The Energy Information Administration reports U.S. oil and gas reserves declined a surprisingly small amount in 1989 in spite of low prices and less exploratory drilling.
Proved crude oil reserves dropped 324 million bbl, or 1.2%, during 1989, less than the 1.6% average during the last 10 years.
EIA said most of the U.S. decline was due to the 285 million bbl drop in Alaskan reserves in 1989. Lower 48 reserves, at 19.827 billion bbl, were barely lower-51 million bbl or 0.3%-than they were in 1987.
Revisions and adjustments to crude oil reserves were 1.546 billion bbl, slightly lower than the 1.653 billion bbl/year average during the past 10 years. About three fourths of the net revisions and adjustments occurred in California, Alaskan North Slope, West Texas, Gulf of Mexico, and Colorado fields.
"Positive revisions to old fields have been sustaining U.S. crude oil proved reserves during the 1980s," EIA said.
OIL DISCOVERIES
Total discoveries of crude oil in 1989 as a result of field extensions, new fields, and new reservoirs in old fields rose 29% to 716 million bbl, the highest level in the last 4 years, EIA figures show.
The average of total discoveries for the last 10 years was 853 million bbl/year, or 19% higher than in 1989.
The Gulf of Mexico, Alaska, and Texas dominated oil discoveries with 76% of the total. Total oil discoveries for the last 4 years have been relatively low, reflecting a similar trend in exploratory drilling after the crude oil price collapse of 1986.
New field discoveries accounted for 112 million bbl of reserves, an improvement over the last few years but still below the average for the last 10 years. Most of the 1989 new field discoveries, amounting to 93 million bbl, were in the Gulf of Mexico Outer Continental Shelf.
GAS RESERVES
Proved reserves of dry gas were down by 0.5%, a smaller than average decline that EIA said reflects relatively strong reserve additions.
Overall, Lower 48 proved natural gas reserves were 3% higher in 1989 than they were in 1987.
Areas with higher gas reserves included the Gulf of Mexico, Wyoming, Oklahoma, Colorado, and Utah. Reserve additions from coalbed methane fields contributed 461 bcf to U.S. gas reserves in 1989.
"Exploitation of the unconventional coalbed methane resource has been rapidly expanding because of tax incentives and an improved understanding of the underlying production technology," EIA said.
While increases from this source were not as large as in 1988, total reserves attributed to coalbed methane reached 1.881 tcf in 1989.
Total discoveries of dry gas reserves amounted to 10.032 tcf in 1989, a 3% decline from 1988. New field discoveries were 1.45 tcf, 31% lower than the prior 10 year annual average. More than two thirds of the new field gas discoveries were in the Gulf of Mexico.
Recently, the net of revisions and adjustments has been playing a larger role in sustaining Lower 48 natural gas proved reserves, EIA said.
In 1989, nearly 6 tcf of these revisions were added, or more than twice the annual average of the prior 10 years. Larger than usual revisions were caused by development drilling and a surge of well recompletions.
Proved gas reserves would have increased for the entire U.S. in 1989 if it were not for negative revisions of 1.47 tcf in New Mexico reserves. They had been assigned large upward revisions in 1988.
Proved reserves of natural gas liquids declined 5.7% to 7.769 billion bbl in 1989. EIA noted that the lower ratio of gas liquids to gas production in 1989 led to a corresponding decrease in the estimate of NGL reserves.
INDUSTRY ASSESSMENT
Nicholas Bush, Natural Gas Supply Association president, said the EIA report confirms that natural gas reserves are more than adequate to meet reasonable demand expectations.
"What is lacking is a sense of urgency with respect to expediting construction of badly needed transportation systems and reform of interstate pipeline regulations," he said.
"Natural gas can play an increasing role in reducing U.S. dependence on imported oil if we encourage and speed construction of currently proposed pipeline systems."
Bush said government regulators also should make the existing pipeline system more competitive and sensitive to market forces.
George H. Lawrence, American Gas Association president, said the 95.4% replacement ratio for Lower 48 gas reserves is good news for U.S. consumers and makes it clear that gas can be used increasingly to back out oil imports and help clean up the environment.
"Lower 48 reserve additions continued to be remarkable considering the lower drilling levels of recent years, providing a dramatic demonstration of the excellent natural gas supply potential in the U.S.," he said.
Lawrence said many discoveries in the Gulf of Mexico "highlight the importance of permitting orderly development of the nation's offshore gas reserves."
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
