The United States Geological Survey (USGS) issued a report this week indicating that the Devonian Marcellus Shale formation holds an estimated 84 trillion cubic feet (Tcf) of technically recoverable undiscovered natural gas (with an additional 3.3 Tcf of undiscovered natural gas liquids). As The New York Times’s Ian Urbina notes, the USGS's estimate is much lower than the approximately 400 Tcf estimated as a recoverable resource by the Energy Information Administration (EIA) in its Annual Energy Outlook 2011 [PDF; see page 80]. Importantly however, the latest USGS estimate is a dramatic increase from the Agency’s pre-Marcellus development estimate in 2002 of only 2 Tcf.

It is too early to know the exact reason for the large discrepancy. For one, the precise methodologies and assumptions made by the USGS and EIA in their respective calculations are not fully understood. For example, it is unclear whether “technically recoverable undiscovered” gas described in the USGS report is the same as the “recoverable resources” noted in the EIA report. The answer to this question needs to be explored and may very well help explain the difference. Regardless, the EIA report makes abundantly clear that the estimates of shale reserves are riddled with uncertainty and assumptions “starting with the estimated size of the technically recoverable shale gas resource.” The EIA report goes on to note that the conclusions are best estimates (due to numerous uncertain technical and economic variables) and "embody many assumptions that might prove to be incorrect over the long term."  Yet, the NYT's article fails to note these statements, or acknowledge that these types of estimations are difficult, inherently uncertain, and perpetually dynamic. Indeed, EIA has already indicated it will revisit and update its estimates in light of the USGS report.

While accurate predictions about future reserve potential are no doubt important, the current reality on the ground cannot be overlooked. The shale gas boom has created thousands of jobs and is bringing much needed economic relief across the country. Unfortunately, this relief has yet to reach New York. Indeed, a recent report led by the University of Wyoming’s Timothy Considine [PDF] shows that New York’s current regulatory and policy course will cost the state between $11 and $16 billion in economic benefits, up to 27,000 jobs, and between $1.4 and $2 billion in lost tax revenue between now and 2020. Those numbers are staggering and highlight the true economic paradigm shift being driven by shale gas, notwithstanding difficulties in predicting how long it will last.