North America Is Poised For Huge Natural Gas Shock

[NickB79]

http://www.businessinsider.com/north-america-is-poised-for-huge-natural-gas-shock-2012-6

It has long been our position at The Automatic Earth that North America is collectively dreaming with regard to unconventional natural gas. While gas is undeniably there, the Energy Returned On Energy Invested (EROEI) is dramatically lower than for conventional supplies. The critical nature of EROEI has been widely ignored, but will ultimately determine what is and is not an energy source, and shale gas is going to fail the test.

As we pointed out in Get Ready for the North American Gas Shock in July 2011, the natural gas situation is not what it seems at all:

The shale gas bubble is a perfect example of the irrationality of markets, the power of perverse short-term incentives, the driving force of momentum-chasing, the dominance of perception over reality in determining prices, and the determination for a herd to stampede over a cliff all at once.

The perception of a gas glut has driven prices so low that none of the participants are making money (at least not by producing gas) or creating value. We see a familiar story of excessive debt, and the hollowing out of productive companies dead set on pursuing a mirage.

[kristopher]

1. This backtracks to coverage by the New York Times

Here is the link to the NYT source documents and list of articles

http://www.nytimes.com/interactive/us/natural-gas-drilling-down-documents-4.html

[bananas]

2. I hadn't seen that

Googling for it I see that the NYT has a series of articles and special reports:
http://www.nytimes.com/interactive/us/DRILLING_DOWN_SERIES.html

[Kolesar]

3. Chesapeake Energy/gas company is overextended

The shareholders replaced the board of directors. There have been allegations that management steered sweetheart contracts towards friends of the CEO. That means that the owners were ripped off.