Investors must ask about shale gas cost

An internal energy industry squabble over the true potential for shale gas, discussed in this column earlier this month, has now filtered through to the attention of some of the institutional investors in energy companies. This tremor of scepticism has not yet affected the ability of the large gas exploration and production companies to finance their ambitious capital spending programmes.

One of the shale doubters that was quoted in this space, consulting geologist Arthur Berman, is no longer published in the pages of World Oil, an American trade journal. World Oil publisher, John Royall, says:

This is more than a parochial argument, or a dispute over the value of energy company shares. The upturn in gas production from shale has been one of the few favourable trends in US energy production. Both Wall Street and Washington have had a growing faith that the technologies for getting gas from the previously uneconomic shales were a gift from the gods of low carbon. Shale drillers have itched to displace the half of US electricity now generated from coal.

Mr Berman contends that shale gas wells