Thursday, August 25, 2011

Shale Hoopla — Careful!

A New York Times headline today says “Geologists Sharply Cut Estimate of Shale Gas.” The reference is to a press release by the U.S. Geological Survey (link) dated August 23, 2011. The first two paragraphs of that press release state:

The Marcellus Shale contains about 84 trillion cubic feet of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids according to a new assessment by the U. S. Geological Survey (USGS).

These gas estimates are significantly more than the last USGS assessment of the Marcellus Shale in the Appalachian Basin in 2002, which estimated a mean of about 2 trillion cubic feet of gas (TCF) and 0.01 billion barrels of natural gas liquids.
This certainly sounds like a huge increase in shale gas estimates, indeed like an 82 TCF increase between 2002 and 2011. The same press release, however, actually references the 2002 report. And if you follow their link (here), you find the following text under Resource Summary:

The USGS assessed undiscovered conventional oil and gas and undiscovered continuous (unconventional) gas. The USGS estimated a mean of 70.2 trillion cubic feet of gas (TCFG), a mean of 54 million barrels of oil (MMBO), and a mean of 872 million barrels of total natural gas liquids (MMBNGL).
The 2 trillion in this year’s release has turned into 70.2 TCF. Was that “2 trillion” a typo. In the 2002 report, furthermore, a detailed table also repeats the numbers with many more decimal points. We still have an increase between 2002 and 2011, but it is an increase of 13.8 TCF not an increase of 82 TCF.

So why does the New York Times headline a sharp cut in shale gas estimates? Well, the Times points at a July 2011 report by the Energy Information Administration in which that agency shows shale gas reserves in the Marcellus Shale of 410 trillion cubic feet. The Times reporter then quotes an EIA official (Philip Budzik) saying that the EIA will sharply revise its estimate downward. The casual reader will wrongly conclude that the EIA has been grossly inflating its numbers and that Budzik, an operations research analyst—not an agency spokesman—knows what he is talking about. The article also mentions testimony by the EIA’s acting director, Howard K. Gruenspecht, defending the EIA’s methods before Congress this July; why wasn’t Gruenspecht interviewed?

The Times reporter might have read both the USGS and the EIA reports with a little more care. He would have discovered (1) that the USGS release actually reports a large increase, but in a subcategory of shale gas, clearly labeled “undiscovered, technically recoverable,” as shown above; (2) that the USGS release might contain an error, and (3) that in the EIA report, where that 410 trillion figure is shown, the EIA clearly states that that number includes 56 TCF of “undiscovered resources estimated by the USGS.” This means that the EIA was only counting a part (56 TCF) of the USGS’s now 84 TCF figure, not all of it, and that the 410 trillion includes a lot of other categories of shale gas (see the note on top of page 5 of the EIA report (link)). The conclusion is that Mr. Budzik might have misspoken and that EIA will probably increase rather than decrease its shale gas estimate in the future. Many a slip twixt journalism’s cup and lip. Alas, it is stories in the “newspaper of record” that build the hype that forms our precious public opinion.

You wonder where that Marcellus Shale region is? Well, here is a map of it, from the EIA’s 2011 report:





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