“Natural Gas: The Fracking Fallacy” — a debate over the recent article in Nature

Nature ChartT’was the week before Christmas, a night during Chanukah and a couple of weeks before Kwanzaa, when, all through the nation, many readers more interested in America’s energy supply than in the fate of Sony’s “The Interview,” were stirring before their non-polluting fireplaces (I wish). They were trying to grasp and relish the unique rhetorical battle between The University of Texas (UT), the EIA and the recent December article in Nature, titled “Natural Gas: The Fracking Fallacy,” by Mason Inman.

Let me summarize the written charges and counter charges between a respected journal, university and government agency concerning the article. It was unusual, at times personal and often seemingly impolite.

Unusual, since a high-ranking federal official in the EIA responded directly to the article in Nature, a well-thought of journal with an important audience, but relatively minimal circulation. His response was, assumedly, based on a still-unfinished study by a group of UT scholars going through an academic peer review process. The response was not genteel; indeed, it was quite rough and tough.

Clearly, the stakes were high, both in terms of ego and substance. As described in Nature, the emerging study was very critical of EIA forecasts of natural gas reserves. Assumedly EIA officials were afraid the article, which they believed contained multiple errors and could sully the agency’s reputation. On the other hand, if it was correct, the UT authors would be converted into courageous, 21st century versions of Diogenes, searching for energy truths. The article would win something like The Pulitzer, EIA would be reprimanded by Congress and the UT folks would secure a raise and become big money consultants to a scared oil and gas industry.

Just what did the Nature article say? Succinctly: The EIA has screwed up. Its forecasts over-estimate America’s natural gas reserves by a significant amount. It granted too much weight to the impact of fracking and not enough precision to its analysis of shale play areas as well as provide in-depth resolution and examination of the sub areas in major shale plays. Further, in a coup de grace, the author of the Nature piece apparently, based on his read of the UT study, faults the EIA for “requiring” or generally placing more wells in non-sweet-spot areas, therefore calculating more wells than will be developed by producers in light of high costs and relatively low yields. Succinctly, the EIA is much too optimistic about natural gas production through 2040. UT, according to Nature, suggests that growth will rise slowly until early in the next decade and then begin to decline afterwards through at least 2030 and probably beyond.

Neither Wall Street nor producers have reacted in a major way to the Nature article and the still (apparently) incomplete UT analysis. No jumping out of windows! No pulling out hairs! Whatever contraction is now being considered by the industry results from consideration of natural gas prices, the value of the dollar, consumer demand, the slow growth of the economy and surpluses.

Several so-called experts have responded to the study in the Journal piece. Tad Patzek, head of the UT Austin department of petroleum and geosystems, engineers and “a member of the team,” according to the Journal, indicated that the results are “bad news.” The push to extract shale gas quickly and export, given UT’s numbers, suggests that “we are setting ourselves up for a major fiasco.” Economist and Professor Paul Stevens from Chatham House, an international think tank, opines “if it begins to look as if it’s going to end in tears in the U.S., that would certainly have an impact on the enthusiasm (for exports) in different parts of the word.”

Now, generally, a bit over the top, provocative article in a journal like Nature commending someone else’s work would have the author of the article and UT principal investigators jumping with joy. The UT researchers would have visions of more grants and, if relevant, tenure at the University. The author would ask for possible long-term or permanent employment at Nature or, gosh, maybe even the NY Times. Alas, not to happen! The UT investigators joined with the EIA in rather angry, institutional and personal responses to the Journal. Both the EIA and UT accused Nature of intentionally “misconstruing data and “inaccurate…distorted reporting.”

Clearly, from the non-scholarly language, both institutions and their very senior involved personnel didn’t like the article or accompanying editorial in Nature. EIA’s Deputy Administrator said that the battle of forecasts between the EIA and UT, pictured in the Journal, was imagined and took both EIA’s and UT’s initiatives out of context. He went on to indicate that both EIA’s and UT efforts are complementary, and faulted Nature for not realizing that EIA’s work reflected national projections and UT’s only four plays. Importantly, the Deputy suggested that beyond area size and method of counting productivity, lots of other factors like well spacing, drilling costs, prices and shared infrastructure effect production. They were not mentioned as context or variables in the article.

The principal investigators from UT indicated that positing a conflict between the EIA and themselves was just wrong. “The EIA result is, in fact, one possible outcome of our model,” they said. The Journal author “misleads readers by suggesting faults in the EIA results without providing discussion on the importance of input assumptions and output scenarios. “Further, the EIA results were not forecasts but reference case projections. The author used the Texas study, knowing it was not yet finished, both as to design and peer review. Adding assumed insult to injury, it quoted a person from UT, Professor Patzek, more times than any other. Yet, he was only involved minimally in the study and he, according to the EIA, has been and is a supporter of peak oil concepts, thus subject to intellectual conflict of interests.

Nature, after receiving the criticism from UT and EIA, stood its ground. It asserted that it combined data and commentary from the study with interviews of UT personal associated with the study. It asked for but only received one scenario on gas plays by EIA — the reference case. It was not the sinner but the sinned against.

Wow! The public dialogue between UT, the EIA and Nature related to the article was intense and, as noted earlier, unusual in the rarefied academically and politically correct atmosphere of a university, a federal agency and a “scientific” journal. But, to the participants’ credit, their willingness to tough it out served to highlight the difficulty in making forecasts of shale gas reserves, in light of the multitude of land use, geotechnical, economic, environmental, community and market variables involved. While it is not necessary or easy to choose winners or losers in the dialogue, because of its “mince no words” character, it, hopefully, will permit the country, as a whole, to ultimately win and develop a methodology to estimate reserves in a strategic manner. This would be in the public interest as the nation and its private sector considers expanding the use of natural gas in transportation, converting remaining coal-fired utilities to environmentally more friendly gas-powered ones and relaxing rules regulating natural gas exports. We remain relying on guesstimates concerning both supply and demand projections. Not a good place to be in when the stakes are relatively high with respect to the health and well-being of the nation.

On a personal note, the author of the article in Nature blamed, in part, the EIA’s inadequate budget for what he suggested were the inadequacies of the EIA’s analysis. Surprise, given what the media has often reported as the budget imperialism of senior federal officials, the Deputy Administrator of EIA, in effect, said hell no, we had and have the funds needed to produce a solid set of analyses and numbers, and we did. Whether we agree with his judgments or not, I found his stance on his budget refreshing and counterintuitive.

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