Is America’s Oil and Gas Industry Overdoing it?

Matthias Bichsel — projects and technology director at Royal Dutch Shell Plc (NYSE:RDSA)(NYSE:RDSB) — told The Financial Post that America’s oil and gas business has been over-fracking and over-drilling. “The reservoirs don’t need that many wells. The reservoirs don’t need that many stages of fracks, because not all the pieces of the rocks are as good” said Bichsel.

U.S. total liquids supply for 2013 is expected to average 12.1 million barrels a day,” reported PIRA, a Market Energy Analysis Group, claiming that the U.S. is presently holding the top position in oil supplies. “The U.S. shale liquids growth of 3.2 million barrels per day over the last four years has been nearly unparalleled in the history of world oil; only Saudi Arabia in 1970 to 1974 raised its production faster,” said PIRA.

PIRA theorizes that though U.S. shale liquid growth rates are not expected to maintain such a high level of growth, they see the U.S. as reasonably secure in its position. “PIRA’s forecast sees the U.S. increasing the lead over the next two largest countries until after 2020 and retaining the lead to at least through 2030,” reported the energy group.  According to Bichsel though, the industry is suffering from an excess of both negativity and confidence. “What we are often lacking is the middle-of-the-road approach — and it is very dangerous when we hype things, because it sets expectation which perhaps can’t be fulfilled to the degree that you would like,” said Bicshel, according to The Financial Post.

Regarding enthusiasm over shale gas numbers, Bicshel says, “We only talk about the Bakken, Eagle Ford, and the Permian in West Texas, and the Marcellus — we never talk about the basins that have not worked. We have some areas that are simply not as good as others.” British Colombia offers up a source of shale gas that Shell and its Asian partners show interest in, along with a number of of others. Canada too has increasing interest and opportunity in the export indusry — according to Bichsel.

Issues over whether or not to link sales of liquified natural gases — or LNG –  to oil prices is currently a contested topic between Shell and other importers in Japan, India, and China.

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