Are unconventional resources for real?
Yesterday I talked about “peak energy” at the Toronto Resource Investment Conference. Although the planet does have finite resources, new technologies are continually adding to our hydrocarbon reserve base. This should buy us enough time to develop alternate energy sources. At $4.50 natural gas prices we are flirting with the cost of production. I think it is time to back up the truck on natural gas related investments.
Our newsletter portfolio is full of unconventional natural gas companies so I thought I’d pass along this article. There is no shortage of skeptics when it comes to unconventional gas plays but in my experience, time and extensive drilling inevitably proves up these kinds of plays.
Perhaps the initial euphoria of early estimates such as 5,000 Tcf in tight sands in the Green River basin have left many people skeptical. But activity in the past 10 years has yielded amazing results measured in Tcf — something nobody would have guessed for the over-drilled onshore United States, and certainly rivalling conventional results. While the pros include multi-Tcf reserves potential and low risk, the cons include the need to drill many wells and employ costly completion technologies, so there is a minimum gas price that is required to justify each play. But in this boom-and-bust industry, that’s really nothing new.