In my forthcoming energy economics textbook (2012), the two natural gas kings are three – Russia, Qatar and Iran – while if I were beginning that book today, I would consider making it a foursome.
The United States (U.S.) might belong with this royalty, assuming that the shale revolution is indisputably authentic and relevant, and not a transient bounty. Unfortunately we must wait a while for the verification we require, because the Energy Intelligence Agency (EIA) of the U.S. Department of Energy has apparently reduced its estimate of reserves in the Marcellus shale deposit by 66 percent. This revaluation has created the equivalent of a real option for owners and potential owners of other shale deposits, due to the influence it may have on the reduction of geological uncertainty. Moreover, a little algebra applied to shale deposits in Texas suggests that some investors in that part of the U.S. are running a serious risk of being gravely disappointed as a result of the physical ‘depreciation’ that characterizes those particular resources.
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