Boom and bust in the gas shale industry | Arkansas Blog

Sunday, October 21, 2012

Boom and bust in the gas shale industry

Posted By on Sun, Oct 21, 2012 at 7:40 PM

WHOS CHEERING NOW: Sen. Jason Rapert is among the undeterred cheerleaders of shale gas production. They might want to look around. The boom has busted.
  • WHO'S CHEERING NOW: Sen. Jason Rapert is among the undeterred cheerleaders of shale gas production. They might want to look around. The boom has busted.

Arkansas isn't specifically mentioned in this major New York Times article, but it might as well be. The crazy speculation, over-exploration and resulting bust that is now besetting the gas industry included a heavy Chesapeake Energy play in Arkansas, to name just one fast-and-loose production company whose go-go times have gone-gone. Fortunes have been made and lost. And the plunge in gas prices from exuberant, money-losing production has been a boon in many ways. (Some electric companies are converting to cheaper gas from dirty coal for example; though not the power companies that do business in poor ol' Arkansas.) But ...

The drillers punched so many holes and extracted so much gas through hydraulic fracturing that they have driven the price of natural gas to near-record lows. And because of the intricate financial deals and leasing arrangements that many of them struck during the boom, they were unable to pull their foot off the accelerator fast enough to avoid a crash in the price of natural gas, which is down more than 60 percent since the summer of 2008.

Although the bankers made a lot of money from the deal making and a handful of energy companies made fortunes by exiting at the market’s peak, most of the industry has been bloodied — forced to sell assets, take huge write-offs and shift as many drill rigs as possible from gas exploration to oil, whose price has held up much better.

Rex W. Tillerson, the chief executive of Exxon Mobil, which spent $41 billion to buy XTO Energy, a giant natural gas company, in 2010, when gas prices were almost double what they are today, minced no words about the industry’s plight during an appearance in New York this summer.

“We are all losing our shirts today,” Mr. Tillerson said. “We’re making no money. It’s all in the red.”

In other words, those thinking the exploration bubble in Arkansas won't ever end might want to read this article closely. If nothing else, read it for more background on Aubrey McClendon, the Chesapeake dealmaker who was treated like a deity in Arkansas by those prone to sanctify businessmen, no matter how shady or rapacious.

Tags: , , , , ,

Sign up for the Daily Update email

Comments (7)

Showing 1-7 of 7

Add a comment

Subscribe to this thread:
Showing 1-7 of 7

Add a comment

More by Max Brantley

Readers also liked…

  • Women's March planned in Arkansas to mark Trump inauguration

    Speaking of Donald Trump and in answer to a reader's question: There will be a women's march in Arkansas on Jan. 21, the day after inauguration, as well as the national march planned in Washington.
    • Dec 30, 2016
  • The LR chamber does the public's business. Is it accountable? Blue Hog on the case.

    Matt Campbell, lawyer and Blue Hog Report blogger, has sent a Freedom of Information Act request to Jay Chessir, director of the Little Rock Regional Chamber of Commerce, and Mayor Mark Stodola related to the publicity stunt yesterday  built around withdrawing from the mayor's rash pronouncement that the city would seek an Amazon HQ2 project even though the city  didn't meet the company's criteria.
    • Oct 20, 2017
  • Your daily dose of Jason Rapert

    Sen. Jason Rapert really, really didn't like it when a KATV reporter asked him about the hypocrisy of his political arguments.
    • Feb 4, 2017

Most Viewed

Most Recent Comments



© 2018 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation