Well that's a relief. At Forbes Magazine, Editor-in-Chief, former Republican presidential candidate, Heritage Foundation trustee and Fox News panelist Malcolm Stevenson "Steve" Forbes, Jr. proclaims that hydraulic fracturing will not only make money but will also solve US energy woes.

Energy Crisis Over!

Not because of some humongous breakthrough in alternative energies but because of new ways to access two sources widely used today: oil and natural gas. The recent news story about China's national oil company, Cnooc, purchasing a stake in Chesapeake Energy's Texas shale oil and gas fields and agreeing to pony up most of the capital to develop them underscores what an amazing transformation is taking place in the U.S.' energy picture.

The word "revolution" is overused, but it's truly appropriate when applied to these technological breakthroughs: hydraulic fracturing--a.k.a. fracking--and horizontal drilling. With fracking, drillers inject water, sand and chemicals deep underground to crack gas-bearing rocks. The technology, which has been around for a long time, has advanced dramatically. Literally trillions of dollars' worth of shale oil and gas can now be economically extracted.

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The implications are staggering. Within a decade the U.S. will be a major natural gas exporter. In those Texas Chesapeake fields alone production will reach the equivalent of 400,000 to 500,000 barrels of oil a day. Pennsylvania and upstate New York will also become major gas producers.

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Environmentalists worry that fracking might poison our water, even though the drilling takes place thousands of feet below the water table. Fortunately the technology is there to get at these reserves in an extremely safe way.

The Earth is awash in energy.

In response to this Pollyanna vision, commenter agramante observes:

400-500,000 barrels per day, oh my, that's quite a bit. All of 2-2.5% of the US' daily consumption. Happy days are here again.

KeepItSimple adds:

University at Buffalo NY researchers just found that fracking causes uranium that is naturally trapped inside Marcellus shale to be released. Uranium is toxic and deadly. The research will be presented at the annual meeting of the Geological Society of America in Denver on Nov. 2 2010. Mr. Forbes, please Google "uranium poisoning", review the results, then reconsider the title of this article.

Also in comments, Lindsay Curren leads us to her interview of geologist and consultant Art Berman, formerly of Amoco, who presented Shale Gas - Abundance or Mirage - Why The Marcellus Shale Will Disappoint Expectations to the recent ASPO conference. ASPO has posted a pdf of his slideshow, but no video so far.

•Shale gas plays are marginally commercial at best.
•The plays have consistently contracted to a core area that represents 10-20% of the resource that was initially claimed. The manufacturing model has failed.
•These are not low-cost plays: the marginal cost of production for most companies is $7.50/Mcf based on SEC 10-K filings over the past 5 years.
•Reserves have been greatly over-stated & 80% of booked reserves are undeveloped.
•The value of undeveloped reserves is low.
•Shareholder equity has been consistently destroyed.
•Because of good hedge positions, the cost environment has been favorable. This has changed.
•The move to liquid-rich shale plays has resulted in poor results so far.
•The Marcellus Shale will disappoint expectations.

Lindsay & Erik Curren have started Transition Voice, which is new to me, although I have read about the Transition Towns movement in the UK. The word transition is popular in Peak Oil circles as people develop strategies to transition away from relying on cheap fuel to get through daily life. 

Curren asked Berman about claims, like Forbes' above, that the Eastern US Marcellus Shale is the next al Ghawar of fossil fuels:

“The investment companies, I’m not accusing them of being dishonest or doing anything illegal, but they have a conflict of interest,” explains Berman. “They make money by promoting and selling stocks to their client … Their research departments are set up to help promote the business. That doesn’t offend me, it’s just how it works. They’re putting out a message that benefits the business they’re in.”

But that conflict of interest is further complicated when, like [Mad Money Jim] Cramer’s, the analysis is driven by a Pavlov’s dog response to W-shaped charts and daily charts which don’t tell you a thing about the longer term performance of not only the stock, but of the larger issues surrounding the commodity it represents.

