Why It Matters If Fracking Companies Are Overestimating Their ‘Proved’ Oil and Gas Reserves
Back in 2011, The New York Times first raised concerns about the reliability of America’s proved shale gas reserves. Proved reserves are the estimates of supplies of oil and gas that drillers tell investors they will be able to tap. The Times suggested that a recent Securities and Exchange Commission (SEC) rule change allowed drillers to potentially overbook their “proved” reserves of natural gas from shale formations, which horizontal drilling and hydraulic fracturing (“fracking”) were rapidly opening up.
“Welcome back to Alice in Wonderland,” energy analyst John E. Olson told The Times, commenting on the reliability of these reserves after the rule change. Olson, a former Merril Lynch analyst, is best known for seeing the coming Enron scandal 10 years before the infamous energy company imploded in 2000.
Today, those same rules have allowed shale drillers to boost their reserves of oil, as well as natural gas. As a result, these “proved” reserves, which investors and pipeline companies are banking on, could potentially be much less proven than they appear.
And the unprecented degree to which this is happening in the shale industry casts a shadow of doubt on the purportedly bright future of America’s booming oil and gas industry.
Rising ‘Proved Undeveloped’ Reserves
- Flip This Well: How Fracking Company CEOs Get Rich While Losing Billions
- This Federal Policy Enabled the Fracking Industry’s $280 Billion Loss
- As Rest of World Moves Towards Renewables, US Keeps Offering Exclusive Tax Breaks for Fossil Fuels
- How Wall Street Enabled the Fracking ‘Revolution’ That’s Losing Billions
- GOP Tax Law Bails Out Fracking Companies Buried in Debt
- Low Octane: The Surprising Reason Shale Oil Makes a Poor Fuel for High-Tech Cars and Trucks
- Despite Disappointing Returns, Oil Driller Pushes Ahead with Fracking Near Rare Texas Wildlands
- The Secret of the Great American Fracking Bubble
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