Mankin Takes Case to Congress

'Think Tank' Charges Answered

As the U.S. Geological Survey prepares to issue a new resource assessment for the National Petroleum Reserve-Alaska, a RAND issue paper questions the common methodology for such assessments.

This paper, "A New Approach to Assessing Gas and Oil Resources in the Intermountain West," proposes a new category for oil and gas evaluation: viable resource.

The viable resource "is a fraction of the technically recoverable resource that is also economically feasible for production, sufficiently supported by infrastructure, and environmentally acceptable," the paper says.

Industry proponents quickly rejected the paper's conclusions, based on everything from the inappropriateness of economic limits on recoverable resources to the vagueness of the phrase "environmentally acceptable."

AAPG Secretary Charlie Mankin presented the Association's response to a congressional committee on April 18.

"The oil and gas that is there is there. We purposely do not put an economic limit on the price of oil and gas, because that becomes very time-dependent," said Lee Gerhard, principal geologist for the Kansas Geological Survey and chair of AAPG's Governmental Affairs Committee.

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As the U.S. Geological Survey prepares to issue a new resource assessment for the National Petroleum Reserve-Alaska, a RAND issue paper questions the common methodology for such assessments.

This paper, "A New Approach to Assessing Gas and Oil Resources in the Intermountain West," proposes a new category for oil and gas evaluation: viable resource.

The viable resource "is a fraction of the technically recoverable resource that is also economically feasible for production, sufficiently supported by infrastructure, and environmentally acceptable," the paper says.

Industry proponents quickly rejected the paper's conclusions, based on everything from the inappropriateness of economic limits on recoverable resources to the vagueness of the phrase "environmentally acceptable."

AAPG Secretary Charlie Mankin presented the Association's response to a congressional committee on April 18.

"The oil and gas that is there is there. We purposely do not put an economic limit on the price of oil and gas, because that becomes very time-dependent," said Lee Gerhard, principal geologist for the Kansas Geological Survey and chair of AAPG's Governmental Affairs Committee.

AAPG considers the USGS assessment methodology "sound, if conservative," said Naresh Kumar, president of Growth Oil and Gas in Dallas and chair of AAPG's Committee on Resource Assessment.

"We do not endorse specific numbers, because this is an industry activity," he said.

RAND calls itself "a non-profit institution that helps improve policy and decision making through research and analysis."

It states that "views and conclusions expressed in issue papers are those of the authors and do not necessarily represent those of RAND or its research partners."

The February 2002 issue paper addresses the debate over access to potential natural gas resources in the Rocky Mountains area, citing conclusions in a 1999 National Petroleum Council study and a later U.S. Department of Energy study of the Green River Basin.

"In summary, the results of these access restriction studies overlook some important considerations and, in doing so, appear to be biased toward maximizing the amount of resources that are perceived to be precluded from development as a result of federal access restrictions," it says.

Kumar questioned that an artificial viability measure would be meaningful in assessing potential resources.

"What was not viable 10 years ago is perfectly viable today," he said.

He also noted that the paper makes no attempt to balance environmental impact against other effects of restriction, such as limitations on national supply.

"AAPG has gone to Congress the past several years, making the statement that energy security is very, very important," Kumar said. "A lot of the resource is locked up under various restrictions and legislation.

"Oil is a worldwide commodity, but gas is a completely different matter," he continued. "It's a domestic issue. The Rocky Mountain Basin has a very significant gas resource, and two-thirds of the gas in the Rocky Mountains is under some sort of restriction."

Gerhard said AAPG and other industry groups have to publicly counter the position taken in the RAND paper, because "it will become a mantra" if left unchallenged.

"Note that the issue paper was funded by the William and Flora Hewlett Foundation for the Wilderness Society," he said. "It's an agenda-driven issue.

"There is so much misrepresentation and misinformation in the discussions on these politically charged issues that it is very difficult for the average citizen to know what's going on," he added.

In general, according to Kumar, initial resource estimates prove to be too low, and increase over time.

"There is no substitute for drilling. Based on today's information, the USGS comes up with estimates. But new plays, new concepts, new technologies keep coming," he said.

"Those resource numbers keep going up and up and up."