Texas

Energy and Environment Reporting for Texas

Shale for Sale: Looking Beyond the Buzz in the Cline

Right now, there’s a lot excitement over different shale formations across Texas and across the country. But along with excitement, there sometimes comes hype.

First there was the Barnett near Fort Worth and Pennsylvania’s Marcellus. In South Texas you’ve got the Eagle Ford. North Dakota taps the Bakken. It seems like everywhere you look, drillers are finding shale formations that might be the “next big thing” for the American energy industry. (Shale formations are layers of rock that companies can sometimes drill for oil and gas using hydraulic fracturing, or fracking.) Recently the “next big thing” being touted is the Cline Shale in the Permian Basin of West Texas.

The Cline Shale lies more than 9,000 feet underground and many in the energy business expect it to bring the next oil and gas boom to West Texas.

But how big of a boom?

The entire formation of the Cline Shale spans nearly 10,000 square miles and could have up to 3.6 million barrels of obtainable oil per square mile.

But not everybody is convinced. Art Berman is an oil and gas geological consultant and prominent critic of some drilling companies.

“The analogy that I like to use is the traveling circus,” Berman said. “Why does a circus have to travel? Well, because after it’s been in the town for a couple days, or a week or so, all the townspeople begin to understand that the bearded lady doesn’t really have a beard!”

Berman said each new shale discovery serves as a way for some companies to inflate their stock values. So all that hype might have to do more with Wall Street than what’s in the ground. But it’s not just industry critics that are tamping down enthusiasm over the Cline.

Ben Shepperd, President of the Permian Basin Petroleum Association, says there’s great potential in the Cline Shale.

But, “number one, it’s not going to happen over night,” he said. “The operating community hasn’t identified [or] cracked the code on how to access it routinely,” he added.

By code, Sheppard was referring to the geology of the region and the hydraulic fracturing techniques necessary to maximize the recovery rates.

Then there are those figures about the millions of barrels of oil that could be deep underground. They come from estimates from Devon Energy. Chip Minty, a spokesperson for the company, says those estimates were actually based on best case assumptions, scenarios where “everything works out perfectly.”

“And we all know that nothing ever works out perfectly. Best case scenarios are highly unlikely. So we are approaching this realistically,” Minty said.

Chesapeake Energy, another big oil and gas player, actually sold most of its holdings in the Cline Shale last year. It has no plans to develop the land it still owns, according to a spokesperson. Yet West Texas communities are still abuzz over the Cline’s potential, and local companies are turning that enthusiasm into profit.

Blake Templeton runs a group called LubbockInvest.com. His company has used the Cline to generate interest in real estate investment in the region. He says business is booming. StateImpact Texas asked Templeton what would happen if the Cline doesn’t deliver on its promises.

“In a boom and bust oil town, the paradigm shift has shifted, it’s changed. The variables are constants,” Templeton said. “What I would say is you still own a tangible asset.”

It would just be worth significantly less if the projected boom ends up going bust.

Comments

  • FailureIsYourOnlyOption

    Businesses running a scam aren’t inclined to INVEST hundreds of millions of dollars to pump up their stock prices that will go bust if they are found out. Berman appears to be a credentialed geologist who couldn’t hack it in the industry so he turned to hacking as a writer.

    • Geo-PG

      I can attest to the fact that Art Berman is a credentialed geologists. We are both active member in the Houston Geological Society. Art has a point. People tend to trumpet the high end of estimates in the shale reserves. But the issue is that these numbers do not necessarily reflect what is actually recoverable at this time. The USGS has revised over and over the numbers for actual oil and gas reserves. That is because the technology to understand these formation has improved. They have been there all along. WE knew where most of this gas was before but they were not accessible or at least cost effective to access 20 years ago. But as time has progressed so has drilling technology/

      Art Berman is correct to express skepticism. Time will tell and for investors a bit of caution is prudent.

      • FailureIsYourOnlyOption

        My point is he characterized these companies as blowing into town, hyping their leases to high heaven and then dumping them on some sucker. That is NOT what is happening when you drive through south Texas and see hundreds of wells being drilled and their flaring off natural gas. That is not the demeanor of somebody pumping and dumping. Also if you look at the initial productions they are going up higher and higher in the same vicinity over time. Also, the down spacing of wells from 640 acres down to 50 acres which means the amount of money INVESTED per acre is increasing drastically, which portends the guys with skin in the game, as opposed to “critics” with a keyboard are anticipating INCREASING production, not diminishing ROI on their per acre infrastructure costs. Berman is either misguided or has an ulterior agenda.

        • MIKE B

          i HAVE HEARD ART BERMAN ADDRESS THE SHALE PLAYS SEVERAL TIMES AND HE USES AVAILABLE PRODUCTION AND GEOLOGICAL DATA. ONE OF HIS PREDICTIONS IS THAT NATURAL GAS PRICES WILL RECOVER. HE CAN BE WRONG I SUPPOSE BUT HE HAS A STRONG ARGUEMENT USING FACTS.

          • FailureIsYourOnlyOption

            That is why you use all UPPER CASE Letters, eh; because your logic fails to persuade perhaps? What I said was factual and irrefutable and some folks just can’t handle the truth without over-emoting.

    • MIKE B

      ART BERMAN WAS ELECTED BY HIS PEERS AS PRESIDENT OF THE HOUSTON GEOLOGICAL SOCIETY. HE IS VERY HIGHLY RESPECTED AND YOUR SNARK IS NASTY AND IGNORANT.

      • FailureIsYourOnlyOption

        You continue to avoid the issue, what I said was factual. Your display of upper case pique is a childish tantrum designed to compensate for your lack of intellectuality.

  • John Craig Wascom

    I understand the concern. I own land leased in the Louisiana Austin Chalk where a 6000 BOE per day well was completed and tested. There was a lot of hype then rapid decline in production. Anadarko has let the rest of its drilling permits expire and has left the area. The difference here in the Cline Shale is I have personaly seen hundreds of new drilling pads constructed. so many fracking water ponds that I can not count. Man camps being constructed everywhere, etc. and it goes on and on. I have not seen this kind of activity since Baton Rouge was the fastest growing city in the U.S. in the months after Hurricane Katrina. The poeple here tell me previous oil booms pale in comparison.
    If this is real it would be in the best intrest of industry geoligist to try to keep enthusiasm dampened. I can tell you industry officials here in the Cline will not speak of what is going on but I can see it with my own eyes.

  • MIKE B

    i HAVE FRIENDS WHO ARE CALLING THE EAGLE FORD THE EAGLE FRAUD. THERE ARE MANY, MANY WELLS THAT WILL NOT PAY OUT. TIME WILL TELL IF THE PLAY IS FOR REAL. THE BAKKEN IS CLEARLY FOR REAL.

    • FailureIsYourOnlyOption

      And you sound like the Eagle Fart.

  • Anthony Monico

    I too have my doubts but when I looked at google maps and seen all of the oil plats……I might be wrong…….. but only time will tell…

  • nitro9898

    Talk it down all you want about the Cline but Magellan is building a Million barrel holding facility and a 540 mile pipe line to Houston in Colorado City texas It just started Goggle it its called the Bridge tex pipeline.I will believe the people with skin in the game before a another hack stirring SH&%#@

  • Steve

    You ever wonder why a geologist is never in charge of a major oil and gas company? Because geology is still a guessing game. Guessing at what happened, hundreds, of millions, of years ago. Geologists have come a long way in the past 50 years. To their credit, every year they make leaps and bounds ahead of where they were. They are still just guessing though.

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