Shale Gas Isn't The End All

The Wall Street Journal today carries a breathless article from the Baker Institute at Rice University trumpeting the gas embedded in shale deposits as being the key to everything from global geopolitics to greenhouse gas emissions. In the entry "Exxon Strikes A Good Deal," we thought the acquisition of unconventional gas resources, including shale, from the XTO acquisition was a bold strategic move. In addition to acquiring properties, it was valuable for Exxon to acquire technological know-how and people. However, much of the acquired resource base is unconventional and unproven, that's why it's a longer-term play.


Production technology will still have to improve, and extraction will have to be extremely sensitive to issues like potential infiltration of the water table in certain locations. In the meantime, there is a very large, more conventional, resource base in LNG and PNG, about 9 trillion cubic feet of gross reserves held by Exxon alone. Natural gas does have lots of attractive features as a fuel for electricity generation, and it could develop some potential in the transportation sector as well. It is obviously a clean burning fuel compared to oil.


However, shale gas alone being the key to the future is an oversell at this point.