output from shale wells declines so quickly that they will never be profitable – when investors realise this, the industry will collapse. The big snag with shale wells is that output falls away very quickly indeed after production begins. Compared with “normal” oil and gas wells, where output typically decreases by 7pc-10pc annually, rates of decline for shale wells are dramatically worse. It is by no means unusual for production from each well to fall by 60pc or more in the first 12 months of operations alone. Faced with such rates of decline, the only way to keep production rates up (and to keep investors on side) is to drill yet more wells. This puts operators on a drilling treadmill, which should worry local residents just as much as investors. Net cash flow from US shale has been negative year after year, and some of the industry’s biggest names have already walked away. telegraph.co.uk/finance/personalfinance/investing/11006723/fracking-for-Shale-gas-the-dotcom-bubble-of-our-times.html?fb
Posted on: Mon, 04 Aug 2014 20:45:46 +0000
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