SHALE BOOM: Why Fracking Is An Economic Game-Changer That Can't Be Overhyped

oil gas field fracking 2

There remains controversy over just how long America’s current energy boom will last.

Some, like University of Chicago professor Raymond Pierrehumbert argue we are totally overlooking the rapid depletion rate of shale oil and gas wells. This is among other signs of a slowdown.

But there are plenty of experts who would argue such notions are off the mark.

Using data from the Energy Information Administration and Canadian energy consultancy ITG, we have put together what we think is a comprehensive review of the American shale story.¬† Ultimately, we think that you’ll conclude that “Saudi America” is real and here to stay.

Quick review: Fracking involves injecting large volumes of fluids and small particles like sand into a well to free up oil or gas.

It's a great way to access otherwise hard-to-reach energy.

Currently, just 1,752 wells in operation drilling both shale and conventional rocks in the U.S.

But the maximum production rate for a single well lasts just a few years, even for wells in the country's most popular shale plays. sceptics say this is a big red flag.

Indeed, Ohio recently vetoed a proposal to force drillers to disclose monthly production data, which makes some analysts even more suspicious.

But, many shale plays are so enormous that only tiny portions have been extensively production tested, the EIA says.

Source: EIA

So, despite the rapidly falling production rates per well, there are huge numbers of wells to come.

The Marcellus Shale currently has around 12,000 wells. The EIA estimates that this number could head north of 100,000.

The same logic applies for shale gas.

The further you get into production, the more realistic reserve estimates get. And they're only down modestly.

So here's the truth: While the average well only lasts so long, we have miles of wells to drill before the American energy boom goes to sleep.

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