The cloud of confusion surrounding the U.S. Geological Survey’s (USGS) recent estimate of undiscovered, technically recoverable natural gas and natural gas liquids (NGL) contained in the Marcellus Shale — and the apparent differences between the USGS assessment and previous estimates — cleared somewhat Friday as the agency clarified its methodology.

In its assessment USGS estimated only resources that may be in the ground but have not yet been proven, USGS geologist Jim Coleman told NGI’s Shale Daily Friday, while a recent estimate released by the Energy Information Administration (EIA), which reported a much larger number, also included proved resources in the play.

USGS and EIA are “working together to understand between ourselves what causes that apparently large difference between the numbers,” Coleman said. “I’m fairly confident that we used different input numbers and they use a different collection of numbers than we do; we also only look at undiscovered technically recoverable, and it’s my understanding…that they also include resources that have been discovered.” That difference could account for at least some of the difference between the EIA and USGS estimates, Coleman said.

The USGS assessment found that approximately 84 Tcf of undiscovered, technically recoverable natural gas and 3.4 billion bbl of undiscovered, technically recoverable NGLs are contained in the Marcellus (see Shale Daily, Aug. 26; Aug. 24). It was the first USGS estimate of the Marcellus since 2002, when the agency estimated about 2 Tcf of gas and 10 million bbl of NGLs. Production and technological development in the intervening years yielded geologic information and engineering data, which prompted USGS to significantly increase its estimate, according to the agency.

The new USGS estimate also differed significantly from a recent report commissioned by the EIA, which included an estimate of 401.3 Tcf of technically recoverable natural gas in the Marcellus (see Shale Daily, July 11).

“We use a methodology that as far as I can tell very few other companies use, and some other agencies and think tank-type groups don’t use either,” Coleman said. “We look at actual data and start from the basic data and create a product that way. It appears that some people who are doing estimates look at what other people have done and assume that that’s right and go from there. We try to go all the way back as far back into the line of data and interpretation and interpolation as possible, so at least we understand where our numbers come from and what the sensitivity to the final result is based on.”

While USGS and EIA need to work together to iron out methodology differences, Coleman was nonplussed by some of the reports that followed the release of the USGS estimate.

“I’ve heard probably the most outrageous ones and not enough of the ones that probably said ‘don’t worry about it, things are OK; we’ve got a lot of gas, it’s just there’s just a lot of uncertainty here,'” he said.

Contrary to some published reports, the USGS did not “slash the Marcellus gas estimate by up to 80%,” said Terry Engelder, a geosciences professor at Pennsylvania State University, who said some mainstream media reports were the result of reporters “not doing an adequate job of due diligence for a number of reasons.”

The USGS assessment “reported a mean undiscovered resource, which is to the best of my knowledge only a fraction of the Marcellus resource.” Engelder told NGI’s Shale Daily. “The USGS used a cell-based methodology that excluded proven gas reserves and possibly the resource potential in a larger offset pattern than is permitted by the [Securities and Exchange Commission] offset rules…put another way, the USGS undiscovered resource is only a fraction of the technically recoverable resource base,” which a number of studies — including Engelder’s (see Daily GPI, July 30, 2009) — have demonstrated, he said.