Natural gas is the new oil, a source of domestic energy that has been embraced by both parties in Congress and which has blinded the governor of my home state, Pennsylvania with the dollar signs in his eyes. Those optimistic projections may not be all that they seem, according to emails leaked from the Energy Information Administration and reported by the NYT. The EIA division of the Energy Department was created in response to the '70's energy crisis to provide independent analysis and information "to promote sound policymaking and efficient markets". There seems to be disagreement within the EIA, however, concerning the rosy future of natural gas and shale gas in particular. The emails were provided to the Times on the condition that the names of the senders and those receiving them not be used.
“Am I just totally crazy, or does it seem like everyone and their mothers are endorsing shale gas without getting a really good understanding of the economics at the business level?” an energy analyst at the Energy Information Administration wrote in an April 27 e-mail to a colleague.
Another e-mail expresses similar doubts. “I agree with your concerns regarding the euphoria for shale gas and oil,”wrote a senior official in the forecasting division of the Energy Information Administration in an April 13 e-mail to a colleague at the administration.
“We might be in a ‘gold rush’ wherein a few folks have developed ‘monster’ wells,” he wrote, “so everyone assumes that all the wells will be ‘monsters.’ ”
The Energy Information Administration’s annual reports are widely followed by investors, companies and policy makers because they are considered scientifically rigorous and independent from industry. They also inform legislators’ initiatives. Congress, for example, has been considering major subsidies to promote vehicles fueled by natural gas and cutting taxes for the industry.
The reports released by the EIA are supposed to be independent and based on scientific evidence, free of industry or political pressure. It seems that some of the information in the EIA reports comes from outside contractors with ties to industry.
Two of the primary contractors, Intek and Advanced Resources International, provided shale gas estimates and data for the Energy Information Administration’s major annual forecasting reports on domestic and foreign oil and gas resources. Both of them have major clients in the oil and gas industry, according to corporate tax records from the contractors. The president of Advanced Resources, Vello A. Kuuskraa, is also a stockholder and board member of Southwestern Energy, an energy company heavily involved in drilling for gas in the Fayetteville shale formation in Arkansas.
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In an April 27 e-mail, a senior petroleum geologist who works for the Energy Information Administration wrote that upper management relied too heavily on outside contractors and used “incomplete/selective and all too often unreal data,” much of which comes from industry news releases
“E.I.A., irrespective of what or how many ‘specialty’ contractors are hired, is NOT TECHNICALLY COMPETENT to estimate the undiscovered resources of anything made by Mother Nature, period,” he wrote.
Energy officials have also quietly criticized in internal e-mails the department’s shale gas primer, a source of information for the public, saying it may be “on the rosy side.”
The primer is written by the Ground Water Protection Council, a research group that, according to tax records, is partly financed by industry.
Once the Times revealed the contents of these emails Monday, federal lawmakers called for an investigation of the natural gas industry.
Federal lawmakers called Tuesday on several agencies, including the federal Securities and Exchange Commission, the Energy Information Administration and the Government Accountability Office, to investigate whether the natural gas industry has provided an accurate picture to investors of the long-term profitability of their wells and the amount of gas these wells can produce.
“Given the rapid growth of the shale gas industry and its growing importance for our country’s energy portfolio, I urge the S.E.C. to quickly investigate whether investors have been intentionally misled,” wrote Representative Maurice D. Hinchey, Democrat of New York, in one of three letters sent to the commission by four federal lawmakers, all Democrats.
The calls for investigations came amid growing questions about the environmental and financial risks surrounding natural gas drilling and especially a technique known as hydraulic fracturing, or hydrofracking, used to release gas trapped underground in shale formations.
Members of the House Committee on Natural Resources said they hoped to hold a hearing in the next several weeks to discuss natural gas drilling.
State lawmakers have also gotten into the act
In Maryland, Delegate Heather R. Mizeur, Democrat of Montgomery County, sent a letter to the state comptroller and the attorney general calling for an investigation into disclosures related to the financial and environmental risks of drilling.
In New York, Assemblywoman Barbara S. Lifton, a Democrat and longtime critic of drilling, sent a letter to the New York State comptroller, Thomas P. DiNapoli, calling for a similar investigation and citing roughly $1 billion in state pension funds invested in shale gas companies.
The New York attorney general, Eric T. Schneiderman, sent subpoenas to five oil and gas companies ordering them to provide documents relating to the disclosure the companies made to investors about the risks of hydrofracking, according to sources briefed on the investigation.
Oil and gas company representatives and energy market analysts all rejected the views presented by the emails in the Times. Eight bipartisan congressmen from gas producing states sent a letter to Obama stressing the need to promote natural gas drilling by any means necessary, but most especially, shale gas recovery.
Wonder where their campaign dollars come from, anyone?
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