The US Energy Information Administration wants comments from industry and others on its plan to dramatically revamp monthly natural gas production data so that the numbers better reflect the market.
"The new production survey can substantially improve both the quality and timeliness of our monthly natural gas production estimates—our goal is to have releasable numbers 60 days after the close of a report month with a sampling error at the national level in the 1% range," said EIA Administrator Guy Caruso.
Call for changes
EIA said that market participants, the financial community, and policymakers want natural gas production data faster and more accurate than what the agency offers now.
EIA plans to survey well operators but promises confidentiality in its sampling.
EIA estimates that 250-350 respondents will be needed to achieve a sampling error of less than 1% at the national level and less than 5% for each of six regions.
Before it decided to query well operators, the agency considered using Securities and Exchange Commission 10-K and 10-Q data. Other alternatives included surveying natural gas pipeline operators or using data from natural gas processors. But none of those options seemed timely or accurate enough for EIA's needs, the agency said.
EIA's current collection methods have a 3% sampling error that the agency acknowledges is too large. EIA issues estimates of monthly natural gas production 120 days after the close of a reporting month, using a variety of sources, including preliminary data from large producing states and from the US Minerals Management Service.
But these data are subject to reporting lags or sometimes are absent altogether; EIA said it has to make a best guess "for a substantial share" of what recent production activity was in any given month.
"A 3% error band, comparable to some monthly variations in production, is too large to accurately discern if production is rising or falling," EIA said.
Reactions
The American Gas Association lauded EIA efforts to improve natural gas production data; various industry players are expected to make specific critiques over the next 60 days.
A Natural Gas Supply Association spokesman said the group's members are still evaluating the notice, "but we have also begun the process of establishing a dialogue with the other producer organizations." NGSA said it hopes to have "a coordinated and unified" upstream response during the comment period. Final comments are due June 22.
Like AGA, energy investment banker Matthew Simmons praised EIA's action. "Reforming our leaky data system is urgently needed. Most people do not realize how broke it really is," he said.
Simmons urged EIA to consider slapping stiff fines on companies that don't take the survey seriously.
"It is important to put teeth in this reporting, which should include fines for simply estimating the data. Too much data reporting is now assigned to the lowest part of totem pole," he said.