The Math Behind the 100-Year, Natural-Gas Supply Debate
When President Barack Obama said in his State of the Union speech this year that the United States has a supply of natural gas that can last nearly 100 years, he was using a quick-and-dirty, back-of-the-envelope computation that is nonetheless rooted in recent geological research.
Even the nation’s top petroleum geologists, who typically measure natural gas reserves in trillions of cubic feet (tcf) grudgingly admit the need to simplify — even oversimplify — their research for public consumption.
“The 100-year supply is strictly a talking point, and scientists don’t use it, but it gives you a comfort factor that lets you know you’re on the right path,” says John Curtis, a geology professor at the Colorado School of Mines and director of the Potential Gas Committee. The nonprofit group of industry experts and academics regularly assesses the nation’s untapped resources.
“We’re geologists, not economists,” Curtis says.
Obama was using what is called an “R/P ratio” — the nation's gas “reserves” divided by the amount of gas “produced” in the last year. The result is a number that represents the length of time those remaining reserves would last if production continues at the same rate.
Curtis’ group has estimated there are about 1,898 tcf of recoverable gas resources in the U.S. The nation’s gas producers pumped out 23 tcf last year, he said. Divide 1,898 by 23 and you get 82.5 years of supply.
“We scientists understand how imperfect the variables are in predicting how much gas is there,” says Terry Engelder, a geosciences professor at Penn State University. “However imperfect the known numbers are, an estimate can be made with a certain confidence, and that is important for making energy policy.”
Technology Advances Supplies
Estimates of recoverable natural gas have exploded in recent years because technology has made it possible to extract huge amounts from areas previously judged infeasible, mostly gas embedded in tight formations of shale rock. The new drilling process known as hydraulic fracturing, or fracking, has become widespread, raising supplies and driving down prices so it’s no longer profitable for many companies to drill for the commodity.
A 2009 study by the IHS Global Insight energy research firm concluded, “Shale gas production has more than doubled the size of the discovered natural gas resource in North America —enough to satisfy more than 100 years of consumption at current rates.”
On top of that, a just-released IHS study estimates the industry boom will wind up creating 2.4 million jobs by 2035.
Pete Stark, IHS vice president of industry relations, says: “Getting all uptight about the 100-year number is ludicrous. There’s all sorts of gas being identified everywhere as potentially recoverable. Since 2009 we’ve known the ‘shale gale’ breakthrough was real. Now it looks as if there will be more than a 100-year supply. It was huge then, it’s huge now.”
A 2011 report by the National Petroleum Council for the U.S. Department of Energy concluded in part, “North America has a large, economically accessible natural gas resource base that includes significant sources of unconventional gas, such as shale gas. This resource base could supply over 100 years of demand at today’s consumption rates.”
The importance of shale gas to the nation’s supply can be seen in the growing estimates of the Marcellus shale, a massive sedimentary rock formation, the bulk of which is in Ohio, New York, Pennsylvania and West Virginia.
In August 2011, the U.S. Geological Survey released its 10-year report on the amount of technically recoverable gas in the Marcellus, raising its estimate from 2 tcf in 2002 to 84 tcf now.
“The increase in undiscovered, technically recoverable resource is due to new geologic information and engineering data, as technological developments in producing unconventional (shale) resources have been significant in the last decade,” the USGS report says.
The assessment caused the government’s Energy Information Administration, the DOE’s data-gathering arm, to drastically reduce its previous Marcellus estimate of 410 tcf, triggering a small controversy in energy circles.
Energy researchers upset about the differing federal numbers aired their grievances at a conference at Penn State in March organized by Engelder. His estimates of gas in the Marcellus formation and those of IHS more closely match the EIA’s earlier, more optimistic, predictions.
“When you see conflicting or at least apparently conflicting information out there, it has implications,” Patrick Henderson, Pennsylvania Gov. Tom Corbett’s top energy adviser told the "Pittsburgh Tribune-Review." “It can send a signal for people who want to do business in Pennsylvania that maybe it’s not as promising as what was thought.”
The amount of gas in the Marcellus has been disputed for years, and accurate data are crucial for long-term policy decisions, experts say.
“Resource investment is a dynamic thing that changes over time, says Sara Banaszak, chief economist for America’s Natural Gas Alliance, an industry group. “The historical pattern has shown that estimates change in an upward direction, especially with new technology and geology. That trend has upheld well in the USGS estimates, suggesting we do a good job of staying conservative.”
Drilling Down on Reserves
'Gas Shale Bonanza'
Whichever estimates play out, Engelder says his research convinces him the Marcellus “will become a super-giant gas field.”