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Chapter 6. ENERGY STATISTICS

Introduction and Overview

The need for information on energy derives largely from the Organization of Petroleum Exporting Countries (OPEC) oil embargo and subsequent price increases which made explicit our dependence on foreign sources of energy, principally oil. The Federal Energy Office, later the Federal Energy Administration (FEA), was established as the focal point for policy analysis and determination. The activities of the Atomic Energy Commission were reorganized, and the Energy Research and Development Administration (ERDA) was created to enhance our ability to develop new sources of energy and to conserve their use. Recently the creation of a Department of Energy (DOE) combined the Federal Energy Administration, Energy Research and Development Administration, Federal Power Commission (FPC), and certain parts of the Department of the Interior such as the Bureau of Mines. In the President's April 20, 1977 address on energy made to a joint session of Congress, he specifically proposed improved collection of data on energy reserves and finances of the petroleum industry. He also stated a need for an emergency energy information system.

Major data needs stemming from this recent activity derive from a need to know more about the process of finding, supplying, processing, transporting, and using energy. These needs for data are more urgent now than before 1973, but were not unknown to the more established agencies before the embargo. The Department of the Interior has long had extensive knowledge of coal and oil reserves, resources, anproduction through the statistical programs of the Bureau of Mines and the U.S. Geological Survey (U.S.G.S.). The Bureau of the Census has collected data on energy exploration, production, and consumption through its surveys and censuses. The Federal Power Commission regulated the interstate price of natural gas using data on reserves and production costs.

regulations, and other aspects of the energy industry. Information is needed to determine the need for regulation, to monitor its implementation and to evaluate its effect. As the regulatory activities increased, additional data requirements have been levied on the public.

It is especially difficult to organize and plan for a national data collection system when regulatory and statistical functions are so thoroughly interrelated. Regulatory data are frequently inflexible since the statute and regulation being implemented may be changed only by Congress or by the need for significant administrative action, and the collection of such data is difficult because the analytical and statistical information is not typically a high priority of the lawmakers or regulators. The Energy Conservation and Production Act of 1976 provides for the establishment of an Office of Energy Information and Analysis (OEIA) within FEA. The OEIA had responsibility for developing the National Energy Information System. In the Department of Energy Organization Act, this responsibility was embodied in the Energy Information Administration. These recent legislative activities indicate a significant awareness on the part of Congress of the need for better data. In addition, statistical data are often collected on a voluntary confidential basis from a sample of respondents. Sample data simply are not acceptable for most regulatory programs, and confidentiality as the statisticians know it precludes most regulatory uses of statistical data. Hence, regulation often brings duplicate data collections which are difficult to consolidate with statistical data programs.

Related to the need for improved information for energy policy decisions is the development of energy programs and the concomitant need for information in almost every department and agency. The Federal Reserve Board has an energy-related production index, the Bureau of Economic Analysis has an energy input-output project, the Department of Transportation deals with energy used in moving people and goods, the Environmental Protection Agency has automobile mileage tests and relates energy consumption to environmental concerns in

The new environment has led also to increased regulation of the energy industry including import fees, allocation of imported crude oil, price

other ways, the Bureau of Labor Statistics (BLS) col System. BOM cooperated with the FEA as the collects data on the retail price of gasoline, and this list lection agency for the Integrated Petroleum Recould go on. The point is that interest in energy porting System. These data bases were quite flexible problems and solutions have sprung up in many in their uses to answer policy questions and places making it difficult to coordinate the various congressional inquiries. BOM also estimated market programs into one or even a few systems.

demand for coal, gas and petroleum. Except for the

joint programs with FEA, BOM collected data on a Major Energy Information Agencies voluntary basis. The creation of the Energy Information

The Federal Power Commission had Administration (EIA) in the Department of Energy

responsibilities for regulation of the price of provided a lead agency to carry out the primary

interstate transmission of natural gas and nonstatistical data gathering, analysis, and energy

nuclear electricity generation. The FPC collected information dissemination functions of the data necessary to conduct these activities including Department. The EIA was provided with a measure reserves of natural gas dedicated to interstate of statutory independence to carry out its function pipelines and data on the cost of producing electrical and was given the obligation to develop and publish energy as well as the sales and prices of electricity. energy information independent of the energy The FPC data collection authority does not extend to policies of the Department.

reserves of natural gas used solely in intrastate

markets. The EIA was formed by consolidating data and information functions of the Federal Energy

In addition to these data programs transferred into

EIA, the U.S. Geological Survey has two main Administration, the Bureau of Mines, and the

divisions which contribute information on energy. Federal Power Commission. The Federal Energy Administration had been the main energy

