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Gas, Oil Reserve Additions Set Record in 2010

Domestic proved oil and natural gas reserves achieved record annual volumetric increases in 2010, thanks in large part to advances in drilling technology, according to a report released by the Energy Information Administration (EIA) last Wednesday.

"The use of horizontal drilling and hydraulic fracturing in shale and other tight rock formations played an important role in the increase of oil and natural gas reserves," said EIA Administrator Adam Sieminski. "For both oil and natural gas, these reserves increases underscore the potential of a growing role for domestically produced hydrocarbons in meeting current and projected U.S. energy demand."

Natural gas proved reserves, estimated as "wet" gas, including natural gas plant liquids, rose by 12% in 2010 to 317.6 Tcf, marking the 12th consecutive annual increase and the first time U.S. reserves surpassed 300 Tcf. The net additions of wet natural gas in 2010 totaled 33.8 Tcf, nearly 5 Tcf higher than the previous record of 28.8 Tcf, the EIA said.

Four of the five largest gas-producing states (Texas, Louisiana, Oklahoma and Colorado) registered net gains, with Louisiana and Texas adding a combined 17.8 Tcf, more than one half of the overall volumetric increase in gas reserves, the agency said. Pennsylvania's proved gas reserves more than doubled in 2010, contributing about one-fifth of the overall U.S. increase.

U.S. gas proved reserves have increased every year since 1999, with the pace accelerating in recent years in step with expanding exploration and development activity in several of the nation's shale formations, the EIA said.

The additions to gas reserves in 2010 largely came from development of the Barnett Shale in North Central Texas, the Haynesville/Bossier formation in eastern Texas and western Louisiana and the Marcellus Shale, most notably in Pennsylvania.

Nearly all (96%) of the nation's shale gas proved reserves in 2010 came from the six largest shale plays. While the Barnett ranked as the largest shale gas play in the United States (in terms of reserves, 30 Tcf in 2010), significantly higher increases over 2009 proved reserves were registered by the Haynesville/Bossier formations (24.5 Tcf in 2010 vs. 10.5 Tcf in 2009) and the Marcellus (13.2 Tcf in 2010 vs. 4.5 Tcf in 2009), according to the agency. It estimated that the six shale plays accounted for 93.2 Tcf of gas reserves in 2010, up from 59.4 Tcf in 2009.

The EIA estimated that production from all U.S. shale plays was 5.3 Tcf in 2010 compared to 3.1 Tcf for the previous year. The most production in 2010 came from the Barnett (1.9 Tcf) and the Haynesville/Bossier formations (1.4 Tcf), the agency said. The biggest year-over-year increases in shale production were seen in the Haynesville/Bossier, which had an output of only 321 Bcf in 2009, and in the Marcellus play (76 Bcf in 2009 vs. 476 Bcf in 2010).

Proved oil reserves, which include crude oil and lease condensate, rose by 13% in 2010 to 25.2 billion bbl, marking the second consecutive annual increase and the highest volume of proved reserves since 1991, the EIA said.

Texas recorded the largest volumetric increase in proved oil reserves among individual states due in large part to development in the Permian and Western Gulf basins, while North Dakota came in second, driven by development activity in the Bakken formation in the Williston Basin.

Proved reserves are those volumes of oil and gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. EIA said its estimates of proved reserves are based on an annual survey of about 1,200 domestic oil and gas well operators.

The EIA said it expects to release data on 2011 oil and gas reserve additions in the first quarter of 2013.

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