EIA: U.S. OIL AND GAS RESERVES SHOWED DECLINES DURING 1991

Sept. 14, 1992
The Energy Information Administration reports U.S. oil reserves dropped 6% and natural gas reserves 1.3% in 1991. EIA Administrator Calvin Kent said the oil reserves drop, the largest since 1977, was not surprising due to falling oil and gas prices and a 20 year low in the count of active drilling rigs. The drop in gas reserves was relatively small, and surplus gas productive capacity continued throughout 1991.

The Energy Information Administration reports U.S. oil reserves dropped 6% and natural gas reserves 1.3% in 1991.

EIA Administrator Calvin Kent said the oil reserves drop, the largest since 1977, was not surprising due to falling oil and gas prices and a 20 year low in the count of active drilling rigs.

The drop in gas reserves was relatively small, and surplus gas productive capacity continued throughout 1991.

As of Dec. 31, 1991, U.S. proved reserves were 24.682 billion bbl of oil, 167.062 tcf of dry gas excluding gas in underground storage, and 7.466 billion bbl of natural gas liquids including lease condensate. EIA noted oil prices dropped during the year to end at $16.50/bbl in December 1991, and gas prices fell to $1.59/Mcf.

CRUDE OIL

EIA figures show the 1.572 billion bbl, or 6%, slide in proved crude oil reserves was four times the average decline of 1.3%/year experienced in the last decade.

The agency pointed out that reserves declines of nearly the same size occurred following the oil price and drilling decline in 1982 and the price and drilling collapse of 1986.

While most areas had declines, four areas accounted for 87% of the U.S. decline: Alaska with 441 million bbl, California 441 million bbl, Texas 309 million bbl, and the Pacific Outer Continental Shelf 177 million bbl.

Annual U.S. crude oil production was up slightly in 1991 because production was high early in the year, a continuation of a surge in second half 1990. But production for the entire year was down.

There were less upward revisions and adjustments for crude reserves, at 386 million bbl, and the downward revisions were larger than average.

The Pacific OCS and California state waters had relatively large downward revisions because of tough economics made worse by environmental costs and restrictions.

"In particular," EIA said, "ARCO returned to California the leases containing the giant Coal Oil Point field off Santa Barbara County because it had been denied permission to install two platforms for field development. In return, it did get permission to substantially expand its waterflood in the Long Beach Unit of Wilmington field.

Four areas had substantial positive net revisions and adjustments. On the Alaskan North Slope and in the Permian basin this was due to enhanced oil recovery projects. On the Gulf of Mexico OCS it was due to improved field performance.

EIA figured 1991 total discoveries amounted to 554 million bbl, down 21% from 1990 and 36% lower than the 844 million bbl average for the prior 10 years. Two areas, Texas and the Gulf of Mexico OCS, accounted for 61% of 1991 crude oil discoveries.

Total discoveries for the last 6 years have been relatively low, reflecting lower reduced drilling following the 1986 crude oil price collapse, but discoveries per wildcat drilled have about doubled, moderating the effect of the 71% drop in successful exploratory oil drilling since 1985.

New field discoveries were down slightly at 97 million bbl and well below the 10 year average of 131 million. Three-fourths were in the Gulf of Mexico.

Proved reserves added in new reservoirs in old fields were down 32% at 92 million bbl, while additions from extensions were down 20% at 365 million bbl.

Horizontal drilling in the Cretaceous Austin chalk was the major factor behind the 146 million bbl of reserve additions by extensions in Texas, which accounted for 40% of U.S. crude oil extensions.

Indicated additional reserves, volumes that may become economically recoverable from known reservoirs through improved EOR, were up 22% at 4.265 billion. Of that increase, 80% was in Alaska and Texas.

NATURAL GAS

Proved reserves of dry gas dropped by 1.3% or 2.284 bcf. All four leading gas producing areas--Texas, Louisiana, Oklahoma, and the Gulf of Mexico--had substantial declines.

Three states had large increases: Alabama with 1.289 tcf, New Mexico 1.279 tcf, and Colorado 1.212 tcf.

"These are the states with large coalbed methane reserves," EIA said. "Operators are not required to separately identify coalbed methane reserves in EIA's survey, and a strong effort was made to identify and estimate these reserves."

EIA said coalbed methane reserves increased 60% or 3.076 tcf in 1991 and now account for 5% of total U.S. gas reserves. Coalbed methane production almost doubled to 348 bcf, accounting for 2% of U.S. production in 1991, largely due to a 90/Mcf tax credit which was more than half the average U.S. wellhead price of $1.59/Mcf.

Dry gas reserves were 7.542 tcf, a 39% drop from 1990 and 35% lower than the average for the prior 10 years. More than half of total discoveries were in the Gulf of Mexico and Texas.

New field discoveries added 848 bcf, down substantially from 1990 and 55% less than the prior 10 year average of 1.881 bcf. Additions by extensions were down 36% and additions in new reservoirs down 33%.

Revisions were 6.827 bcf, 60% more than the average for the past 10 years. "In recent years, the net of revisions and adjustments has been playing a growing role in sustaining Lower 48 natural gas reserves," EIA said.

Gas liquids reserves dropped 1.6% to 7.466 billion bbl.

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