Nature’s “Battle Of The Forecasts” No Real Battle, Say EIA and UT

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Recently featured in our IE Read Feed was a story in the influential science journal Nature, titled “Natural gas: the fracking fallacy.” Reporter Mason Inman analyzed research being conducted at the University of Texas at Austin that suggested natural gas production forecasts were vastly overestimated. The story called into question the bullish outlook for the shale gas industry and suggested that the four biggest shale gas plays in this country may peak in 2020, two decades earlier than predicted by the federal Energy Information Administration. If the UT researchers’ analysis is correct, a lowered natural gas production reality could have broad impact across the oil and gas industry as well as on the entire U.S. economy. As the story’s subtitle puts it: “The United States is banking on decades of abundant natural gas to power its economic resurgence. That may be wishful thinking.”

nature_fracking_projections_chartV2_04.12.14

Now the EIA has struck back.  In a letter sent to Nature editors on Monday, Howard Gruenspecht, the Deputy Administrator of the EIA, wrote that the agency agreed with Nature on certain points, namely that the agency had not anticipated the rapid growth in shale gas production and that the future of shale gas production is uncertain. But the letter chided Nature for “inaccurate and distorted reporting” which could mislead readers who relied on the journal for accurate analysis of a complex issue. The letter also called out Nature for relying on Professor Tad Patzek — head of the University of Texas at Austin’s department of petroleum and geosystems engineering, but not one of the principal investigators on the UT research project — as a main source in the story. The letter suggests that Patzek may have another agenda in pressing the “fracking fallacy,” as he is a prominent proponent of the theory of “peak oil” which emphasizes the risks of relying on limited fossil fuel resources.

It is not just the EIA that is pushing back against the Nature story. Two principal investigators in the project at the UT Austin’s Bureau of Economic Geology, Dr. Scott W. Tinker and Dr. Svetlana Ikonnikova, also wrote a strongly worded letter to the journal. Their argument was that Nature, as one of the most highly respected science journals, has the responsibility to rise above politics and report objective science.  The letter said the “fracking fallacy” story “contains misrepresentative speculation and apparent bias based on the limited data presented. Energy—all energy—is an immensely important global topic and deserves more careful treatment.” Like the EIA, the investigators took issue with how the Nature story appeared to create conflict between the EIA and the UT team when, in actuality, the two groups work collaboratively and, “both consider future scenarios and perform sensitivity analyses to show how variations in input parameters affect production outlooks. The EIA result is, in fact, one possible outcome of our model.”

In its final paragraph, the UT letter concludes: “With due respect, in our opinion, Nature is lacking in objective and balanced coverage of broad energy research.”

While this may seem like inside baseball, or energy nerd combat, natural gas or oil forecasts are immensely important for what’s happening in our economy today, and tomorrow. As the original Nature story itself put it:

Companies are betting big on forecasts of cheap, plentiful natural gas. Over the next 20 years, US industry and electricity producers are expected to invest hundreds of billions of dollars in new plants that rely on natural gas. And billions more dollars are pouring into the construction of export facilities that will enable the United States to ship liquefied natural gas to Europe, Asia and South America.

The Nature story comes on the heels of a report issued by the Post Carbon Institute in late October 2014 that also questioned the EIA’s estimates for shale oil and gas.  The report calls the estimates “extremely optimistic” and says:

By 2040, production rates from these plays will be about one-third that of the EIA forecast. Production from shale gas plays other than the top seven will need to be four times that estimated by the EIA in order to meet its reference case forecast.

Inside Energy is watching this area closely and weighing in with our own explanations of where these numbers are coming from and what they mean.