Untapped U.S. Reserves Hold Lots of Gas, USGS Finds

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--There could be enough natural gas in resource plays under the U.S. Gulf Coast to meet current demand for more than a decade, a U.S. government study found.

The U.S. Geological Survey (USGS) released data from a years-long study of the Hosston and Travis Peak formations that stretch along the Gulf Coast from Florida to Texas. In response to an Arab oil embargo on the United States for its policies on Israel in the 1970s, the USGS is mandated to study the domestic resource potential.

"USGS energy assessments typically focus on undiscovered resources -- areas where science tells us there may be a resource that industry hasn't discovered yet," said Sarah Ryker, the acting director of the USGS. "In this case, our assessment found substantial resources of gas."

In its study, the agency estimated the technical recoverable reserves of undiscovered resources at 28 million barrels of oil and 35.8 trillion cubic feet of natural gas. That's enough natural gas to satisfy current domestic demand for 14 months.

Much of that gas is considered "tight," which means it's trapped in low-permeability rock formations below the surface.

"Producing tight gas here would involve drilling and fracking, down more than 8,000--10,000 feet from the surface," said Christopher Schenk, a geologist at USGS.

Most fracked wells are drilled to those depths, which translates to nearly two miles at the extreme. Operators are becoming more efficient with drilling by using multi-bore wells and laterals that can extend for miles in some cases.

Regional shale basins along the USGS study area are the Eagle Ford and Haynesville plays. Estimates from the Energy Information Administration, the data arm of the U.S. Department of Energy, show the Eagle Ford is expected to yield 6.7 billion cubic feet of natural gas per day (Bcf/d) and Haynesville to produce an average of 14.9 Bcf/d this year.

Combined, those basins account for about 20% of total U.S. gas production from the Lower 48 states. Data from IIR Energy show current natural gas production is somewhat suppressed due to regular seasonal maintenance on the nation's pipeline network, though federal data point to a year-on-year production increase of nearly 2% to 117.8 Bcf/d by 2026.

EIA in its monthly market report for May said demand was relatively subdued to start the year due to warmer-than-average temperatures, though seasonal demand should spike into the summer months.

"Additionally, we now forecast that there will be more demand for natural gas domestically and for U.S. exports of natural gas over the next two years than we had initially forecast," the agency stated in a report published Tuesday.

EIA estimates Henry Hub, the U.S. benchmark for the price of natural gas, will average $4.10 per million British thermal units this year, nearly double last year's levels and despite economic headwinds from U.S. trade policies.

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