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

| Tuesday August 30th, 2011 | 2 Comments

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


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  • jamie

    SO birth defects, cancer and irreplaceable aquifer damage is trumped by investor fears.

  • RayfromPA

    Environment imsmiriment! As long as somebody can make money, who cares. Oops, MAYBE they can make money. They can use the money they make to pay to have their water trucked in. You can always buy your fish and seafood from China that has virtually no criteria for safe food (do some research on where your food is really coming from – bet you’ll be surprised) after all the waterways are polluted. Those accidents are rare, that is why they have been making the news so much. So what if we bulldoze a bunch of roads into our state forests and clear 6 acre pads everywhere. The state government will be making so much money they’ll lower your taxes for sure – NOT. They will still be in the red and look for more resources to exploit. A fortune doesn’t do anybody any good if they waste it. Maybe the state should start selling heroine to afford to build more rehab centers?