So goes the logic of the Potential Gas Committee’s report, which has sprung the claim in the media that the U.S. is sitting on a massive trove of natural gas resources:
The claim of a 100-year supply originated with a report released in April 2011 by the Potential Gas Committee, an organization of petroleum engineers and geoscientists. President and Chairman Larry Gring works with Third Way Energy LLC, a company based in Austin, Texas, that is engaged in acquiring and exploiting oil and gas properties along the Texas Gulf Coast. Chairman of the Board Darrell Pierce is a vice president of DCP Midstream LLC, a natural-gas production, processing, and marketing company based in Denver. The report’s contributors are from the industry-supported Colorado School of Mines. In short, the Potential Gas Committee report is not an impartial assessment of resources.
But how did they arrive at their estimates?
Those details haven’t been made freely available to the public, but their summary breaks it down as follows here and in the graph below: 273 tcf are “proved reserves,” meaning that it is believed to exist, and to be commercially producible at a 10 percent discount rate. That conforms with the data of the U.S. Energy Information Administration. An additional 536.6 tcf are classified as “probable” from existing fields, meaning that they have some expectation that the gas exists in known formations, but it has not been proven to exist and is not certain to be technically recoverable. An additional 687.7 tcf is “possible” from new fields, meaning that the gas might exist in new fields that have not yet been discovered. A further 518.3 tcf are “speculative,” which means exactly that. A final 176 tcf are claimed for coalbed gas, which is gas trapped in coal formations. (Note: The PGC reports the total for probable, possible, and speculative coalbed gas as 158.6 tcf, but adding up their numbers for each category, we find the correct total is 157.7 tcf. We haven’t been able to reach the PGC to discuss the discrepancy. Adding the 18.6 tcf of proved coalbed gas reserves reported by the EIA in 2009—the most recent data it offers—to the 157.7 gives a total of 176.3 tcf for all categories of coalbed gas.
In other words, over half of our supposedly massive natural gas reserves are based on something less than an educated guess. Chris Nelder nails it:
By [this] logic, you can claim to be a multibillionaire, including all your “probable, possible, and speculative resources.”