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Bullish Marcellus Estimates Supported by ICF, IHS Research

Two new reports by top international research companies have come in on the high side of the great Marcellus Shale resources debate, producing estimates that range between 267 Tcf and 698 Tcf of potential reserves production.

ICF International Inc. asserted that 461-698 Tcf of natural gas is technically recoverable from the shale play, depending on whether wells are drilled at intervals of eight or 16 per square mile. Researchers from IHS Inc. then said they believed 267-534 Tcf is technically recoverable from the play.

The new research came to light at a conference last week at Pennsylvania State University organized by geosciences professor and Marcellus guru Terry Engelder. Way back in 2009, Engelder said there was a 50% probability that the Marcellus would ultimately yield 489 Tcf, an estimate that was also published in Fort Worth Oil and Gas Basin magazine (see NGI, Aug. 3, 2009).

The independent estimates are a long way from estimates by federal government agencies that range from 84 Tcf to 141 Tcf. Of the ICF and IHS reports, Engelder said "they offer numbers that are really close to the numbers that I've offered, and they have been obtained in just about the same way."

Recent federal reports by the U.S. Energy Information Administration (EIA) and, in particular, the U.S. Geological Survey (USGS), had caused confusion and consternation, Engelder said. In January the EIA reported that the Marcellus contained an estimated unproved technically recoverable resource of 141 Tcf (see NGI, Jan. 30). Last August the USGS said the Marcellus held just 84 Tcf of undiscovered, technically recoverable natural gas (see NGI, Aug. 29, 2011).

It's all in the definitions. "One of the conclusions from the [March 19] conference was that there is still great confusion with the terminology," Engelder said. "There are terms being used that are very difficult to translate from one to another, and that leaves the analyst scratching his head, wondering whether he's actually comparing apples to apples, or apples to oranges."

Engelder said he was delighted with the participation in the conference, but was disappointed that representatives from EIA and USGS declined to attend.

"The EIA has said in the past that the USGS is sort of the 'gold standard' in terms of geological assessment," Engelder said. "I wish they would operate almost completely independent of one another, but that's not the hierarchy. That became very clear last summer when the EIA came out with its 410 [Tcf] and then the USGS a few weeks later undercut them with their 84 [Tcf]," (see NGI, July 11, 2011).

Last month an EIA official said budget cuts almost forced the agency to stop publishing its annual report of proved reserves in the Marcellus (see NGI, Feb. 20). However, funding was restored and the report is expected this spring.

Conference attendees agreed that a follow-up meeting, this time with EIA and USGS participation, was in order, said Engelder.

"We're early enough on in the shale plays," Engelder said. "A very small fraction [of natural gas] has been recovered and a larger, but still very small, fraction has been proven. The numbers should not be all that much different. I guess my view is that if you have a number of people that come up with roughly the same number, and then you have an outlier -- in this case the USGS -- one has to wonder why that outlier exists."

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