Chesapeake Energy and its high-profile CEO Aubrey McClendon issued a blistering response to a Sunday New York Times article that questioned the profitability and staying power of the U.S. shale-gas drilling boom launched in North Texas' Barnett Shale.
"The Times story was obviously motivated by an anti-natural gas agenda," McClendon said in a statement posted Monday on the company's website.Meanwhile, U.S. Rep. Edward Markey, D-Mass., citing a related Times article published Monday, said he wants the U.S. Energy Information Administration to justify "optimistic estimates" for shale-gas production. The Star-Telegram published versions of both articles.Chesapeake, the second-largest natural gas producer in North Texas' Barnett Shale, characterized the Times' Sunday article as "inaccurate and misleading."The newspaper said its review of Barnett Shale production data from 2003 to 2009, for more than 9,000 wells, "shows that -- based on widely used industry assumptions about the market price of gas and the cost of drilling and operating a well -- less than 10 percent of the wells had recouped their estimated costs by the time they were 7 years old."The data "suggest that if the wells' production continues to decline in the current manner, many will become financially unviable within 15 years," the article said. "The data show that while there are some very active wells, they are often surrounded by vast zones of less productive wells that in some cases cost more to drill and operate than the gas they produce is worth," the article said.The Times said it viewed "hundreds of industry e-mails and internal documents" in which "energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally overstating the productivity of their wells and the size of their reserves."The article said an unnamed analyst from IHS Drilling Data, a research firm, wrote in 2009 that "the word" in the industry was "that the shale plays are just giant Ponzi schemes and the economics just do not work."McClendon said Chesapeake "stands behind all of its statements to shareholders, partners and the public regarding our natural gas discoveries and production.""Our industry's operations and investment decisions are informed and guided by the best geoscientific, petrophysical and 3-D seismic data available and analyzed by some of the best drilling, completion, production and reservoir engineers in the business," he said. "If the Times was interested in reporting the facts ... it could easily have contacted respected independent reservoir evaluation and consulting firms.Initial production rates and expected lifetime output for most shale-gas wells "have been steadily improving," McClendon said. "We fully expect that the majority of these wells will be productive for 30-50 years, or even longer."Online: www.chk.comJack Z. Smith, 817-390-7724Have more to add? News tip? Tell us