“Most of the people who are doing that kind of research, their backgrounds are in economics and finance and business,” says Berman. “They haven’t worked in the oil and gas business, they don’t understand the costs, they’ve never had to explain a dry hole to their bosses or to a client. It’s very difficult for people who haven’t participated in the nuts and bolts of the operations to understand it. The companies come to them and say, ‘These are our costs, these are our reserves,’ and they just accept that information.”

And that, says Berman, is neither a recipe for wealth, nor a plan for reliably bringing more natural gas on line.

Though he sees dealing with environmentalists as a business concern, Berman is not convinced that hydraulic fracturing is proven to harm the environment.

Though Berman is enough of a conservationist to take a bus to work while claiming that he tries to live with as light a carbon footprint as he can, he disagrees with the case environmentalists are making.

“There’s no conclusive evidence that any aquifer in Pennsylvania or West Virginia has been contaminated by hydrofracking. There is anecdotal evidence, and I’m completely on board with saying that we need to look into it further. But whether we like the oil and gas companies or think they’re criminals, they’ve been drilling for fifty years with a minimum of pollution.”

And, says Berman, we’re not getting off fossil fuels any time soon. “We do need the natural gas. And we need the jobs.”

But we need to drink water, too. Berman claims there is only anecdotal evidence in PA or WV, but take a quick look at the map on the Gasland site and click on the picture in PA to watch a snippet about the undrinkable water in Dimock. Then go to Vanity Fair and read more about Dimock in A Colossal Fracking Mess:

Sixty miles west of Damascus, the town of Dimock, population 1,400, makes all too clear the dangers posed by hydraulic fracturing. You don’t need to drive around Dimock long to notice how the rolling hills and farmland of this Appalachian town are scarred by barren, square-shaped clearings, jagged, newly constructed roads with 18-wheelers driving up and down them, and colorful freight containers labeled “residual waste.” Although there is a moratorium on drilling new wells for the time being, you can still see the occasional active drill site, manned by figures in hazmat suits and surrounded by klieg lights, trailers, and pits of toxic wastewater, the derricks towering over barns, horses, and cows in their shadows.

The real shock that Dimock has undergone, however, is in the aquifer that residents rely on for their fresh water. Dimock is now known as the place where, over the past two years, people’s water started turning brown and making them sick, one woman’s water well spontaneously combusted, and horses and pets mysteriously began to lose their hair.

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“It was so bad sometimes that my daughter would be in the shower in the morning, and she’d have to get out of the shower and lay on the floor” because of the dizzying effect the chemicals in the water had on her, recalls Craig Sautner, who has worked as a cable splicer for Frontier Communications his whole life. She didn’t speak up about it for a while, because she wondered whether she was imagining the problem. But she wasn’t the only one in the family suffering. “My son had sores up and down his legs from the water,” Craig says. Craig and Julie also experienced frequent headaches and dizziness.

By October 2009, the D.E.P. had taken all the water wells in the Sautners’ neighborhood offline. It acknowledged that a major contamination of the aquifer had occurred. In addition to methane, dangerously high levels of iron and aluminum were found in the Sautners’ water.

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Even as Dimock was experiencing this series of disasters, Pennsylvania officials assured the public that shale-gas extraction was safe and benefitting the state, providing jobs and millions of dollars in tax revenue. “What do you have to be afraid of? It’s only sand and water,” said Ron Gilius, the director of the Pennsylvania D.E.P.’s Bureau of Oil and Gas Management, in 2008. “There has never been any evidence of fracking ever causing direct contamination of fresh groundwater in Pennsylvania or anywhere else,” said Scott Perry, another Oil and Gas Management official, as recently as April 2010. (John Hanger, secretary of the Pennsylvania D.E.P., now admits that fracking fluid is “nasty, nasty stuff,” and the department has announced plans to regulate fracking more closely.)

Seriously, read the whole article, then decide if you trust Steve Forbes, T Boone Pickens and Jim Cramer or your lying eyes.