Join        Login             Stock Quote

Forget Uncle Sam: The U.S. Is Still Swimming In Natural Gas -- And Investors Can Still Profit

 March 20, 2012 02:47 PM

On Jan. 26, the U.S. Department of Energy (DOE) released a report showing the United States had about 482 trillion cubic feet (Tcf) of recoverable natural gas reserves in shale formations (not counting conventional basins).

That's a big number by any measure -- enough to fuel U.S. energy needs for the next 20 years at the current rate of consumption.
However, before this update, the last DOE projection pegged domestic shale reserves at 827 Tcf -- nearly twice as much.

So should investors panic? Has the natural gas renaissance we've all been told about -- and been positioning to profit from -- been a sham?
Here's what you need to know...

Before we get any further, let's remember that calculating oil and gas reserves is an inexact science. Sometimes even the best geologists are wildly off the mark. The more extensively an area is drilled and developed, the more data are collected regarding what lies below the surface.
Since thousands of new wells have been drilled and monitored in the nation's shale plays in the past year, earlier estimates have been fine-tuned.
Apparently, the latest data suggest that prior reports may have exaggerated Pennsylvania's Marcellus Shale reserves. Marcellus reserve estimates have been cut from 410 Tcf to 141 Tcf. That accounts for most of the overall downward revision nationwide.
But consider this...

The U.S. Geological Survey (USGS) announced last September that the Marcellus Shale held 84 Tcf of gas. Before that, the agency was sticking to an estimate of just 2 Tcf.
So the number wasn't just tweaked -- it was raised 40-fold. At the same time, potential natural gas liquid (NGL) reserves were taken from a few million barrels to a few billion barrels. Revisions of that magnitude prove these reports are anything but precise readings.  
Furthermore, government agencies are widely considered to be ultra-conservative in their projections. They ignore thousands of undeveloped acres where gas is hidden. Plus, they don't reflect what's in the ground, only what can be economically recovered -- and extraction technologies are getting better all the time.
If the shale revolution has taught us anything, it's that technology can put resources that were once viewed as off-limits firmly and cheaply within our grasp.

Next Page >>12


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageBogle Says Indexing Destined To Win The Battle Of The Quants

Vanguard founder John Bogle gave a powerful speech last month at the Q Group’s Spring Seminar that lays out read on...

article imageVMAX and VMIN Poised to Be Most Important VIX ETP Launch in Years

REX Shares is launching two new VIX exchange-traded products on Tuesday in what is likely to be the most read on...

article imageThe April 29 Gold Triangle Breakout Update

If you’re just watching stocks, you may be missing this powerful Triangle Breakout surge in read on...

article imageSell In May, But It Is A Presidential Election Year

With May just around the corner, articles covering the "Sell in May' phenomenon are not in short supply and read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.