U.S. STILL HAS OIL, GAS ALLURE

March 13, 1995
Much oil and gas remains to be discovered and produced in the U.S. The U.S.? Isn't that the world's most mature producing region, considered by conventional wisdom to be all but drilled up? Yes, the U.S. According to a new study by the U.S. Geological Survey, the mature, drilled-up U.S. has technically recoverable volumes of 113 billion bbl of oil and 1.1 quadrillion cu ft of natural gas (OGJ, Mar. 6, p. 84). In these terms, the country has six times the oil and eight times the gas

Much oil and gas remains to be discovered and produced in the U.S.

The U.S.? Isn't that the world's most mature producing region, considered by conventional wisdom to be all but drilled up?

Yes, the U.S. According to a new study by the U.S. Geological Survey, the mature, drilled-up U.S. has technically recoverable volumes of 113 billion bbl of oil and 1.1 quadrillion cu ft of natural gas (OGJ, Mar. 6, p. 84). In these terms, the country has six times the oil and eight times the gas normally included in estimates of reserves.

WHAT'S TECHNICALLY RECOVERABLE

What are technically recoverable volumes?

The USGS estimates include proved reserves plus expected future additions to reserves in existing fields and undiscovered resources. Future additions in existing fields will come from revisions, extensions, and new pool discoveries-reserves growth, in other words. USGS puts those totals at 60 billion bbl for oil and 322 tcf for gas. Future discoveries will add 33 billion of oil and 260 tcf of gas to reserves. There also will be additions from unconventional resources of 2 billion bbl of oil and 360 tcf of gas.

Statistics can be deceiving. What's important in all this?

USGS published a similar assessment in 1989. Compared with the older estimates for technically recoverable volumes, the new figures are up 44% for oil and 42% for gas. Estimates for undiscovered conventional oil and gas resources-what USGS thinks will come from future discoveries other than new pool discoveries in existing fields didn't change much. The big changes occurred in reserves growth, volumes added through new knowledge about old fields.

Isn't it true that the important volumes are reserves added through discoveries and that reserves growth is just an accounting exercise?

The short answer: Who cares, as long as it burns? There's no diminishing the value of a major oil and gas discovery. But unless someone doctors the figures, which no one suggests has been happening, reserves growth involves hydrocarbons every bit as real as those added to reserves through rank exploration. USGS points out that its new study uses field-level reserves data not available at the time of the 1989 study. That only bears out a clear trend: The more industry learns about reservoirs and how to produce hydrocarbons from them, the more producible hydrocarbons it recognizes as potential supply.

Technically recoverable resources are growing, yet reserves of both oil and gas are falling. Why?

A key point. Oil reserves dropped from 24 billion bbl in 1989 to 20 billion bbl in 1994, gas reserves from 157 tcf to 135 tcf. The broadest explanation is diversion of capital away from U.S. exploration and development. There are many reasons for the shift, among them limits on oil and gas leasing of federal land. USGS doesn't take these problems into account in its study. What the study says is that reserves declines must be explained by reasons other than limits to the resource.

WHAT IT MEANS

So what does all this mean?

Opportunity.

For whom?

Companies willing to learn as much as possible about the reservoirs at their disposal, companies adept at the application of technology, companies oriented more to profits than to volumes.

It's a finite resource. This can't go on forever.

That's certainly correct. But it may be a very long time before events prove the point. For now, the most important factor in the volume of oil and gas ultimately produced in the U.S. is the supply of human ideas. As the USGS study shows, that supply shows no sign of exhaustion.

Copyright 1995 Oil & Gas Journal. All Rights Reserved.