Potential Gas Resources Dip Slightly Since 1996
The domestic natural gas resource base, both proven and
potential, has dropped slightly over the past two years, but
there's more than enough available and known gas supply to meet
U.S. needs well into the middle of the next century, according to a
new study released last week by the Potential Gas Committee (PGC).
"Oh, very much so," said John B. Curtis of the Potential Gas
Agency (PGA) of the Colorado School of Mines, when asked if gas
resources were sufficient to meet current and forecasted demand
levels, including a 30 Tcf gas market between 2010 and 2015. In
fact, he noted the 60-year resource base estimated 20 years ago
remains largely unchanged because producers are finding gas at
deeper depths in the Gulf of Mexico and are "getting better" at
recovery. Producers are drilling at depths that were "unheard of" a
decade ago, while improvements in completion technology are
allowing them "to get more out of the rock, more out of the coal."
Overall, the biennial study estimated the potential gas base,
including proved reserves, fell 2.3% to 1,205 Tcf at year-end 1998
from 1996. The 1998 figure includes 896 Tcf of traditional
resources, 141 Tcf of coalbed-methane resources and 167 Tcf of
proved reserves. At current production rates, the PGC said the gas
supply base would be enough to meet domestic needs for about 63
years. Curtis said the PGC's estimates do not assume any time
schedule for the discovery and production of future gas supply.
Potential gas resources include those that have been discovered and
haven't been discovered yet, and those in existing fields.
The drop in potential gas resources was evident in nearly every
major U.S. production region - with the exception being the Gulf
Coast, which experienced a modest rise, according to the PGC study.
Potential gas resources from the Atlantic region and Alaska
remained the same over the two-year period.
The overall reduction was largely owing to a revision in
potential resources from the shallow Devonian Antrim Shale gas play
in north-central Michigan. The PGC projected a "large potential
resource" for that region in 1996, but the results of drilling
activity have shown that the assessment was "too optimistic," said
Curtis, who as director of the PGA provides technical assistance to
the PGC. Consequently, the committee downsized the mean value (a
combination of minimum, most likely and maximum estimates) of the
gas resource base for the entire U.S. North Central region by
almost 26%, to 22 Tcf in 1998 from nearly 30 Tcf two years ago.
The next biggest decline in potential gas resources came in the
Rocky Mountain region - down almost 7% over the two-year period.
The PGC estimated the mean value of the resource base there has
dropped to 150 Tcf from 161 in 1996 largely due to depressed oil
and gas prices. Also, it cited a delay in drilling while the
federal government completes its environmental impact studies of
the Green River, Powder River and Uinta basin coalbed-methane
areas. One positive factor has been the strengthening of the
region's spot gas prices relative to the New York Mercantile
Exchange (NYMEX), the study noted. "Although not yet at parity
with the NYMEX, price differentials at least have narrowed since"
The potential resource base of the Mid-Continent region - which
includes the Anadarko, Arkoma and Permian basins - was down about
5% since 1998, according to the PGC. Specifically, it estimated
the mean value of the region's potential resource base dropped to
122 Tcf last year from 128 Tcf. The committee predicts that most
future gas production and resources in the Mid-Continent will come
from small- to intermediate-size plays or in deep areas that
haven't been fully explored yet.
The mean value of potential resources for the Pacific region
registered the smallest decline, down 1.2% to 37 Tcf, while the
resource base for the Atlantic region and Alaska remained unchanged
- 104 Tcf and 194 Tcf, respectively.
The Gulf Coast was the only area that reported an increase,
albeit slightly, in its potential resource base - by 0.2% to 266
Tcf since 1996. The change "reflect[s] the transfer of potential
resources to proved reserves as a result of continued drilling and
discoveries," the PGC study said. The region "remains the dominant
producing area of natural gas in the United States...Most of the
area is in a mature exploration stage, but important new fields
continue to be discovered," such as the Gulf of Mexico continental
slope and the eastern Gulf shelf, it noted.
"Between 1990 and 1998, the greatest percentage gains in
resources occurred in the Gulf Coast and East Texas basins as a
result of continued success and development of the Austin Chalk and
Cotton Valley pinnacle reef trends," the PGC said.