OGJ Chief Editor-Exploration
HOUSTON, Oct. 30 – Proved US crude oil reserves fell by more than 10% in 2008, but there would likely have been a smaller drop or perhaps even an increase under new Securities and Exchange Commission rules.
Proved natural gas reserves grew by almost 3%, largely due to continued development of unconventional gas from shales, said the US Energy Information Administration.
Gas reserves additions replaced production of 20.5 tcf during 2008, and operators added 6.9 tcf on top of that. The new figure is 244.7 tcf, the highest since EIA began reporting in 1977.
Gas discoveries of 29.5 tcf in 2008 were the sixth consecutive yearly increase and the highest level of discoveries in 32 years of reporting. Ninety percent of the discoveries came from extensions of existing fields.
Natural gas liquids reserves rose 1.4% to 9.3 billion bbl.
Texas accounted for about two thirds of US proved shale gas reserves, primarly in the Barnett play, although other shale plays have emerged.
EIA said shale reserves rose by 5.3 tcf in Texas, 2.4 tcf in Arkansas due to the Fayetteville play, 2.6 tcf in Oklahoma due to the Woodford play, and 800 bcf in Louisiana with the Haynesville play. Marcellus shale development is too recent to have led to a major reserves increase in 2008, EIA added.
Proved reserves of coalbed methane fell 5% to 20.8 tcf.
The SEC accounting change would also have affected 2008 gas reserves. Under existing SEC rules, the price at Henry Hub, La., used to estimate reserves dropped 21% to $5.63/MMbtu at yearend 2008. The price would have increased 32% to $8.93/MMbtu under the new rules.
As to crude oil, the SEC rules change will allow producers starting in 2009 to calculate reserves on an average of first-day-of-the-month prices throughout the year rather than the single price in effect on the year’s last trading day. This should reduce sensitivity to price troughs that often occur near the end of a year, EIA noted.
Under the old system, oil reserves fell to 19.1 billion bbl, largely due to the misleading effect that arises almost entirely from negative net revisions, EIA said. The spot price of West Texas Intermediate fell to $44.60/bbl on Dec. 31, 2008, compared with $99.64/bbl on Jan. 1 and $145.31/bbl in early July.
The yearend price was close to the market low of $30.28/bbl on Dec. 23. Net negative revisions were about the same as the 1.7 billion bbl produced in 2008 and were nearly 1.5 times what was discovered.
“Using the new (SEC) approach, the WTI price would have been $71.79/bbl for 2007 and $101.63 for 2008, an increase of 42%,” EIA said. It said the effect of the new pricing methodology can’t be estimated precisely for past years, but “it seems certain that net revisions for 2008 would have been substantially less negative, or perhaps even positive, under the new reporting method.”
Oil reserves added in 2008 include 375 million bbl in the Gulf of Mexico Outer Continental Shelf, 250 million bbl in Texas, and 167 million bbl in North Dakota.
Contact Alan Petzet at firstname.lastname@example.org.