Gap in Supply and Demand of Natural Gas Narrowing

By Fears, Ronda | THE JOURNAL RECORD, May 9, 1989 | Go to article overview

Gap in Supply and Demand of Natural Gas Narrowing


Fears, Ronda, THE JOURNAL RECORD


Natural gas prognosticators see the gap in supply and demand narrowing in 1989, with reserve replacements for last year estimated between 90 and 105 percent and demand rising 11 percent over the past two years.

"There is little doubt that as supply and demand move into balance, probably within the year, there will be ample capacity to develop a growing supply to meet a growing demand," said George H. Lawrence, president of the American Gas Association.

The association made its conclusions based on data from annual reports and filings with the Securities and Exchange Commission by the 30 largest natural gas reserve holders. The analysis was supplemented with similar information from distribution and transmission companies that account for 12 percent of annual U.S. natural gas production.

Reserve additions examined, in both new discoveries and revisions, totaled 8,200 billion cubic feet, 47 percent higher than reserve additions of the 30 top companies in 1987.

Based on those 30 companies' results, the gas association estimated nationwide reserve additions of between 14,600 billion cubic feet and 17,100 billion cubic feet.

New discoveries in 1988 were up 53 percent, while revisions rose 39 percent over the previous year.

Largest reserve additions were by Arco Oil and Gas Co., Amoco Corp., Burlington Resources, Texaco Inc. and Chevron Corp., all of which reported more than 650 billion cubic feet of reserve additions last year.

Strong performance in reserve additions, Lawrence said, reflects:

- Renewed development in deep gas drilling of more than 15,000 feet deep.

- The discovery of significant new fields in the lower 48 states.

- Greater influence of the U.S. natural gas resource base.

- The emergence of coalbed methane as a drilling target.

Arco and Amoco both have drilling activities in the deep Anadarko Basin in west Oklahoma, the world's richest natural gas reservoir where drilling is between 22,000 feet and 40,000 feet. Arco also has a discovery well in the Arkoma Basin in southeast Oklahoma where drilling is at about 15,000 feet.

Reserve addition figures were not available for Oklahoma, but in 1988, 1.708 billion cubic feet of natural gas was sold in the state, compared to 1.599 billion cubic feet in 1987, according to records filed with the Oklahoma Corporation Commission.

Lawrence emphasized that a particular reason for positive reserve additions is the result of continued technological advances in exploration and production techniques, including not only better access to new natural gas in deep resources but improved geological capabilities to evaluate conventional formations.

"It is noteworthy to remember that, for the 11 years prior to the passage of the Natural Gas Policy Act of 1978, the replacement ratio for the lower 48 states was only 46 percent," Lawrence said. . .

- Proration, which brought order to the chaotic oil and gas industry in 1914, marked its 75th anniversary Sunday.

It is a system of laws allowing all producers to share in the available market in proportion to the amount of their production. …

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