The head of the US Department of Energy's data and analysis arm on Wednesday defended the way his agency assesses natural gas plays in the US, in the wake of New York Times news stories earlier in the week that questioned the economic viability of the US shale gas development.
"I think EIA has done an outstanding job of keeping track of something that is a rapidly emerging change in the [US energy] system," Richard Newell, the administrator of DOE's Energy Information Administration, told Platts.
"It is something that a government agency could easily not be on top of, and it is a part of the system that in a year things change so much that you can be out of touch," he said. "So, to stay in touch you get access to the best information, and you incorporate that into your outlook, and I think that is exactly what we have done."
Two stories in the New York Times on Sunday and Monday quoted internal EIA emails from officials there who were skeptical that US shale gas resources would live up to the rosy production outlook from industry and the EIA.
The stories also led Representative Ed Markey, a Massachusetts Democrat and critic of the controversial techniques used in accessing shale gas, to question whether the estimates reflected reality or a "speculative bubble hyped by the oil and gas industry." Markey requested that Newell outline the methodology it uses to make estimates on shale gas production.
But Newell defended the work of his agency, and emphasized that US gas production was increasing.
"This isn't just perception. Natural gas is being produced, it is being measured, and it is being produced from shale gas reserves," he said.
The development of hydraulic fracturing and horizontal drilling has led to massive increase in the amount of natural gas produced in the US over the past several years. The new techniques also led to independent estimates of gas reserves almost doubling in 2009, from 1,000 Tcf to 1,836 Tcf, with the increase influenced by shale gas activity. The NYMEX natural gas futures contract price also dropped dramatically in the past three years, from above $12/MMBtu in June 2008 to around $4.30/MMBtu this week.
That development has its critics however, with many environmental groups and state government's voicing concerns over the undisclosed chemical materials pumped into the ground by gas companies to retrieve oil from shale.
Since the New York Times stories, analysts and others within the natural gas industry have also defended estimates that natural gas production has increased and will continue to increase.
