Potential Gas Committee pegs US resource at 1,308 tcf

Sept. 14, 2005
Total US natural gas resources at yearend 2004 amounted to 1,308 tcf, the Potential Gas Committee said in its latest biennial report.

Nick Snow
Washington Correspondent

WASHINGTON, DC, Sept. 14 -- Total US natural gas resources at yearend 2004 amounted to 1,308 tcf, the Potential Gas Committee said in its latest biennial report.

The yearend estimate, which arrived several months later than usual, included 950 tcf of discovered and potential resources, 169 tcf of coalbed methane, and 189 tcf of proved reserves.

Officials said the delay occurred because committee members, all of whom are volunteers, were busier than usual at their regular jobs.

In its prior report, the committee estimated the US gas resource at 1,311 tcf, including 958 tcf of traditional resources not counted with proved reserves of 183 tcf, and 169 tcf of coalbed methane (OGJ, Apr. 21, 2003, Newsletter).

"We have been taking a geologic look at the nation's natural gas resource base for the last 40 years," said John B. Curtis, director of the Potential Gas Agency at the Colorado School of Mines. "The people who do these estimates work these basins for a living."

US proved reserves of gas grew slightly since the last study despite 19 tcf/year of production, he told reporters at a Washington briefing. "What we report is what could come on stream in the future, given the right technical, economic and government conditions," Curtis said.

Production remains limited to the Gulf of Mexico and Gulf Coast, Midcontinent, and Rocky Mountains, with limited contributions from other areas, he continued. Alaska, for example, won't contribute meaningfully to the total until a pipeline is completed to the Lower 48 in perhaps 10 years, he said.

Changing characteristics
But the production's characteristics are changing as more of it comes from the Rockies, noted Michael K. Decker, the committee's board chairman and chief operating officer of Gasco Energy Inc., Englewood, Colo.

Gas there is coming from formations that are harder to reach and require more wells than in the gulf, he said.

Higher prices make a difference, too, according to Decker. "Our company is drilling to 13,000 ft in Utah. Seven or eight years ago, you couldn't go to that depth. Now, you can. The field has moved from the possible to the proved category," he said.

That doesn't mean that producers in the Rockies are getting $11/Mcf at the wellhead. That's a Henry Hub spot price, Decker said. "If you go to Opal in Wyoming, you might be getting $7," he said.

Curtis said that Utah's Uinta basin, where Gasco operates, and the nearby Piceance basin of western Colorado are among the country's hottest current gas plays. Others include the Barnett shale of North Texas and the Fayetteville play in Arkansas.

"Only Russia produces more gas each year than the United States," observed Christopher B. McGill, managing director of policy analysis at the American Gas Association, which hosted the briefing. "However, it's going to be difficult to expand our production."

He said, "The Gulf of Mexico is going to continue to be an important producing area. AGA believes it's important to diversify, however. We would like to see moratoria issues resolved and states given the opportunity to decide whether gas will be produced off their coasts."

Curtis confirmed that the gulf would remain an important production area through 2025. "The challenge will be to produce from deeper formations," he said.

The report also tries to assess offshore areas under moratoriums that could expire but excludes blocks that are permanently off-limits. Estimates come from data gathered before moratoriums were imposed and from extrapolations of results from currently producing blocks.

Decker said that as a Rocky Mountain producer Gasco faces challenges getting rigs to drill wells and drilling permits processed. Federal permits in Utah that used to take 90 days now take 270, he said.

Day rates and other operating costs have increased, too. "The prices I pay have increased 70% from 3 years ago. My day rate is $17,000, and my all-in cost is about $40,000," Decker said.

His company's operating environment has improved, however, as transportation has improved. "The Uinta basin used to be a backwater because of transportation constraints," said Decker. "That is changing because of Kern River and other pipelines. There's more discussion now about taking gas east and even some talk about building a route south to a pipeline from the San Juan basin as production matures there."

Contact Nick Snow at [email protected].