.dir/2/files/2012/08/AAF_8.jpg Save your self righteous indignation for someone else and answer my questions from my prior post instead of using the spin of “sickened animals”, etc. Here they are again: Why have 33 states permitted drilling and not one has stopped? Why aren’t there waves of Pa residents pouring over the NY/PA border fleeing all this devastation to frack – free NY? Why are PA land values so healthy and robust contrary to all the lies being promulgated by the anti – driller pro 1%ers? – http://www.realtor.com/realest… Why did former NY DOH commissioner Dr. Nirav Shah move to a state that just recently passed drilling regs, California?

  • KS

    Also in the news …enviros are blamed for increase in robbery, rape and murder

  • Taxpayer1301

    The underlying truth is that fracking–because of how fast the wells play out and the low quality of what is extracted–is a losing proposition with the energy companies running a ponzi scheme on investors. When the bubble bursts, those left holding gas investments then will be SOL.

  • Thomas Martin

    There is no safe fracking. Valuable ground water will be polluted. The surface environment will be harmed. There will eventually be earthquakes. This reminds me of the “clean” coal routine. They promote the idea of eliminating rules, especially those that support the environment to prop up business. They have infiltrated red state legislatures to eliminate government and to promote privatization of public services.

  • Toni Walsh

    Keep in mind, folks: The failure to prove man-made global warming over the last 20 years makes the case for it even less plausible.

    • Margie Vicknair-Pray

      Toni, you are kidding, right? Over 90% of weather-related scientists blame our activities for at least part of the warm-up. If you look at only non-weather trained “experts” and the handful of meteorologists who owe their living to industry backed grants, the numbers get better for your view, but still not nearly”unproven”. Your apparent ignorance of the huge body of research showing the exponential growth of warming factors since the industrial revolution is remarkably flat-earth like in it’s simplicity. Do you also believe that we faked the trips to the moon?