Opinion ID: 388136
Heading Depth: 2
Heading Rank: 2

Heading: PGC Model

Text: 34 The PGC model is based upon estimates of natural gas reserves issued by the Potential Gas Committee in conjunction with the Potential Gas Agency at the Colorado School of Mines. The Potential Gas Agency is supported by the American Gas Association. It is one of the few studies which provide natural gas estimates by area. Most predictions only give figures for the entire United States. As noted above, the PGC includes representatives from energy, government and academic institutions. 35 The PGC divides its estimates into three categories: probable, possible and speculative. 14 The FERC staff did not use the third category of the PGC estimates. They concluded that the speculative category was too uncertain to be included. 15 South Dakota claims that the FERC has arbitrarily eliminated a large source of potential reserves for Northern noting that in the 1972 PGC report the speculative category constituted twenty-nine percent of the Hugoton-Anadarko estimate and eighteen percent of the Permian Basin's. 36 We conclude that the FERC's view is supported by substantial evidence. The PGC's own publications reveal the questionable nature of the speculative category. In the PGC's Comparison of Estimates report, the Committee described the reserve estimates in the speculative category as having a very high degree of uncertainty and likely represent, at best, geologically based speculation. A Comparison of Estimates of Ultimately Recoverable Quantities of Natural Gas in the United States A Potential Gas Committee Report 13 (Colorado School of Mines) (1977). In that same study, the PGC did not include the speculative category in its estimates of the most likely gas to be discovered. Id. at 12. In the 1976 report, the Committee wrote that arguments in support of both zero and fifty Tcf for the speculative category of the two relevant areas were reasonable. 1976 PGC Report at 14. We agree with ALJ Benkin that it would be imprudent to base the depreciation rates of a major pipeline company on such uncertain reserves. 37 We also agree with the FERC's decision not to include non-traditional sources such as gas from Alaska, Canada and Mexico as well as coal gasification and the anticipated supplies discovered as a result of the Natural Gas Policy Act (NGPA), 15 U.S.C. § 3301, et seq. 16 South Dakota did not present evidence that would allow us to remove the sources from the speculative category. The date such supplies will be available and in what quantity, the FERC found, is highly uncertain. The Commission did note that these sources will be taken into consideration in future rate proceedings when they may be estimated with some precision.