Introduction

Many scientists think that the supply of

economically recoverable oil and natural gas is

geologically limited. However, as recently as

early 1999, we experienced a glut of oil on the

world market and the lowest inflation-adjusted

price of gasoline in history. What is going on?

While we cannot provide a comprehensive

answer to that question here, we can describe

one process that significantly affects the

domestic oil and gas industry, a process that

also will affect the global industry at some

point—reserve growth (also known as field

growth).

The Phenomenon of Reserve Growth

Operators of oil and gas fields in the United States are required to report total annual

production and an estimate of proved reserves

from each field to the U.S. Department of

Energy. These two quantities provide an estimate of the petroleum volume that ultimately

will be recovered from a field. Experience

shows that over the life of many oil and gas

fields, these estimates of ultimate recovery will

increase. Figure 1 illustrates reserve growth for

the Midway-Sunset oil field in California. 

By 1968, 56 years after discovery of the

Midway-Sunset field, cumulative production

totaled about 1 billion barrels of oil, and

proved reserves—the amount of resource

known with a high degree of certainty to be

available for future production—stood at about

200 million barrels (fig. 1). Ultimate recovery

was estimated then at about 1.2 billion barrels.

Just 8 years later, in 1976, cumulative production exceeded this estimate of ultimate recovery, proved reserves stood at 400 million barrels, and ultimate recovery was set at 1.65 billion barrels. Twenty years later in 1996, cumulative production had reached 2.3 billion barrels, proved reserves stood at about 500 million

barrels, and ultimate recovery was set at 2.8

billion barrels. Over a period of 28 years, long

after the discovery of the field, estimates of

ultimate recovery more than doubled, from 1.2

billion barrels to 2.8 billion barrels. While this

example describes the reserve growth of a very

large and somewhat atypical field, the general

phenomenon of reserve growth is common to

fields of all sizes and types.

Reserve Growth and National

Resource Estimates

Results of the U.S. Geological Survey

(USGS) 1995 National Assessment of United

States Oil and Gas Resources (Gautier and

others, 1996) indicate that the most important

future additions to the Nation’s petroleum

stocks will come from the reserve growth of

fields already discovered, not from discoveries

of new oil and natural-gas fields. The 1995

National Assessment estimated that about 30

billion barrels of oil would be added to the

Nation’s petroleum resources from conventional fields that were yet to be discovered

(excluding Federal waters), whereas about 60

billion barrels would be added from reserve

growth of conventional fields already discovered (fig. 2). For natural gas, about 258 trillion

cubic feet would be added from large and

small conventional fields that were yet to be

discovered, whereas 322 trillion cubic feet

would come from the reserve growth of conventional fields already discovered. If continuous-type (unconventional) natural-gas accumulations are added to the reserve growth figures

(a notion enlarged upon in a following section), the total reserve growth estimate for gas

would increase to 680 trillion cubic feet. Thus,

reserve growth is expected to contribute at

least twice as much oil and natural gas to the

Nation’s reserves as new discoveries. 

Our understanding of reserve growth is

incomplete. We cannot yet analyze the specific

effects of individual contributing factors. Estimates of United States reserve growth are

based on projections of past reserve-growth

patterns rather than on analysis of individual

causative elements. Estimating the reserve

growth of world petroleum reserves is even less

refined because, among other issues, criteria

for reporting reserves vary significantly from

country to country.

The Components of Reserve Growth

Factors that contribute to the reserve

growth of fields can be grouped into three categories that are not independent of each other:

• Revisions of reserve calculations

• Improvements in recovery percentage

• Delineation of additional in-place oil and gas 

1. Revisions of Reserve Calculations

Operators in the United States are

required by law to report only those reserves

that are known with high certainty to be available for production, thus excluding resources

that are at all speculative. It follows that one

component of reserve growth is the difference

between early estimates of recoverable

resources, which in the presence of limited data

are required to be conservative, and later estimates based on better knowledge of the field.

Revisions of reserve calculations are driven by

tangible (and expensive) field-development

activities such as those outlined below.

Reserve Growth Effects on Estimates of Oil and Natural Gas Resources

Figure 1. Reserve growth of Midway-Sunset field, Calif., discovered in 1912. Data from successive

issues (1968–96), International Petroleum Encyclopedia, PennWell Publishing Co., Tulsa, Okla.

U.S. Department of the Interior

U.S. Geological Survey

USGS Fact Sheet FS–119–00

October 2000
2. Improvements in Recovery Percentage

In many U.S. areas, the search for new

petroleum reserves has been switching from

exploration for new fields to emphasizing

extraction of more oil and gas (a higher recovery percentage) from existing fields. Recent

successes in applying new technology to lower

quality oil and gas accumulations suggest that

some known resources that are prohibitively

expensive to develop now might become economically available in the future. It is interesting that technology advances do not seem to

be strongly dependent upon price levels.

