Abstracts for EIA’s Spring 2008 Meeting

with the

ASA Committee on Energy Statistics

1.  The Role of A Federal Advisory Committee: A Case Study of the American Statistical Association (ASA) Committee on Energy Statistics, Calvin A. Kent, Former EIA Administrator and Dean of Lewis College of Business, Marshall University

The energy crisis of the 1970’s brought about the creation of the U. S. Department of Energy, which was created by congress in 1977.  As a statistical organization within the Department of Energy, the Energy Information Administration integrated the activities of more than fifty different government agencies.  Recognizing the need for a central, comprehensive and unified energy data and information program, the EIA collects, evaluates, assembles, analyzes and disseminates data and information which is relevant to energy resource reserves, energy production, demand and technology, and related economic and statistical information. 

To assist the organization in this effort, the EIA initiated the development of an advisory program. The American Statistics Association’s (ASA) Committee on Energy Statistics was created for this purpose.   The committee meets twice a year, reviews elements of EIA’s data collection and analysis programs and offers advice on various aspects of EIA’s work, such as matters concerning energy modeling and forecasting.

This paper reviews the history of the ASA Committee on Energy Statistics and examines its advisory role, its interactions with EIA and its effectiveness from the standpoint of its members.  This discussion presents a welcome opportunity to obtain input from the committee regarding EIA’s future direction.

This was an information session that did not solicit advice from the committee.  Therefore, no summary of committee recommendations or EIA intentions is required.

2. Modeling Peak Oil Production, John Holte, Lauren Mayne, John Staub, and Glen Sweetnam, OIAF, EIA

Recent increases in oil prices and unanticipated delays in non-OPEC oil exploration and development projects have raised concerns that global oil production may be nearing a peak.  In order to improve its ability to generate long-term oil production projections, the Energy Information Administration has developed the International Petroleum Production Model (IPPM).

The IPPM is an economic model that schedules investment in new petroleum liquids production capacity for six resource types in each of five producing regions.  Production from new production capacity added by the model is scheduled according to an exogenous, predetermined production profile.  The resource types in the current version of the model are:

Conventional crude and lease condensate
Natural gas plant liquids (NGPL)
Extra heavy crude oil
Shale oil (kerogen)
Crude oil from source rocks

The regions in the current model are:
United States
Other non-OPEC
Saudi Arabia
Other Middle East OPEC
Other OPEC

The model adds new production capacity in a manner that maximizes producer surplus (net present value - NPV) of the capacity additions consistent with exogenous, pre-determined constraints.  The primary constraint is that production must equal an exogenous, pre-determined consumption trajectory in each year (2008 – 2200 in the current version of the model).  Other constraints are typically associated with government or national oil company decisions to restrict capacity additions to maintain a certain market share of the market (e.g. Saudi Arabia) or to address environmental concerns (e.g., Alberta oil sands).  The NPV of additions are calculated using assumptions about capital (finding and development - F&D) and operating costs, tax rates, and a pre-determined oil price trajectory.  The model uses exogenous assumptions of initial-in-place (IIP) quantities and ultimate recovery factors (RF) for each resource in each region.  F&D costs rise as cumulative additions to production capacity approach the product of IIP and RF and decline as technology advances.    

ASA Committee members will be asked to comment on the appropriateness of the proposed model structure/design for modeling future oil industry behavior and to provide suggestions as to how more accurate estimates of key parameters (e.g., regional finding and development costs) might be obtained or derived.

ASA Committee Recommendations:

Committee members recommended that the International Petroleum Production Model (IPPM) should be reconstructed to operate as a general equilibrium model, incorporating demand curves in place of candidate consumption trajectories and solving for the world oil price, rather than receiving this as an input.  The committee also recommended that the grouping of resource owners and liquids suppliers be further disaggregated, rather than limited to only four country groupings.  Committee members also suggested that sensitivity analysis should be conducted on several input assumptions, including IIP and RF estimates.  In addition, it was suggested that more logic should be integrated into the modeled market structure, allowing for a greater diversity of noneconomic based production decisions than were addressed in the version of the IPPM presented. 

