US natgas reserves rise to nearly 40-year high based on shale

30 November 2010 21:09  [Source: ICIS news]

WASHINGTON (ICIS)--US proven reserves of natural gas rose by 11% in 2009 from 2008 largely on gains in shale gas development, the Department of Energy (DOE) said on Tuesday, marking the highest level of recoverable natural gas supplies in nearly 40 years.

In its latest annual assessment of US oil, gas and coal supplies, the department’s Energy Information Administration (EIA) said that US proven reserves of natural gas - estimated as “wet” gas that includes natural gas plant liquids - reached 284,000bn cubic feet (bcf) last year, the highest level since 1971.

The US petrochemicals industry and downstream chemical manufacturers are heavily dependent on natural gas as a feedstock and process energy fuel.

The administration said that advances in shale gas discoveries were chiefly responsible for the 11% gain in overall natural gas proven reserves, with a 76% increase in shale gas reserves.

Oil and natural gas reserves are categorised as “proven” if they can be produced from known reservoirs under existing economic and operating conditions and with current drilling technology.

Proven reserves of shale gas in the US rose to 60,600 bcf at the end of 2009, up from 34,400 bcf at the end of 2008, the EIA said.

Shale gas reserves at the end of 2009 accounted for 21.3% of all US natural gas proven reserves, including coalbed methane and conventional gas reserves.

That marks a significant improvement from just one year earlier, when shale resources accounted for only 13.4% of overall US natural gas proven reserves.

The administration noted that the 76% advance in shale gas reserves came about “despite a 32% decline in the natural gas wellhead prices used to assess economic viability for 2009 reserves compared with the prices used in reserves reporting for 2008”.

“This underscores the role of more efficient and effective shale gas exploration and productive technologies such as horizontal drilling and hydraulic fracturing,” the administration said.

EIA administrator Richard Newell said that the sharp advance in shale gas reserves last year “demonstrates the growing importance of shale gas in meeting both current and projected energy needs”.

The states that produced the largest gains in shale gas reserves last year were, in order, Louisiana, Arkansas, Texas, Oklahoma and Pennsylvania, according to the EIA.

US proven reserves of oil also increased in 2009, the administration said, rising by 9% to 22.3bn barrels.

The EIA noted that “Unlike the situation for natural gas, where proved reserves grew robustly despite lower wellhead prices, the rise in proved reserves of crude oil was supported by a 37% increase in the crude oil prices used to estimate reserves”.

“These increases demonstrate the possibility of an expanding role for domestic natural gas and crude oil in meeting both current and projected US energy demands,” the administration said.

However, the production technology that is crucial to shale gas development - hydraulic fracturing - is at the centre of an ongoing controversy, with environmentalists arguing that “fracking” should be restricted by federal regulators because of the technique’s alleged threat to groundwater supplies.

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