Guest cheer leading by David Middleton
USGS Estimates 214 trillion Cubic Feet of Natural Gas in Appalachian Basin Formations
Release Date: OCTOBER 3, 2019
The Marcellus Shale and Point Pleasant-Utica Shale formations of the Appalachian Basin contain an estimated mean of 214 trillion cubic feet of undiscovered, technically recoverable continuous resources of natural gas, according to new USGS assessments.
“Watching our estimates for the Marcellus rise from 2 trillion to 84 trillion to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have,” said USGS Director Jim Reilly. “Knowing where these resources are located and how much exists is crucial to ensuring our nation’s energy independence.”
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USGS
“Watching our estimates for the Marcellus rise from 2 trillion to 84 trillion to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have.”
USGS Director Jim Reilly
I had the good fortune of working with Jim Reilly at Enserch Exploration back in the 1980’s and early 1990’s… Before he became a NASA astronaut and then Director of the USGS.
“Shale” comprises more than 60% of current U.S. proved natural gas reserves… The Marcellus/Utica comprise about 50% of “shale” proved reserves… And the undiscovered technically recoverable resource potential of the Marcellus/Utica is now larger than the proved reserves and nearly as large (70%) as the current proved reserves of all “shale” plays….
Natural gas is the exact opposite of climate change: Always better than previously thought!
Oct 6, 2019
U.S. Natural Gas Reserves Continue To SoarJude Clemente Contributor
Energy
I cover oil, gas, power, LNG markets, linking to human development.
* In other words, we have even more natural gas than advertised“Watching our estimates for the Marcellus rise from 2 trillion, to 84 trillion, to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have,” USGS director Jim Reilly, October 3, 2019
Ever since the U.S. shale revolution took flight in 2008, it’s been a consistent theme: not just rising natural gas production but also rising proven natural gas reserves. In fact, over the past decade, the U.S. Department of Energy reports that our proven gas reserves have ballooned nearly 85% to almost 450 trillion cubic feet (Tcf). It’s all turned the previous pre-shale notion that reserves were dwindling and production was in permanent decline on its head.
Not even the industry itself ever envisioned how fast our natural gas business would be transformed, thanks to shale. ExxonMobil CEO Lee Raymond infamously stated in 2005: “Gas production has peaked in North America.” Not quite good sir: led by shale, North American output is up 50% since then to past 105 Bcf/d, or some 30% of the global total.
What’s even more amazing is that this boom in gas production and reserves has happened under a low-price environment, which typically work to hamper both. In other words, we have even more natural gas than advertised.
Indeed, don’t forget that reserves are just subsets of the massive gas resource that we have.
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Forbes
That’s right Jude… Proved “reserves are just subsets of the massive gas resource that we have.” Proved reserves aren’t even the most likely future production estimate. Proved reserves are the >90% probability estimate.
In the US. “proved reserves” are the 1P number. This is the minimum volume of oil and/or gas expected to be produced from a reservoir (>90% probability). Proved reserves go up all of the time without additional drilling because well performance converts 2P (50% probability) and some 3P (>10% probability) into 1P. Changing economic conditions can also move contingent resources into the 1P category.
As long as proved reserves and undiscovered resource potential remain steady or rise, each barrel of oil or thousand cubic feet of gas produced pushes Peak Oil/Gas farther off into the future.
This is where some ill-informed Peak Oiler babbles something about new discoveries being at a 70-yr low.
U.S. Crude Oil and Natural Gas Proved Reserves, Year-end 2017
Most reserve additions don’t come from new discoveries. They come from reservoir management and field development operations.
“The future’s so bright, I gotta where shades”
This Natural Gas Supply Association graphic is from 2013. Cumulative production, proved resources (reserves) and technically recoverable resources have all grown since this was generated.
We can see that the rate of growth of proved natural gas reserves and technically recoverable resources are growing faster than we can burn or sell the stuff… But, there’s another category of resource that is even YUGER… Technically unrecoverable resources.
Potential Gas Committee estimates fall on the conservative side. The PGC is cautious in its appraisals. For example, even if natural gas is known to be present, if it is located too deep or in a quantity that does not justify the effort of extraction, the PGC does not count it. In fact, there is at least a 1,000-year supply of natural gas in the United States that is considered“unrecoverable”with current technology and economic constraints, such as gas locked deep under the ocean in frozen methane hydrates. It is possible that one day improvements in technology will enable the PGC to include some of those natural gas resources in its estimates.
NGSA
This is worth repeating:
In fact, there is at least a 1,000-year supply of natural gas in the United States that is considered“unrecoverable”with current technology and economic constraints, such as gas locked deep under the ocean in frozen methane hydrates.
Seafloor methane hydrates might actually already be technically recoverable resources… But, they are far from being economically recoverable.
