U.S. natural gas discoveries reached a record level during 2008, as shale formations drove gas production and reserves markedly higher, the Energy Information Administration (EIA) said in a new report.

Total natural gas discoveries of 29.5 Tcf in 2008 represented the sixth consecutive yearly increase and were the highest level of discoveries in the 32 years that EIA has published proved reserves estimates, according to the report, which was released Thursday. It noted that 90% of the total gas discoveries came from extensions of existing fields, while new field discoveries totaled 1.2 Tcf and new reservoir discoveries in previously discovered fields were 1.6 Tcf.

Proved gas reserves grew 2.9% to 244.7 Tcf at year-end 2008 from 237.7 Tcf at year-end 2007, the EIA reported. “Proved reserves of natural gas rose enough not only to replace production [in 2008], but also to grow [reserves] by almost 3% over 2007, largely due to continued development of unconventional gas from shales,” the agency said.

Of the 244.7 Tcf, Lower 48 onshore production contributed 169.9 Tcf of the proved reserves and the federal offshore output accounted for 13.5 Tcf, the EIA said.

Production of dry natural gas was pegged at 20.5 Tcf in 2008, up 5.4% from the prior year, marking the third consecutive annual increase in domestic gas production.

In 2008 gas reserves attributable to shale reservoirs “grew dramatically,” up 51% to 32.78 Tcf, or 13% of total proved reserves of dry natural gas, the EIA said. It noted that production from shale formations last year climbed sharply as well, surpassing 2 Tcf in 2008, for a 65% hike from 2007.

Texas accounted for about two-thirds of the nation’s proved shale gas reserves, primarily due to early and sustained development in the Barnett Shale play in and around Fort Worth, TX. The EIA estimated Texas shale gas reserves climbed to 21.59 Tcf in 2007 from 16.33 Tcf in 2007.

In addition to the Barnett Shale, the EIA reported shale gas reserve increases of 2.4 Tcf in Arkansas (primarily the Fayetteville), 2.6 Tcf in Oklahoma (primarily the Woodford), and 0.8 Tcf in Louisiana (primarily the Haynesville). “Development of the Marcellus Shale (Northeast) has only recently begun and did not lead to major proved reserve increases in 2008,” it noted.

Proved reserves of coalbed methane declined by about 5% to 20.8 Tcf last year from 21.9 Tcf in 2007 after growing rapidly through the 1990s and earlier this decade, the EIA said. “It now accounts for about 8.5% of the country’s total dry natural gas proved reserves. Coalbed gas production continues to grow, however, and totaled nearly 2 Tcf in 2008, 12% more than in 2007. Colorado, New Mexico and Wyoming combined accounted for about three-quarters of both proved reserves and production in 2008,” the agency noted.

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