Panel hikes US gas estimate 39% to 1,836 tcf; 1/3 from shale gas

The United States has considerably more natural gas than previously thought, totaling 1,836 trillion cubic feet, says a new assessment from the Colorado-based Potential Gas Committee.

“This is the highest resource evaluation in the Committee’s 44-year history,” a June 18 press release said.

The assessment is for the year ended 2008 and shows 39 percent more gas than the year-end 2006 report, which put total potential resources at 1,321 tcf.

The committee attributes most of the increase in its latest assessment to a “reevaluation of shale-gas plays in the Appalachian basin and in the Mid-Continent, Gulf Coast and Rocky Mountain areas.”

The Potential Gas Committee is a nonprofit organization of volunteer members working in the natural gas exploration, production and transportation industries, as well as field and technical services and consulting.

The independent committee receives technical assistance and other support from the Potential Gas Agency at the Colorado School of Mines at Golden, Colo.

“The PGC’s year-end 2008 assessment reaffirms the Committee’s conviction that abundant, recoverable natural resources exist within our borders, both onshore and offshore, in all types of reservoirs,” said John Curtis, a geology professor and director of the Potential Gas Agency.

Alaska implications

Two industry alliances are now pursuing a multibillion-dollar pipeline to feed the state’s 35 tcf of known North Slope gas reserves into the North American marketplace.

Competing supplies of gas, whether from conventional gas fields or from emerging unconventional sources such as shale gas, could have some bearing on whether or when expensive new ventures such as the Alaska gas pipeline will proceed.

The two gas pipeline alliances — ExxonMobil and TransCanada, and a BP-ConocoPhillips partnership called Denali — each plan open seasons next year to try to recruit sufficient gas to their projects.

That’s when all the factors, including potential supplies of non-Alaska gas, will come into play, said Dave MacDowell, a spokesman for the Denali project.

“We have a long-term view. The long-term view is that the North American market will have a place for Alaska gas,” MacDowell said.

But pipeline companies aren’t the ultimate decision makers, he said.

“Of course, the shippers are the ones who will need to evaluate future market prospects during the open season, when they will decide whether to make the long-term, multibillion-dollar financial commitments needed to underpin project financing,” MacDowell said.

Report details

Compared to the year-end 2006 report, traditional resources increased by almost 519 tcf while coalbed gas dipped by 3 tcf. That results in a net increase of 515 tcf or 39 percent for the year-end 2008 assessment.

These results combined with the U.S. Department of Energy’s latest determination of 238 tcf of proved gas reserves as of year-end 2007 yields a total available “future supply” of 2,074 tcf, the PGC report says.

The PGC generates its gas resource assessments every two years in three categories of decreasing certainty: “probable” or current fields, “possible” or new fields, and “speculative” or frontier areas. For each category, a “minimum,” “most likely” and “maximum” volume is assessed for each of 89 geological provinces grouped into seven geographic areas in the Lower 48 and Alaska. Mean values are calculated by statistical aggregation of the minimum, most likely and maximum traditional values for each resource category.

Technically recoverable gas

“Estimates of the Potential Gas Committee are ‘base-line estimates’ in that they attempt to provide a reasonable appraisal of what we consider to be the ‘technically recoverable’ gas resource potential of the United States,” he said.

Curtis continued: “Our knowledge of the geological endowment of technically recoverable gas continues to improve with each assessment. Furthermore, new and advanced exploration, well drilling and completion technologies are allowing us increasingly better access to domestic gas resources — especially ‘unconventional’ gas — which, not all that long ago, were considered impractical or uneconomic to pursue.”

Overall, the Gulf of Mexico shelf, slope and deepwater remains the nation’s top gas region, followed by the Rocky Mountain, Atlantic and Mid-Continent regions. Together these account for 87 percent of the 2008 assessed traditional resource, the PGC report says.

The biggest mover was the Atlantic area, jumping 285 percent from 91.7 tcf to 353.5 tcf in the latest assessment. The Atlantic region takes in the Marcellus shale, which has huge gas potential.

The newest report shows no change from year-end 2006 in Alaska’s assessment of 193.8 tcf.

Shale gas

The rising importance of shale gas is reflected in the fact that it accounts for 33 percent or 616 tcf of the 1,836 tcf of total potential resources.

Geologists and other experts, however, continue to debate how big a contributor shale gas ultimately will prove to be, or whether it poses a threat to the Alaska gas pipeline.

Shale gas today accounts for about 5 percent of total U.S. production.

Producing shale gas means horizontal drilling, sinking many wells to maintain production rates and hydraulic reservoir fracturing. This generally means higher cost than producing from conventional gas fields.

Mark Myers, a former U.S. Geological Survey chief now working on the State of Alaska’s gas pipeline effort, told Petroleum News in March that North Slope gas produced at high sustained rates from conventional fields can compete with shale gas on a cost basis.

Even if much shale gas is produced, it could actually help chances for an Alaska gas pipeline by driving industrial development that will need North Slope gas by the time a gas line is in place, Myers said.

—Wesley Loy