Monday, April 26, 2010

EIA Publishes New Production Estimation Methodology

Today, the EIA published its revised methodology for calculating natural gas production, the now infamous "EIA-914 Monthly Gas Production Report."  As noted in an earlier post, the new methodology will be used in the February monthly gas report, due out later this week. 

The production report is an estimate because it would be impossible to get accurate reports from every natural gas producer out there.  The EIA takes the best available data from a representative sample and estimates production for those not included in the sample.  Recall that the method used to work pretty well until the rapid expansion of the Haynesville Shale threw a rock through its window.  As it became apparent that the estimates had become less accurate, the EIA has reviewed its methods and revised them.  Because of the nature of the data, there is some lag time, but now it is only six months, as opposed to more than 18 in some cases. 

In case you're wondering, this is formula to get to the monthly estimate of total production:

Seems pretty straightforward to me (which is why I leave the statistics to the statisticians).  If you want to read more, here is the link to the report.

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