US gas from land wells

Nov. 7, 2005
Most US readers know that the Gulf of Mexico dominates US gas reserves and production, that heavy gas drilling in Rocky Mountain states is bringing on large volumes of so-called unconventional supplies, that the country also leans on gas from Canada, and that it is gearing to ramp up LNG imports.

Most US readers know that the Gulf of Mexico dominates US gas reserves and production, that heavy gas drilling in Rocky Mountain states is bringing on large volumes of so-called unconventional supplies, that the country also leans on gas from Canada, and that it is gearing to ramp up LNG imports.

The most recent US government reserves and production figures show some other interesting trends.

The big news in the Energy Information Administration’s advance summary of US reserves was that US proved gas reserves climbed for the sixth year in a row to 192.5 tcf at the end of 2004. Since Gulf of Mexico reserves fell an unusually large 15%, it was land drilling that more than made up the difference (OGJ Online, Oct. 14, 2005).

A growing portion of gas production and reserves in US land basins comes from tight sands, shales, and coal beds.

These wells have long been thought to produce at lower rates than conventional formations, but several operators now claim to be “manufacturing gas” from these plays because technology advances have made economic completions so repeatable.

Gulf’s decline

Hurricane Ivan hurt the gulf’s gas situation in 2004, and hurricanes will be a big factor again when 2005 figures are released a year from now, EIA said.

The other big drags on gulf numbers were “low new field discoveries and relatively large negative revisions to proved reserves.”

For the year 2004 alone, estimated proved dry gas reserves in federal waters off Louisiana fell 2 tcf to 14.7 tcf. In federal waters off Texas they fell 1.2 tcf to 4.1 tcf.

They fell 124 bcf to 382 bcf in Louisiana state waters and 135 bcf to 321 bcf in Texas state waters.

Deepwater fields held 44.5% of gulf dry gas reserves and contributed 31.5% of the production in 2004.

Gulf gas production in 2004 and change from 2003: Louisiana federal 2.8 tcf, down 13.6%; Texas federal 1 tcf, up 0.9%; Louisiana state 99 bcf, down 21%; Texas state 65 bcf, down 2.9%.

EIA’s report, which did not take 2005’s multiple gulf hurricanes into account, said Ivan’s damage “will also reduce 2005 gulf production from what it could have been.”

Land drilling effects

So, EIA said, increased onshore gas drilling in 2004 resulted in large reserves additions to known fields and helped sustain production.

Gas drilling the past decade has stabilized gas production in the US. Estimated US dry gas production was 19.168 tcf in 2004, or 0.9% above the 1994-2004 average. The year of highest production during this time was 2001 at 19.779 tcf.

EIA’s figures show that 24 of the 45 US states and districts produced more gas in 2004 than they did in 2003. These included North Texas, where Devon Energy Corp., Oklahoma City, began producing the company’s 2,000th Mississippian Barnett shale well in the third quarter of 2005.

The sheer number of unconventional gas plays is swelling the count of producing gas wells in the US. According to the Independent Petroleum Association of America, the US had 357,000 gas-producing wells at the end of 2003 compared with 265,000 at the end of 1990.

This trend can be expected to continue, possibly for decades, as well density in the larger fields is increased to 10-20 acres/well because operators are able to show that wider spacing is resulting in recoverable gas being left in the ground (OGJ Online, Nov. 2, 2005). EIA said US exploratory and developmental gas completions were 15% higher in 2004 than in 2003.

As for reserves, operators added 20.2 tcf in 2004 from a combination of new field discoveries, new pay discoveries in existing fields, and field extension wells. This was 32% more than the prior 10-year average and 5% more than in 2003, and less than 7% of it came from offshore or Alaska.

Of the 20.2 tcf of 2004 additions from discoveries and extensions, 18.2 tcf came from extensions.

Coal’s contributions

EIA reported US coalbed methane production and reserves in 13 states in 2004, and several other states have potential. It put US CBM reserves at 18.4 tcf.

CBM is also making a difference in the Western Canada Sedimentary Basin. Gas from coal is expected to enable a slight increase in Canadian gas deliverability in 2005-07 compared with 2004 even though production of conventional gas declines slightly, Canada’s National Energy Board said last week.

It estimated that overall Canadian gas deliverability will average 17.3 bcfd in 2007, up 2.3% from 2004, with CBM deliverability tripling to an average 900 MMcfd in 2007 from 300 MMcfd in 2005.