2020 Forecast - U.S. reserves

According to the U.S. Energy Information Administration (EIA), U.S. oil and natural gas proved reserves increased to yet another record-high in 2018. This correlated with a 17% increase in U.S. crude oil and lease condensate production, as well as a 12% increase in total U.S. natural gas production. This is largely due to another year of stronger oil and gas prices, the EIA said.

From the late 1970s through the late 1990s, natural gas and crude oil reserves maintained a steady downward trend. Around 1997, however, this changed, due to several new innovations in horizontal drilling and hydraulic fracturing techniques. In recent years—from 2016 to year-end 2018—the EIA reported that prices and reserves have been trending upward.

Crude oil proved reserves increased 11.7%, from 39.2 Bbbl at year-end 2017 to 43.8 Bbbl at year-end 2018. This was an increase of 4.6 Bbbl from the previous record set in 2017. Proved reserves of lease condensate increased 14.3%, from 2.8 Bbbl at year-end 2017, to 3.2 Bbbl at year-end 2018. Adding lease condensate to crude oil yields total liquids proved reserves of 47.1 Bbbl, a 12.1% increase over year-end 2017.

In Texas, alone, producers added 2.3 Bbbl of crude oil and lease condensate proved reserves—a 13.2% increase from 2017. It was a result of increased prices and development in the Permian basin. This was the largest net increase of all states during 2018. After Texas, the next largest net gains in crude oil and lease condensate proved reserves were in New Mexico (750 MMbbl) and North Dakota (422 MMbbl), which saw 27.9% and 7.7% increases from 2017, respectively. Conversely, Louisiana saw the largest net decline in proved reserves during 2018, a 32-MMbbl decrease (-6.2%) in crude oil and lease condensate proved reserves.

The EIA reported that operators saw the largest volume of extensions and discoveries of crude oil and lease condensate proved reserves in the past decade during 2018.

Natural gas proved reserves also increased 8.7%, from 464.3 Tcf at year-end 2017 to 504.5 Tcf at year-end 2018. This, too, was another U.S. record for total natural gas proved reserves. The previous record was set in 2017. Likewise, natural gas proved reserves from shale increased from 66% of total U.S. gas proved reserves in 2017 to 68% at year-end 2018.

Proved natural gas reserves increased in five of the top eight U.S. natural gas reserves states in 2018. Three of the eight largest gas reserves states reported a net decrease in proved reserves in 2018—Louisiana, Colorado and Ohio. The EIA attributed this decrease to net downward revisions to natural gas proved reserves in 2018, despite each reporting an increase in proved reserves greater than 9 Tcf during the previous year.

The largest net increase of natural gas proved reserves was in Texas, where producers added 22.9 Tcf (+19.9%). This was a result of increased prices and development in the Wolfcamp/Bone Spring shale play. The next largest net gains in natural gas proved reserves by volume in 2018 were in Pennsylvania (14.1 Tcf) and New Mexico (4.2 Tcf), increases of 15.6% and 20.3%, respectively. These gains were a result of development in the Marcellus shale play and in the Appalachian basin, as well as the Wolfcamp/Bone Spring shale play in eastern New Mexico.

The EIA’s report estimates U.S. proved reserves of crude oil and lease condensate and proved reserves of natural gas at the end of 2018. According to the EIA, proved reserves are estimated volumes of hydrocarbon resources that analysis of geologic and engineering data demonstrates with reasonable certainty are recoverable under existing economic and operating conditions.