Natural gas and the trouble with estimating fossil fuel reserves

Over the past few years, I've heard several people in the natural gas industry estimate that the United States is sitting on 100 years worth of natural gas. Every time I've heard the 100-year estimate batted around, it's been presented as a positive thing, a shorthand way of saying, "We've got tons of home-grown energy, people! We don't need to worry about the future of energy at all!"

It's an interesting example of the fundamental disconnect between short-term and long-term thinkers.

All things considered, 100 years is not really a very long time. Especially given the fact that estimates like this are based on current natural gas usage rates, but are presented with an implication that we should be using more natural gas than we currently do. I don't think that a 100-year-supply of something as critical as energy represents a time of plenty. I think it represents a ticking clock. At best, what you've got there is a transitional energy source—something with the potential to be cleaner and less politically complicated than coal and oil, that you can use while you build up an energy infrastructure based on something other than fossil fuels.

But the critique of that "100 years of gas" estimate goes even deeper. That's because any estimate of fossil fuel reserves is made under the limitations of corporate secrecy. Different well owners estimate reserves in different ways, so you can't just add up everybody's estimates and compare apples to apples. There's no way for independent sources to check estimates. And there's not really any independent bodies reviewing the state of fossil fuel reserve estimation science. (The closest you'll get to that is a review of oil reserves done in 2009 by a small group of researchers in the US and UK.)

Meanwhile, as energy analyst Chris Nelder points out on, if you take a close look at the information about the estimates that is available, you'll find that "100 years of natural gas" doesn't necessarily mean 100 years of natural gas.

But what is that estimate based upon? Those details haven’t been made freely available to the public, but their summary breaks it down as follows here and in the graph below: 273 tcf are "proved reserves," meaning that it is believed to exist, and to be commercially producible at a 10 percent discount rate. That conforms with the data of the U.S. Energy Information Administration. An additional 536.6 tcf are classified as "probable" from existing fields, meaning that they have some expectation that the gas exists in known formations, but it has not been proven to exist and is not certain to be technically recoverable. An additional 687.7 tcf is "possible" from new fields, meaning that the gas might exist in new fields that have not yet been discovered. A further 518.3 tcf are "speculative," which means exactly that. A final 176 tcf are claimed for coalbed gas, which is gas trapped in coal formations.

I'd recommend reading Nelder's full article. It's a nice summary of why estimates of fossil fuel reserves need to be approached skeptically, why the job of measuring this stuff is difficult to begin with, and why we don't really have enough information to declare a "Golden Age" of natural gas.

Image: Natural Gas Flare, a Creative Commons Attribution Share-Alike (2.0) image from rickhurdle's photostream


  1. Sustainably produced natural gas is one of our best options for the future.  We already have the infrastructure built to distribute and use it!

    However, releasing geologically  sequestered natural gas is fundamentally retarded.  Fracking demonstrates this more than sufficiently…

    Another way to look at that 100 year figure (which, incidentally, assumes fracking will not only continue but increase) is that the US natural gas reserves are guaranteed to run out in our children’s lifetimes.  At least one child born this year will live to be at least 100.

  2. Natural gas is a great part of an overall energy strategy, as the plants have very short start-up and shut-down times when compared to coal or nuclear plants. This means that they would be ideal “peaker plants” to be built in conjunction with geothermal, solar, or wind plants, to be turned on only when the renewable energy sources can not meet the total, peak demand (this is particularly necessary when using solar or wind which are not as reliable).

    I think the 100 year number is significant to some people because to them it means “not in my lifetime”, and they are either too selfish or small minded to consider future generations’ needs.

