Stock exchanges around the world have rules for what you are allowed to tell prospective investors about how good your business plan expectations are.
Bloomberg have done an analysis of the recoverable reserves that shale oil and gas companies have told investors they have, as compared to how much reserves those same shale oil and gas companies have told the Securities and Exchange Commission they have.
As you can see from the chart, across the industry as a whole, the companies have told their investors that their reserves are five times bigger than what they have told the SEC.
No wonder investors have poured funds into this sector, expecting huge returns.
The SEC requires drillers to provide an annual accounting of how much oil and gas their properties will produce, a measurement called proved reserves, and company executives must certify that the reports are accurate. But no such rules apply to appraisals that drillers pitch to the public. Indeed, many company presentations remind investors that “publicly announced estimates are more speculative than the numbers the drillers file with the SEC.”
Nevertheless, as John Lee, a university professor who helped to write the SEC rules on reporting, puts it: “They’re running a great risk of litigation when they don’t end up producing anything like that [level of output]. If I were an ambulance-chasing lawyer, I’d get into this.”
You can read the full story on Bloomberg.
Or a very dismissive analysis of the whole situation on the more tabloid Daily Kos.
With the government deciding to ignore not only the evidence of its own report, but also 99% of the input to its so-called ‘consultation‘ on fracking, and fracking companies now seeming to bribe landowners with billions of pounds, it seems a good time to step back and take stock of the situation.
Where have we come from, where are we now, and what is going to happen next?
Can we really win?
a. David Cameron has said that he wants to go “all out” for shale gas.
b. Ryedale sits on top of one of the biggest reserves of shale gas in the world: up to ten thousand feet thick in places (nearly two miles).
c. In other places where shale gas has been extracted, the USA, Australia, the consequences have been appalling: in terms of health of humans, livestock, crops, and wildlife, and the effects on people’s livelihoods and property prices.
d. From a climate change point of view (if you believe in climate change) fracked gas is worse than coal.
a. Shale gas extraction so far has been carried out in places with far lower population densities than here. In the USA, densities are typically 100th of the UK average. Even at eight pads per square mile not many people live close by.
b. As frackers have moved into areas with higher population densities, like New York state, so popular resistance has grown. In places like Dryden (New York) and Bentley (Australia), Romania, Northern Ireland, Germany, France, Netherlands, people have been able successfully to hold fracking back — at least for a while.
c. Meanwhile the price of solar electricity is falling rapidly, with banks like UBS and Citibank predicting that solar will achieve “grid parity (even in the UK)” by around 2020. And whether you believe in the worsening effects of climate change or not, the movements for fossil fuel divestment are growing.
3) What next?
a. So, despite all the evidence of harms, and the opinion of the vast majority of the British people, some people in government seem to be set on fracking.
b. And despite some some setbacks in the planning system, the fracking companies are continuing to press ahead.
c. But their approach is very much ‘softly softly’. Seismic surveys and planning applications are “not for fracking”… until they are. They seem to be trying to slip things through ‘under the radar’. And now they are trying to use money to change our opinions.
d. Why? Why are they behaving like this? If fracking is so good for us, why aren’t they showing us the facts (to contradict our facts)? And if the government is behind it, why aren’t the fracking companies simply charging forward full steam ahead?
e. The only thing that makes sense is because they know we can win. They know the harms, and they know we can win.
f. Across the UK there are now over 300 groups against fracking, up from zero just two years ago.
a. The fracking companies know we can win. It won’t be an easy fight, because billions of pounds are at stake. But we can and will win.
b. For them, that is ok. Because fracking is just a game. The Bowland shale is just another “play”. And their attitude to investors is the same as their attitude to the local people on the ground.
c. Fracking has been described as a ponzi scheme. (The first investors in make a lot of money. The last investors in lose everything.) The bankers don’t care about them, any more than they care about the people who live nearby.
d. The banks’ don’t risk their own money — they risk the money of other investors, and they take their cut. And once the ‘play’ is over, they move on to the next game.
e. This is why we shall win: because for the fracking companies it is just a play, but for the people on the ground fracking is about health, wealth, and quality of life.
f. It won’t be an easy win. But there are two ways to stop fracking:
— One is to remove the political will, by demonstrating how many people are against it.
— The other is to remove the financial will, by raising the costs of fracking, at the same time as the costs of other forms of energy are falling.
“Barclays Bank is backing the search for shale gas in Yorkshire and could fund fracking in the area as early as next year [ie 2014!, The Sunday Telegraph can disclose.” (Nov. 2013)
“Third Energy, which is 97pc-owned by Barclays Natural Resource Investments, a private equity arm of the bank, took shale rock samples while drilling in Kirby Misperton, Ryedale, this summer and is now analysing their potential.” (more…)