Reserve additions

Finding costs are exploration and development expenditures in current dollars (excluding expenditures for proved acreage) divided by reserve additions (excluding net purchases). When reported, finding costs for gas... 

Any analysis of future domestic supply necessarily involves an estimate of the level of future reserve additions. A recent analysis of natural gas supply and demand relationships by the Federal Power Commission (FPC) staflF (4) reached several conclusions with respect to the future annual reserve additions depicted in Figure 5. First, an increase from the present level of annual reserve additions to the average national finding level of the past 10 years (17 Tcf annually) is consistent with estimates of the undiscovered potential gas remaining and recent regulatory actions which have increased the wellhead price of gas in several important supply areas. Second, it is unlikely that annual reserve addi-... 

Cumulative reserve additions under this anticipated schedule would amount to 325 Tcf from 1971 through 1990. This rate of reserve additions is compatible with current independent estimates of potential gas supply by the Potential Gas Committee (PGC) and the United States Geological Survey (5, 6). Under this schedule of annual reserve additions, cumulative additions through 1990 would represent the development of about 38 and 21%, respectively, of gas supply in the lower 48 states as estimated by PGC and the Geological Survey. 

Average reserve additions for the 5 year period 1971 through 1975 would be 14 Tcf per year which was also the average experienced during the period from 1966 through 1970. Reserve additions for 1971 were projected by the Federal Power Commission staff to be about 12 Tcf. In 1971, reported additions amounted to only 9.4 Tcf. Some reserves... 

Figure 5. Actual and projected net reserve additions, contiguous 48 states...

The production projection for 1971 through 1990 (Figure 6) was derived from presently proved reserves plus anticipated reserve additions as scheduled by the methods described above and was computed by using the national availability curve. Annual gas production has increased exponentially in the past. In the 1971-1990 time interval, however, it is projected to peak at about 24.8 Tcf, around 1973-1974, and thereafter dechne and stabilize at a somewhat lower level in the 1980 s. Because demand is projected to grow while domestic supply is projected to sta-... 

Future supply and demand will not develop exactly as depicted in the above projections because precision is not possible in such a projection. Both demand and domestic production are susceptible to considerable deviation from the levels projected. In terms of sensitivity to error, it is obvious that the projection of domestic production is very susceptible because of its dependence upon the level of future reserve additions. Even if much more optimistic levels of reserve additions (and hence productive capacity) are assumed, however, increasing demand cannot be satisfied. Figure 7 illustrates a comparison of demand and three different levels of productive capacity should annual reserve additions exceed 17 Tcf per year. Reserve additions of 20, 25, and 30 Tcf are programed for every year beginning with 1971. Even under the best of these conditions, a substantial supply gap develops in the mid-1970 s and worsens over the time span considered. 

Figure 7. Levels of domestic productive capacity with annual reserve additions of (A) 30 Tcf, (B) 25 Tcf, and (C) 20 Tcf...

Several significant gas discoveries have already been made in the frontier areas. Because of these discoveries, a future level of annual reserve additions greater than historical rates can reasonably be used to estimate the future gas surpluses which Canada may be able to make available for export. Annual reserve additions in Canada s traditional supply areas averaged 4 Tcf from 1966 to 1970. On the basis of the potential of the frontier areas, however, future annual average additions may be estimated at 6.5 Tcf. This finding level in conjunction with Canada s projected requirements and scheduled exports under existing licenses would result in an increase in the annually exportable volumes of 0.8 Tcf in 1970 to 1.9 Tcf by 1990 (Table III). 

The global reserve/production ratio for the natural gas was sixty-two years in 1999 (compared to forty-one years for crude oil, and 230 years for coal). So far about 180 Gtoe of natural gas have been extracted and found in proven reserves additional natural gas resources are conservatively estimated to total another 200-300 see British Petroleum (74) Odell, P. 1999. Fossil Fuel Resources in the 21st Century. Vienna IAEA. 

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