U.S. reserves: U.S. proved reserves experience significant increase
According to the U.S. Energy Information Administration (EIA), U.S. energy demand during 2021 rebounded from its 2020 lows caused by the Covid-19 pandemic. The average prices of both crude oil and natural gas in the U.S. rose to their highest levels since 2014. Proved reserves of natural gas reported by operators established a new record in the United States in 2021, while proved U.S. reserves of oil increased but did not quite return to pre-pandemic levels.
Proved reserves are estimated volumes of hydrocarbon resources that analysis of geologic and engineering data demonstrates, with reasonable certainty, are recoverable under existing economic and operating conditions. Reserves estimates increased from year to year because of: 1) new discoveries; 2) thorough appraisals of existing fields; 3) concentration on producing existing reserves; 4) higher prices, combined with lower development costs; and 4) new and improved exploration techniques and production technologies.
The EIA’s reserves report is based on independently developed estimates of proved reserves from a sample of operators of U.S. oil and natural gas fields with Form EIA-23L. The administration uses this sample to further estimate the portion of proved reserves from operators, who do not report. This year, the EIA received responses from 392 of 411 sampled operators, which provided coverage of approximately 90% of proved reserves of oil and 93% of proved reserves of natural gas at the national level. The EIA developed estimates for reserves located in the U.S., in each state individually and some state subdivisions.
Crude oil highlights. Proved reserves of U.S. crude oil and lease condensate increased 16.2%, from 38.2 Bbo to 44.4 Bbo at year-end 2021. Despite the increase in reserves, U.S. production of crude and lease condensate decreased about 1% in 2021. Texas saw the largest net increase in proved oil reserves in 2021, up 11.6% or 1.9 Bbbl. New Mexico enjoyed the second-largest net increase of proved reserves, posting a 39.7% gain of 1.4 Bbbl, and Alaska increased 31.1% and now holds 3.2 Bbbl of reserves. The largest net decrease in proved reserves of crude oil and lease condensate during 2021 was reported by operators in Oklahoma, down 19 MMbbl, a loss of 1.1%. The 12-month, first-day-of-the-month average spot price for WTI at Cushing, Oklahoma, increased 67%, from $39.66/bbl in 2020 to $66.26/bbl in 2021.
Natural gas highlights. Proved reserves of U.S. natural gas increased 32.1%, up from 473.3 Tcf at year-end 2020 to 625.4 Tcf at year-end 2021, establishing a new record for U.S. proved gas reserves. For the second consecutive year, Alaska saw a substantial volume of proved natural gas reserves added in 2021. The annual total of proved reserves in Alaska increased in 2021 by 63.3 Tcf, almost tripling the state’s total from 36.5 Tcf to 99.8 Tcf—the largest increase of all states in 2021. Texas experienced the second-largest increase in proved reserves in 2021 (34.3 Tcf, 29.9%), while New Mexico saw the third-largest increase, up 10 Tcf, or 38.3%, compared to 2020. The 12-month, first day-of-the-month average spot price for natural gas at the Louisiana HH increased 84.4% from $1.99 MMBtu in 2020 to $3.67/MMBtu in 2021, which was the highest annual average price since 2014.
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