It’s no secret that there has been a serious shale gas boom happening across the United States, but it looks like things are starting to wind down now that shale oil and gas assets are plummeting in value. Aside from the now oversaturated market, many wells have reportedly failed to live up to expectations.
Companies that accrued all sorts of debt during the rush into the shale industry are having a hard time depending on sales to stay afloat, according to Bloomberg Business Week. In fact, the decline has dropped so far that energy assets are the lowest they’ve been since 2004, with a 52% decline from $54 billion to $26 billion in just one year. Between 2009 and 2012, companies spent over $461 billion on North American oil and gas development.
The boom began back in 2000 when improved methods of hydraulic fracking opened up a seemingly endless array of accessible, and often controversial, drilling locations. Since prices have dropped and it has become more challenging to make a profit, these same companies are selling the land and cutting off drilling. This could be good news for the renewable energy industry; that is, if investment funds are now redirected toward cleaner alternatives.
Do you think energy development companies might redirect their attention toward a cleaner energy market? What do you think will be the next big move?
Image CC licensed by Lars Plougmann: Natural gas drilling.
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