OUTLOOK 2005: United States
US Reserves

US oil reserves down, gas up

US proved crude oil reserves fell 3.5% in 2003. This was the first drop in five years. Reserves only replaced a paltry 58% of production. Although not reflected in these tables, NGL reserves – which account for one-fourth of hydrocarbon liquids reserves – fell a hefty 6.7%. On the upside, proved dry natural gas reserves increased for the fifth consecutive year, adding 1%. This is the ninth increase in the last ten years. Moreover, reserve additions replaced all gas produced in 2003 and added another 11% on top of that.

As always, it takes nearly a year for the US government to gather and analyze reserve data; so, comparative data for 2004 will be ready by year-end 2005. It’s impossible to define the extent to which Shell’s startling revelation of its downward revision of reserves, in January 2004, may have had on reserves reporting that has taken place since. But that event, together with Sarbanes-Oxley legislation, has, in general, probably made estimates more conservative, and revisions have tended to be downward.

Crude oil. Total discoveries comprise the categories new field discoveries, extensions, and new discoveries in old fields. At 1.2 million bbl, these were 16% more than the prior 10-year average, and 30% more than in 2002. Within new field discoveries, most of the volume was found in the federal waters of the Gulf of Mexico – some 99% of 705 million bbl. This was 84% more than the prior 10-year average and more than double 2002’s volume.

The other discoveries categories were much less than prior years, as were net revision and adjustments, all of which helped yield the overall downtrend. This was despite two facts that should have boosted reserves: 2003 saw a 22% increase in average first purchase price of crude, to $27.56; and exploration and development well completions were up 4% from 2002. In keeping with these puzzlements, 398 million more barrels of assets were sold than were bought.

Natural gas. Total discoveries of dry gas were 36% more than the prior 10-year average and 8% more than in 2002. Most of the increase in dry gas reserves in 2003 came from extensions of existing conventional and unconventional gas fields. Extensions comprised 11% more than in 2002 and 66% more than past 10-year average. Texas and the Rocky Mountain states saw continuing development of tight sands, shales and coalbed methane. CBM reserves increased 1% and accounted for 10% of national gas reserves in 2003. The net of sales and acquisitions found that 1Tcf more gas assets were bought than were sold. That phenomenon occurred mostly in the states of Texas, Oklahoma and New Mexico.

Wellhead gas prices averaged $4.98 in 2003, 66% more than the prior year. Exploration and development well completions were up 22% in 2003, while gas production was up a tad, at less than 1%. 

	TABLE 1. Estimated US crude oil proved reserves, 2003 vs. 2002, million bbl
	TABLE 2. Total dry natural gas proved reserves, reserves changes, and production, 2003, Bcf @ 14.73 psia and 60° F