California leads '97 U.S oil reserves growth

California's old heavy oil fields accounted for almost half the year-to-year increase in U.S. proved oil reserves in 1997.

It was the first time in a decade that the estimate of U.S. proved reserves of crude oil rose from year to year. U.S. natural gas reserves also increased in 1997, the fourth year in a row, says U.S. Energy Information Administration (OGJ, Sept. 14, 1998, Newsletter). EIA said, "Oil and gas discoveries in the federal offshore, several in deep water, also played a major role in the oil and gas reserves increases."

It further noted that the U.S. depends on oil and gas for 63% of its energy and that 63% of this supply is produced domestically.

Oil additions

EIA said that, in 1997, U.S. crude oil reserve additions exceeded production by 25%. The number of new oil field discoveries in the U.S. last year was more than twice those in 1996 and more than five times the prior 10-year average. EIA said that nearly 80% of new field discoveries were in the Gulf of Mexico federal offshore, with most of the rest in Alaska.

Total discoveries per exploratory oil well were up by more than 50% in 1997 and were more than six times the rates of the early 1980s, when oil prices and drilling activity peaked.

"Improved technologies for exploration and deepwater production enhanced industry's ability to discover and develop offshore oil fields, especially in deep water. The Seastar platform used the first subsea injection well in the Gulf of Mexico to make a discovery in deep water economic."

EIA said that indicated additions to U.S. reserves of crude oil increased to 3.207 billion bbl in 1997: "These are crude oil volumes that may become economically recoverable from known reservoirs through the application of improved recovery techniques using current technology.

"The presence of large indicated additional reserves on the Alaskan North Slope (and in) California, Texas, and Louisiana implies that significant upward revisions to crude oil proved reserves may continue in the future.

"However, in a low-price environment such as 1998, large reserve additions from upward revisions in old fields will be more difficult to obtain."

EIA noted that technology improvements allowed California operators to hike their estimates of reserves in old fields that produce heavy oil.

"For example, more oil is efficiently heated by replacing less-efficient steam cycling processes with continuous steam injection that lowers the oil viscosity, allowing it to move more easily to producing wells. This lowers costs and increases production rates."

It said that Alaska's reserves declined in 1997, despite substantial new field discoveries, because there were not enough upward revisions and adjustments to reserves to replace production from the North Slope's declining giant oil fields.

Gas additions

EIA noted that U.S. natural gas reserve additions again replaced gas production in 1997. Declines in gas reserves in the Lower 48 were offset by increases in Alaskan gas reserves.

The number of total U.S. gas discoveries in 1997 was the highest of the decade. Total discoveries per exploratory gas well were up in 1997 and more than four times the rates of the early 1980s.

Revisions and adjustments to U.S. natural gas reserves in existing fields for 1997 were the lowest in a decade, but total discoveries of natural gas were the highest in a decade.

EIA said that coalbed methane reserves continued to grow faster than conventional natural gas reserves, accounting for nearly 7% of 1997's proved gas reserves. Coalbed methane production, now over 5% of the U.S. total, also increased faster than did conventional gas production.

U.S. gas liquids proved reserves increased 2% to 7.973 billion bbl in 1997.

The American Gas Association said that the EIA data support the findings in AGA's preliminary reserves report (OGJ, May 25, 1998, p. 34).

Paul Wilkinson, AGA vice-president for policy analysis, said, "(The EIA data) show gas supply continues to exceed consumption. Thanks to strong annual reserve additions, the level of total reserves is greater today than it was in 1989."