New USGS Report Clouds the Future of Gas Drilling in the Marcellus Shale Formation

usgs report on marcellus natural gas at odds with us doe estimateThe U.S. Geological Survey has just issued a new report on the amount of natural gas in the Marcellus Shale formation, and the findings add to the growing uncertainty over just how profitable new gas wells in the region will be over the long run. Drilling in the Marcellus, a rich deposit of natural gas under Pennsylvania, West Virgina, New York  and other states, is already a dicey proposition due to concerns over the potential for water contamination in heavily populated areas. U.S. investors have long proved willing to pump money into fossil fuel projects despite the known environmental risks, but the possibility of an investment “bubble” based on faulty production estimates throws a new element of undisclosed financial risk into the picture.

Marcellus and Undisclosed Risks

The apparent exposure of Marcellus investors to undisclosed financial risks recently lead U.S. Attorney Eric Schneiderman to subpoena the records of three gas drilling companies and investigate a fourth. The subpoenas seek information on the companies’ methods of calculating the profitability of their wells. A growing number of shareholder resolutions and supportive rulings by the Securities and Exchange Commission also demonstrate the growing pressure on drilling companies to exercise more transparency regarding estimated production and the true risks of gas drilling, particularly in fracking operations which involve pumping a chemical brine underground.

The New USGS Estimate of Marcellus Gas

The new USGS report estimates that there are about 84 trillion cubic feet of natural gas in the Marcellus, which is massively higher than its 2002 estimate of only two trillion cubic feet. However, it is significantly lower than the Department of Energy’s estimate of 410 trillion cubic feet, which came out just a few weeks ago. As reported by Bloomberg.com, a spokesperson from the Department of Energy stated that the agency would defer to the USGS, but the matter is still up in the air. Ken Ward, Jr. of the West Virginia Gazette (known for his extensive coverage of coal mining in Appalachia) reports that the USGS is “trying to figure out” how the two reports came to such different conclusions on.

Energy and Risk

Dramatic catastrophes like the Gulf oil spill have drawn more attention to the environmental risks involved in fossil fuel harvesting, but it could be the more recent focus on transparency, profitability, and responsible investing that results in a more safe and sustainable approach to energy supply over the long run.

Image: Natural gas by ndrwfgg on flickr.com.

Twitter: @TinaMCasey

Tina is a career public information specialist and former Deputy Director of Public Affairs of the New York City Department of Environmental Protection, and author of books and articles on recycling and other conservation themes. She writes frequently on sustainable tech issues for Triple Pundit and other websites, with a focus on military, government and corporate sustainability, and she is currently Deputy Director of Public Information for the County of Union, New Jersey.