Vital U.S. energy data held hostage by budget fight: EIA
Author: Timothy Gardner and Ayesha Rascoe
The U.S. federal budget fight might prevent a timely study of the country's new energy bonanza, a senior official said, and stands in the way of data that could help ease volatility that is costly to energy companies and traders alike.
New production of shale gas in Pennsylvania and petroleum in the Dakotas is already shaping policy, but the country's energy study agency is not collecting timely and thorough data from those reserves.
"I think it would be really good for policy makers and the public to know what's going on now," Adam Sieminski, head of the Energy Information Administration said. "Particularly given the swiftness of the changes taking place."
The agency's budget will be slashed 8 percent to $96 million next year if Congress does not dodge broad automatic deficit cuts at the end of the year.
Even if a deal is worked out, the agency faces a tough political climate for getting a bigger budget.
A half-million dollar boost to the EIA budget would let officials take a monthly pulse of Dakota crude and Pennsylvania shale gas, said Sieminski, who left his post as a top energy economist for Deutsche Bank six months ago and now leads the statistics arm of the Department of Energy.
The agency has struggled to keep track of the shale gas boom, saying in 2010 that it overestimated gas output from states such as Texas and Louisiana. Data on shale gas and petroleum is still lagging and incomplete, Sieminski said.
In the case of Texas, home of the Eagle Ford shale and gas reserves, production data can lag 18 months.
Sieminski said the scope of the domestic energy boom came to life for him during a recent flight over his home state of Pennsylvania with his brother-in-law, a recreational pilot, when they witnessed the abundance of shale gas infrastructure.
"There's going to be a surge in natural gas production in Pennsylvania," he said, noting that an EIA monthly tally of the state's natural gas output is based only on estimates, not surveys.
Sieminski said one of his missions has been to modernize an eclectic system that still receives data using somewhat outdated technology.
"There are some surveys where we are still getting faxes and there's at least one of our surveys that's running on Lotus 1-2-3," he said, referring to spreadsheet software that was popular in the 1980s.
Sieminski hopes to restore the EIA's annual long-term energy outlook, a victim of budget cutbacks, and have it look all the way out to the year 2040.
Sieminski is careful to sidestep policy debates as his agency is chiefly a data engine, but he said the new abundance of fossil fuels will naturally spark a rethink of some existing energy policy such as the Strategic Petroleum Reserve.
The SPR, a nearly 730-million barrel cushion against supply shocks, might be retooled if oil imports keep falling and domestic output continues to rise.
"It's logical that we might want to think about what the SPR should look like and what the rules on using the SPR should look like in a period of lower dependence on oil imports," Sieminski said.
Philip Verleger, another prominent energy economist, estimated recently that the U.S. government could sell about 66 million barrels by this time in 2013 and 100 million barrels in 2014. The SPR currently holds 695 million barrels after a sale last year during turmoil in Libya.
Given the long history of oil shocks the United States has seen since the 1960s, including embargoes from Arab oil producers and hurricanes that damaged oil production facilities, "it would probably make sense to have some kind of strategic reserve system even if we were net exporters," Sieminski added.
The shale revolution has also opened the door to serious consideration of easing restrictions on U.S. exports of crude. Exporting U.S. oil had been viewed as politically untenable for decades, especially after the oil embargoes in the 1970s.
The river of oil coming out of North Dakota is not well matched with the Gulf coast refining hub, which is more suited to process heavier crudes.
"We are going to fairly soon be in a situation where we will have an excess of light sweet crude oil compared to our refinery set up," Sieminski said.
That bottleneck could "lead to either lower prices and less resource development or a rethink about what the economic and national security consideration are around the idea of exports," he added.
(Writing by Patrick Rucker. Editing by Andre Grenon)