Divergent trends in proved reserves

According to the US Energy Information Administration (EIA), proved reserves and oil and natural gas demonstrate divergent trends, reflecting the large decline in natural gas prices.

Oil reserves

Proved oil reserves, which include crude oil and lease condensate, increased 15.4% in 2012 to 33 billion bbls. This represents the largest volumetric and percentage increase in oil reserves since 1970, when 10 billion bbls of Alaskan reserves were added to the US total. Tight oil plays accounted for 7.3 billion bbls, 22% of the US total. US production of crude oil and lease condensate increased 16% from 2011 to 2012, rising from 5.8 million bpd to 6.5 million bpd.

At the state level, Texas recorded the largest volumetric increase in proved oil reserves, up 3 billion bbls. This was largely due to development in the Permian and Western Gulf basins.

Natural gas reserves

The average natural gas price for 2012 was 34% below its 2011 level. Before April 2012, the natural gas spot price at the Henry Hub had not been below US$ 2.00/million Btu since December 2001.

Natural gas proved reserves decreased 7.5% in 2012 to 323 trillion ft³ as operators revised the proved reserves of their existing natural gas fields in response to lower natural gas prices.

Pennsylvania and West Virginia reported the largest net increases in natural gas proved reserves in 2013, driven by continued development of the Marcellus Shale play. Proved reserves in shale gas plays accounted for 40% (129.4 trillion ft³) of wet natural gas proved reserves in 2012. However, gains in the Marcellus and Eagle Ford, 10.9 trillion ft³ and 7.8 trillion ft³ respectively, were more than offset by price driven reductions of reserves estimates in more mature shale plays. For example, the Barnett and Haynesville declined a combined 20.7 trillion ft³ in 2012.

Natural gas reserve outlook

Despite the drop in natural gas reserves in 2012, US natural gas marketed production increased approximately 5% from 2001 to 2012, increasing from 65.9 billion ft³/d to 69.1 billion ft³/d.

“With natural gas prices higher in 2013 and technology continuing to advance, EIA expects US natural gas proved reserves to increase in 2013”, commented EIA Administrator Adam Seiminski.

Adapted from a press release by Emma McAleavey.

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