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Fracking Bubble is About to Burst (and Enviros Aren’t to Blame)

North America’s fracking bubble is likely to burst in the next decade, the Post Carbon Institute predicts. And while the oil and gas industry will blame environmentalists and restrictive regulations when their business begins to tank, says PCI’s Richard Heinberg, the real culprit is the poor market fundamentals in shale gas and tight oil wells. The Institute’s analysis “documents the high per-well decline rates (a typical well’s production drops 70% during the first year), the high variability of production potential within geological formations being tapped, and the dwindling number of remaining drilling sites in the few ‘sweet spots’ that offer vaguely profitable drilling potential,” he writes. “The industry continues to claim that tight oil and shale gas are ‘game changers’ and that these resources will last many decades if not centuries. Though the CEOs of companies engaged in shale gas and tight oil drilling are undoubtedly aware of what’s going on in their own balance sheets, hype is an essential part of their business model.”

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