    1. Since the 80s the mantra of the people in power have been “me me me”, so i am not surprised. I think it is the culmination of a twofold change. first is the conversion for mostly farmers to mostly services workers. This removes the long time planning reflex, as one is no longer considering seasons and such. Second is the industry pushed switch from need to desire, as we can see with the most common use for the population is not citizens but consumers. We are told to get something if we desire it, over and over and over via all possible channels of advertizing. Do not worry about how long you will be able to use it for, or how easy it will be to repair if broken, just buy a new one. Oh and if you can’t afford it on your salary there is the ever present credit card, that allows you to spread the cost over months or years.

  3. We have no non-laughable estimates on any of our fossil fuel reserves.  This is especially the case with oil.  To call the figures that are bandied about “estimates” is an insult to anyone who ever estimated the number of jelly beans in a jar.  The base figures come from regimes who constantly lie about the number of their own citizens that they torture to death on any given day.  Rest assured that if there is a nickel more profit to be made by changing the estimates they will be changed.  Check out how Nigeria’s reserves swell and shrink based on OPEC production quotas: sometimes in the same week.

    Pet Peeve: the US oil and gas reserves report from the Feds takes about a month to compile.  The day after it comes out the newswires and talking heads on TV draw portentous conclusions from it based on the  previous day’s weather conditions and driving activity.  I guess being able to read the first page of a report to see what time period it covers isn’t one of the requirements to being a financial analyst.

  4. What these estimates also don’t usually include is estimates of the energetic expenditures necessary to acquire more and more speculative reserves. The assumption is generally that improved technology will appear at appropriate intervals to bring more and more marginal reserves into the fold of exploitability, but the history of oil extraction has watched the energetic return (on oil, at least) fall from much better than 10:1 to more like 3:1- and when it reaches 1:1, no price or technology gets it out of the ground, except as an energy carrier that’s actually “paid for” by other power sources. Granted, that sort of math depends on the efficiencies of as-yet-unconstructed technologies, but it’s still something to ponder.

  5. To put that 100 year figure in context, a typical thermal power station has a sixty year lifespan.  That means you have enough natural gas to run a gas turbine plant through its original lifespan, plus just one major refit.  

  6. 100 years (or even half that) may well be long enough for other energy sources and technologies to become practical. Nobody wants to burn fossil fuels forever, but we need to for a while longer.

    There’s something else about “proven reserves” that works the other way: the government definition specifically excludes oil known to exist, but which is off-limits due to government policy. E.g. oil in Alaska where the EPA forbids drilling is *not* counted. 

    1. Except that the 100 year “meme” ends up being a but like the y2k or ipv6. It generates a perception of there being plenty of time, and so the investments required to make said new tech viable never happens. We humans kinda blanks out beyond 4-5 years. Hell, i recall growing up in the 80s/90s with the perception that the 2000s was far far off into the future. Hello, we are now writing 2012! And bar a accident or some other major event i am likely to live well into 2060. That is scifi territory, where anything appears to be possible…

      1. There is truth in what you say, but of course it works the other way, too: lots of crying “wolf” about how we’re running out of fossil fuels right now, and then when that turns out not to be true, people stop listening to whatever else “those people” have to say, not matter how true it may be. 

        For decades the environmental movement’s most vocal and alarmist proponents have been its worst enemies, discrediting not just themselves, but much of the rest of the movement. 

  7. Quick-fix scenarios – whether realistic or shamelessly blown out of proportion –  like “The Golden Age of Natural Gas” are attractive to a consumer base that doesn’t what to change their lifestyles in such a way as to make it easier to move *away* from fossil fuels. There may not be one single panacea solution to our energy/environmental concerns but a solution set of multiple point sources to supply our energy needs while we learn to adapt and change ourselves in the ways necessary for us reduce our dependence on fossil fuels. If there were a single point within this solution set that I might call my personal favorite, it would be conservation. Best wishes and a Happy New Year to all, Robert.

  8. The simple truth is that, so long as we continue to increase our fossil fuel consumption at an exponential rate (and we have for well over a century), it matters not how much fossil fuels are available. we can still predict when they will run out (soon).

