U.S. proved natural gas, crude oil reserves soar - EIA

U.S. proved natural gas, crude oil reserves soar - EIA

 

By Selam Gebrekidan and Joshua Schneyer

NEW YORK | Tue Nov 30, 2010 6:34pm EST

(Reuters) - U.S. natural gas reserves increased by the most in history last year, and crude reserves also rose, as companies drilled frantically into shale rock formations with new technology, the Energy Information Administration said in an annual report on Tuesday.

U.S. net proved natural gas reserves rose 11 percent, or 28.8 trillion cubic feet (tcf), in 2009 to total 284 tcf, underscoring the dramatic impact that new gas pumped from shale rock formations is having on world energy supply.

Louisiana, whose statewide reserves grew quickest, saw its economically viable gas reserves surge by 77 percent, or 9.2 tcf, led by developments in its Haynesville Shale.

U.S. net proved crude oil reserves rose 9 percent, or 1.8 billion barrels, to 22.3 billion barrels in 2009. Texas saw its proved oil volumes rise most, by 529 million barrels, or 11 percent.

North Dakota, home of the oil-rich Bakken Shale formation, saw its reserves jump by a whopping 83 percent, or 481 million barrels.

"These increases demonstrate the possibility of an expanding role for domestic natural gas and crude oil in meeting both current and projected U.S. energy demands," EIA researchers said in their report.

Proved reserves -- which now stand at the equivalent of 12 years of gas consumption and 3.3 years of oil demand -- represent energy supplies that are extensively charted out and could be tapped under current market conditions. Total recoverable reserves, however, can be far higher.

The addition of 47.6 tcf in new proved gas reserves was the sharpest on record and caps seven straight years of increases, EIA said. It was led by gas from shale rock formations, such as Haynesville, where advances in horizontal drilling and hydraulic fracturing have unlocked vast new energy potential.

As the cost of tapping gas fell, reserves were added even though prices of U.S. natural gas futures fell sharply last year, by an average of 32 percent, according to EIA's calculations. Burgeoning supplies of the fuel contributed to the price rout.

The expansion in crude and liquids reserves came largely as a function of a rise in U.S. oil prices over the course of 2009. Based on price levels at the beginning of each month, oil futures averaged $61.08 a barrel last year, up 37 percent from 2008, EIA said. That rise prompted oil companies to shift more oil reserves into the "proved" category, which is contingent on viable economics for their production, EIA said.

About 1,200 companies, including the largest domestic operators, were included in the EIA proved reserves survey.

The rise in proved crude reserves came after 2008 reserves dipped by 10.3 percent, their largest drop in 32 years. Natural gas proved reserves had risen 2.9 percent in 2008.

SHALE BOOM

Shale gas development in Arkansas, Texas, Oklahoma and Pennsylvania supported the reserves increase. The Fayetville and Marcellus shale plays in Arkansas and Pennsylvania, respectively, nearly doubled their reserves in the reporting period.

Hydraulic fracturing technologies originally used to tap gas but now increasingly used to tap crude and liquids from shale plays helped boost crude oil reserves. All major oil production regions saw reserves rise, including California, Alaska and the Gulf of Mexico Federal Offshore area, EIA said.

While the reserves boost is promising for U.S. energy supplies, it has also helped push natgas futures down further in 2010. They have fallen nearly 25 percent, by far the biggest loser of 2010 on the Reuters-Jefferies CRB Index of 19 commodities.

On Tuesday, January natgas futures slid 3 cents to settle at $4.18 per million British thermal units.

EIA's estimates of U.S. 2009 proved natural gas reserves were 16 percent higher than the 244.7 trillion cubic feet BP said are viably recoverable in the U.S. in the Statistical Review of World Energy report it published last June.

EIA's annual report also showed that British oil giant BP Plc remained the largest reserve holder and proprietary producer of both oil and gas in the United States last year.

The company, whose Macondo offshore prospect was the site of the biggest U.S. oil spill in history this year, owned 3.07 billion barrels of proved U.S. crude reserves and 15.2 trillion cubic feet of proved natural gas at the end of 2009.

Proved reserves are volumes of oil and natural gas that can be recovered in the near future from known reservoirs with a reasonable certainty using existing technology and under current economic conditions.

(Additional reporting by Eileen Moustakis; Editing by Marguerita Choy and David Gregorio)