U.S. OIL AND GAS DISCOVERIES STAY A STEP BEHIND PRODUCTION

Sept. 12, 1994
Oil and gas discoveries rose markedly in the U.S. last year but not enough to halt declines in reserves. The Energy Information Administration reported yearend 1993 reserves stood at 22.957 billion bbl of crude oil, 162.415 tcf of dry gas, and 7.222 billion bbl of natural gas liquids. Declines were 3.3% for oil, 1.6% for gas, and 3% for NGL. U.S. production for 1993 amounted to 2.339 billion bbl of crude oil, 17.789 tcf of gas, and 788 million bbl of NGL. Compared with 1992, crude was down

Oil and gas discoveries rose markedly in the U.S. last year but not enough to halt declines in reserves.

The Energy Information Administration reported yearend 1993 reserves stood at 22.957 billion bbl of crude oil, 162.415 tcf of dry gas, and 7.222 billion bbl of natural gas liquids. Declines were 3.3% for oil, 1.6% for gas, and 3% for NGL.

U.S. production for 1993 amounted to 2.339 billion bbl of crude oil, 17.789 tcf of gas, and 788 million bbl of NGL. Compared with 1992, crude was down 4%, gas up 2%, and NGL up 2%.

EIA's advance summary of its annual tally of reserves noted that increased gas prices and drilling helped rein the slide in gas volume. The full report will be published in October.

CRUDE OIL

Proved crude oil reserves have declined for 6 years in a row, EIA data show. Low oil prices and a string of new lows for oil drilling activity are the major reasons.

The biggest drop in the downturn-1.572 billion bbl occurred in 1991, when yearend reserves stood at 24.682 billion bbl. The last increase only 367 million bbl took place in 1987, when yearend reserves totaled 27.256 billion bbl.

Average oil prices slipped to $14.20/bbl in 1993, the lowest annual average in constant dollars since the 1973 Arab oil embargo. Oil well completions during 1993 dropped to 8,170, another 20 year low.

EIA called total oil discoveries, especially new oil field discoveries, a "bright spot" for 1993. Discoveries of crude oil amounted to 785 million bbl, up 62% from 1992. Just two areas, the Gulf of Mexico Outer Continental Shelf and Texas, accounted for three fourths of the 1993 volume.

EIA defines total discoveries as reserves attributable to field extensions, new field discoveries, and new reservoir discoveries in old fields.

Reserves in discoveries of new oil fields were the highest in 23 years at 319 million bbl. That is three times the prior 10 year average for new field discoveries and a "tremendous turnaround" from the exceptionally low 1992 level of only 8 million bbl. Almost all new oil field discoveries were in the Gulf of Mexico OCS.

Improved exploration and deepwater production technology enhanced the ability to discover and develop offshore fields. EIA cited as an example Shell Oil Co.'s plans to develop its Mars prospect in 2,933 ft of water in the Gulf of Mexico, setting a U.S. water depth record for installation of a permanent platform.

Among other categories of reserves, EIA listed new oil reservoir discoveries in old fields at 110 million bbl for 1993, up 29% from 1992, field extensions at 357 million bbl, well below the prior 10 year average, and revisions and adjustments at 766 million bbl, less than half the prior 10 year average.

Indicated additional crude oil reserves were 3.453 billion bbl, down 9% from 1992. By EIA's definition, those reserves are volumes that may become economically recoverable from known reservoirs by means of improved recovery techniques using current methods.

EIA said, "The presence of large indicated additional reserves in the Alaskan North Slope, California, West Texas, and New Mexico implies that significant upward revisions to crude oil proved reserves could occur in the future."

NATURAL GAS

EIA noted that gas discoveries were up substantially, but lower revisions and adjustments, along with increased production, caused the 1993 reserves decline of 2.6 tcf. It was the third yearly decrease in a row and more severe than the decline of 2.284 tcf in 1991 and 2.047 tcf in 1992.

Total discoveries of dry gas reserves amounted to 8.868 tcf in 1993, or about half the country's production for that year and a 26% gain over 1992.

Texas and the Gulf of Mexico OCS accounted for almost two thirds of 1993 discovery volumes.

New field discoveries added 899 bcf of reserves, up 39% from 1992, field extensions were 6.103 tcf, up 31%, and new reservoirs in old fields were 1.866 tcf, up 8% but well below the prior 10 year average.

Gas well completions exceeded oil well completions for the first time. Gas well completions increased 8% to 8,590 in 1993, still less than half the number of gas wells drilled per year during the early 1980s.

While gas reserves declined in 1992 and 1993, production increased because there was enough productive capacity to meet increased demand. But to sustain long term increased production, reserves will eventually have to increase, EIA said.

"It will take a growing and successful drilling effort to reverse the decline of gas reserves."

Copyright 1994 Oil & Gas Journal. All Rights Reserved.