2008 Report On Proved Reserves Of Natural Gas and Crude Oil

The Energy Information Administration’s (EIA) estimates of proved reserves of natural gas and crude oil as of the end of 2008 tell very different stories about apparent changes in the availability of these two energy resources in the United States. Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved reserves of natural gas rose enough not only to replace production, but also to grow by almost 3 percent over 2007, largely due to continued development of unconventional gas from shales. In contrast, even though discoveries of crude oil rose for the third year in a row, proved reserves of crude oil fell by more than 10 percent.

Total U.S. proved reserves of dry natural gas rose by 7.0 trillion cubic feet (Tcf) from 237.7 Tcf at year-end 2007 to 244.7 Tcf year-end 2008. Total natural gas discoveries in 2008 was 29.5 Tcf which represented the sixth consecutive yearly increase and were the highest level of discoveries in the 32 years EIA has published proved reserves estimates. In 2008, 90 percent of total discoveries came from extensions of existing fields. Natural gas produced during a year is subtracted from proved reserves. Production of dry natural gas in 2008 totaled 20.5 Tcf, up 5.4 percent from 2007, marking the third consecutive annual increase in U.S. natural gas production.

Total U.S proved crude oil reserves declined 10.3% from 21.3 billion barrels (bil. bbls) at the end of 2007 to 19.1 bil. bbls year-end 2008. The changes included 1.1 bil. bbls of new discoveries, downward revisions of 1.6 billion barrels and production of 1.9 bil. bbls. EIA also collects reserves estimates of natural gas liquids (NGL) which are hydrocarbons in natural gas that are extracted (as liquids) at the surface in gas processing or cycling plants. Year-end 2008 proved reserves of NGL were 9.3 billion barrels, an increase of 1.4 percent over 2007.

Commentary - A notable source of new crude oil discoveries was North Dakota, which added 167 million barrels. These discoveries represent rapid growth in reserves in the Bakken shale and the underlying Three Forks formation. Operators can produce oil from the Bakken using the same horizontal drilling and hydraulic fracturing techniques used so widely for natural gas shale production. The production of oil from the layers of shale within the Bakken Formation is different from the extraction of oil from oil shale plays such as the Canadian oil sands