One June 25, 2011 The New York Times published a news article claiming that the reports of vast amounts of natural gas which had been made available by the drilling process of hydrofracturing (fracking) were highly exaggerated. You can read the article HERE.

The outcry from academic, government, and industry experts led the Times’ “Public Editor” to issue a response. The Public Editor, currently Arthur S. Brisbane, is an independent “ombudsman” who is, by contract, free to take to task other editors, reporters or, for that matter, readers in an attempt to untangle disputes.

Mr. Brisbane wrote a scathing analysis of the natural gas article which said, in part:

The June 26 article, written by Ian Urbina, was clearly intended to offer that kind of signal [that claims of huge natural gas reserves were ‘headed for a fall’] and specifically invoked “Enron,” “Ponzi schemes” and “dot-coms” in the early paragraphs.

He went on to point out that

“the story painted its subject with an overly broad brush and didn’t include dissenting views from experts who aren’t entrenched on one side or another of the subject.”

You can read the entire evaluation by Mr. Brisbane HERE.

In the NY Times of Sunday, August 7, 2011 a group of letters regarding the original article and the Public Editor’s response to it. Among those who wrote was the host of CNBC’s Mad Money Jim Cramer. Here is his letter:

Thank you for calling attention to Ian Urbina’s confused reporting about the transformational oil shale business and his insistence that natural gas executives may be exaggerating the reserves.

First, there is an immense glut of natural gas in this country, as witnessed by the failure of natural gas to spike in record cold and record heat, as it always did before the shale discoveries.

Second, we now have discovered so much natural gas in this country that oil and gas companies are mothballing gigantic facilities that were built to import natural gas from overseas. Many industry executives now expect that we will be exporting natural gas, as our production costs are now the lowest in the world.

Third, Mr. Urbina asserts that shale production falls rapidly after a short time. Actually, the production has increased over time and the initial projections in all the major shales have gone up, and up dramatically, from their initial discoveries. Fourth, both national oil companies and major integrated oils, including Korean, Japanese, Chinese, Norwegian and Indian companies as well as Exxon Mobil, have spent tens of billions of dollars buying up domestic shale properties.

Could all of these entities be wrong and Mr. Urbina right? I don’t think so.

JIM CRAMER
Host, “Mad Money” on CNBC

— The Pickens Team