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New York Times Articles on Shale Plays Create a Stir

Two recent articles by a New York Times reporter, Ian Urbina, have caused strong reactions among the industry and those following shale plays in the U.S. Urbina’s articles may be found here and here. Urbina’s basic theme is that the new reserves of natural gas attributed to shale plays are not real, but are a “Ponzi scheme” created by overestimates of reserves by companies desiring to pump up their stock prices. Urbina bases his conclusions on emails from different industry players and analysts, including the Energy Information Administration, PNC Wealth Management and IHS Drilling Data, and anonymous sources in the industry, including Chesapeake and Enron. Links to these emails are in the articles. Many of them date back to 2009. “In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles,” says Urbina.

Urbina’s articles have provoked strong responses.

  • ExxonMobil responded with a post on its “Perspective” blog page:   

“It is unfortunate that the words “rigorous” and “methodical” can’t be applied to the New York Times’ recent articles. Understanding the facts surrounding the potential for development of our nation’s energy resources is every American’s business.  Our economic recovery, environmental progress and energy security depends in part on a sound, stable and sensible policy and regulatory framework informed by honest, fact-filled debate.  The Times’ current campaign undermines this debate and is a disservice to its readers.”

  • The Energy Information Administration issued a press release defending its estimates of shale gas reserves.


  • Chesapeake weighed in with its criticism of the NYT articles:

“The Times story was obviously motivated by an anti-natural gas agenda. It is telling that the reporter chose not to interview a single reliable source and instead selectively quoted emails from unnamed sources or well-known industry critics dating back to as early as 2007 to invent a series of inaccurate and misleading allegations. If the Times was interested in reporting the facts and advancing the debate about the prospective benefits of natural gas usage to energy consumers, it could easily have contacted respected independent reservoir evaluation and consulting firms that annually provide reserve certifications to the U.S. Securities and Exchange Commission or contacted experts at the U.S. Energy Information Administration, the Colorado School of Mines’ Potential Gas Committee, the Massachusetts Institute of Technology, Navigant Consulting and others who would gladly have gone on record to confirm the abundant resources that have been made available thanks to the horizontal drilling and hydraulic fracturing techniques that Chesapeake and other industry peers have pioneered in deep shale formations across the U.S.”

  • IHS CERA responded to the Times that
“Emails referenced in the article were written in 2008 and 2009, early in the understanding of the performance metrics for shale gas and have been proven completely wrong by events. One of the emails that was referenced in the article as from IHS was apparently written by someone misidentified as an IHS employee when in fact that person had not been employed by IHS for more than a year.


“Unconventional technologies and resources have moved with great speed. There is much more information about the performance and potential of shale resources available today than in the past. Shale gas supplies have built up very rapidly and now are 25 percent of total U.S. gas supply, as costs have come down dramatically and experience and knowledge have progressed.


“In February 2009, the IHS CERA report, “The Shale Gale,” stated that the “recent revolution in the production of unconventional shale gas” would result in “a substantial increase in shale production and reserves”‘ and “a rapid growth of shale gas supply.”  Also in February 2009, IHS CERA’s study Rising to the Challenge said: “Unconventional gas will drive growth.”  


“That was the IHS position then and it continues to be our position today.  Both of these reports were released well before the 2009 email cited in the NY Times story.”
  • ProPublica published its own article alleging that the SEC revised its rules on how reserves are calculated, allowing companies to greatly increase their reserve estimates, relying heavily on the Times articles and research.


  • Forbes Magazine published a blog post calling the Times “all hot air on shale gas.” 

The best and most thoughtful response to the Times articles is from this post by Michael Levi of the Council on Foreign Relations: “I can’t say that I’ve read through all of the hundreds of pages of documents that the Times has posted on its site. But I’ve gone through a good enough slice of them (including all the emails that the Times references in its articles) to get a feel for how Urbina went about using them in his stories. There’s a pattern: Urbina was clearly looking for negative views of shale gas, and had no problem finding them.” Levi goes on to write that Urbina did raise some significant issues about how shale gas reserves should be assessed, but he did so without really understanding the economics of the E&P industry.

This is not the first criticism of industry estimates of shale gas reserves. In 2009, Arthur Berman, a geologist and then consultant with World Oil, published a gloomy analysis of Barnett Shale economics and reserves in 2009. See my earlier post about Berman here.

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