Shale Gas Development Drives U.S. Reserves to New High

U.S. natural gas proved reserves, estimated as "wet" gas which includes natural gas plant liquids, increased by 11 percent in 2009 to 284 trillion cubic feet (Tcf), the highest level since 1971, according to the U.S. Energy Information Administration's (EIA) Summary: U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves, 2009, released Nov. 30.

U.S. Wet Natural Gas Proved Reserves, 1979-2009

"Shale gas development drove an 11 percent increase in U.S. natural gas proved reserves last year, to their highest level since 1971, demonstrating the growing importance of shale gas in meeting both current and projected energy needs," said Richard Newell, EIA's Administrator. "Louisiana, Arkansas, Texas, Oklahoma, and Pennsylvania were the leading states in adding new proved reserves of shale gas during 2009," he said.

Louisiana led the nation in additions of natural gas proved reserves with a net increase of 9.2 Tcf , or 77 percent, owing primarily to development of the Haynesville Shale. Both Arkansas (Fayetteville Shale) and Pennsylvania (Marcellus Shale) nearly doubled their reserves with net increases of 5.2 Tcf and 3.4 Tcf respectively. These increases occurred despite a 32 percent decline in the natural gas wellhead prices used to assess economic viability for 2009 reserves as compared to the prices used in reserves reporting for 2008.

The increase in proved gas reserves during a low-price environment that resulted in negative revisions to existing reserves "underscores the major improvements in shale gas exploration and production techniques - horizontal drilling coupled with hydraulic fracturing - and efficiencies," EIA noted in its report.

Natural gas from shale plays represented 21 percent of U.S. gas reserves in 2009, with the majority coming from six major shale areas: Barnett, which remains the largest U.S. shale play, Haynesville/Bossier, Fayetteville, Woodford, Marcellus and Antrim. The only shale of the six to experience a reserve decline during 2009 was the Antrim shale in northern Michigan, a mature, shallow biogenic shale gas play discovered in 1986 that is no longer being developed at the same pace as the other leading shales.

The natural gas price drop began to impact development plans as operators started shifting investments in late 2009 toward the development of shale gas plays in areas with a higher yield of natural gas liquids (NGLs) and crude oil, including portions of the Marcellus shale in southwest Pennsylvania and the Eagle Ford shale in Texas. The addition of higher priced crude oil, condensate and NGLs improved project economics.

Proved reserves of U.S. oil (crude oil plus condensate) also increased in 2009, rising 9 percent to 22.3 billion barrels. Driven by net revisions and a fourth consecutive increase in discoveries, the overall increase was the largest in the 33 years that EIA has published estimates.

Texas showed the largest increase in reserve volume with an 11 percent increase, or 529 million barrels, nearly all from the Permian Basin. Meanwhile, North Dakota had the second largest increase, 481 million barrels, or 83 percent, reflecting growth in the Bakken Shale. Unlike the situation for natural gas, where proved reserves grew robustly despite lower wellhead prices, the rise in proved reserves of crude oil was supported by a 37 percent increase in the crude oil prices used to estimate reserves.

Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. EIA's estimates of proved reserves are based on an annual survey of about 1,200 domestic oil and gas well operators.


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