U.S. reserves performance modestly improved

Industry's replacement of U.S. oil and gas reserves is still weak, but the news is not all bad.

U.S. Reserves chart (12375 bytes) Latest figures compiled by the Energy Information Administration place U.S. reserves as of Dec. 31, 1994, at 22.457 billion bbl of crude oil and 163.837 tcf of gas. The volumes are down 2.2% and up a bare 0.9%, respectively, from a year earlier.(121539 bytes)

Even so, the oil decline was the smallest in 4 years, and the gas gain was the first in 4 years.

EIA said large discoveries on the Outer Continental Shelf, several of them in deep water, played a major role in bolstering industry's performance. Successful wildcats were up, although total well completions were down, as were oil and gas prices.

Natural gas liquids reserves, the sum of natural gas plant liquids and lease condensate volumes, were off less than 1% at 7.17 billion bbl in the latest tally.

Total reserves of liquid hydrocarbons were 29.627 billion bbl at yearend 1994, a decline of 552 million bbl from 1993. NGL accounted for 24% of total liquid hydrocarbon reserves in 1994, unchanged from 1993.

Crude oil

Proved reserves of crude oil have declined for 7 years without a break. Low oil prices and a string of new lows for oil drilling are the big reasons.

Operators replaced only 78% of their 1994 oil production.

Total discoveries were 572 million bbl in 1994. Two areas -- Texas and the Gulf of Mexico OCS -- accounted for 60% of the volume.

New field discoveries amounted to 64 million bbl, a sharp drop from the exceptionally high 319 million bbl of 1993. For the second year in a row, more than 80% of the discoveries were in the Gulf of Mexico OCS. Deepwater discoveries made a large contribution both years.

Revisions and adjustments were 1.196 billion bbl in 1994, up 56% from 1993.

The large 482 million bbl of revisions and adjustments for Alaska replaced most of the state's production. Those changes were due mainly to expansion of enhanced oil recovery projects in North Slope fields. By contrast, there were major downward revisions in many Lower-48 fields because of poor economics.

Among other 1994 crude oil highlights:

Prices slid to $13.19/bbl, the lowest yearly average in constant 1994 dollars since the 1973 Arab oil embargo.
Lower oil prices caused lower oil drilling. Oil well completions dropped to 6,789, another 20-year low.
New reservoir discoveries in old fields were 111 million bbl, about the same as 1993.
Field extensions were up at 397 million bbl but still well below the prior 10 year average.

Indicated additional crude oil reserves were 3.151 billion bbl in 1994, a 9% decrease from 1993. Those reserves are crude oil volumes that may become economically recoverable from known reservoirs through improved recovery techniques using today's technology.

Large indicated additional reserves in California, West Texas, New Mexico, and the North Slope imply that significant gains in proved crude oil reserves could occur in the future, EIA said.

Natural gas

Total natural gas discoveries were up substantially during 1994, as were revisions and adjustments. These combined to replace 108% of gas production, which also rose in 1994 to 18.322 tcf from 17.789 tcf in 1993.

The last previous gas reserves increase was in 1990, and the one prior to that was in 1981.

While Lower-48 gas reserves have been generally declining since the late 1960s, they have slipped less than 1%/year since gas prices peaked in 1983. EIA said, "This is a low reserves decline rate for a period in which rapid changes in price, demand, drilling, and the industry's regulatory environment occur-red. These changes left gas prices and drilling at levels much lower in 1994 than in 1983."

In 1994, U.S. gas production reached the highest level since 1981.

"The U.S. is counting on more gas production increases in the future," EIA said. "This will require generally in-creasing levels of gas reserves. "While improved technology has brought about the capability to add reserves with more effective exploratory and developmental drilling, it will take a strong and successful drilling effort to sustain a rising trend in gas reserves."

EIA cited a large increase in wildcat gas wells in 1994.

Improved exploration and deepwater production methods enhanced the ability to find and develop offshore fields.

For example, in the Gulf of Mexico, Shell Oil Co. plans to install its Ram/Powell platform in 3,220 ft of water. It will set a U.S. depth record for a permanent platform.

Shell also plans to develop a large natural gas discovery in the gulf, its Mensa prospect, in 5,400 ft of water using a subsea completion. This will set a world record for deepwater production.

The four leading gas producing areas -- Texas, the Gulf of Mexico OCS, Oklahoma, and Louisiana -- book- ed 1994 reserves increases that totaled 3.202 tcf.

Following several years of growth, coalbed methane reserves declined in 1994. However, coalbed methane production grew to nearly 5% of U.S. dry gas production. Coalbed methane reserves accounted for 6% of U.S. natural gas reserves in 1994.

No federal tax incentives for new coalbed methane wells have been available for 2 years.

Total discoveries of dry gas reserves amounted to 12.315 tcf in 1994, an increase of 39% from 1993. These discoveries equaled two thirds of 1994 gas production.

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

EIA's breakout shows:

New field discoveries were 1.894 tcf, up 111% from 1993.
Field extensions were 6.941 tcf, up 14%.
New reservoir discoveries in old fields were 3.48 tcf, up 86% from 1993 and the highest since 1979.
Total discoveries per exploratory well stayed at a high level in 1994. They were more than twice that of the early 1980s.
Texas and the Gulf of Mexico OCS accounted for almost two thirds of U.S. total gas discoveries in 1994.

The net volume of revisions and adjustments to reserves also played a significant role in increasing U.S. natural gas reserves, EIA figures showed. This net amounted to 7.429 tcf in 1994, an 18% increase over 1993.

Texas had the largest increase in revisions and adjustments as its gas reserves increased in 1994. Infill drilling played a major role.

Other 1994 natural gas highlights were:

Exploratory gas well completions increased by 48% to 720, the highest since 1986.
Total gas well completions substantially exceeded oil well completions.
Wellhead prices fell 10% to an average $1.83/Mcf.