AGA Estimates Gas Reserves Slipped in 2002

A new study released by the American Gas Association indicates that gas reserve levels remained flat or dropped slightly last year compared to the 183.5 Tcf recorded in 2001. Reserves rose in six out of the last eight years.

"Natural gas producers are essentially running in place to keep up with rising natural gas demand," said Chris McGill, AGA managing director of policy analysis. "They are working hard, both to replace the natural gas that they have produced and to maintain a steady level of on-the-shelf gas reserves that can be tapped for future production to meet consumer demand."

Based on results from a survey of 30 companies' filings with the Securities and Exchange Commission, AGA estimates that reserve additions amounted to between 14.7 and 23 Tcf of gas while production was about 19 Tcf, which results in a 77-121% replacement ratio. And the AGA believes the replacement ratio probably was on the low end of the range given the tight supply fundamentals demonstrated throughout the year.

In contrast, reserves rose a net 10 Bcf in 2000 and 6 Bcf in 2001, AGA said in its Preliminary Findings Concerning 2002 Natural Gas Reserves. On Thursday, the U.S. House of Representatives is scheduled to debate national energy policy legislation designed, in part, to increase natural gas supplies. McGill noted, "Congressional legislation is essential, not only to increasing supplies of natural gas but also to promoting expansion of the utility pipelines through which natural gas is delivered to customers."

AGA said production by the 30 companies in its survey was 9,409 Bcf, down about 4% from 2001. "Even though the companies in each sample differ slightly, this observation supports the idea that production capability fell in 2002 compared to 2001," AGA said in its study. "Estimates of the change by various analysts range from 2-7% or even more."

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