The Conservation Division has regulatory authority

over leases on Federal lands, especially offshore. The policymaking agency in the Federal Government. It

Geologic Division needs information on reserves to was responsible for developing policy to provide increased independence from foreign energy sources

facilitate estimation of resources, namely those and for regulating prices and supplies of energy. FEA

deposits of oil and gas which are as yet undiscovered

but which will be economical to produce when found. had basic data collection programs in supply and cost

The Bureau of the Census, Department of Comof energy, prices of energy, and reserves of oil and natural gas. FEA also had joint data collecting

merce, traditionally the core of the U.S. Federal

Statistical System, has collected data which directly agreements with the Bureau of Mines (for petroleum and for coal), and with the Federal Power Com

or indirectly relate to energy. This is accomplished mission, Interior, and Commerce (natural gas

through many surveys including the quinquennial curtailments). This agency also established or had

census of mineral industries, the annual survey of oil under development, models (e.g., Project

and gas, the annual survey of manufactures, and the Independence) and data systems (e.g., consumption,

foreign trade statistics program which relies on im

port documents of the U.S. Customs Service. Other national energy accounts) which required data inputs from other agencies as well as data collected by FEA.

Census programs including demographic statistics, FEA coordinated much of the energy data with its

the agriculture census, and the transportation National Energy Information Center and Federal

statistics shed light on various aspects of energy in a

less direct fashion. Censuses and annual surveys are Energy Information Locator System, and was the

conducted by the Census Bureau on a mandatory first agency to chair the Federal Interagency Council

basis. on Energy Information. FEA used mandatory powers of data collection including subpoena, and The Energy Research and Development authority to conduct audits and other verification Administration, which was incorporated into other procedures. The Energy Conservation and Pro parts of the Department of Energy, was responsible duction Act of 1976 established the Office of Energy for developing a national plan for research on energy. Information and Analysis within FEA which had the ERDA had units which were concerned with: responsibility to establish, operate, and maintain a conservation, environment and safety, fossil fuels, National Energy Information System (NEIS) and to solar, geothermal and advanced energy systems, coordinate Federal energy information.

nuclear energy, and national security. Reference

information on research and development technology The Bureau of Mines (BOM) collected data on was abstracted and maintained by ERDA. ERDA reserves, production, distribution and consumption programs are now conducted by environmental and of coal, oil, and gas in their Fuels Availability technology program areas in DOE.

dedicated to or associated with the interstate market. Finally, data on the characteristics of reserves and resources help to indicate the directions to be pursued in developing new technology for extraction.

Reserves and Resources

The Nuclear Regulatory Commission (NRC) is involved with the regulation and licensing of nuclear power plants. This agency concentrates on the health, safety, and environmental aspects of the technology used to produce electrical energy from nuclear sources, and the demand and supply position facing the industry. NRC has a field staff of plant inspectors to check on hardware performance, to investigate accidents, and to monitor radiation release.

The Federal Interagency Council on Energy Information was formed in 1975 to provide improved coordination and planning for energy statistics collected and tabulated by many Federal agencies. The Council serves as a forum for general discussion of many energy information issues which arise and serves in an advisory capacity to the Director of the Office of Federal Statistical Policy and Standards and the Administrator of EIA. In addition, the Council has undertaken several specific projects including: the development of standards for energy terminology in data collection, the development of a data element dictionary, and the identification of energy data requirements and unmet priority needs in particular areas.

Agencies active in this area include the Department of the Interior's Geological Survey, the Energy Information Administration, and the Census Bureau. The EIA is the major source of data on the coal extracting industry. These systems contain data on location of coal mines as well as the production of coal.

Basic Program The Federal Government collects and analyzes a great amount of information on energy. It is helpful to present a general description of this program by the way in which energy is found, produced, distributed, and used by the economy. It is also important to identify the principal uses for data in each stage of the cycle. Each of the following subsections includes important programs for different energy sources and some general comments as to their quality.

The U. S. Geological Survey's Conservation Division has regulatory responsibility for estimating the value of reserves in the Federal lands including the Outer Continental Shelf and for monitoring Federal leases. A great deal of testing and production data is collected to enable the Division to estimate the reserves and the maximum effective rates of oil and gas production. Offshore exploration activity is also reported. This is a relatively new program which should be expanded to cover adequately all of the areas under its jurisdiction.