    This was spelled out quite adequately over thirty years ago by Dr A Bartlett in his essay, “Forgotten Fundamentals of the Energy Crisis”.

    1. There is a quote about human inability to grasp exponential out there somewhere. Hell, the oldest example may be doubling the number of rice grains on each square of a chessboard. 1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024, 2048 is just 12 of the 64 squares. Continue on, and one get 18446744073709551616 (thanks Wikipedia). Crazy thing is, (neo)classical economists take it for granted that the economy is expected to grow at least 3% pr year. Note that even if that is 3/100 of the growth above, it still becomes crazy over time. It just takes longer.

  9. I have not read the full article yet, but I suspect I won’t be the only reader/poster guilty of that, so I would like to add one detail here: proved, probable and possible are based on current costs. If the cost of natural gas goes up, more of what is in the ground moves up a level (e.g., probable becomes proved).  Proved means not only do we have knowledgeable estimation that it’s there, but we can get it into the pipeline at a profit.

  10. The most interesting story here is who’s behind the 100 (see 20) year myth and why they are pushing it (see T. Boone Pickens).

    Likely Big Oil and Coal companies trying to sell the great next ‘best thing’ for large gov’t subsudy handouts, taxbreaks and massive taxpayer infrastructure outlays which will then be useless in 40 years.

    40 years being the important relative lifespan of your avg Big Oil CEO.

  11. Not to mention that natural gas is a fossil fuel, and burning it adds CO2 to the atmosphere. At some point soon we have to get to grips with the fact that a signficant fraction of known fossil fuel reserves will have to stay buried in the ground if we want to avoid catastrophic climate change. I calculate about it’s about half of all reserves if we want to stay below 2 deg C of warming:
    Of course, I’d rather see us use Natural Gas as a transition fuel, and leave more of the coal untouched. But I don’t see anyone in the mainstream media even willing to discuss this.

  12. Transmission 1: 123.d.60.07

    Observations prove conclusive that human beings in their present state of consciousness cannot be reasoned with.
    Any form of co-existance with them would be intolerable, if not impossible, at this time.
    They are almost always led by the most delusional and self absorbed among them.
    They have all the information and tools needed to get along with each other and live in comfort, sustainability and peace. Yet their leaders choose not to and the masses comply.

    They have a gem of a planet that they show nothing but disdain for and are no way prepared for a world with 12 billion humans (twice as many within our next cycle- 50 earth years).

    No need to attack them now, they will destroy themselves soon enough and then all the resources we need will be available at no loss to our species.
    My estimate is that human beings will not be here a hundred years from now.

    The planet will provide resources for our species indefinitely.

    There is an incredible sun, oxygen, water and an eco system that provides shelter, food sources and unlimited entertainment.

    On a personal note:
    This planet will be a wonderful and exotic vacation destination in the mean time. There is a creature called a gecko who lives along the equator who makes a marvelously enchanting sound and can be watched for hours on end as it rids my dwelling of invasive insects.

  13. I haven’t read any articles yet… but the math on this is rather scary. If all those numbers add up to the 100-year metric, that means we have only 12 years of proved natural gas resources?!
    Edit: Yes, I skimmed the Slate article, and my math is accurate. Scary stuff!

    1. See my post above.  Proved is based on current costs.  If we were really running out, the price would go up, and that would mean the drilling companies could afford to tap additional wells.  The “probables” would become “proved”, etc.

      Think of it this way: what matters is if they can PROVE (to themselves) they’ll make money if they drill a well in that spot.

  14. You write “It’s an interesting example of the fundamental disconnect between short-term and long-term thinkers.” regarding anyone who points out there is a 100 year supply of natural gas.

    Not possible to know this and say this, and yet still be a long-term thinker…perhaps with this being one of dozens of factors informing our opinion? Really? Kind of an oppresive standard.

