Natural gas by the numbers
Posted January 30, 2012 at 7:00 am 
Filed in: Sunday’s NYT had a thoughtful piece on the latest revision by the Energy Information Administration (EIA) of their estimates about the U.S. natural gas resource base.
As Ian Urbina reported:
The agency estimated that there are 482 trillion cubic feet of shale gas in the United States, down from the 2011 estimate of 827 trillion cubic feet — a drop of more than 40 percent. The report also said the Marcellus region, a rock formation under parts of New York, Ohio, Pennsylvania and West Virginia, contained 141 trillion cubic feet of gas. That represents a 66 percent drop from the 410 trillion cubic feet estimate offered in the agency’s last report.
Rather than hurling accusations about incompetence or malfeasance, Urbina began the piece with a straightforward lead emphasizing the “difficulty and uncertainty in predicting natural gas resources.” EIA’s history on estimating oil and gas resources includes repeated attempts to get folks to understand that doing those estimates is indeed a highly uncertain exercise — we’re glad to see a reporter educating the public on that front.
The explanation for the downward revision is simple: “Drilling in the Marcellus accelerated rapidly in 2010 and 2011, so that there is far more information available today than a year ago.”
Urbina also gets it just right on why an understanding of the resource base matters:
The estimates are important because they underpin policy decisions on energy subsidies and exports. Market analysts look to these estimates in making investment decisions. Historically, they have varied widely based on assumptions about the future of technology, coming regulations on drilling and the long-term price of gas.
The lesson here? Because estimates vary widely over time, policy-makers must be wary about basing decisions with major implications for fuel use — and usually long-tailed implications — over today’s snapshot of the available resource.
Nonetheless, even these new, lower estimates merely make an incredibly great US energy landscape instead simply really, really great:
The share of natural gas produced by drilling in shale formations is projected to more than double, from 23 percent in 2010 to 49 percent in 2035, the report said. The United States will also become a net exporter of liquefied natural gas by 2016, while natural gas prices are expected to remain low for more than a decade, according to the report.
And that’s still the promise of shale gas, even at the new, lower resource estimates: low, stable prices for residential and industrial consumers with exports that help our balance of trade. Oh what a difference a few years can make. Instead of the clamor to build LNG-importing terminals in the face of volatile and rising domestic prices we saw around 2005, policy-makers in 2012 now have the luxury of weighing the value and extent of an export strategy against the other competing potential uses of this important resource. That is a much better challenge to have.
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