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US and Texas Oil and Gas Reserves Grow at Record Pace

A report of the US Energy Information Administration issued within the past few months indicates that horizontal drilling and hydraulic fracturing in shale have helped US and Texas oil and gas reserves grow at a record pace in 2010. This was the biggest single year increase since the organization began publishing oil and gas reserve estimates in 1977. These figures identify how much oil or natural gas can be produced with reasonable certainty, given current economics and existing technology.

The EIA Report stated that domestic crude and condensate proved reserves rose by 2.9 billion barrels, from 22.3 billion barrels in 2009 to 25.2 billion barrels in 2010, which is an increase of 12.8%. The wet natural gas proved reserves rose by 33.8 trillion cubic feet, from 283.9 trillion cubic feet in 2009 to 317.6 trillion cubic feet in 2010, an increase of 11.9%.

EIA Administrator Adam Sieminski told the US House Energy and Commerce Subcommittee last week that the increasing ratio of oil to gas prices in the US had led oil producers to focus on liquid-rich areas in 2010. The trend has continued for 18 months after that. In other words, higher oil and gas prices make drilling more profitable and increase production.

The trend this year continues into 2012. From January to May, EIA estimates crude and condensate production averaged 6.2 million barrels per day, which is the highest level since 1998. There have been significant increases in onshore oil production, particularly because of higher output in North Dakota and Texas. There have been increases in dry gas production since 2005, mainly due to shale gas production. Reduced production in some areas, like the Haynesville shale, were offset by increased production in the Eagle Ford Shale, the Marcellus Shale, and associated gas production.

In addition to this national information, Texas is also doing well. The Texas Petro Index showed a nine percent increase in crude oil production in Texas from January to June 2012 compared to the same time period in 2011. Before the recent energy boom, Texas oil had been in decline since the 1970s, making this transformation all the more impressive. Texas had the largest volumetric increase in the nation, largely due to development of Permian and Western Gulf basins. Texas also led in additions of natural gas proved reserves.

All of this comes at a time when our lawmakers in Washington are debating the pace of domestic oil production expansion. Republicans have strongly criticized the administration’s blocking of offshore drilling in the Atlantic and Pacific.

“These reserves increases underscore the potential of a growing role for domestically produced hydrocarbons in meeting both current and projected U.S. energy demands,” Mr. Sieminski told the House committee. Erik Milito of the American Petroleum Institute also weighed in, saying “The report is further proof that we have more oil and natural gas than anyone thought possible even a few years ago. We are sitting on a lottery ticket that could spur millions of jobs, billions of dollars in revenue for the government, and more than 100 years of energy for our country.”

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