    Am I allowed to know it and not say that I know it, or is too late for me at that point? Just want to fit in…

  15. If there are more than thirty years’ reserve of any mined resource, that’s an accident.

    Put yourself in the place of an oil, coal or mining company CEO – and you have my permission to be for the sake of argument a socially responsible one (no matter how much you believe that’s an oxymoron).  Let’s say you’re sitting atop thirty years’ proven reserves – or even five years’ proven reserves with another twenty-five probable.  Are you going to finance new exploration? Pay to secure new leaseholds? Plan out the development of new fields?  The shareholders will tar and feather you for wasting their money!

    The bad thing about natural gas is that it does release sequestered carbon, although less in terms of grams per Joule than petroleum, to say nothing of coal.  One good thing about it is that a natural-gas physical plant is readily modified to work on hydrogen, on biogenic gas, or on methanol, all of which are carbon-neutral. So as far as fossil fuels go, it’s pretty nice – there’s a lot of it, and it’s replaceable with renewables without needing a total retooling. It’s a lot less worrisome than oil or coal.

    It’s hopeless as a transportation fuel, though, which is where petroleum shines.  In order to make a real dent in emissions, we have to (a) go nuclear, wind, solar, geothermal, ocean-thermal, etc. for fixed power stations, (b) work on energy storage for transportation, so that we don’t have to burn petroleum to run automobiles, locomotives, ships and airplanes.  

    Gas, in the applications that can use it, but can’t yet use true renewables economically, may be entirely the right thing, even if it’s being sold for the wrong reasons.

    1. Why do you say natural gas is hopeless as a transportation fuel? There are already vehicles on the roads in the US right now using it.

  16. There are two problems with abundant natural gas.

    One problem: It makes greenhouse-effect worries more definite. As long as fossil fuels looked scarce, it looked like there simply wasn’t enough of them to create a major greenhouse problem. Now, it looks like there are enough.

    Another problem: The formerly-absurd environmentalist worry of running out of oxygen might not be absurd after all. As long as it looked like fossil fuels could only have been created by photosynthetic life millions of years ago, any fossil fuel would be matched by the oxygen in the atmosphere (and some of that fossil fuel would be too deep to be reachable). In other words, we would run out of fuel before we ran out of oxygen. If Thomas Gold was right and there’s far more fuel than was created by photosynthesis, we might run out of oxygen first.

    1. That would require burning more than one hundred thousand times as much fossil fuel as has been burned since the dawn of the industrial revolution.

      If we’re that dumb, we deserve it, and besides, even at 3% annual growth in energy use, global warming would kill us long before there was an oxygen crisis.

  17. Memo from the Evil Hydrocarbon Industry: accurately estimating the amount of one part of a variable gas mixture in an irregular shaped, non homogeous porous rock formation several kilometers below ground is *bloody hard*! The Oil and Gas biz spends a heck of a lot of time and money trying to get it right, because multi billion dollar decisions are based on it. Most estimates are based on a combination of seismic profiles (which look like a 3 year old drew a forest and are about as accurate) and drawdown tests.

    A drawdown test is where you suck a bunch of gas out of a well, then watch the profile of pressure as it re-establishes. Imagine an odd shaped bucket connected to a random number of randomly sized and shaped buckets through random diameter tubes connected to other buckets. You can only see one bucket. You scoop out a few inches of water from your bucket, and watch how the level of the water flows back over time. From this, you are meant to work out the size and distribution of every connected bucket and work out how much water is in the system. In practice, it’s sort of like a reverse echo location system; you send out a “pulse” of low pressure, and see how it echoes of the walls of the rock formations. The pressure trace you get is horribly complicated, and the only way to estimate the reserves it represents is to speculate a distribution of “buckets and pipes”, simulate it on computer, and compare it with the trace you get. The closest match you get is the answer reported.

    For the conspiracy theorists, there is a legal obligation to report reserves as accurately as possible to shareholders, the market and the government. Of course some companies inadvertently or deliberately misrepresent their reserves, but always get caught out and hammered by the stock market or regulator when they do.

