Nature article questions natural gas optimism

HOUSTON — A news feature in the scientific journal Nature suggests that the U.S.’s widespread belief in the abundance of natural gas may be misplaced.

The report highlights conflicting estimates about the long-term viability of increasing natural gas production, and warns that acting on the assumption natural gas will always be cheap may not be ideal.

Specifically, Nature highlights widely-used predictions by the U.S. Energy Information Administration showing that natural gas production will increase at a healthy clip until 2040.

The EIA projects that growth until 2020 will mostly be driven by four major shale plays: the West Virginia and Pennsylvania Marcellus, the Barnett in Texas, the Fayetteville in Arkansas and the Haynesville in Louisiana and Texas.

Nature then cites work done by the University of Texas at Austin indicating that those predictions may be off the mark.

The UT study suggests that the major natural gas shale plays will peak in 2020 and begin a decline after that. By 2030, according to the UT numbers cited in the report, the plays will be producing about half as much as suggested by the EIA.

Nature attributes the difference in estimates to how the researchers added up all of the natural gas that could potentially be produced. According to the report, researchers at the EIA broke up shale plays and analyzed productivity by county, while researchers at UT used blocks of one square mile — giving their research much more resolution than the EIA’s.

Nature cited EIA representatives saying that the two studies shouldn’t be compared because they use different assumptions and include many different scenarios.

As an example of a situation where estimates didn’t pan out, Nature points to Poland. In that case, according to the report, consultancy Advanced Resources International reduced its estimates for the amount of natural gas contained in Polish shale fields after test wells didn’t yield expected results.

The article doesn’t delve into industry reports and independent reports by analyst groups, saying that the methodology and information used to compile them isn’t available for review.

Industry and analyst groups have predicted a broad range of possibilities, including many scenarios by Goldman Sachs and Wood Mackenzie that are more optimistic than the EIA’s case.

One example by Wood Mackenzie — not cited in the nature report — indicates that there may be as much as $90 billion in remaining value left in the Marcellus Shale.

Still, the Nature report concludes by saying that estimates often come with large amount of uncertainty.