A report recently published by The New York Times that questioned some of the productivity claims made by natural gas drillers has caught the attention of some federal and state lawmakers. According to the Times, a number of lawmakers have sent letters to the Securities and Exchange Commission (SEC) and other state and federal agencies asking that they investigate whether the industry has provided accurate information about the productivity of natural gas wells, particularly those involved in shale gas drilling.
The Times reported over the weekend that some natural gas industry insiders have privately expressed doubts about the rosy production predictions made by shale gas drillers, adding to the concerns about the environmental and financial risks of hydraulic fracturing. Among other things, the Timesâ€™ report drew on hundreds of industry e-mails written by energy executives, industry lawyers, and state geologists that voice doubts about energy companiesâ€™ forecasts for natural gas production. Some even questions whether energy companies are intentionally â€“ and maybe illegally â€“ misstating both the productivity of their wells and the size of their reserves.
A separate analysis conducted by the Times also found that many gas wells are not producing as promised. According to that analysis, which looked at the production of 10,000 wells located in the Barnett shale in Texas, the Haynesville shale in East Texas and Louisiana and the Fayetteville shale in Arkansas, less than 20 percent of the area heralded by companies as productive will likely be profitable under current market conditions, the Times said.
â€œGiven the rapid growth of the shale gas industry and its growing importance for our countryâ€™s energy portfolio, I urge the SEC. to quickly investigate whether investors have been intentionally misled,â€ wrote Representative Maurice D. Hinchey, Democrat of New York, in a letter sent to SEC.
Hinchey, along with Representatives Carolyn B. Maloney and Jerrold Nadler, also New York Democrats, and Representative Edward J. Markey, a Massachusetts Democrat, also sent letters to the SEC asking that it “reconsider recent rule changes that allow companies to avoid disclosing details about the proprietary technology used to predict future gas production and to avoid some third-party audits of those predictions,” The New York Times said.
On the Senate side, Benjamin L. Cardin, (D-MD) has written the Government Accountability Office asking it to look into, among other things, the accuracy of the industry’s reserve estimates.
The Times piece has also inspired action on the state level. In Maryland, Heather R. Mizeur, a Democratic Delegate from Montgomery County, has written the state’s comptroller and attorney general seeking an investigation. Meanwhile, in New York, Democratic Assemblywoman Barbara S. Lifton has asked the state controller there for a similar investigation, and has expressed concern about state pension funds invested in shale gas companies. At the same time, New York’s attorney general has subpoenaed five oil and gas companies demanding documents relating to the disclosures they made to investors about the risks of fracking.