There has been much confusion surrounding the United States Geological Survey (USGS) assessment of shale gas resources in the Marcellus “play,” released in late August 2011. As explained in a new RFF Issue Brief, the questions likely lie in a misunderstanding of the definitions of shale gas resource classifications used by the U.S. Energy Information Administration (EIA) and USGS.
Both the EIA and the USGS have virtually identical definitions for undiscovered resources. The USGS defines these as technically recoverable accumulations of gas outside known fields that have the geologic potential to be added to reserves. They do not include reserves, and are not a prediction of resources that will actually be discovered. Similarly, the EIA defines undiscovered resources as those that are located outside of oil and gas fields, excluding reserves, where the presence of resources has been confirmed by exploratory drilling. Whereas the EIA defines inferred reserves as unproven reserves in known fields, and the USGS does not attempt to measure or define inferred reserves.
Adhering strictly to the definitions, and barring any misclassification of resources, leads to the conclusion that the 84 trillion cubic feet (tcf) estimated by the USGS measures only undiscovered resources outside known fields in the Marcellus, and is different and separate from the EIA’s 410 tcf estimate of inferred reserves in known but unproven fields. Even though the definitions for undiscovered resources and inferred reserves are mutually exclusive, this alone does not eliminate the potential for the misclassification of resources as reserves or address the larger discussion of using a conventional resource framework to classify the continuous shale resource in the Marcellus play.
