Proved Crude Oil Reserves Hit a Record in 2017David Wagman | November 29, 2018
Relatively high prices and continued development of shale and tight resources drove proved reserves of both U.S. crude oil and natural gas to new records in 2017, according to the Department of Energy's (DOE's) recently released U.S. Crude Oil and Natural Gas Proved Reserves report.
Proved reserves of U.S. crude oil rose 19.5% from the end of 2016, reaching 39.2 billion barrels. That level surpassed the previous peak level of 39.0 billion barrels set in 1970.
Proved reserves of natural gas rose 36.1% from the end of 2016 to 464.3 trillion cubic feet (Tcf) in 2017. That surpassed the previous record of 388.8 Tcf set in 2014.
According to the DOE, proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. It said that changes in proved reserves from year to year reflect new discoveries (in new fields, new reservoirs in old fields or extensions of existing reservoirs), net revisions and other adjustments to previous reserve estimates, and reductions from annual production of each fuel.
Higher fuel prices typically increase estimates as operators consider a broader portion of the resource base economically producible. In 2017, the annual average spot price for the benchmark West Texas Intermediate (WTI) crude oil increased 20% from the 2016 average price. The WTI price exceeded $60 per barrel for the first time since June 2015, helping to drive increases in reserves.
Permian Basin Growth
Texas and New Mexico had the largest net increases in proved reserves of crude oil in 2017, adding 3.1 billion and 1.0 billion barrels of proved crude oil reserves, respectively. Increases in these states were primarily the result of increased crude oil prices and development in the Permian Basin, the DOE said.
The annual average spot price for natural gas also rose in 2017. Natural gas prices at the benchmark Henry Hub increased 21% in 2017, helping to drive increases in natural gas reserves. Pennsylvania added 28.1 Tcf of natural gas proved reserves, the largest net increase among states in 2017. Growth there was credited to higher commodity prices and development of the Marcellus and Utica shales in the Appalachian Basin.
Texas had the second-largest net increase in natural gas proved reserves, DOE said. The largest portions of the increase came from the Wolfcamp/Bone Spring shale play in the Permian Basin and the Haynesville/Bossier shale play in eastern Texas and northern Louisiana. DOE said that the share of natural gas from shale rose from 62% of total U.S. natural gas proved reserves in 2016 to 66% in 2017.