Just before sending his energy reorganization plan to Congress last month, President Carter promised to take steps to "increase the surety we have" that the numbers supplied by the oil industry on the nation's reserves are accurate.
In making that pledge the President addressed a central issue in the debate over natural gas policy - the credibility of the estimates of how much gas we have on hand that can be produced at a profit.
Critics of the industry, in Congress and elsewhere, have voiced suspicions that the shortage is contrived by the oil companies to justify increased prices and deregulation. Industry spokesmen reject those allegations as unfounded and politically motivated.
And yet billions of dollars in profits could ride on the outcome of the Battle of the Numbers. The Federal Power Commission uses the proven reserve figures to regulate interstate gas prices. The reserve numbers also figure in the formulation of national energy policy, including such questions as deregulations.
The Carter administration can now take two approaches to the battle of the numbers: it can, as the government has since 1946, continue to rely on the estimates provided by the American Gas Association, an industry figures was provided under the cise authority given it under two recently passed laws to develop its own base of independent reserve data.
The authority to determine the reserve data independently of the industry figures was provided under the 1975 Energy Policy and Conservation Act as well as the Energy Supply and Environmental Coordination Act passed in 1974.
What course will Carter take?
So far the administration has hesitated to spell out a policy on the natural gas numbers, despite Carter's public acknowledgment that "it is obvious to all of us that there are some instances where natural gas is withheld from the market."
James R. Schlesinger Jr., the new energy chief, is represented by associates as wanting to take a hard line on the numbers game in ntrual gas "Schlesinger wants to know with confidence what the hell the facts are," said one official familiar with his views.
Everyone seems to agree, as FPC Commissioner James G. Watt admits, that "the question of who prepares proven reserve data would never have been raised if there had not been the shortages."
But energy officials differ on what steps the administration should take and how aggressively it should pursue the goal of governmental self-sufficiency in energy arithmetic.
John F. O'Leary, head of the Federal Energy Administration, says, "At the moment there is no alternative to relying totally on industry data."
Acting FEA Deputy Administrator Gorman C. Smith says the administration should develop a new system for estimating proven reserves. But he declined to say whether the FEA should exercise its new authority to get data from companies - including the exercise of subpoena powers.
Some career officials, such as Victor H. Zabel, chief of the FPC's Reserves Evalution Branch, say they are bewildered by what they regard as the government's passive role to ward building its own data base.
"We should have had reservoir-by-reservoir data 15 years ago," Zabel says. "If we had it we wouldn't have been caught by surprise with a gas shortage. Worse yet, we need that data now in order to cope with the shortage."
Interior Secretary Cecil D. Andrus expressed surprise at a recent meeting with reporters at his inability to get quick answers to questions about gas withholdings on publicly owned lands under his jurisdiction. The U.S. Geological Survey, an Interior Department agency, has the right by law to demand from the companies operating on public lands engineering and geological raw data used to determine proven reserve estimates.
Andrus has new ordered the Gologizal Survey to complete a survey of the outer continental shelf lands under Interior Department jurisdiction.
The picture of natural gas supplies, as portrayed by American aGs Association figures, is bleak. Annual gas production has declined each year since 1973, and at current production rates, AGA says, the United States has roughly a 10-year supply of proven gas reserves.
A producer exploring for gas has a 1 in 10 chance of finding it when he drills a well, and a 1 in 50 chance of finding gas in quantities that can be economically recovered.
Two years ago, however, the eGological Survey estimated that with existing technology and prevailing economics about 484 trillion cubic feet - a 25-year supply at present consumption rates - remain to be discovered in the United States.
The industry's demands for gas deregulation has been based upon its own declining reserves estimates. In response, congressional critics have brought increasing pressure upon the FPC to validate the industry-supplied date.
Until last year the regulated interstate price of gas was 52 cents per thousand cubic feet. Today the price is $.41. Intrastate gas sales, which are unregulated, often exceed $2.
In Congress the battle of the numbers on gas reserves has been led by Rep. John E. Moss (D-Calif.), who heads a watchdog subcommittee of the House Commerce Committee. The Moss subcommittee has undertaken hearings and investigations into what one Moss aide labels as "crude and inaccurate" industry estimates of proven reserves.
As the result of Moss' findings - which are challenged by the industry - the critics reel off such accusations as these:
A 1975 PFC investigation of 31 leases in the Gulf of Mexico turned up a discrepancy between AGA's figures and the staff findings of 1.7 trillion cubic feet. The survey, based on a 4 per cent sample of acreage under lease, suggested a 54 per cent shortfall in the AGA reserve estimate.
In a Southern Louisiana rate case the FPC staff found a 34-trillion-cubic-foot reserve in fields for which the AGA listed a reserve of 24 trillion cubic feet.
In 1976 the Moss subcommittee discovered that industry estimates for 153 gas fields, two thirds of the fields in the Gulf of Mexico, were 37.4 per cent lower than Geological Survey estimates.
Buttressed by such findings, David S. Schwatz, former chief economist of the FPC, maintains that "there has been massive evidence since 1969 that the producers under-report to the AGA."
AGA, on the other hand, counters these allegations by pointing to government studies corroborating their own estimates. It makes such points as these in its own defense:
The 1974 FPC National Gas Survey of older producing fields found that AGA may have overstated gas reserves by as much as 10 per cent.
A 1975 Federal Energy Administration study, based on voluntarily supplied industry data rather than onsite inspection, concluded that the AGA's estimates were accurate.
In response to congressional pressure and his own desire to improve the data base, John N. Nassikas, FPC chairman from 1969 to 1975, asked the producers to supply reservoir-by-reservoir estimates of reserves. His action touched off a bitter controversy which went to the heart of the battle of the numbers between industry and government advocates of regulation.
The new reporting requirement involved an order called the Form 40, and it quickly inspired an appeal by 20 gas-producing companies. They maintained that reservoir-by-reservoir reporting placed an undue burden on the companies. The EPC's order was stayed by a federal court, and the EPC plans hearings on the Forum 40 procedure in the coming weeks.
George H. Lawrence, president of the AGA, said reporting requirements such as these could threaten the confidentially of propriety information.
David H. Foster, executive vice president of the Natural Gas Supply Committee, expressed concern that some information provided to the government "will not be used for legitimate regulatory functions but for political purposes." He said Moss subcommittee operations are conducted "under the guise of fact-finding to promote a particular political purpose."
Foster's organization represents more than 100 major and independent gas producers.
Congressional critics dismiss the "proprietary information argument" as a dodge - pointing out that gas reserve data is specifically excluded from Freedom of Information regulations.
Today, nonetheless, the Federal Energy administration has the power and, in some instances, the Geological Survey has the data the FPC is fighting in the courts to get from the companies through the Form 40 litigation. Even within industry the view is gaining ascendancy that the government must take on a larger role in estimating proven reserves in order to bring an end to the battle of the numbers.
The only reamining question is what the Carter administration will do about it.