EIA Intended Response(s):

To address the committee’s sensitivity analysis recommendation, several additional IPPM runs based on lower IIP and RF assumptions were conducted and summarized in the yet to be published EIA whitepaper on peak oil.  After careful consideration, EIA decided that other committee recommendations were inappropriate to include in the IPPM due to the model’s particularly long time frame.  These recommendations, however, were incorporated into other modeling efforts, primarily the WEPS+ model, supporting EIA’s International Energy Outlook (IEO), the projection period of which is limited to 25 years.  The incorporation of these recommendations resulted in three significant and ongoing changes to the WEPS+ model.  First, resource estimates supporting liquids supply projections in WEPS+ were expanded from reports of proved reserves to include estimates of IIP and RF for conventional crude and lease condensate.  Second, the IIP estimates included in WEPS+ were disaggregated to the country level.  And third, the price scenarios presented in the IEO2008 (and used as a basis for the AEO2009) expressed a much wider range of possible future noneconomic driven production decisions than previous outlooks.

3.  Web Customer Survey and New Web Directions, Colleen Blessing and Nicholas Johnson, NEIC

The Energy Information Administration (EIA) web site is central to accomplishing its mission, including the charge, "to promote public understanding" of energy.  We have recently introduced new features and updated our home page to support this mission.  The session will briefly present these changes on EIA's web site.

We reorganized the EIA home page based on usability testing results to group like information and show more of the most popular items.  We added a graphical feature box to the home page to help EIA promote specific content.  We placed an improved A-Z Topics feature on the home page to support new ways to look for information.

We also launched a new series aimed at educating the curious novice about energy issues.  The series is called Energy in Brief and answers popular or important energy questions in a one- to two-page format online with graphs, charts and easy-to-understand text.  The series will occasionally include articles to educate the public about statistical questions and misconceptions.  For example, we may write about the difference between short-term fluctuations and long-term trends in energy prices.

We would appreciate feedback and suggestions from ASA members regarding the EIA home page and the Energy in Brief series to support public understanding of energy.

ASA Committee Recommendations and EIA Intentions for this presentation are presented based on the question/answer format of this advisory session.

Web Customer Survey Summary- ASA Advice and EIA Response

Advice:  Because the survey is presented to some customers more than once over the survey period, ask a question at the top “Have you taken the survey before?”

Response:  We don’t need that information specifically.   The note to close the browser if they have taken the survey already needs to be very obvious and clear.  That way we can be more sure to avoid getting multiple responses from any one user, although we don’t think that has been a problem in the past.

Advice:  The survey respondents are not a random sample.  People who come to the website more frequently have a greater likelihood of getting the survey.  The survey is sampling sessions, not visitors, so one class of users may be overrepresented.  People who use bookmarks might not have even gotten the survey. 

Response:  Yes, this is correct.  For the 2008 survey EIA placed the tags for the survey on every web page that had a footer, many, many more than the 25 tagged in the 2007 survey.  We know the 2008 survey reached many more people because we received over 5,600 responses in 2 weeks, versus about 5,000 responses in three weeks in 2007.  Having the survey appear from many more pages, we are more likely to catch people coming to our site from Google or bookmarks.  One ASA member said it’s not a scientific sample, but maybe that’s fine because we are not presenting it as such.

Advice:  Ask first-time visitors if they are likely to come back.

Response:  We included this question in our 2008 survey conducted in July!

Advice:  Why do we always do the survey in the summer?  Why not some other time of the year?

Response:  That’s just the time of year that works out best for us.  Also, we get fewer crazy responses from school kids because they are on vacation. 

Advice:  The survey gets feedback from people who come to the website but not from people who don’t.  How do we know what they want?  Maybe we should provide a tutorial or users guide for novice visitors.

Response:  We collect a limited amount of user feedback at conferences and from the people who talk to customers on our information hotline.  We are working on consolidating and adding content in a new area of our site aimed at the general public.  It would be more about energy education and an introduction to what information EIA has.

Advice:  Some people may actually want to take a longer survey.  We should give an option for more questions. 

Response:  This year we had follow-up questions for 4 of the 12 questions, drilling down for more information depending on their response to the original question.  These additional questions made the survey a little longer, but the responses will provide more useful information and explanations for the answers. 

Advice:  have some one-question surveys embedded in the site, like “was this information useful to you (yes/no).”

Response:  We are still hoping to do this. 

4.  Challenges for Long-Term Energy Models: Summary of EIA Conference Session and Brainstorming for Future Undertakings, Phillip Tseng, SMG

This was a review of a session from the EIA Conference and was presented as  an information session that did not solicit advice from the committee.  Therefore, no summary of committee recommendations or EIA intentions is required.