Markey said, "The SEC rules allow natural gas companies to self-report their reserves without providing enough detail or independent review of their claims. When it comes to fuel that millions of Americans depend upon to meet their energy needs, the SEC should not violate the 'trust, but verify' principle. The SEC needs to provide answers on how they think these new rules could be affecting assumptions of domestic natural gas reserves."
According to a release from Markey, under prior SEC rules, natural gas companies were allowed to count gas only from areas close to their active wells as part of their proven reserves. Under the 2008 rules adopted by the Bush administration just days before former Chairman Christopher Cox's departure from the commission, companies can now include gas from yet untapped fields based on modeling methods. Markey indicated that the Times article reports that natural gas companies were not required under the rule to disclose precise details about the technology used to estimate reserve sizes, and that while the SEC considered requiring third party audits to verify the new reserve estimates, it did not do so in the final rule.
Markey sent a similar inquiry to the Energy Information Administration (EIA) about their reported staff concerns regarding the official estimates of domestic natural gas reserves. In that letter, Markey asked the EIA "to justify their bullish claims on natural gas resources and reserves in light of reports in The New York Times "indicating skepticism exists within. . . [EIA] about its own estimates. In a letter to the head of the EIA, Markey asked "how the agency was justifying optimistic estimates of domestic natural gas production, especially from shale gas formations that require the increasingly-scrutinized technique called hydraulic fracturing to extract the trapped fuel, in light of the revelations."
Markey said, "We need to know whether the natural gas located underneath the surface is a real source of fuel for the next generation, or a speculative bubble hyped by the oil and gas industry, and echoed by the federal government's energy experts. Natural gas has been touted as a 'bridge fuel' that will take us from dirtier fossil fuels to cleaner renewable energy technologies. If these claims are accurate, natural gas could offer a viable pathway towards meeting our energy needs while reducing carbon dioxide pollution. If they are not, America's natural gas future could be a bridge to nowhere."
Chesapeake Energy Corporation CEO Aubrey McClendon immediately sent a lengthy letter to all company employees in response to the NYT "Sound an Alarm" article. The letter, posted on the Company Facebook page indicates in part, "The story is misleading, at best, and is the latest in a series of articles produced by this publication that obviously have an anti-industry bias. We know for a fact that today's NYT story is the handiwork of the same group of environmental activists who have been the driving force behind the NYT's ongoing series of negative articles about the use of fracking and its importance to the US natural gas supply growth revolution which is changing the future of our nation for the better in multiple areas. It is not clear to me exactly what these environmental activists are seeking to offer as their alternative energy plan, but most that I have talked to continue to naively presume that our great country need only rely on wind and solar energy to meet our current and future energy needs. . .
"Since the shale gas revolution and resulting confirmation of enormous domestic gas reserves, there has been a relatively small group of analysts and geologists who have doubted the future of shale gas. Their doubts have become very convenient to the environmental activists I mentioned earlier. . . But I wanted you to know that this reporter's claim of impending scarcity of natural gas supply contradicts the facts and the scientific extrapolation of those facts by the most sophisticated reservoir engineers and geoscientists in the world. Not just at Chesapeake, but by experts at many of the world's leading energy companies that have made multi-billion-dollar, long-term investments in U.S. shale gas plays, with us and many other companies. . ."
Access a release from Rep. Markey on the SEC letter (click here). Access a release from Rep. Markey on the EIA letter (click here). Access the Markey letter to SEC (click here). Access the Markey letter to EIA (click here). Access the NYT 6/25 article (click here). Access the NYT 6/26 article (click here). Access the McClendon letter to employees (click here). [*Energy/NatGas/Shale] (click here for information on getting the links and more information about eNewsUSA).