Potential Gas Committee Report Shows Unprecedented Increase in U.S. Natural Gas Resources

September 19, 2007 // Published as a news service by IHS

This amount is the equivalent of 82 years of production at current rates and is the largest volumetric increase and percentage increase in the PGC's biennial estimates since 1968, said the American Gas Association (AGA).

Much of the resource growth can be attributed to U.S. onshore areas where success in extracting natural gas from shales and coal seams has resulted in revised assessments of existing resource plays and inclusion of new opportunities, said the PGC report.

This has been the case in numerous mid-continent production areas such as the Arkoma, Anadarko, Fort Worth and Permian basins. According to the PGC report, additional growth in the resource base has resulted from new data from the Gulf Coast, Rocky Mountain and Pacific areas.

"Abundant natural gas resources help to keep energy costs affordable for U.S. consumers - as long as producers are allowed access to those resources," said Chris McGill, managing director of policy analysis for AGA.

"This kind of growth in onshore resources only happens when companies are permitted to explore and the opportunities for leasing and permitting of multi-use acreage is allowed to proceed," said McGill.

The PGC report showed the total size of the resource base has increased since the committee's last report, even though 36 Tcf of natural gas have been drawn down since that time.

Factoring in the past two years of production, the PGC actually increased its estimate of the U.S. natural gas resource base with each successive report over the last 16 years, primarily due to new geologic information, technology developments and changing economics, said AGA.

According to AGA, the demand for natural gas has shifted recently among consuming sectors, primarily because of its greater use by electricity power generators. Natural gas is the cleanest fossil fuel and its use in power generation helps many power plants to meet cleaner air standards.

AGA said that proposed climate change legislation may further the demand for natural gas. Direct use of natural gas delivers three times as much energy as electricity for similar applications, when measured from point of generation to point of use.

According to the U.S. Department of Energy (DOE), about one-fifth of U.S. natural gas production comes from the Gulf of Mexico, with another large portion coming from concentrated areas, including Texas, Oklahoma, the Gulf Coast onshore, New Mexico, the mountain west and Appalachia.

"Hurricane Katrina demonstrated how dramatically natural gas customers can be penalized when one producing region is impacted by supply disruptions," said McGill. Also according to McGill, supply diversity is the key and the industry must continue to educate the public about advanced exploration and production technologies that have made onshore and offshore gas development safer and more environmentally acceptable.

The PGC is comprised of 105 volunteer members from the natural gas industry, government agencies and academic institutions. The PGC functions independently, but with the guidance and technical assistance of the Potential Gas Agency of the Colorado School of Mines.

Source: American Gas Association (AGA).