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EIA: Gas Production in 2004 Dipped Due to Ivan, Fewer New Discoveries

Domestic production of dry natural gas fell 1% to 19.17 Tcf in 2004 due largely to the damage to infrastructure caused by Hurricane Ivan in the fourth quarter and the drop in new gas field discoveries, according to the Energy Information Administration 's (EIA) annual report on U.S. oil and natural gas reserves.

The areas with the most gas production last year were Texas (5.32 Tcf, 28% of U.S. total); Gulf of Mexico federal offshore (3.87 Tcf, 20% of total); Oklahoma (1.56 Tcf, 8%); New Mexico (1.53 Tcf, 8%); Wyoming (1.53 Tcf, 8%); Louisiana (1.32, 7%); and Colorado (1.05 Tcf, 5%), the statistical arm of the Department of Energy (DOE) said in the report, which was issued Thursday. Even though the Gulf of Mexico remained a leading producing area in 2004, overall output from the federal offshore region declined by 10%.

U.S. natural gas reserves rose for the sixth year in a row in 2004 to 192.5 Tcf, although Gulf of Mexico gas proved reserves dropped an unusually large 15% because of reduced new discoveries, the EIA reported. It noted that discoveries of new gas fields nationwide were the lowest in 12 years in 2004. Even so, total U.S. reserves additions replaced 118% of dry gas production last year due to the fact that onshore Lower 48 states' total discoveries were almost 18 Tcf, the agency said.

Texas had the largest proved reserves hike of any state last year -- 4.23 Tcf, up 9%. The state's production increased 3% as a result of exploration in South Texas and extensions of existing gas fields in the Permian Basin and the Newark East Field in North-Central Texas, the EIA noted. New Mexico's reserves of dry natural gas also rose by 9% due to the continued development of the San Juan Basin, the leading U.S. field in terms of both production and remaining resources.

"The large proved natural gas reserves drop experienced in the Gulf of Mexico was primarily due to low new field discoveries and relatively large negative revisions to proved reserves... Hurricane Ivan caused pipeline damage that shut in significant gas production in the Gulf in the last quarter of 2004. Ivan's damage will reduce 2005 Gulf production from what it could have been, and it remains to be seen what impact the damage from 2005 hurricanes will have on reserves and production in the Gulf," the EIA said.

Total discoveries of dry natural gas reserves (reserves attributable to field extensions, new field discoveries and new reservoir discoveries in old fields) were 20.16 Tcf in 2004, a 5% hike over the level reported in 2003, the EIA said. About 32% of the total discoveries were in Texas; 16% were in Wyoming; 10% were in each the Gulf of Mexico federal offshore, Louisiana and Oklahoma; and 6% were in New Mexico, it noted.

The largest component of total gas discoveries in 2004 was extensions of existing gas fields, accounting for 18.20 Tcf, or 11% more than in 2003 and 66% more than the prior 10-year average of 10.98 Tcf, the agency said. New field discoveries, on the other hand, produced only 759 Bcf last year, which was 38% less than in 2003.

Reserves from new field discoveries in 2004 were the lowest since 1992 and 59% less than the prior 10-year average of approximately 1.85 Tcf, according to the EIA. The areas with the most prolific new field discoveries last year were Texas (264 Bcf, 35% of the total), Gulf of Mexico federal offshore (252 Bcf, 23% of total) and Colorado (171 Bcf, 23% of total), the EIA reported.

New discoveries of natural gas in old fields fell 25% in 2004 to 1.2 Tcf, with the largest discoveries coming from the Gulf of Mexico federal offshore, Texas and Louisiana. Reserves from new reservoirs discovered in old fields in 2004 were 50% of the prior 10-year average of 2.43 Tcf, the EIA said.

The agency also reported that production of coalbed methane (CBM) gas rose 8% to 1.72 Tcf last year, accounting for 9% of the U.S. dry gas output. However, CBM reserves in 2004 fell for the first time since 1994, down 2% to 18.4 Tcf. Five states (Colorado, New Mexico, Wyoming, Alabama and Utah) have the vast majority (86%) of CBM proved reserves. Three of the states -- Colorado, Wyoming and Utah -- reported declines in their proved CBM reserves last year from 2003.

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