Friday, 11 April 2014 01:26
NEW YORK: Proven U.S. oil reserves in 2012 reached the highest level since 1976, boosted by shale plays in Texas and North Dakota, but gas reserves tumbled for the first time in a decade due to low prices, the Energy Information Administration said on Thursday.
Production in the world's largest oil consumer is booming thanks to shale oil and gas recovered from tight rocks by drilling long horizontal wells and hydraulically fracturing them, or "fracking."
The boost in oil reserves reflects the buoyant U.S. energy industry, but it does not change the country's standing among the world's petroleum powerhouses.
Proven oil and condensate reserves, meaning oil still in the ground estimated to be technically and commercially recoverable,
jumped 15.4 percent in 2012 to 33 billion barrels, the EIA said. Companies booked 5.4 billion barrels of new reserves through discoveries, including extensions in old oil fields.
Various revisions and adjustments added another 1.5 billion barrels, while the extraction of 2.4 billion barrels brought the net addition to reserves to 4.5 billion barrels, the EIA said.
Reserves in the Eagle Ford shale oil play in Texas, at 3.4 billion barrels, surpassed that of North Dakota's Bakken play, which had 3.2 billion barrels. In 2011, Bakken held 2.0 billion barrels and Eagle Ford 1.6 billion barrels.
Proven reserves count only the oil that is possible to access under current commercial conditions and using current technology and so can rise and fall with oil prices or increase as technologies improve - as they have done in shale drilling.
While the Bakken has been the poster child for U.S. shale oil, a lack of pipeline infrastructure in North Dakota has meant the oil must be sold at a discount to get it to markets. Texan oil fields, by contrast, are far better connected.
"It's just really return on investment-driven. The money is going to go where the opportunity is more attractive. Directionally, Eagle Ford is looking competitively attractive compared to other places," said John Lee, a professor at University of Houston's Petroleum Engineering Program.
Despite that, for most oil drillers such differences do not matter now at current oil prices.
"I think there are probably more opportunities than there is money to invest right now. I think they're going to drill as many wells in both places as they can," Lee said.
Sparsely populated North Dakota state has been transformed since Bakken began significant oil production and is now second only to Texas in U.S. oil production. As of 2012, it is also the third largest state in terms of reserves after Texas and the Gulf of Mexico, which the EIA terms a "state."
In previous years Alaska and California were ahead of North Dakota in reserves.
For a graphic showing how oil reserves grew between the end of 2011 and 2012 click here http://link.reuters.com/cyp48v. For how they developed in the top five states between 2007 and 2012 click here http://link.reuters.com/pup48v.
OUTSIDE THE WORLD'S TOP 10
U.S. oil reserves are now at their highest since 1976, underscoring renewed hopes for U.S. energy independence. But the country still stands just outside the world's top 10 in terms of reserves.
Even after the increase, it holds less than half as much crude as Russia, which ranked No. 8 in 2012 with 87 billion barrels in BP Plc's benchmark Statistic Review of World Energy published last year.
The world's five largest resource-holders, which include OPEC's biggest members plus Canada, hold over 1 trillion barrels, according to the review.
U.S. gas production, meanwhile, remained at record highs, thanks to the heavy drilling of the previous five years. But reserves fell 26 trillion cubic feet, or 7.5 percent, to 322.7 tcf, as oversupply depressed prices, making drilling uneconomic.
As gas prices halved and dropped to a 10-year low below $2 per million British thermal units (mmBtu), investment in gas drilling fell sharply and the gas rig count plummeted from record highs.
Still, the EIA expects reserves to have rebounded again in 2013, when gas prices recovered to above $4 per mmBtu.
Proven reserves in the Marcellus shale formation in Pennsylvania and West Virginia surpassed those in the Barnett Shale play of Texas to become the largest in the country, the EIA said.
Copyright Reuters, 2014