    Also, oil and gas is rather unique in that the amount of usable gas you get out of a reservoir entirely depends upon how you do it. Suck oil or gas hard / flow it fast, and you generally get less out in the long term (like overfishing or overproducing a farm field), take it slow and you could get more gas out overall but go bust in the meantime paying off the loan you took to drill the well because you’re not earning enough. Another thing the evil hydrocarbon industry spends a heck of a lot of time and money trying to balance so you can sit in your airconditioned basement typing on a PC which runs on hydrocarbon based electricity because there ain’t enough sun and wind to go around, and no-one likes to live in the Fukishima suburbs.

    Remember: we only dig up the hydrocarbons – it’s you lot who burn them.

  18. tl;dr version: Gas-fired generation plants really have more like a 40-year useful life.  If you want a greener and more efficient fleet, install a CO2 tax and watch the market correct itself.

    The following are my personal opinions, and not those of my employers – past, present, or future.
    As someone who has written financial models to value and purchase gas-fired generation plants and worked closely with numerous plant engineers, I would correct your assumption of a 60-year lifespan.  In my experience, they are modeled for 30 additional years, on plants that are less than 10-15 years old.  The plants could still conceivably be running after 40 years but the biggest financial risk at that point is technology risk. 

    What I mean is that better and more efficient natural gas power plant technologies are being continuously researched and developed by the major turbine manufacturers, as well as improvements made to steam turbines and heat recovery steam generators (HRSG) used in combined cycle applications.  Essentially, the useful life of the original equipment, even with reasonable cycling and refurbishment/replacement of parts that wear, is about 30-40 years before the technology is surpassed in efficiency to the point that they will never run in a competitive pricing environment.  Rebuilding the plant after that useful life is usually done with the most capital efficient technology available, which is generally far more efficient than the previous installation.

    Power prices in the United States are generally market-based.  In a simplified explanation, the least efficient plant that has to run to meet demand sets the market price for power based on the cost of inputs (fuel used plus startup and maintenance costs).  If more efficient plants can come on first, that plant runs less.  As other alternatively fueled options become available, and economic factors saddle polluters (SO2, NOx, CO2, etc.), alternative fueled generators will be economically feasible and fossil fuels will no longer make money.  Plants that don’t make enough money will get shut down.

    Our power generation fleet is not centrally planned.  Companies invest shareholder capital to  build the most economically efficient plants available when they see low enough construction prices that they think they can overcome the cost of that capital, based largely on (proprietary) forward pricing curves for power and whatever their fuel input is.  Correlation between those prices increases certainty in the forecast.

    If you want to promote more efficient/green generation, you need to do it in an economic fashion if you want to be successful, and the best way to do that is to put a tax on CO2 generation.  It will economically stimulate builders of new plants to head in a more green direction.  Changing the fleet will take 40-60 years, perhaps more, but it will get mostly there rather quickly.

    How to implement such a carbon scheme is rife with argument, as existing generators probably deserve to continue to make a fair/reasonable profit on their projects, but we also need to send the proper signal to new builders of generation projects.  A series of allowances that allows current generators to run with lower costs as CO2 costs come on would soften the blow, but still allow the right changes.  Phasing out the allowances over time will force the change on reasonable timelines.  The timelines should, however, be legislated well in advance, to allow for adequate time to react to the schedule with the new generation projects, which can take anywhere from 2 years to 20+, depending on the type of plant.

    1. It should be pointed out that there are many ways to implement a price on carbon emissions that are nevertheless net revenue neutral (the government wouldn’t make a dime in that case). Fee-and-dividend is one example: you would have to pay a fee per ton of emissions (rather, companies would pay and pass the cost on to you in their product prices), but at the end of the year you divide the total collected by the population and send everyone a check, so that people who use less than the average make a profit and people who use more pay a penalty.

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