New Statistics after View of Natural Gas Supplies
Fears, Ronda, THE JOURNAL RECORD
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 natural gas.
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 reserves, too.
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 perilously slim.
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. …