(Corrects amount of natural gas use in ninth paragraph in story published June 18.)

June 18 (Bloomberg) -- U.S. natural gas reserves are likely 39 percent higher than estimated just two years ago as new technology is revealing deeper potential resources of energy.

The U.S. has an estimated 1,836 trillion cubic feet of potential natural gas, the most on record, according to a report today by the Potential Gas Committee, a group of industry, government and academic volunteers. The estimate is up from 1,321 trillion cubic feet two years ago. The amount of proven and potential gas would meet U.S. demand for almost 100 years.

“New and advanced exploration, well drilling and completion technologies are allowing us increasingly better access to domestic gas resources -- especially ‘unconventional’ gas -- which, not all that long ago, were considered impractical or uneconomical to pursue,” said John Curtis, a committee member and professor of geology at the Colorado School of Mines.

Most of the increase is from a re-evaluation of shale in the Appalachian basin and in the mid-continent, Gulf Coast and Rocky Mountain areas. While new technology makes extracting gas from shale more economical, environment groups including Trout Unlimited say the process can send chemicals into groundwater.

Shale gas, which accounts for about a third of the committee’s potential resources estimate, can so far only be extracted by hydraulic fracturing. That process involves pumping hundreds of thousands of gallons of water, sand and chemicals into the ground at high pressure to break up the rock.

Tainted Groundwater

Hydraulic fracturing would no longer be exempt from the Safe Drinking Water Act under a bill introduced this month by U.S. Representatives Diana DeGette of Colorado, Maurice Hinchey of New York and Jared Polis of Colorado, all Democrats. The bill would require permits from the Environmental Protection Agency.

“We’re already seeing the impacts on people from tainted groundwater in the gas fields of Colorado and Wyoming,” Brad Powell, energy policy director for Arlington, Virginia-based Trout Unlimited, said in a statement when the bill was introduced. “There’s no telling how the industry’s chemicals are affecting our fish and game populations.”

Michael Decker, executive vice president for Gasco Energy Inc. said fracturing projects his company is working on drill to depths of 13,000 feet or more and that drinking water sources are generally at about 300 feet. He also said that the drilling wells are incased in concrete and that the substances used to extract gas are now less hazardous.

Future Supply

The U.S. consumes about 23 trillion cubic feet of natural gas a year, including 6.7 trillion for electricity. Climate legislation in Congress that would cap greenhouse gas emissions would favor natural gas over coal because it produces about half the emissions, said Christopher McGill, managing director of policy analysis at the American Gas Association. Coal accounts for 50 percent of U.S. electricity output and natural gas accounts for just over 20 percent.

When the results from the Potential Gas Committee are combined with the Energy Department’s determination of proven gas reserves, 238 trillion cubic feet as of year-end 2007, the U.S. has a total available future supply of 2,074 trillion cubic feet. The Potential Gas Committee, with the help of the Colorado School of Mines, issues an estimate every two years.

Prices on the New York Mercantile Exchange fell today as a separate government report showed that U.S. stockpiles of natural gas advanced last week more than analysts expected. Natural gas for July delivery fell 13 cents, or 3.9 percent, to $4.123 per million British thermal units at 11:44 a.m. in New York. Prices have declined 27 percent this year.

“Ample supply is not in itself a reason to exhale,” Kevin Book, managing director for ClearView Energy Partners LLC, said in a telephone interview. “The challenge for gas companies is to get a price that they can grow their business.”

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Last Updated: June 22, 2009 12:38 EDT