Friday, August 26, 2011

US Geologic Service Clarifies Its Estimate: Major Development

Brad Plumer of the Washington Post is reporting tonight that the US Geologic Service has clarified what its estimate is of and what its estimate is not of.  See http://www.washingtonpost.com/blogs/ezra-klein/post/hold-off-on-those-marcellus-shale-obituaries/2011/08/25/gIQAyP83fJ_blog.html.

We have a major apples to oranges issue that now has caused massive confusion and misunderstanding. 

Apparently, according to Brenda Pierce who is the USGS Energy Program coordinator, the USGS estimate of 43 to 144 trillion cubic feet is of "undiscovered resources that can be recovered with current technology."

By contrast the Energy Information Administration estimate is of both "active" and "undeveloped" reserves together that put the Marcellus reserves at over 400 trillion cubic feet.

According to Pierce of USGS, the USGS estimate is "additive to what's already in production."  That is a hugely important interpretation of the USGS data.

The USGS and the EIA are reportedly "working together to reconcile their two studies, which could take a few weeks."

According to the Washington Post, the USGS estimate could be much less stark than those early media reports that chose to call the USGS estimate an 80% cut of the Marcellus reserve.

And which reporter of course presented the USGS estimate as an 80% cut of the Marcellus reserve, while others reported that the USGS had increased its estimate from 2 trillion cubic feet to 84 trillion cubic?  Yes indeed, the one and only NYT gas reporter.

Tonight he has more egg on his face, but he is beyond shame or supervision.

While folks figure out what various agencies are estimating, what is an apple, what is an orange,  huge amounts of gas are being produced in the Marcellus and shale gas now provides 30% of all US natural gas.  That is a fact.





5 comments:

  1. Though a lot of us like to think that facts are facts, instead facts are too often manipulated by what we want to believe.

    On the shale gas reserves question, this has evolved into an obscure intellectual battle between warring partisans over two radically different sets of preferred facts. One side wants the economically recoverable size of the Marcellus to be game-changing and huge, while the other side wants it to be a scam, or a bubble, or a mirage.

    Since no technical projection of this sort can ever be known with complete certainty in advance, there will be plenty of room for various experts (and politicians, and regulators, and journalists) to be marshalled into either camp -- and to keep the battle alive for years going forward.

    To me, it's more important than ever that the subject-matter pros with the U.S. Geological Survey, and with the Potential Gas Committee, and with the Energy Information Agency, be asked to do their work, to update their work, and to explain their work, independent of the crash and scold of our current political showdown over shale gas.

    That might be naively asking too much, but that is what I would ask.

    ReplyDelete
  2. The US Geologic Service now says it's estimate is limited to undiscovered reserves that are recoverable with today's technology. This is a subset of all reserves and does not include active reserves.

    You are right that EIA and US GEologic Service need to communicate as they are now doing to arrive at a estimate that is comprehensive.
    You are also rightnthat they find themselves in the middle of a battle that only the NYT is fighting about the size of the gas find.

    ReplyDelete
  3. Concerned ScientistAugust 27, 2011 at 12:59 PM

    I think it was something of a mistake for the USGS not to figure out the differences with EIA prior to the press release. This was bound to happen and even some major supporters of shale gas saw this as a write down of reserves.

    I am interested to know how undiscovered is even defined. If a 10 square mile area has a good well in each corner and is undrilled in the middle is that whole area considered to be discovered or undiscovered? I would say it has been discovered. Some might say you need to drill all the wells for it to be discovered.

    I also think technology will improve and in 5 or 10 years they will get twice as much back per well as they are getting now.

    ReplyDelete
  4. In order of increasing certainty/probability...
    Undiscovered (as reported by USGS)
    Discovered, economic
    -speculative reserves (Recovery probability, R0-R10)
    -Possible reserves (R10-R50)
    -Probable Reserves (R50-R90)
    -Proved Reserves (R90-R100)
    Production

    Discovered uneconomic, contingent resources

    economically unrecoverable (forever)

    Confused yet? Good.

    So, USGS reported on Undiscovered resources, a subset of EIA estimates.

    EIA's report included production, Proved reserves (as filed with the SEC), Probable/Inferred reserves (P90 to p50, as reported by I'm-not-sure), and a large volume of gas that falls somewhere in between(P50 to P0); EIA also used USGS's older estimate for undiscovered resources for a full spectrum picture of shale resources (with very little nuance).

    EIA contracted INTEK to put together a summary of the gas that is in the uncertain area (p50 to p0 chance of recovery), but, unfortunately, there's not much transparency as to how INTEK arrived at their estimates. The INTEK report estimates that only 1% to 3% of the US shale resource base has been produced (which indicates to me that their assessment has a significant room for0 potential error), with a caption "In order to realize this production, substantial drilling is required. As the effective lifespan of the shale gas wells is relatively short, new wells are required to maintain current production levels as well as increase them."

    Also, EIA's disclaimer for the INTEK report shouldn't be glossed over...
    "For example, the gas resource estimates in the INTEK shale report are predicated on the assumption that natural gas production rates for current wells covering only a limited portion of a play are representative of an entire play or play sub-area; however, across a single play or play sub-area there can be significant variations in depth, thickness, porosity, carbon content, pore pressure, clay content, thermal maturity, and water content. As a result, individual well production rates and recovery rates can vary by as much as a factor of 10."

    So EIA outright says, "We made an assumption that will ultimately prove to be false for the sake of making an estimate"

    So where does that leave the public?

    Good question. As someone who has followed this closely for over two years, I never cease to be amazed at the lack of coordination and communication within the government, state to federal, or within federal. It's a little embarrassing.

    EIA should be more clear about what EIA/INTEK is actually estimating, why EIA is making the estimate, and how it relates to the estimates made by the USGS. I have to wonder why USGS isn't taking the lead on resource estimates. EIA is not known for its geologic aptitude and skill sets. It's an agency run by economists, statisticians and modelers. Reliable inputs for economic analysis are key to long term energy planning, not only in terms of the resource base, but also in terms of potential environmental impacts.

    The various emissions studies, resource estimates, and assertions of environmental and/or human harm are more evidence of a poorly organized and orchestrated governmental role in energy.

    I'd like to think the US could do better than this.

    ReplyDelete
  5. Thank you very much for this comment. It is very helpful. I agree with your point about coordination within the federal government. The left and right hands know not what the other is doing.

    I am also struck by how just about the entire media blew this story in one way or another. Those who played it straight and reported a 42 times increase in the USGS estimate did not explain what the estimate was.

    The NYT gas reporter who portrayed the estimate as an 80% decline in shale reserves to advance his war on shale gas was exposed yet again as jumping in directions that advance his narrative, the truth be damned. I will use this comment as the basis of a posting tomorrow.

    ReplyDelete