Continuing a trend that has sent ripples through global energy markets in recent years, U.S. oil and natural gas reserves hit new highs in 2013, according to a December 2014 Energy Information Administration report.
Proved natural gas reserves rose 9.7 percent to reach a record 354 trillion cubic feet (tcf) at the end of 2013, the Energy Information Administration (EIA) reported, while proved oil reserves increased 9.3 percent to 36.5 billion barrels.
For EIA, proved reserves are “estimated volumes of hydrocarbon resources that analysis of geologic and engineering data estimates with reasonable certainty are recoverable under existing economic and operating conditions.”
Impact of Marcellus Shale
Propelled by the twin technologies of hydraulic fracturing (fracking) and horizontal drilling, the United States has become the world’s largest producer of natural gas.
Driving the boom in domestic natural gas production is the Marcellus Shale formation, where, in 2013, estimates of gas reserves in Pennsylvania rose 37 percent, adding 13.5 tcf to proved reserves. West Virginia was close behind, racking up a 56 percent gain adding 8.3 tcf. Proved reserves of natural gas also grew significantly in Arkansas, Colorado, North Dakota, Ohio, and Texas.
The EIA notes proved reserves of both oil and natural gas are dependent on price, which can fluctuate wildly. Price, in turn, is determined by supply and demand, which can be affected by factors such as, regulations and limits on production and delivery, political instability and weather. The winter of 2012-13, for example, was long and severe in the Upper Midwest and Northeast, raising demand for natural gas and driving up its price.
Growing U.S. Oil Reserves
Oil, too, including associated hydrocarbon liquids known as lease condensates, has benefited from the American fracking boom. In rising to 36.5 billion barrels in 2013, U.S. proved reserves of oil increased by 3.1 billion barrels from the previous year. It was the fifth consecutive year proved reserves of oil rose, exceeding 36 billion barrels for the first time since 1975.
North Dakota had the largest increase in proved oil reserves, about 1.9 billion barrels, or 61 percent of the nation’s net increase. EIA attributes this increase to continued development of the Williston Basin, site of the Bakken and Three Forks shale formations. For the first time, North Dakota’s reserves exceeded those found offshore in the Gulf of Mexico, putting the Peace Garden State in second place behind Texas.
EIA found Texas had the second-largest increase, about 0.9 billion barrels, mostly from the Eagle Ford shale play in South Texas. Together, North Dakota and Texas accounted for 90 percent of the overall net increase of U.S. proved oil and lease condensate reserves in 2013.
“The strong numbers on U.S. oil and gas reserves are good news,” said Marita Noon, executive director of New Mexico-based organization Energy Makes America Great. “Our own resources ensure America’s energy security and provide a boon to consumers, who benefit from lower prices. Never again will we be held hostage by countries wanting to do us harm by withholding fuels that power our economy.”
Oil Glut Winners, Losers
The EIA’s report does not reflect the dramatic plunge in global oil prices in late 2014.
From a peak of $110.53 on September 6, 2013, the price of a barrel of crude oil fell below $48.00 on January 6, 2015. This development has created winners and losers.
With the cost to fill up the average fuel tank haven fallen bay as much as 50 percent in some states, consumers are benefitting from lower prices, leaving more discretionary income in their pockets.
Countries disproportionately dependent on exporting crude oil—such as Russia, Iran, and Venezuela—have had their fortunes deteriorate as oil revenues plummeted.
Domestic drilling patterns have also been affected. The number of rigs drilling for oil in North Dakota and parts of Texas began to edge down in the closing weeks of 2014. However, the situation has varied from site to site.