3:55pm

Tue January 24, 2012
Natural gas

Department of Energy lowers Marcellus gas reserves estimate

In its Energy Outlook for 2012, the Department of Energy has reduced its estimate of unproven "technically recoverable reserve" (TRR) natural gas in the Marcellus Shale from 410 trillion cubic feet to 141 trillion cubic.

For those of you playing at home, 141 trillion down from 410 trillion represents a nearly one-third  two-thirds reduction in natural gas across the whole Marcellus Shale formation.

But it's still pretty far off from the U.S. Geological Survey's (USGS) competing estimate, of about 84 trillion cubic feet.

The DOE's Energy Information Administration (EIA) will share the full energy outlook in the spring. The reduced estimate was included in a preview released Monday.

Here's why the EIA says it made the cut:

Both EIA and USGS have recently made significant revisions to their TRR estimates for the Marcellus shale. Drilling in the Marcellus accelerated rapidly in 2010 and 2011, so that there is far more information available today than a year ago. Indeed, the daily rate of Marcellus production doubled during 2011 alone. Using data though 2010, USGS updated its TRR estimate for the Marcellus to 84 trillion cubic feet, with a 90-percent confidence range from 43 to 144 trillion cubic feet—a substantial increase over the previous USGS estimate of
2 trillion cubic feet dating from 2002.

The earlier EIA estimate was from a combination of industry reports and information from the USGS.

At the same time as the DOE's announcement on Monday, natural gas company Chesapeake announced [PDF] that it will drastically reduce its drilling operations.

The company cited 10-year low natural gas prices as the reason for its decision.