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Budget Cuts Nearly Forced EIA to Halt Annual Marcellus Report

Officials with the Department of Energy's (DOE) Energy Information Administration (EIA) said they plan to publish their annual report on proved reserves in the Marcellus Shale by spring. However, budget cuts last year temporarily forced the agency to cut the report.

"The current plan is to get [the Marcellus proved reserves] in there," Jim Kendell, director of the EIA's Office of Oil, Gas and Coal Supply Statistics, told NGI's Shale Daily on Thursday. "At one point it looked like we wouldn't have the resources to do it. But at the present time...our current plan is to publish it again for the 2010 report."

Kendell said fewer people were working on the 2010 report -- perhaps two full-time federal employees and six contractors -- compared to the 2009 report, when the EIA reported proved reserves in the Marcellus totaled 4.48 Tcf.

"I think the earliest [the 2010 report] could appear would be May 1," Kendell said. "It depends on our clearance process."

Kendell and EIA spokesman Jonathan Cogan said a 14% budget cut in the EIA's final 2011 fiscal year budget had briefly imperiled the publication of the report last April.

"We had to look for places where we could save money and one of them, at the time, was to not publish our annual reserves report," Cogan told NGI's Shale Daily on Thursday. "Since then we've gotten some additional funding with this fiscal year so we're going to go ahead and try to put out an annual reserves report this year, probably in the spring.

"The question is: will it look different from our annual report that we typically put out? For the last couple of issues, we have broken out the shale reserves from the other reserves. Obviously, we would want to put out as much detail as we can. But with decreased funding and decreased staffing, some questions remain over what we're going to be able to do and how quickly we're going to be able to do it."

Kendell said industry analysts and policymakers typically use the EIA's report as a basis for making estimates of total natural gas "resources," emphasizing that term differed from reserves.

"It's just important to make a distinction between 'reserves' and 'resources,'" Kendell said. "Reserves are basically those deposits of oil and gas that could be produced with current technology at current prices. [Probable] resources are those deposits that can be inferred from known deposits of oil and gas. Possible resources are those that can be postulated from the knowledge we have about the geologic structures that are in place. But we don't actually know that they're there, and we don't know that they can be addressed with current technology at current prices."

Understanding that distinction has sometimes been a challenge for the mainstream media, which has erroneously compared dissimilar figures, creating confusion and consternation (see Shale Daily, Sept. 1, 2011; Aug. 29, 2011; June 28, 2011).

"People typically use our reserves report as the building block on which they make estimates of unproved resources to get a total resource number," Kendell said.

Last month the EIA, in its Annual Energy Outlook 2012, estimated that unproved, technically recoverable resources of shale gas in the United States was 482 Tcf, down from the 827 Tcf it reported one year earlier (see Shale Daily, Jan. 24). The decline was mostly driven by a decrease in the estimate for the Marcellus Shale, which fell from 410 Tcf to 141 Tcf.

Last August the U.S. Geological Survey reported that undiscovered, technically recoverable resources in the Marcellus totaled 3.4 billion bbl of natural gas liquids and 84 Tcf of natural gas (see Shale Daily, Aug. 24, 2011).

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