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AGA Predicting Strong 1997 Reserve Numbers
The American Gas Association(AGA) predicts additions to domesticproved gas reserves last year will come out between 96% and 120% ofproduction. “The indication of strong 1997 reserves replacementcomes at a time when long-term natural gas growth is expected toreach 30 Tcf by 2015,” said Chris McGill, director of gas supplyand statistics at AGA. “To meet the requirements of robust growthin gas markets, annual additions to gas reserves through drillingmust also remain strong, balancing new sources of natural gas withdomestic production each year.”
The AGA’s outlook is more optimistic than views expressedrecently by some producers and by consultants Arthur Andersen andJohn S. Herold. “Although annual reserve additions have improvedmeasurably from the low additions that accompanied depressedwellhead gas prices in 1992, Andersen and Herold remain concernedthat domestic gas reserve additions may not be adequate for theindustry to meet continuing increases in U.S. demand for naturalgas,” said Victor A. Burk, managing director of Andersen’s energyindustry services group, last month (NGI 4/20/98).
Based on AGA’s analysis of the top 30 gas reserve holders, 1997reserve additions, which include discoveries and revisions, will bebetween 18.1 and 22.7 Tcf when reported by the Energy InformationAdministration (EIA) this fall. Since 1990, the 30 companies inAGA’s study have accounted for 34% to 49% of all domestic gasreserve additions from discoveries, extensions, improved recoveryand revisions. Reserve additions from companies in the most recentstudy were 8.8 Tcf, which yields the 18.1 to 22.7 Tcf estimate. Inrecent years, the final EIA reserve report has tended to showadditions on the high side of AGA’s estimated range of totaladditions. Companies with the largest net additions to reservesduring 1997 from the AGA sample include Burlington Resources, 981Bcf; Texaco, 927 Bcf; and Shell, 642 Bcf. During 1997, 11 of the 30studied companies had total reserve additions greater than 350 Bcf,including eight of the top 10 gas reserve holders.
Ironically, Burlington Resources’ Randy Mundt, executive vicepresident of marketing, recently voiced pessimism about reservereplacement at Ziff Energy Group’s North American Gas StrategiesConference (see NGI May 4, 1998). “Large discoveries are fewer,production has grown only nominally despite record rig activity,and the industry is not replacing its reserves.” McGill pointed torising well completions and other signs of strong activity asreasons to be optimistic. “It is not uncommon for producers to bepessimistic about reserves potential,” McGill said. “They work in avery volatile environment. It’s tough to be a producer.”
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