U.S. Natural Gas Production, Proved Reserves Continue Growing

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--U.S. natural gas production and proved reserves increased in 2013 compared to 2012, according to preliminary estimate from the American Gas Association (AGA) (Washington, D.C.). And new discoveries and extensions helped producers continue their recent trend of extending the estimated lifetime of proved reserves. At current levels of production, U.S. proved gas reserves will last about 13 years, up from an estimate of nine years in 2000. The broader measure of possible gas reserves shows that the U.S. could have up to 100 years of natural gas, the AGA study added.

Proved gas reserves at year-end 2013 stood at about 330 trillion cubic feet (Tcf), slightly ahead of year-end 2012 levels but slightly behind the historic 2011 amount of 334 Tcf, AGA said in its report, Preliminary Findings Concerning 2013 Natural Gas Reserves. That report, released March 19, examines the activities of the 30 largest U.S. gas companies, and uses their financial filings on production, proved reserves, probable reserves and possible reserves to prepare a preliminary estimate for the industry as a whole.

Click on the image at right to see how U.S. natural gas proved reserves have increased since 1991.

Year-end 2013 proved reserves of about 330 Tcf is about double the amount of proved reserves held in the late 1990s. The AGA report said these were the companies with the largest gas reserves at yearend 2013:

Exxon Mobil (26.3 Tcf)

Chesapeake Energy (11.7 Tcf)

BP (9.9 Tcf)

ConocoPhillips (9.6 Tcf)

Anadarko (9.2 Tcf)

Devon (8.6 Tcf)

The combination of horizontal drilling and hydraulic fracturing has led to a surge in production from new fields, as well as from existing fields thought to be mature or uneconomic. The Marcellus Shale is one of the most prolific gas-producing formations in the U.S. For more on how gas production from that formation is changing the outlook for a variety of industries, see May 20, 2014, article - Marcellus Gas Transforms Chemical Processing, Gas Production Industries.

In 2013, U.S. gas companies produced about 24.3 trillion cubic feet (Tcf) of dry gas, a 27% increase over 2000 production of 19.1 Tcf, the AGA report noted. Speaking at Industrial Info's recent Industrial Outlook executive briefing, Chris Paschall estimated U.S. gas production could surge to about 31 Tcf by 2023.

Click on the image at right to see how U.S. dry gas production has increased since 1930.

The AGA report listed these companies as the largest domestic gas producers in 2013:

• Exxon Mobil (1.4 Tcf produced)
• Chesapeake Energy (1.1 Tcf produced)
• Anadarko (965 billion cubic feet [Bcf] produced)
• Devon (709 Bcf produced)
• ConocoPhillips(678 Bcf produced)
• Southwestern Energy (656 Bcf produced)

Last year, average prices realized by the 30 largest gas producers improved slightly over 2012, but still lagged well behind 2011 levels, the AGA report found. Last year, the 30 companies included in this estimate received an average of $3.53 per thousand cubic feet (Mcf) of gas, above 2012's average price of $3.21 but well below 2011's price of $4.39 per Mcf. Currently, strong demand caused by industrial activity and a colder-than-average winter have thinned gas inventories, helping push up prices to about $4.50 per Mcf at the Henry Hub. If that trend continues, average gas prices will be higher this year than last year.

Gas supply, demand and prices, in addition to availability of transportation infrastructure, are key factors affecting companies' reserve replacement ratios. The AGA report listed these companies as having the highest percentage of replacement compared to 2013 production:

• PDC Energy (replaced 1,245% of 2013 production of 20 Bcf)
• CONSOL (replaced 1,029% of 2013 production of 169 Bcf)
• Southwestern Energy (replaced 550% of 2013 production of 656 Bcf)
• Cabot Oil & Gas (replaced 532% of 2013 production of 394 Bcf)
• Noble Energy (replaced 527% of 2013 production of 161 Bcf)
• Range Resources (replaced 468% of 2013 production of 265 Bcf)

"U.S. natural gas is a good story that keeps getting better," said Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "We expect demand to continue rising, driven by liquefied natural gas (LNG) export terminals and the Power and Chemical Processing industries. That should lead to modest price increases, which would make additional production of dry gas more economically viable. Domestic natural gas producers are at the center of a virtuous cycle for numerous industries."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.