Sunday, 3 July 2011

SWN Comment on New York Times Articles

By Cheryl Norrad


SWN General Manager Tom Alexander at the company's open house in Durham Bridge last week. (Photo: Charles LeBlanc)


Before the open house was shut down last week in Durham Bridge by Natives, The Purple Violet Press was able to ask SWN General Manager Tom Alexander for a response to the recent spate of articles in the New York Times that had an anti-shale gas tone. Here's what he had to say:

PVP: What do you say about one of these articles that has U.S. Department of Energy officials raising doubts about the longevity of the shale gas industry; that it's a financial bubble like housing and technology stocks, and won't last?

TA: I disagree. It's not a bubble. Supply and demand in business are in constant flux, it's part of the business cycle. 

PVP: Mentioned in one of the articles, Deborah Rogers of the advisory committee at the Federal Reserve Bank in Dallas, has research showing wells are petering out faster than expected, costing companies more money than forecasted. What will SWN do if wells don't perform as expected?

TA: If the wells don't produce, we won't drill. But also, Deborah Rogers isn't independent. 

Alexander gave us numerous information handouts available at the open house, which we assumed would have information on what he meant about Rogers. However, upon later reading, nothing was found about her in the materials. But on the internet, an industry site, fuelfix.com, said she wasn't a credible source on the issue because she had no background or education as an industry expert, but is a small business owner of a family dairy in Fort Worth, Texas that produces goat cheese. The website got that information from her bio put out by the Dallas Federal Reserve in a press release during 2008.

PVP: What about the suggestion shale gas production will decline in 10 to 15 years?

TA: It's not happening in NB yet. We're still exploring. But [in our other operations] we plot gas production and keep track. We've found production declines initially then flattens out. Our costs become lower and we can drill doubled the lateral length at or below the same cost.

PVP: Information was found in the articles that said shale companies are also adjusting their strategies to make money by focusing on shale wells that produce lucrative liquids, like propane and butane, in addition to natural gas. Is SWN doing this?

TA: It depends on what mother nature gives you. If we find it, we will use it.

PVP: In internal emails and documents submitted to the Times reporter, many industry executives and federal officials have questioned whether some companies are overstating, perhaps intentionally, the amount of gas they can economically produce in a given period. This practice, known as overbooking, is illegal because it misleads investors trying to assess a company's strength and banks that use reserves as collateral for loans. People have compared it to Enron, do you think that's a fair comparison?

TA: It's ridiculous...those [NYT] articles are irresponsible and misleading. The reporter is doing a hit job on the industry. Some have called it a Ponzi scheme, but SWN has been in business since 1929 and you can't fool people for 82 years. Look at the company's performance and reports. I've worked in the industry for 29 years and I know down to the penny what it costs to complete a well. 


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