The Geologic Division estimates resources of fuel which are as yet undiscovered. These estimates are constructed from a mixture of reserves data, available geological information, and formulas based on past studies of production from established oil and gas fields. These should be improved, because they rely on old data. The methodology underlying these estimates also requires improvement.

Estimates of resources are subject to significant errors. Even proved reserve numbers are judgmental estimates based on indicative data, and expert geologists and petroleum engineers may differ on their implications in estimating the extent of proved reserves. These errors can only be corrected as a field is produced and additional data become available. The point is that estimates of cubic feet of gas or barrels of oil in the ground will usually be more or less “soft” and indicative with any cost-effective level of data collection effort.

The Federal Energy Regulatory Commission (FERC) needs estimates of reserves of natural gas primarily to regulate interstate gas pipelines and to study natural gas curtailments in periods of short supply. EIA has collected data on reserves dedicated to interstate pipelines for FERC. FERC has also used reserves estimates published annually by the American Gas Association (AGA) and the American Petroleum Institute (API) in determining reserve additions and costs and the interstate price of gas.

Reserves, Resources, and Exploration

Information concerning the reserves, resources, and exploration of oil, natural gas, coal, and uranium is needed for several reasons. First, it is essential that the Government have an estimate of the future supply of energy which involves estimating the amount of the basic U.S. energy resources which are or will be available to meet the demands. Second, Federal policies designed to encourage exploration may be evaluated by examining the amount and causes of additions to proved reserves on a yearly basis and the level of exploration activity undertaken. Third, the determinations of leasing policies and the management of Federal leases involves estimates of those reserves on Federal lands. Fourth, regulation of the interstate price of natural gas and the effect of possible deregulation require data on gas reserves

The Federal Energy Administration conducted an Oil and Gas Reserves Survey for 1974. This study was mandated by Congress as a complete and independent survey. The FEA surveyed about 15,000 operators who account for an estimated 95% of all reserves. Seven hundred reports were audited by independent contractors and the FEA. Independent estimates of reserves were conducted for 59 of the largest fields from input data. The FEA estimates tended to confirm the API and AGA published estimates overall, although some of the individual field estimates showed significant differences.

The Federal Trade Commission (FTC) recently examined the industry's reserve estimates for some important oil and gas producing regions in Louisiana and the Gulf of Mexico. FTC believes their study indicates significant inconsistencies in the estimates leading to serious questions about the overall totals published by industry.

The Securities and Exchange Commission (SEC) requires public reports from registered companies. Securities registration statements and the annual Form 10-K include information on all material assets of the issuers, including their holdings of oil and gas reserves. SEC relies on the opinions of auditors as a check of these estimates. The SEC requires the filing company to produce such basic data as are necessary to support their filing. Since coverage is incomplete and the definitions used have not been the same across companies, the SEC filing requirement is not a source of comprehensive data but is duplication of reporting burden.

An ad hoc group of agencies worked together, with Statistical Policy Division of the Office of Management and Budget (OMB) serving as chairman, and published a report with recommendations for the next comprehensive government survey of oil and gas reserves. FEA held an early public meeting on this subject, and OMB held another with participation from industry, public interest groups, and outside experts. The main effort was to determine to what extent several agencies' requirements can be consolidated into one data collection effort. The EIA, FTC, Conservation Division of USGS, and SEC request data on an ownership basis, while other needs of EIA and Geologic Division of USGS are better served by collecting data from operators. The basis on which the estimates are to be calculated, whether by fields, reservoirs or States; and whether the data are to be collected from owners, operators, or pipelines are questions to be resolved. Other questions include the extent and method of data verification and coordination with industry's existing efforts. EIA has continued development and design work for this survey program.

Reserves of nuclear fuel are also of significant interest in providing for the country's future energy needs. There is active debate as to whether nuclear energy will provide a virtually inexhaustible supply or whether it is only a short-term stopgap for the United States. Uranium resources have been assessed by ERDA (previously by the Atomic Energy Commission) and by the U.S. Geological Survey. A national uranium resource evaluation has been started for which DOE will have prime responsibility to collect and verify data annually, while the Geological Survey will make resource estimates for those areas for which it has made detailed geologic studies and will supply that information to DOE. Also, the Geological Survey, and DOE are collaborating to establish a classification system for uranium reserves and resources to improve the estimates.

The American Petroleum Institute and the American Gas Association have estimated proved reserves of oil and gas for many years. Their reserves committees consist of experts in particular regions who compile estimates for particular fields. The engineers and geologists have at their disposal records from their own companies and from public sources but do not necessarily have data from all companies which operate in a given field. The resulting estimates are based on a give-and-take within each area subcommittee. These industry estimates are viewed with suspicion by some congressional committees and some members of the public since they tend to support the notion that reserves are scarce and the Government should take steps to promote expanded exploration and development. Other experts claim that the industry estimates are about the best that can be made. API and AGA officials have stated that they would discontinue their program if Government would conduct such a survey annually.

