The recent proliferation of shale and tight sands natural gas development has boosted U.S. natural gas reserves for the eleventh consecutive year to 245 Tcf — the highest level in more than 35 years, according to American Gas Association’s (AGA) year-end 2009 data. “Something is obviously positive in the domestic reserves and production story,” the association said.

The report, which focuses on “known reserves” within the United States, found that “much of the supply optimism can be traced to the influences of unconventional resources.” In addition, AGA reported that dry gas production in 2009 reached 21.1 Tcf — the largest volume in history except for the period 1970-1973.

“Natural gas supply in this county remains bullish,” said AGA CEO David Parker. “Production is also up, underpinned by the recent development of secure, domestic natural gas resources in deepwater offshore, as well as unconventional gas in the Lower 48 states. This is great news for natural gas customers. AGA believes these numbers will hold steady for the foreseeable future unless significant policy decisions restrict access to potential resources of domestic natural gas.”

While production and reserves were higher than in previous years, producers felt the pinch on prices. According to AGA data, BP’s price of gas at the wellhead went from $6.77/Mcf in 2008 to $3.07/Mcf in 2009. Likewise, ExxonMobil went from $7.23/Mcf in 2008 to $3.10/Mcf in 2009 and ConocoPhillips fell from $7.67/Mcf in 2008 to $3.45/Mcf in 2009. The estimated median price at the wellhead of the 30 largest U.S. gas reserves holders fell from $7.75/Mcf in 2008 to $4.03/Mcf in 2009, or 48%.

The report found that for the 30 large domestic natural gas reserves holders identified in the report, 2009 was a year of significant new gas discoveries and extensions. In fact, nearly 23 Tcf of discoveries and extensions were reported by the companies; however, 6.1 Tcf of negative revisions were also noted. Even so, AGA said the net additions of 16.9 Tcf far exceeded the 10.4 Tcf of production from the sample of companies. This means that more than 160% of gas produced was replaced by reserve additions and therefore the companies’ reserves increased in 2009.

The association said this sample of 30 large reserves holders accounts for about 54% of domestic reserves and about half of U.S. production. “If the thousands of smaller producers that account for the other half of U.S. natural gas reserves and production reached similar results during 2009, then growth in domestic reserves for the eleventh straight year (1999-2009) is certain — perhaps to as much as 250 Tcf or even more,” AGA said in the report.

During 2009 BP was the largest U.S. producer of natural gas, but the energy giant’s 907 Bcf was less than 5% of the national volume, “indicating that the natural gas production industry remains very competitive,” AGA said. Rounding out the top five U.S. producers of gas last year were XTO with 855 Bcf, ConocoPhillips (850 Bcf), Chesapeake Energy (835 Bcf) and Anadarko (817 Bcf).

On the reserves front, BP is the largest natural gas reserves holder in the country with 15,216 Bcf, followed by Chesapeake Energy (13,510 Bcf), XTO (12,502 Bcf), ExxonMobil (11,688 Bcf) and ConocoPhillips (10,742 Bcf).

What’s most interesting about the leading reserve holders this year is the independent-to-major ratio. “Seven of the top 10 reserves holders are large independent producers of oil and gas — only three are what people normally view as integrated multinational oil and gas majors,” AGA said.

The report, titled “Preliminary Findings Concerning 2009 Natural Gas Reserves,” is available on the AGA website.

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