People like BNEF talk about UK shale gas being expensive and hard to extract, although they have not, to the best of my knowledge, ever published the report that they claim justifies their position. In the meantime evidence continues to surface that the technology of shale gas extraction is developing apace.
Just a year or so ago we were talking about breakeven points of $6 for most shale plays in the USA, but as Natural Gas Intelligence reports, US producers seem quite able to get product to the surface at prices below $5:
Fourth quarter prices are expected to average $3.85/Mcf versus a previous forecast of $4.70, with 2015 prices sliced to $3.65 from $4.25, and the long-term deck priced at $4.25 from $4.50. Analysts in May had raised the gas price forecast on the bet that prices would need to average $4.75 through 2014 to encourage enough gas-to-coal switching to hit a below-normal storage target (see Daily GPI, May 27).
"The reality is that U.S. gas producers are finding ways to bring online staggering amounts of natural gas at prices well below $4.50," wrote analysts J. Marshall Adkins and Edward Rowe. "More importantly, these lower gas drilling breakeven costs are likely to fall even further over the next few years as operators continue to drive better gas production efficiencies.
This is an odd thing to see if shale really is a Ponzi scheme and the operators are all trading at a loss.