Positive growth trends in U.S. natural gas production and proved reserves (particularly since Hurricanes Katrina and Rita in 2005) continued during 2010. As a springboard, by year-end 2009, domestic dry natural gas reserves had reached 273 trillion cubic feet (Tcf), growing 42 percent in only 5 years. During the same five-year period, growth in domestic reserves also translated into growth in domestic dry gas production–from 19.2 to 21.5 Tcf. The primary driver for this growth, and key reason to expect more of the same for 2010, was increased onshore drilling activity that targeted shale gas resources in the lower-48 states.
Shale production grew from about 1 billion cubic feet (Bcf) per day in 2000 to about 15 Bcf per day by year-end 2010, thus forming nearly twenty-five percent of all domestic dry natural gas production. U.S. shale gas production is now spread between Appalachian states, the mid-continent, Texas, Louisiana, Arkansas and even the Michigan basin. Natural gas is not the only target for producers in domestic shale but also oil and other liquids.
The Energy Information Administration (EIA) has published official aggregate reserves statistics for all companies since the late 1970s. Prior to that, the AGA Natural Gas Reserves Committee published these annual data. More recently AGA has published this annual study in early spring to provide a preliminary indication of changes in the national reserves inventory before the traditional EIA release in late summer or early fall.
In this report, AGA examines the reserves activity of 30 large U.S. natural gas reserve holders via reports they submit to the Securities and Exchange Commission, including the company annual report, Form 10-K, Form 20-F and Form 40-F. The sample of companies does not necessarily make up the thirty largest producers of natural gas; however it is considered representative of the industry—accounting for about 54 percent of domestic reserves and about half of U.S. production. The company sample may change year-to-year as companies change their reserves holdings or as the producer sector consolidates through mergers and acquisitions.
For the 30 large domestic natural gas reserves holders identified in this report, 2010 represented another year of significant gas discoveries and extensions. In fact they reported nearly 23 Tcf of discoveries and extensions. Net reserves additions of 25.7 Tcf (including negative and positive revisions of gas reserves) for the sample companies far exceeded the 10.7 Tcf of production. This means that 240 percent of the gas produced was replaced by reserve additions and the companies’ aggregate reserves increased in 2010. If the other half of the U.S. natural gas reserves and production market, represented by the thousands of smaller producers, reached similar results in 2010, then growth in 2010 final domestic reserves and production, as reported by the Energy Information Administration in 2011, is certain. This represents the twelfth straight year, since 1999, of natural gas reserves growth in the United States—perhaps to as much as 285 Tcf or more by year-end 2010.
- AGA estimates that aggregate reserve additions were large in 2010, perhaps as much as 35 Tcf or even more for all U.S. domestic producers and that production reached about 21.5 Tcf.
- It is expected that total domestic year-end 2010 reserves may reach 290 Tcf, representing the largest inventory since 1970.
- Domestic dry gas production has risen about 25 percent since 1990, growing from 17.2 Tcf to the current estimate of 21.5 Tcf in 2010. AGA’s current view of future production capability is that it will remain in the 20 to 22 Tcf range per annum for the foreseeable future, unless significant policy decisions impede access to potential resources or economic activity remains in recession, which tends to correlate with significant decreases in drilling investments.
Full Report: Preliminary Findings Concerning 2010 Natural Gas Reserves (EA 2011-04, Mar 29 2011)
Direct inquiries to: Chris McGill, Managing Director Policy Analysis, (202) 824-7134