Proved reserves of oil and natural gas show divergent trends reflecting large decline in natural gas prices
Crude oil reserves highest since 1976
• Largest annual increase in crude oil reserves since 1970
• Average natural gas prices fell 34% between 2011 and 2012, reducing estimate of recoverable volumes of natural gas under existing economic conditions
• Pennsylvania’s Marcellus becomes largest natural gas shale play in 2012
U.S. crude oil proved reserves, led by reserve additions in Texas and North Dakota, increased at a record pace in 2012 according to the U.S. Crude Oil and Natural Gas Proved Reserves, 2012 report released today by the U.S. Energy Information Administration (EIA). Despite notable gains in the Marcellus and Eagle Ford shale gas plays, low natural gas prices drove down natural gas proved reserves in 2012, ending a 14-year run of consecutive increases in gas reserves.
Proved reserves are estimated quantities of energy sources that analysis of geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Significant year-to-year price changes can directly affect the “existing economic” metric.
Proved oil reserves, which include crude oil and lease condensate, increased 15.4% in 2012 to 33 billion barrels (bbl), both the largest volumetric and percentage increase in oil reserves since 1970, when 10 billion bbl of Alaskan oil reserves were added to the U.S. total. Proved oil reserves in 2012 increased for the fourth year in a row and were the highest since 1976. Tight oil plays accounted for 7.3 billion bbl (22% of the U.S. total) of proved reserves of crude oil and lease condensate in 2012. U.S. production of crude oil and lease condensate increased 16% from 2011 to 2012, rising from 5.8 million barrels per day (bbl/d) to 6.5 million bbl/d.
Natural gas proved reserves, estimated as wet natural gas that includes natural gas plant liquids, decreased 7.5% in 2012 to 323 trillion cubic feet (Tcf) as operators revised the proved reserves of their existing natural gas fields downward in response to lower natural gas prices. The average natural gas price during 2012 was 34% below its 2011 level, presenting more challenging economic conditions for estimating proved reserves. Before April 2012, the natural gas spot price at the Henry Hub had not been below $2.00 per million British thermal units (MMBtu) since December 2001. Despite the drop in natural gas reserves in 2012, U.S. natural gas marketed production increased about 5% from 2011 to 2012, rising from 65.9 billion cubic feet per day to 69.1 billion cubic feet per day.
“With natural gas prices higher in 2013 and technology continuing to advance, EIA expects U.S. natural gas proved reserves to increase in 2013,” said EIA Administrator Adam Sieminski.