Myth 12 – Fracking is commercially viable

Much has been written over the last few years about how fracking has revolutionised the US energy market and driven gas prices down for consumers. What is less well covered is the fact that fracking is based on a highly risky business model.

hamsterA combination of hyperbolic productivity decline rates and relatively insignificant recovery rates for each well mean that shale gas companies have to continually sink more capital into their businesses by drilling more and more wells to maintain cash flow. Some have likened this to a hamster wheel, others to Ponzi and pyramid schemes.

 

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