I am not an environmentalist. Everything has its environmental cost. We want to minimize impacts to the environmental while maximize what we get from a resource.
Shale gas is a big hype supported by lies and more lies. Foolish investors supported the Ponzi Scheme by pumping in more than $130B per year to support the massive shale well drilling efforts that so far brings in only 10 TCF of shale gas per year, or worth $35B annual revenue.
This is un-economical and un-sustainable. When the bubble bursts, CHK probably will be one of the first one gone. My take is people should get out of the natural gas sector and get into the coal mining sector. My reasons are clear and hard to dispute:
1. Current coal price is right around the profitability level. In Q4 2012, after taking off the one time items, the real operating loss of ANR was only $0.60 per ton of coal produces. That is an extreemly small margin of loss, consider that internatinal coal price is around $100/ton. Coal goes up just a bit more and ANR can begin to make tons of money. Same is ACI and JRCC.
2. Current natural gas price is still a FRACTION of what it takes for shale gas companies to be profitable. My estimate is gas price needs to be at $10/mmBtu for shale gas company to break even. It needs to be even higher to attract enough investment money to sustain $130B/year capital spending of well drilling. That's not going to happen any time soon.
3. The "coal is dead and is replaced by natural gas" meme is so wide-spread and so WRONG. Coal remains America's most abundant fossil fuel. Conventional gatural gas is depleting fast and will be gone in a few more years. Shale gas is NOT going to provide a hundred years of gas supply. Proven shale gas rsource is really only good for 7 years of supply. And if you take coal away and count on gas only, then it's only 4 years worth of supply, not 100 years.
The article he referred to is worthy of some discussion, but it does have errors in it. It is an example of what can happen when an economist writes about geology. Once again mr. cadmium wants to start a discussion, but begins with an offensive ignorant title. If people then respond and discuss the topic, it gives his ignorant title the appearance of having some importance, when that is not the case at all.