Here’s an interesting tidbit from today’s Wall Street Journal:
Royal Dutch Shell PLC on Thursday posted a 60% drop in second-quarter profit, largely because the oil and natural-gas giant wrote down the value of its North American shale assets by more than $2 billion after tax, highlighting the difficulties that energy companies face in finding new oil they can pump at a profit.
….Shell cited disappointing drilling results at its North American shale assets, which it said turned out to contain less oil than it had hoped. Even excluding the charge on those assets, Shell’s earnings fell well short of analysts’ expectations as the company struggled with production declines and rising costs.
I wouldn’t make too much of a single report like this, but it does fall in line with other evidence suggesting that although North America has a lot of shale oil, it probably doesn’t have quite the gargantuan quantities that some people think. What’s more, the shale oil we do have has turned out to be fairly expensive to get at. Plus shale oil deposits tend to deplete rapidly. Bottom line: don’t get too caught up in the shale oil hype.
POSTSCRIPT: Keep in mind that we’re only talking about oil here. Natural gas fracking from shale is a different story. There’s probably some hype there too, but it’s of a different kind.