The domestic natural gas resource base, both proven andpotential, has dropped slightly over the past two years, butthere’s more than enough available and known gas supply to meetU.S. needs well into the middle of the next century, according to anew study released last week by the Potential Gas Committee (PGC).

“Oh, very much so,” said John B. Curtis of the Potential GasAgency (PGA) of the Colorado School of Mines, when asked if gasresources were sufficient to meet current and forecasted demandlevels, including a 30 Tcf gas market between 2010 and 2015. Infact, he noted the 60-year resource base estimated 20 years agoremains largely unchanged because producers are finding gas atdeeper depths in the Gulf of Mexico and are “getting better” atrecovery. Producers are drilling at depths that were “unheard of” adecade ago, while improvements in completion technology areallowing them “to get more out of the rock, more out of the coal.”

Overall, the biennial study estimated the potential gas base,including proved reserves, fell 2.3% to 1,205 Tcf at year-end 1998from 1996. The 1998 figure includes 896 Tcf of traditionalresources, 141 Tcf of coalbed-methane resources and 167 Tcf ofproved reserves. At current production rates, the PGC said the gassupply base would be enough to meet domestic needs for about 63years. Curtis said the PGC’s estimates do not assume any timeschedule for the discovery and production of future gas supply.Potential gas resources include those that have been discovered andhaven’t been discovered yet, and those in existing fields.

The drop in potential gas resources was evident in nearly everymajor U.S. production region – with the exception being the GulfCoast, which experienced a modest rise, according to the PGC study.Potential gas resources from the Atlantic region and Alaskaremained the same over the two-year period.

The overall reduction was largely owing to a revision inpotential resources from the shallow Devonian Antrim Shale gas playin north-central Michigan. The PGC projected a “large potentialresource” for that region in 1996, but the results of drillingactivity have shown that the assessment was “too optimistic,” saidCurtis, who as director of the PGA provides technical assistance tothe PGC. Consequently, the committee downsized the mean value (acombination of minimum, most likely and maximum estimates) of thegas resource base for the entire U.S. North Central region byalmost 26%, to 22 Tcf in 1998 from nearly 30 Tcf two years ago.

The next biggest decline in potential gas resources came in theRocky Mountain region – down almost 7% over the two-year period.The PGC estimated the mean value of the resource base there hasdropped to 150 Tcf from 161 in 1996 largely due to depressed oiland gas prices. Also, it cited a delay in drilling while thefederal government completes its environmental impact studies ofthe Green River, Powder River and Uinta basin coalbed-methaneareas. One positive factor has been the strengthening of theregion’s spot gas prices relative to the New York MercantileExchange (NYMEX), the study noted. “Although not yet at paritywith the NYMEX, price differentials at least have narrowed since”1996.

The potential resource base of the Mid-Continent region – whichincludes the Anadarko, Arkoma and Permian basins – was down about5% since 1998, according to the PGC. Specifically, it estimatedthe mean value of the region’s potential resource base dropped to122 Tcf last year from 128 Tcf. The committee predicts that mostfuture gas production and resources in the Mid-Continent will comefrom small- to intermediate-size plays or in deep areas thathaven’t been fully explored yet.

The mean value of potential resources for the Pacific regionregistered the smallest decline, down 1.2% to 37 Tcf, while theresource 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 266Tcf since 1996. The change “reflect[s] the transfer of potentialresources to proved reserves as a result of continued drilling anddiscoveries,” the PGC study said. The region “remains the dominantproducing area of natural gas in the United States…Most of thearea is in a mature exploration stage, but important new fieldscontinue to be discovered,” such as the Gulf of Mexico continentalslope and the eastern Gulf shelf, it noted.

“Between 1990 and 1998, the greatest percentage gains inresources occurred in the Gulf Coast and East Texas basins as aresult of continued success and development of the Austin Chalk andCotton Valley pinnacle reef trends,” the PGC said.

Susan Parker

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