Exploration

The Bureau of the Census is a major source of information on energy exploration. The quinquennial census of mineral industries collects data on oil and natural gas exploration expenditures and drilling statistics as well as on coal mining. These data are extensive, covering types and characteristics as well as geographic area of activity. The annual survey of oil and gas collects data on exploration and development of oil and gas and the degree of owner operation. Statistics are shown separately for the continental United States, offshore activities, and for

Alaska. The annual survey is also a source of data on production, revenue, sales, and assets employed.

In the 1960's the Interagency Petroleum Statistics Study Group was established to improve the Government's petroleum statistics. The actions of this group led to improvement in the well-drilling data including field development and exploratory wells as well as drilling cost data. Another result of this group's activity was the representation of Government on the working subcommittees of the industry's oil and gas reserves reporting committees.

Production, Supply, Processing, and Distribution

The majority of the policy and regulatory decisions in energy deal with production, supply, processing, and distribution of energy sources. The bulk of Federal data acquisition activity is concerned with this stage of the energy cycle. Federal policy concerning allocation of petroleum to areas of the country and to different producers, pricing of petroleum products and natural gas, heating oil and gas availability, production of electrical energy from fossil and nuclear fuel, and related environmental questions are based on information collected from industry. In addition, such general information bases as the national energy accounts, which were created by FEA and will be updated by EIA, require great amounts of such data.

The EIA collects production, supply, and distribution data from refineries, crude and petroleum producers, pipelines and other distribution elements. Information is published monthly in the Monthly Energy Review series and in monthly and annual reports on petroleum refining, distribution, and consumption. The Fuels Availability System provides such data for petroleum, natural gas processing, and coal.

As stated above, the EIA is now the main agency responsible for coal data. They collect extensive data on samples and characteristics of coal produced and distributed as well as the surface and underground conditions of coal mining. Data are collected from railroads on coal shipments, costs, and other operating data on transportation in cooperation with the Department of Transportation.

The Integrated Petroleum Reporting System is composed of four basic survey forms which cover refineries, bulk terminals, and pipelines. In this system, data are collected on production, stocks, and shipments. The latter are classified by user category for crude oil production.

The Energy Information Administration has many statistical forms and regulatory reports describing

production, supply, processing, and distribution of petroleum and natural gas. One of the important activities for this new agency is to consolidate and redesign many of these forms. The mandatory crude oil allocation program, designed to ensure sufficient supplies of crude oil to small and independent refineries, includes a quarterly survey of refinery capacity and crude oil runs to stills. Another system monitors the types and amounts of energy used in electric utilities including fuels consumed, inventories on hand, and monthly power generation. Residual fuel oil consuming utilities and propane/butane producers are also surveyed for regulatory purposes.

Imports of petroleum are measured to determine the extent of the U.S. dependency on foreign supplies of energy. This system relies on both direct reporting to EIA and required reporting to the U. S. Customs Service on import declaration forms. The Census Bureau also compiles and publishes monthly import statistics, including data on imports of petroleum and petroleum products, utilizing a statistical copy of the import declaration form filed with Customs. Because Census monthly data has been based on "date of filing" import declarations with Customs, EIA and Census statistics have shown different monthly import totals. Because of this anomaly, Census has recently changed to a “date of import" method of compiling the monthly import statistics. The results of this change are: (1) Census and EIA statistics will be more consistent; (2) all Census import statistics will be a more accurate reflection of shipments received in a particular month; and (3) EIA can eliminate its requirement for duplicate company reporting on imports, thereby reducing the respondent burden.

The EIA also has a program to monitor natural gas supplies and curtailments to particular types of users and to particular regions of the country. Information is collected on sales, deliveries, or curtailments of natural gas to direct end use customers, and alternative fuels requirements of those customers. Surveys cover both interstate pipelines and intrastate gas shipments as well as underground storage (inventories) of natural gas as part of the natural gas curtailments exercise.

The Bureau of the Census also collects data which relate to energy production, processing, and distribution. The census of manufactures, an extensive quinquennial data collection program conducted on a mandatory basis, provides input, output, and cost information on petroleum refining, coal, crude oil, and petroleum-based chemical products and related industries. (It is also a major source of data on energy consumption in manufacturing which is discussed below.) The annual survey of

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