OUTLOOK 2007: US RESERVES

US oil and gas reserves rise

At year-end 2006, the US EIA released its estimates for US crude and gas reserves for 2005. Proved crude oil reserves rose nearly 2%, or 386 million bbl, in 2005, in contrast to the prior year drop of 2.5%. This was the first increase since 2002. Additions to reserves surpassed crude production in 2005 by 22%.

Natural gas proved reserves increased by 6% in 2005, the largest increase since 1970. Reserves additions exceeded 2005 dry gas production by 64%, as US gas reserves increased for the seventh consecutive year.

Crude. Texas easily had the largest gain of any state, at 306 million bbl in reserve additions, while Wyoming added 76 million bbl, Montana gained 63 million bbl, and Oklahoma and California expanded by 60 and 59 million bbl, respectively. Field extensions in these four states comprised the majority of crude reserve additions.

The federal Gulf of Mexico accounted for nearly all new field discoveries, adding 205 million bbl, although this was not enough to offset production there. This discovery volume was only half of the prior 10-year average.

The big losers were Alaska, with 159 million bbl less, the federal Gulf of Mexico, losing 102 million bbl, and federal offshore California, off 106 million bbl.

TABLE 1. Estimated US crude oil proved reserves, 2005 vs. 2004, million bbl. Click image to enlarge view

Natural gas. The majority of gas discovered in 2005 came from extensions to existing gas fields. These extensions were 21,050 Bcf, 16% more than in 2004 and 74% more than the prior 10-year average. New field discoveries were 942 Bcf. While up from the prior year, this was still 46% less than the prior 10-year average for that category. As is usually the case, the net of sales and acquisitions was nowhere near its theoretical zero. Thus, the amount of gas reserves bought was 2,544 Bcf more than the amount sold.

TABLE 2. Total dry natural gas proved reserves, reserves changes, and production, 2005, Bcf @ 14.73 psia and 60° F. Click image to enlarge view

Coalbed methane (CBM) gas reserves increased 8% in 2005, making up 10% of US dry gas reserves. While CBM gas production increased less than 1% from 2004, it accounts for 9% of US dry gas production.