It's new in Oklahoma to be talking about natural gas proration
for unallocated wells on a quarterly basis. And it's a process
that will probably take some getting used to, for some folks.
Oklahoma Corporation Commissioners are now digesting comments
taken last week on first quarter 1993 production limits, which
varied in wide degrees.
It is quite a challenge to sort out gas statistics. Any
statistics, for that matter. But history tells us that we have
blundered, sometimes almost fatally, in past interpretations of
energy statistics. Or, at least government reactions to energy
data has been extreme.
Numerous experts and great volumes of data have appeared in
this column and elsewhere that point to impending shortages of
gas. Many believe that still to be the case, although it doesn't
mean that we are running out of gas.
Perhaps in response to those reports and others, there are now
several industry reports showing there are more-than-adequate
supplies of gas for this winter.
Both may prove to be the case.
The shortage argument largely points to reserves replacement.
A new American Petroleum Institute analysis paper by Ed Porter
quotes the reserve replacement ratio for the past few years, for
both gas and oil, in the U.S. to be below 100 percent. Some
industry groups dispute that, particularly when it comes to
Certainly we know, or at least believe, that there are vast
quantities of gas in the ground in the U.S.
But the clincher is that, what with persistently low gas
prices in the past eight years, drilling for gas has fallen off
dramatically from the boom days. And, it was deep drilling for
gas that drove the boom, you may recall.
While drilling for new reserves was on the decline, though,
natural gas demand has been on the rise. Thus, the reserve to
production ratio got out of whack. And, ironically, perhaps,
production has maintained a level in excess of consumption until
recently. But production is different than drilling for new
Just in the past several months, it has been widely observed
that the so-called "gas bubble" that has lingered for over a
decade has finally burst. That is, the gap between natural gas
production and consumption has narrowed. Some say it is
The Natural Gas Supply Association, a group of major gas
producers, issued a report recently on gas field deliveries that
concludes the surplus has shrunk by 30 to 35 percent in the past
four years. …