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Potential Gas Resources Dip Slightly Since 1996

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 next century, according to a new study released Monday by the Potential Gas Committee (PGC).

"Oh, very much so," said John B. Curtis of the Potential Gas Committee, 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 that 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 from traditional and coalbed-methane resources, when combined with the Department of Energy's assessment for proved reserves (167 Tcf), was down 2.3% in 1998 from 1996. Potential resources from traditional reservoirs were computed at 896 Tcf in 1998, while resources from coalbed methane averaged 141 Tcf. At current production rates, the PGC said the gas supply base would be enough to meet domestic needs for about 63 years. 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 has shown that the assessment was "too optimistic," Curtis noted. 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" 1996.

The potential resource base of the Mid-Continent region - which includes the Anadarko, Arkoma and Permian basins - was down about 5% over 1998, according to 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," PGC said

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