Directional and horizontal drilling—

Advances in drilling technology now allow

extraordinarily precise control of drilling

direction. Multiple wells, directed at targets

several miles distant, can be drilled from a single location, and multiple laterals extending in

different directions can be drilled from within

a single wellbore. Wells can be drilled into a

reservoir unit and the bit then directed horizontally, keeping it within a few feet of the top

of a thin bed and above the oil-water contact

(fig. 3). In complex fields where reservoir

geometry limits the volume of petroleum that

can be tapped by a vertical well, a horizontal

well might produce a greater percentage of the

oil or gas in place (fig. 4).

Three-dimensional (3-D) seismic profiling

and reprocessing of seismic data.—Where

intense exploration and development have created a massive store of information, new methods of processing, analysis, and display of

existing seismic data are helping to create

reserve growth. Seismic profiles provide a scale

diagram of the strata below the surface.

Improvements upon two-dimensional seismic

profiles made possible by today’s fast computers provide 3-D seismic profiles that show a

detailed image and precise location of small oil

and gas traps, allowing pinpoint targeting of

specific features. Time-lapse (4-D) seismic profiling provides, in addition, a time sequence of

3-D seismic images, allowing engineers to

view changes in gas, oil, and water contacts as

a field is produced. These seismic techniques

make production processes more effective and

result in improved recovery from identified

pools in a field as well as the delineation of

additional in-place oil and gas.

Enhanced oil-recovery methods.—In the

past, enhanced oil-recovery projects were mostly limited to flooding reservoirs with water.

Now, several additional methods have proven

to be commercially successful. Carbon dioxide

injected in some wells moves oil out other

wells. Steam flooding of heavy-oil reservoirs

reduces oil viscosity and allows the oil to flow

more freely into producing wells. Where these

methods are applicable, the recovery percentage can increase significantly.

3. Delineation of Additional In-Place Oil

and Gas 

As a field is developed, drilling tends to

extend the field’s boundaries. Reserve estimates grow with each increment added to the

areal extent of a field. In addition, geological

and geophysical analyses coupled with drilling

of development wells may find new pods of oil

or gas and new petroleum-bearing horizons

above or below the initial target.

Continuous-Type Gas Accumulations

Gas in a continuous-type (unconventional)

accumulation is dispersed throughout an extensive reservoir, not localized in discrete fields. A

continuous-type accumulation can be regarded

as a collection of gas-filled cells, wherein any

single well drilled into the accumulation will

tap only the limited volume of gas in one cell.

The USGS 1995 National Assessment estimated the amount of technically recoverable gas in

undrilled cells of continuous-type accumulations to be 358 trillion cubic feet (fig. 2).

Because most of the continuous-type accumulations assessed were already discovered, this

large volume of gas can best be classified as

reserve growth.

The Bottom Line

The measure of petroleum availability that

most affects our economy and our daily lives is

the rate at which petroleum can be produced.

At some future time, world oil and gas production capacity will decrease as supplies are

depleted. The phenomenon of reserve growth is

an important component of predictions of

future production capacity because it is an integral part of estimates of the world’s ultimate

supply of petroleum. Recent estimates incorporating reserve growth suggest that the world’s

ultimate supply of petroleum might be larger

than has been generally appreciated.

References Cited

Finley, R.J., Laubach, S.E., Tyler, Noel, and Holtz,

M.H., 1990, Opportunities for horizontal

drilling in Texas: Texas University Bureau of

Economic Geology Geological Circular 90–2,

32 p.

Gautier, D.L., Dolton, G.L., Takahashi, K.I., and

Varnes, K.L., eds., 1996, 1995 National

Assessment of United States Oil and Gas

Resources—Results, methodology, and supporting data: U.S. Geological Survey Digital

Data Series DDS–30, release, 2, one CDROM.

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. (Also available online at

http://greenwood.cr.usgs.gov/energy/

execsum.html)

For more information, please contact:

James W. Schmoker

U.S. Geological Survey, MS 939

Denver Federal Center, Box 25046

Denver, CO 80225–0046

Telephone: (303) 236–5794

E-mail: schmoker@usgs.gov

Figure 2. Estimates of technically recoverable oil

and gas resources in the United States (excluding

Federal waters). In percent and in billions of barrels

of oil and trillions of cubic feet of gas. Data from

USGS National Oil and Gas Resource Assessment

Team (1995) and Gautier and others (1996).

Figure 3. Example of a horizontal well following the

top of a thin producing interval or reservoir.

Figure 4. Example of a horizontal well tapping several producing reservoirs in a complex field where

producing strata (stippled) and nonproducing strata

intertongue. Modified from Finley and others (1990).