AGA: U.S. GAS RESERVE ADDITIONS SHOW A DECLINE

May 17, 1993
The American Gas Association reports U.S. gas reserves additions amounted to 70-86% of production in 1992. Mike Baly, AGA president, said although the level was less than the 90% reserve replacement average of the past 10 years, the total was strong considering fluctuating rig counts and low gas well completion levels. AGA said 71% of 1992 reserve additions were from gas discoveries and extensions, while only 29% came from revisions of estimates for existing fields. Total proved reserve

The American Gas Association reports U.S. gas reserves additions amounted to 70-86% of production in 1992.

Mike Baly, AGA president, said although the level was less than the 90% reserve replacement average of the past 10 years, the total was strong considering fluctuating rig counts and low gas well completion levels.

AGA said 71% of 1992 reserve additions were from gas discoveries and extensions, while only 29% came from revisions of estimates for existing fields. Total proved reserve additions may amount to 12-14.8 tcf.

The U.S. had 167 tcf of proved gas reserves in 1991. The Department of Energy estimates total gas resources at 1.188 quadrillion cu ft, or about a 70 year supply.

Baly said, "Reduction in natural gas inventory is a logical response in an industry with surplus deliverability.

"During 1992, natural gas sup,ply and demand came more into balance, greatly reducing the long term natural gas oversupply and setting the stage for higher drilling and well completion levels.

"The end of the natural gas bubble will result in higher levels of seismic activity, exploration, drilling, and well completions by the second half of 1993.

"This, coupled with field price increases, will send market signals to natural gas producers, which will ensure that adequate supplies of natural gas are made available at competitive prices to meet growing demand."

UPSWING AHEAD

Baly predicted an increase in drilling activity will occur before yearend because spare productive capacity is almost gone. He said, "There is no question that fewer well completions affected the 1992 level of natural gas proved reserve additions.

"For example, annual rig activity dropped about 16% from 860 rigs operating in 1991 to 721 rigs in 1992. As a result, gas well completions were down from 8,960 in 1991 to 7,240 in 1992, almost a 19% decline."

AGA compiled its data from the 30 largest U.S. gas producers' annual reports and data filed with the Securities and Exchange Commission, supplemented with data from gas pipelines that control large volumes of reserves.

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