#### Fact Sheet FS-202-96

# The Importance of Reserve Growth to the 
Nation's Supply of Natural Gas



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### Introduction

Experience shows that initial estimates of the size of
newly discovered oil or gas fields are usually too low. As years pass, successive
estimates of the ultimate recovery of fields tend to increase. The term
"reserve growth" refers to the typical increases in estimated
ultimate recovery that occur as oil or gas fields are developed and produced
(Arrington, 1960; Attanasi and Root, 1994).

An example for a particular field helps explain
the nature of reserve growth. Figure 1 (63k GIF).
shows ultimate recovery for a large natural-gas field in Texas as estimated
in each year from 1977 through 1991. This gas field was discovered in the
mid-1940's. In 1977, its ultimate recovery was estimated to be 2.1 trillion
cubic feet of gas (tcfg). One might think that after some 30 years of development
and production, the resource potential of a field would be well understood.
However, by 1991 the estimated ultimate recovery of this field had increased
to 3.1 tcfg. Reserve growth over the 15-year period totaled 1.0 tcfg and
shows no signs of stopping.



### Historical Reserve-Growth Trends 
for Natural Gas

Increases of estimated ultimate recovery over time such
as shown in figure 1 are typical of many United States gas fields. From
1978 through 1993, reserve growth of natural gas in existing United States
fields totaled 205 tcfg, whereas initial size estimates of new-field discoveries
totaled only 31 tcfg (fig. 2, 32k GIF). (United
States natural-gas production during the same time period totaled 277 tcfg.)
From 1989 through 1993, reserve growth contributed about 15 tcfg/yr to United
States proved gas reserves, whereas new-field discoveries added only about
1 tcfg/yr (fig. 2). In recent years, reserve growth has contributed far
more to United States proved gas reserves than new-field discoveries.

### Causes of Reserve Growth

Factors that contribute to reserve growth include (1) physical
expansion of fields by areal extensions and development of new producing
intervals, (2) improved recovery resulting from application of new technology
and engineering methods, and (3) upward revisions of reserve calculations
based on production experience and changing relations between price and
cost. The causative factors that contribute to reserve growth are complex
and interrelated, and have thus far resisted individual analysis. Estimates
of the future reserve growth of a set of fields are at present usually based
on empirical projections of past reserve-growth patterns.

### U.S. Geological Survey (USGS) Estimates of 
Future Reserve Growth for Natural Gas

The USGS 1995 National Assessment of United States oil
and gas resources (Gautier and others, 1995) was a scientifically based,
unbiased analysis. In this assessment, the USGS estimated that 1,074 tcfg
of technically recoverable natural gas remains in the United States (exclusive
of Federal waters), of which 322 tcfg (30 percent of the total) is in the
category of reserve growth of existing fields (fig.
3, 32k GIF). By comparison, the ultimate technically recoverable volume
of gas in conventional fields not yet discovered is estimated to be 259
tcfg (fig. 3).

Placing economic constraints upon the assessment
of technically recoverable resources significantly changes estimates of
remaining natural gas. For an example based on a wellhead price of $2.50
per thousand cubic feet of gas coupled with reserve-growth projections only
to the year 2015, the estimated total remaining United States gas resource
drops from 1,074 tcfg (fig. 3) to 404 tcfg (fig. 4,
63k GIF). The percentage attributed to reserve growth of existing fields
increases from 30 percent to 35 percent. The reserve growth of gas remains
extremely important to the Nation's energy future if one narrows the assessment
scope from technically recoverable to economically recoverable gas resources
(fig. 4).

### Summary and Conclusions

Reserve growth is a major component--perhaps THE major
component--of remaining United States natural-gas resources. Historical
data (figs. 1, 2) support this premise, as do estimates of technically recoverable
and of economically recoverable gas resources remaining in the United States
(figs. 3, 4).

Yet, as Attanasi and Root (1994) emphasized when they referred
to "the enigma of oil and gas field growth," reserve growth is
poorly understood. Projections of future reserve growth in the United States
carry large uncertainty. Much work remains to be done on the phenomenon
of reserve growth, which is arguably the most significant research problem
in the field of hydrocarbon resource assessment.

### References

International Affairs Group, The American Gas Association, 1515 Wilson
Boulevard, Arlington, VA 22209, 206 p.

Arrington, J.R., 1960, Predicting the size of crude reserves is key to
evaluating exploration programs: Oil and Gas Journal, v. 58, no. 9 (February
29), p. 130-134.

Attanasi, E.D., Gautier, D.L., and Root, D.H., 1995, Economics and undiscovered
conventional oil and gas accumulations in the 1995 National Assessment of
U.S. oil and gas resources: U.S. Geological Survey Open-File Report 95-75H,
50 p.

Attanasi, E.D., and Rice, D.D., 1995, Economics and coalbed gas in the
1995 National Assessment of U.S. oil and gas resources: U.S. Geological
Survey Open-File Report 95-75A, 22 p.

Attanasi, E.D., and Root, D.H., 1994, The enigma of oil and gas field
growth: American Association of Petroleum Geologists Bulletin, v. 78, no.
3, p. 321-332.

Attanasi, E.D., Schmoker, J.W., and Quinn, J.C., 1995, Economics and
continuous-type oil and gas accumulations in the 1995 National Assessment
of U.S. oil and gas resources: U.S. Geological Survey Open-File Report 95-75F,
35 p.

Gautier, D.L., Dolton, G.L., Takahashi, K.I., and Varnes, K.L., eds.,
1995, 1995 National Assessment of United States oil and gas resources-Results,
methodology, and supporting data: U.S. Geological Survey Digital Data Series
DDS-30.

U.S. Geological Survey National Oil and Gas Resource Assessment Team,
1995, 1995 National Assessment of United States oil and gas resources: U.S.
Geological Survey Circular 1118, 20 p.

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### For additional information contact:

James W. Schmoker, U.S. Geological Survey 
Denver Federal Center, Mail Stop 939 
Denver, Colorado 80225 
(303) 236-5794 
e-mail: schmoker@usgs.gov



Emil D. Attanasi, U.S. Geological Survey 
National Center, Mail Stop 956 
12201 Sunrise Valley Drive, Reston, VA 20192 
703-648-6129 
e-mail: attanasi@usgs.gov



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