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Shale Implosion?

Energy and Capital's Weekend Edition

Written by Keith Kohl
Posted January 28, 2012

Recently, the EIA dropped another bombshell on the shale gas boom.

We've had front-row seats to the surge in natural gas production that's taken place in the United States over the last seven years.

And finding those plays has never been much trouble.

shale plays

According to the EIA, almost 90% of the total technically-recoverable shale gas resources are located in just three regions: the Northeast, Gulf Coast, and Southwest.

But lately, the government has been sending mixed signals when it comes to shale gas...

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So what happened?

Remember last year when the United States Geological Survey released its report stating the Marcellus Shale formation (the largest shale gas play in the U.S.) held more than 400 trillion cubic feet of natural gas?

At the time, it was huge jump over their previous estimate of just 84 TCF.

Then, just as Obama delivered his “all-of-the-above” plan to develop domestic energy sources, the EIA suddenly had other ideas...

A few days ago, Nick Hodge explained how the United States will become an LNG exporter as early as 2016.

And we know that companies like Cheniere are already lining up long-term contracts for gas shipments reaching as far as India and China.

Yet even with the latest revision, that 2016 date will be met — and here's why...

Even the latest trimming of Marcellus reserves doesn't diminish the role that these shale gas resources will play for the next several decades; nor does it significantly change the big picture when we break down our natural gas production:

shale gas breakdown

Some things aren't going to change — and that includes our growing reliance on natural gas.

As you can see above, more than half of our future natural gas production will be from shale and tight gas resources.

The Opportunity is There for the Taking

If you were looking for news to bump natural gas prices from their weakest levels since 2001, the Marcellus revision has already helped push natural gas 20% higher this week:

small gas priceclick image to enlarge

Investors will be hard-pressed not to be optimistic over natural gas in the long run.

The only question for investors now is when to jump in feet first.

You can find more profit ideas for today's market, below...

Enjoy your weekend,

kpk sig

Keith Kohl
Editor, Energy and Capital


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