Experts question move by feds to hack estimate for Marcellus reserves by 66 percent

| Tuesday, Jan. 24, 2012

The Department of Energy cut its estimate for the Marcellus shale's unproven natural gas reserves by 66 percent, but industry officials and geologists say that doesn't diminish the formation's true bounty.

The mile-deep formation has 141 trillion cubic feet of "unproven technically recoverable" reserves, based on current technology, down from the previous estimate of 410 trillion, the government said on Monday in its Annual Energy Outlook. About 482 trillion cubic feet can be produced from shale basins across the nation, down 42 percent from 827 trillion in last year's outlook.

That trend should have been expected, industry officials said. As drilling companies chart the formation, they're essentially moving gas volume from unproven to proven reserves. Companies are driven to prove them in order to quickly increase their own value, said Greg Wrightstone, vice president of geology at Mountaineer Keystone LLC.

"This is the only topic where the numbers continue to jump and people call it a decrease," said Matt Pitzarella, spokesman for Range Resources Corp. "It doesn't make a lot of sense."

What's left uncharted in the Marcellus would meet U.S. gas demand for about six years, using 2010 consumption data, according to the Energy Department. That's down from 17 years in the previous outlook. That downward trend is likely to continue as companies prove more reserves, Wrightstone said.

"Drilling in the Marcellus accelerated rapidly in 2010 and 2011, so that there is far more information available today than a year ago," the Energy Department said.

The daily rate of Marcellus production doubled during 2011. Shale gas from formations nationwide will probably account for 49 percent of total U.S. dry gas production in 2035, up from 23 percent in 2010, the Energy Department said.

The Marcellus shale is a rock formation under much of the mid-Atlantic region, including West Virginia, eastern Ohio, most of Pennsylvania and southern New York. Shale producers use a technique known as hydraulic fracturing, in which water, sand and chemicals are pumped underground to break rocks, hold them open and extract gas.

Penn State University geosciences professor Terry Engelder helped set off a gas rush through the region in 2008 and 2009 by projecting nearly 500 trillion cubic feet of natural gas could be produced from the entire formation. Engelder yesterday sent an e-mail in response to the report, saying he stood by his initial figures.

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