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Fed Energy Estimate Rocked by Geologists's Findings

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"They’re geologists, we’re not."

Because of what appears to be poor planning on the part of seemingly inept, bureaucratic federal agencies, the U.S. will have to correct its Marcellus Shale reserve estimate from 410 trillion cubic feet of gas to 84 trillion, according to Business Insider.

Geologists from the U.S. Geological Survey have just released a report that contradicts--and outranks in authority--the shale estimates made by the Energy Information Administration. Sheepishly, the EIA has not (and most likely won't) challenged the USGS’ findings.

"They’re geologists, we’re not. We’re going to be taking this number and using it in our model,” an EIA analyst told Bloomberg.

Although the USGS's new estimates are slightly higher than their previous findings, there is still an enormous difference between what was previously thought to be available in the shale deposits and what may actually be there.

Shale gas in the United States is rapidly increasing as a source of natural gas. Because of the application of hydraulic fracturing technology and horizontal drilling, the development of new sources of shale gas has actually helped to offset declines in production from conventional gas reservoirs, and has led to increases in reserves of U.S. natural gas.

Furthermore, it has been a commonly held belief that the Marcellus shale in West Virginia, Pennsylvania, and New York, would contain enough reserves to supply the majority of the northeast U.S. with natural gas.

In fact, it was just in April that the estimate released by the EIA increased Marcellus reserves by a multiple of 42 "based on new technology and information." As part of their estimate, they triumphantly proclaimed that America would have “enough recoverable natural gas to heat homes and run power stations for 110 years.”

The geologists, to whose expertise they defer, would disagree with that claim and almost every other figure they have supplied.

With hopes and expectations raised like this, it is easy to see how the apparently irreconcilable discrepancy between the two estimates might be slightly off-putting, to say the least.

One final thought: if the USGS's report carries more weight and authority than the EIA's (and it is more likely to be accurate), then why weren't they sent out first?

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