Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth

286 Pages·2013·5.5 MB·English

by  Bill Powers

Praise for
Bill Powers cuts through the deceptions of the natural gas industry’s PR machine with a little bit of history
—we’ve been here before!—and a meticulously researched survey of the current disturbing trends in North
American natural gas production. Powers’ step-by-step dismantling of the abundance myth ought to alarm
policymakers, corporate managers, investors, business owners and concerned citizens alike. That alarm
needs to translate into action along lines he suggests in order to meet the very real and daunting energy
challenges we face.
—Kurt Cobb, author, Prelude (a peak oil novel), and frequent contributor to The Christian Science Monitor
Everyone should be aware of Bill’s work because it is going to change nearly all current expectations about
energy in the US if he is correct.
—Jim Rogers, author, Street Smarts: Adventures on the Road and in the Markets; Investment Biker; A Bull
in China; Hot Commodities; and Adventure Capitalist
As our master resources of oil and gas dwindle and get much less cheap, the master wish in a wishful
society is the wish to keep driving to WalMart forever. Bill Powers disperses the smoke and shatters the
mirrors of a nation wishing itself to death. He lays out in lucid detail why shale gas is not the “game-
changer” touted in Wall Street’s propaganda mills and he is brave enough to draw conclusions that
Americans desperately need to hear, if we’re to have any chance of passing successfully through the great
bottleneck of history that looms just ahead.
—James Howard Kunstler, author, The Long Emergency and Too Much Magic, and the World Made By
Hand novels
Bill Powers has an outstanding ability to see the patterns within a large diverse set of data. He has made it
clear why natural gas in North America will experience severe supply issues, resulting in much higher
prices in the near future. Highly recommended for investors in the natural gas and energy sector.
—Harley Kempthorne, P. Eng.
Cold, Hungry and in the Dark is a deep dive into the data on shale gas, and a must-read for anyone involved
in energy policy, journalism, or investing. Energy data nerds will love this book. Powers’ retelling of the
history of natural gas production and policy provides a very useful context for understanding where we are
in the progression of gas development, and his careful debunking of the oversold expectations for gas is
timely and important. There is no doubt that horizontal drilling and hydrofracking of gas-bearing shales is a
triumph of technology that brought us a new abundance of gas in a remarkably short time, but we should
heed his warning that it could have a much shorter life than is generally believed. The future of shale gas is
uncertain, and this study offers some immensely useful signposts that have been lacking until now.
—Chris Nelder, author, Profit from the Peak and Investing in Renewable Energy and editor,
www.getreallist.com energy blog
The rhetoric around “100 years of gas” and growing production from shale with low prices for decades is
pervasive, and is setting the US economy up for an energy shock that is completely off the political radar.
Bill Powers brings a crystal clear focus to the realities of future gas production and prices, and dissects the
pervasive hype. It is a must read for understanding the risks of accepting conventional wisdom of eternal
cheap energy on long term US energy security. Gas will be a very important input to US energy for the
foreseeable future, but assuming it will be cheap and abundant ad infinitum is unrealistic and dangerous in
terms of energy policy development – this book provides the facts on future gas supply and prices that are
critical in designing a more sustainable energy future.
—Dave Hughes, Fellow, Post Carbon Institute, and Geologist Emeritus of the Geological Survey of Canada

