Munn from Mack Energy Says Slow Down the Talk

Amid the frenzy of shale gas drilling that has extended from the Barnett Shale to the Marcellus in the northeast, one Midland expert is holding a stop sign.

"My pitch is to slow down," said Bill Munn, manager of gas marketing with Mack Energy of his recent talk with members of the Natural Gas Society of the Permian Basin.

"The shales, no one knows what they are yet," he continued. "The facts have nowhere near caught up with the hype. The facts may support the hype or they may not; we're getting way ahead of ourselves."

Munn compared the hype to the dot-com and real estate bubbles or even electric deregulation in Texas where "we were told under deregulation our electric bills would be real cheap."

He stressed that the gas reserves operators active in the shale plays promise may well exist, "but this is still bad rock," and producing that gas will be difficult and expensive. The operators promoting those reserves are not doing anything wrong, he added. But, he pointed out, everyone has their own agenda.

"I'm not an expert," said the veteran gas marketer. "I'm not a geologist, I don't have degrees. But I have some facts and I don't believe we have all this gas that will be coming out of the ground. I don't think it's economical," and he is skeptical production could rise to 30 billion cubic feet.

Again, he said, he is urging patience.

"If I were these companies, I'd put the best spin on it; that's not wrong. But the public is not seeing a lot of the facts. We don't know if the depletion rate is rapid or if the rate will last forever. When I see phrases like 'game changer' or 'new world,' when I hear those terms I get cautious. We need that gas and it's there, we just don't know what it will cost. In an area that covers 100 miles, that shale isn't uniform. This isn't a hoax but we need to slow down and make sure we know what the production will be and what it will cost."

What is not a part of the discussion about the nation's natural gas supplies, Munn added, is the sharp decline in conventional gas production, which he said has sunk to 6 billion cubic feet a day since he began marketing gas.