General > Hinchey Calls on SEC to Investigate Charges of Overbooking, Questions EIA’s Handling of Shale Gas Reserve Estimates

Hinchey Calls on SEC to Investigate Charges of Overbooking, Questions EIA’s Handling of Shale Gas Reserve Estimates

For Immediate Release
June 27, 2011
Contact: Mike Morosi
202-225-6335 (office)

Washington, DC – Following several reports in The New York Times, Congressman Maurice Hinchey (D-NY) today sent letters to the Securities and Exchange Commission (SEC) and the U.S. Energy Information Agency (EIA) questioning the manner in which both bodies have handled shale gas reserve estimates. One report revealed that rule changes and oversight problems at SEC may have caused natural gas companies to overestimate their reserves. A separate report detailed the use of data from industry-biased sources and intra-agency disagreements regarding gas reserve estimates at EIA.

“These reports raise serious questions about the economics behind the shale gas rush,” said Hinchey. “Now it’s up to the SEC and the EIA to get to the bottom of these charges and ensure that the public has accurate and honest information about our country’s shale gas reserves. EIA has some serious questions to answer and the SEC needs to investigate whether investors have been intentionally mislead.”

In the letter to EIA Administrator Richard Newell, Hinchey questioned the agency’s handling of internal disagreements regarding shale gas reserve estimates. Hinchey also questioned EIA’s internal rules governing the selection of contractors who may have financial conflicts of interests.

In the letter to SEC Chairman Mary L. Schapiro, Hinchey urged the SEC to quickly investigate whether investors have been intentionally misled and to consider updating its oil and gas reserve reporting requirements to provide greater disclosure to investors and the public by, for example, requiring third party audits and requiring companies to reveal the methodologies and technologies they use to develop reserve estimates.

Hinchey is a co-author of the FRAC Act, which would mandate disclosure of chemicals used in frack fluid and allow the EPA to regulate fracking activities under the Safe Drinking Water Act. Hinchey also authored the appropriations language that led to the current U.S. Environmental Protection Agency study on hydraulic fracturing.

View the full text of the letters online or as a PDF.

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