Copyright © 2013 by Bill Powers. All rights reserved.
Cover design by Diane McIntosh. Flame image © iStock (alessandroiryna)
Paperback ISBN: 978-0-86571-743-5eISBN: 978-1-55092-528-9
Limit of Liability/Disclaimer of Warranty: While the publisher and the author have used their best efforts in
preparing this book, they make no representations or warranties with respect to the accuracy or
completeness of the contents of this book and specifically disclaim any implied warranties of
merchantability or fitness for a particular purpose. No warranty may be created or extended by sales
representatives or written sales materials. The advice and strategies contained herein may not be suitable for
your situation. You should consult with a professional where appropriate. Neither the publisher nor the
author shall be liable for any loss of profit or any other commercial damages, including but not limited to
special, incidental, consequential or other damages.
Inquiries regarding requests to reprint all or part of Cold, Hungry and in the Dark should be addressed to
New Society Publishers at the address below.
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LIBRARY AND ARCHIVES CANADA CATALOGUING IN PUBLICATION
Powers, Bill, 1970–Cold, hungry and in the dark : exploding the natural gas supply myth / Bill Powers ;
foreword by Art Berman.
Includes bibliographical references and index.
ISBN 978-0-86571-743-5
1. Natural gas reserves — Economic aspects — United States. 2. Natural gas — Prices — United States. I.
Title.
HD9581.U52P69 2013333.8′2330973C2013-901315-6
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To Traci and Grace.
Thank you for all of your love and support.
You have made me the luckiest man alive.
Contents
Acknowledgments
Foreword by Art Berman
Preface
Part One: 1970s Gas Crisis Set For Replay
1. Early Regulation, Price Fixing and the 1970s Gas Crisis
2. 1978 to 1984: The Failure of Policy Half-Measures
3. 1984 to 2000: The Era of Deregulation
4. 2001 to 2010: The Supply Scramble Begins
5. Enter the Shale Promoters
Part Two: US Natural Gas Demand–An Increasingly Inelastic Demand
Curve
6. Electric Power Industry Becomes Hooked on Natural Gas
7. The Coming Increase in Industrial Demand for Natural Gas
8. Commercial and Residential Consumers Add to Demand Inelasticity
9. Natural Gas Vehicles: A Non-Starter
Part Three: Supply: We Will Not Produce Our Way Out of the Next
Crisis
10. Texas: The Big Enchilada
11. Louisiana’s Fleeting Production Rebound
12. The Gulf of Mexico’s Terminal Decline
13. The Cowboy State’s Reversal of Fortune
14. New Mexico’s Long Slide
15. Pennsylvania’s Marcellus Renaissance
16. Arkansas: Limits of the Fayetteville Shale Abundantly Clear
17. Canada: Era of Cheap Exports to the US Ending Soon
18. LNG Will Not Save Us in the Next Crisis
Part Four: What Should Be Done
19. The US Energy Information Agency’s Mission Failure
20. Solutions to the Coming Deliverability Crisis
21. A Look at the Future
Notes
List of Figures and Tables
Bibliography
Index
About the Author
Acknowledgments
Writing a book is a very collaborative effort and I have received wonderful
assistance and advice from dozens of great people. For this I am truly blessed.
My interactions with everyone involved over the three-year life of this project
have both enlightened and challenged me in so many different ways. I hope
those who contributed to this project understand how truly grateful I am for their
assistance. Thank You.
Below are just a handful of the people who helped get this book published.
There has never been a more patient, professional and creative editor/writing
coach than Kate Ancell. Without your prodding to punch things up, this book
would never have seen the light of day. Additionally, a special thank you to all
those who read part of the manuscript and provided feedback. These truly great
professionals include Ron Forth (who vastly improved my knowledge of decline
curve analysis), Tony van Winkoop, Harley Kempthorne, Robert Carington, Bill
Powers of San Diego, CA (who is the “real” Bill Powers and was very helpful in
getting me up to speed on alternative and distributed power) and Kevin Haggard.
I cannot say “thank you” enough to Art Berman, who graciously let me include
much of his groundbreaking work on shale gas and decline curves. Also, I owe a
huge debt of gratitude to fellow contrarian and author James Howard Kunstler,
who went out of his way to help me get published and put me in touch with the
great people at New Society Publishers. It has been a joy to work with Ingrid
Witvoet, EJ and Sara at New Society to get this book out the door. Thank you
for taking a chance on me. Scott Steedman made much magic happen in taking
my raw manuscript and turning it into a real book. Heidi Jo Brady did a
wonderful job in taking the photo for the jacket and website.
Lastly, thank you to my family. Thanks to Mom and Dad for all the love and
support and the great education you provided me with. Thanks to Jay, Jimmy
and Helen for being the best siblings in the world. Finally, I owe a very special
thank you to my wife Traci and my daughter Grace. Traci spent countless hours