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Unconventional Gas: Enough to Last a Century?

The United States still has 2,247 Tcf of natural gas reserves, enough to last more than 100 years at 2007 demand levels, according to a study released last week by American Clean Skies Foundation (ACSF) and Navigant Consulting Inc. (NCI).

The study attempts to explain why existing forecasts by the Energy Information Administration (EIA) have "underestimated and understated" the potential of unconventional gas reserves in three sources: tight sands, coalbed methane (CBM) and shale gas formations.

"The assessments and estimates on natural gas supply are very impressive and have, frankly, caught industry forecasters off guard," said NCI project manager Rick Smead, who co-authored the study.

According to the analysis, all three unconventional gas sources have increased production over the past decade, but gas output from shale formations is growing exponentially, increasing from 0.3 Tcf/year in 1998 to 1.05 Tcf/year in 2007, a 203% increase. Proved CBM reserves currently are estimated at 20 Tcf, up from 11.5 Tcf in 1998, and less than 4 Tcf in the 1980s. Proved shale reserves stand at around 15 Tcf, up from 3.5 Tcf in 1998. Tight gas proved reserves total around 80 Tcf, up from about 36.6 Tcf in 1998.

"The extent of this ramp-up has not been fully captured by many reserve estimators," said Smead, "probably because their emergence has been too rapid for existing models to capture accurately."

To date about 22 shale basins have been discovered onshore in more than 20 states that include Arkansas, Colorado, Louisiana, Michigan, New Mexico, New York, Oklahoma, Pennsylvania, Texas, West Virginia and Wyoming. NCI's researchers formulated a snapshot of domestic gas reserves by analyzing production and reserve data from existing sources including studies, state agencies responsible for minerals management and corporate investor data. Researchers also used "direct outreach" to more than 60 gas producers nationwide. Researchers then compared this snapshot with current models, including ones produced by the EIA.

"Recent technological innovation has transformed the natural gas exploration and production industry, particularly as it pertains to shale," said co-author Kenneth B. Medlock III, a fellow in energy studies at the James A. Baker III Institute for Public Policy at Rice University. "The findings in this study indicate significant potential for expanded use of domestically produced natural gas for many purposes, including power generation and even transportation fuel for many years to come."

ACSF President Denise Bode said, "This is the age of natural gas...This study authoritatively refutes head-on the mistaken belief that we do not have sufficient supply. The fact is America has substantial natural gas to fuel its future beyond this century and at a price that is likely to remain less than half the price of oil and will provide significant environmental benefits as well."

ACSF was launched last year under the auspices of gas producer Chesapeake Energy Corp., which operates in several of the country's biggest shale plays (see related story). ACSF Chairman Aubrey McClendon, who also chairs Chesapeake, noted that "new technologies have allowed the rapid emergence of gas shales as a major energy source, representing a truly transformative event for U.S. energy supplies."

The study is available at www.cleanskies.org.

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