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State Geologist Says Some North Carolina Gas Supply Estimates Too Optimistic

North Carolina's assistant state geologist said estimates put forth by supporters of natural gas development in the Tar Heel State are overly optimistic and actual reserves are probably much lower.

Kenneth Taylor, who also serves as section manager for the North Carolina Geological Survey (NCGS), told NGI's Shale Daily that based upon consumption levels from 2009, the state probably has five years' worth of natural gas, not 40 as some proponents of development have suggested.

"The problem we're faced with is that we need specific information to get a real gas estimate," Taylor said Wednesday. "We need to go down there with wireline sampling, pull the stuff up and then de-gas it to actually get a real measurement. [Otherwise], the only place we have any real information is in the Sanford sub-basin" of the state.

According to Taylor, if the NCGS undertook such a project, it would cost the state $7 million.

"If we could do that at multiple locations within the Cumnock, Sanford, Durham and Wadesboro formations and on up into the Dan River basin -- let's say at three points each -- that's 12 data points that can give us some real information as to what the gas potential is," Taylor said. "But I don't think the state of North Carolina is going to spend $7 million on that kind of stuff."

Taylor said the NCGS' calculations for the 59,000-acre Sanford sub-basin are based upon results taken in 2009 from two vertical test wells, Butler No. 3 well and the Simpson No. 1 well, which were drilled by Amvest Oil and Gas Inc. in Lee County in 1998 and have since been shut in.

"If you take the numbers we have for the Sanford sub-basin and multiply that in the ratio with the rest of the entire region, you end up with a five-year supply," Taylor said. "But I wouldn't be the one to recommend that's how you do it."

The problem, according to Taylor, is that not all of the Triassic basins in North Carolina are suitable for development through hydraulic fracturing (fracking), which he asserts is the only way energy companies will ever have any success producing natural gas.

Taylor said energy companies would probably not want to target at least half of the Wadesboro sub-basin -- located primarily in Anson, Montgomery and Richmond counties in southern North Carolina -- because the organic-rich Sanford and Cumnock formations are not prevalent there. Instead, the area is home to the tight section of the Pekin formation. He added that targeting the Durham formation -- in Chatham, Durham, Granville, Orange and Wake counties -- would be problematic because it lies under an urban area.

Elsewhere, solidified magma could put other areas of the state out of reach from natural gas drilling, over fears that the magma could somehow allow fracking fluids to contaminate underground water supplies.

In a report released last month the North Carolina Department of Environment and Natural Resources said it has "been forced to extrapolate from data gathered from only two wells in the Sanford sub-basin; those well values have been averaged to project an estimate of the natural gas resource potentially available in that sub-basin. Since there are only two data points and the two wells have significantly different values, it is not clear how well the average value represents the resource throughout the Sanford sub-basin."

But Taylor said extrapolating the data from Sanford for the entire state could be misleading, hence the disparity between a five- or 40-year supply of natural gas for North Carolina's use.

"The numbers are not interchangeable," Taylor said. "When someone talks about there being a 40-year supply of natural gas in North Carolina and you look at the numbers, it could be as good as 40 years' supply. But the critical thing is that that's what it could be."

Taylor said the U.S. Geological Survey is one to four months away from releasing a report on the hydrocarbon potential of Eastern Mesozoic basins. That report, he said, will probably indicate that there isn't any oil or condensates in North Carolina's shale formations, just dry gas. More precise figures would ultimately be put forth by energy companies, provided that the General Assembly passes legislation to make fracking legal (see Shale Daily, May 23).

"Until that's changed, no one is going to show up," Taylor said.

The reserve-to-consumption ratio for the United States as a whole was 11.9 in 2009, according to calculations based on Energy Information Administration data. Wyoming (247.1) and Louisiana (173.9) have by far the largest reserve-to-consumption ratios of any individual states, while Pennsylvania (25.6) and Kentucky (25.3) head the list of the more traditional reserves-to-production ratio.

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