Coupling the vastness of U.S. natural gas resources with the fact that it is also the fastest, most cost-effective path to lower carbon intensity energy production and…
In Australia we do have vast reserves of gas (Coal as well) however, being the smart country and all that, we export it, sell it (Rather, practically give it away to consumers in Asia), then import it back in to Australia at higher rates.
Now there are calls to included CO2 emissions from exported fossil fuels, burnt by consumers over seas, in Australia’s emissions figures.
Australia! The lucky country!
These articles are a joke. On one hand, we have Luddites who are anti-technology and would repress activities that would benefit individuals. On the other hand, we have Panglossians who believe the nonsense about technological advances bringing us the best of all worlds when those advances are not real. Resources are NOT the same as reserves. The US shale sector has burned through hundreds of billions of capital and has yet to provide a positive free cash flow from shale production. The entire shale miracle fraud is based on the same kind of manipulation and accounting sleight of hand that gave us the AGW fraud.
It is time for rational individuals to step back and ask for objective evidence. The climate alarmists need to stop putting out reports about expert judgment and show us objective evidence that supports their thesis. The shale miracle people need to do the same. If shale production has required the destruction of capital and if funding gaps have to be filled by the sale of properties to a greater fool, by borrowing more money, or selling more equity, where exactly is the miracle? Why can’t the sector generate positive free cash flows after a decade and a half of production? Isn’t it time that the writers of these types of articles and their readers found out that a resource is not the same as a reserve? Or discovered that much of the excitement has been driven by changes in accounting rules designed to help the struggling young shale industry?
The market price for the stocks of most shale companies is down around 80% or more from their peaks. The industry is struggling and on the margin, we are seeing bankruptcies soaring. Shouldn’t that tell us something? And why is the USGA more reliable and trustworthy than the IPCC?
Cabot is the biggest Marcellus player. Cabot has delivered positive free cash flow from 2016 through the first half of 2019.
EOG Resources is one of the biggest shale players. They’ve generated positive free cash flow three of the last five years.
In Q2 2019, nearly 90% of the major shale players generated positive free cash flow.
This may be the same Vangel who used to troll quite regularly at BishopHill blog some years ago, with essentially the same story.
The story worked in 2014 when oil prices were through the roof and the cost of doing business was prohibitively expensive.
Vangel, a better question might be why do you conflate past stock price declines with current profitability?
Stock prices fluctuate for all sorts of reasons, many of which are related to speculative excesses having little to do with the underlying fundamentals of the companies involved.
The list of stocks that are well off historical peaks is very long, and hardly isolated to the case of energy companies.
Is Amazon less profitable now that it was when the price of the stock was 20% higher?
Now that the country is up to its eyeballs in natural gas and at $2.25/Mcf it’s very difficult for producers to make a profit, is it time to cut back drilling and development?
Prices always drive the pace of activity… But, you have to keep drilling to maintain or increase production.
If you were the sole owner of EQT, would you put up the “For Sale” sign in hope that XOM or RDS or CVX would overpay for your present value?
I’d do that any day of the week. Getting another oil company to overpay for your assets is like winning the Lottery. Overpaying for another company’s assets really bites. That’s why there’s a “rule of thumb” that you never go with the company that you just sold your old company to… Because you’ll get blamed for whatever goes wrong. (Says the geo who is working for the company that bought his previous company, which bought the one before that.)
I’ve worked for 4 companies in the last 3 years. However I’m still sitting by the same window.
I’ve worked East Cameron 346 since 1988 for 4 of the 5 companies I’ve worked for… 1, 3, 4 and 5.
I have painful memories of the last gas “bubble” which lasted from 1985 until the late ’90s. In fact, it took so long to dissipate that people took to calling it the gas “sausage” instead of the gas “bubble.”
What’s new this time is the rapid decline curves of fracked wells and the concomitant need to continue drilling to maintain deliverability.
The $64,000 question for managers is, at $2.25/Mcf, is drilling simply recycling dollars and while not making any money ?
Cabot, the biggest Marcellus player, is making money like crazy. There costs are about $1.41/mcf.
I have wondered if anyone ever uses an existing borehole to drill a new horizonal leg at a different depth, and if not, why not?
Sidetracking existing boreholes is a common procedure. However, the flexibility depends on the design and status of the original well.
These are great articles, Mr. Middleton. I’ve had various brushes with the energy sector (including oil), but your expertise adds way more to my understanding than anything else I’ve encountered. In sum, thank you, and I look forward to more!
High Treason,
“Throughout almost all of human history, humans have lived under tyranny.”
Weigh life times against hardship and expand with
Throughout almost all of human history, humans have searched leadership by leaders, shield by shields, explorer’s enabled subsidence …
High Treason. Fits.
10,000 years BC:
https://news.uchicago.edu/story/stone-age-graveyard-reveals-lifestyles-green-sahara-two-successive-cultures-thrived-lakeside
https://www.google.com/search?q=archaeology+findings+sceletons+hands+bound+Sahara+lake&oq=archaeology+findings+sceletons+hands+bound+Sahara+lake&aqs=chrome.