How Should Gas Reserves in the United States Be Compiled and Reported?

Abstract

Government policy can be no better than the data it is based on. Until reporting committees express the figures they come up with in more universal terms, and until they define those terms clearly in the context they are expressed in U. S. gas reserves will be that amorphous elephant, groped at blindly by the well-intentioned. In responding to the JPT Editor's invitation to discuss the reporting of natural gas reserves, I will confine my comments to various possible improvements in reporting that will advance our understanding of the current gas shortage and how that shortage might be corrected.* Earlier criticisms of gas reserves statistics often focused on their questionable reliability as a data base for evaluating the long-run adequacy of the nation's natural gas resources.** Today the principal concern among users of these statistics is principal concern among users of these statistics is that they do not provide adequate information for policy decisions on the near-term problems of gas policy decisions on the near-term problems of gas supply. Both industry and government are attempting to correct this situation with new or expanded statistical programs. Comprehensive and reliable gas reserves estimates are required for many important public policy purposes, including Federal regulation of natural gas purposes, including Federal regulation of natural gas producers and pipelines, decisions on leasing offshore producers and pipelines, decisions on leasing offshore areas and oil shale lands, Federal support of energy research and development programs, petroleum taxation and import policies, and long-run planning for the nation's economic well-being and security. The officials responsible for decisions in these interrelated areas of national energy policy require more than the conventional estimates of known recoverable reserves under a restricted set of assumptions. They must be able to get behind the reported data to understand the specific forces that affected past discoveries. They also require well defined data regarding the prospects for additional supplies within reasonable degrees of probability. Moreover, the data requirements for probability. Moreover, the data requirements for indepth research on policy alternatives must be met as far as possible. Starting in the mid-1960's the petroleum industry launched a major overhauling of its published statistics. In its report on reserves and productive capacity, an API Task Group considered the recommendations of the Petroleum Statistics Study Group in the latter's report to the Bureau of the Budget, March 22, 1965, as well as findings by Lovejoy and Homan. One result of the overhauling effort is the biennial report prepared by the Potential Gas Committee in cooperation with the Potential Gas Agency of the Colorado School of Mines. This report, which has been improved with each successive issue, has become a widely used source of information on undiscovered reserves." (The first report of its type was prepared by the Future Gas Supply Committee prepared by the Future Gas Supply Committee organized in 1964. About 150 industry experts and 4 government observers" are now involved in the work of the Potential Gas Committee and its "work committees.") In addition, the American Gas Association (AGA) Committee on Natural Gas Reserves, which has been publishing annual estimates of proved reserves since 1946, now issues a much more informative report with additional breakdowns of annual changes in proved reserves and new estimates of ultimate recovery of proved gas reserves by year of discovery, reservoir lithology, and type of entrapment. P. 530