The Energy Information Administration’s U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Proved Reserves, 2009 reports that the Nation’s estimated proved reserves of oil (crude oil plus lease condensate) increased by nearly 9 percent in 2009, primarily because of significantly higher prices used to estimate proved reserves. Proved reserves are those volumes that geological and engineering data demonstrate with reasonable certainty to be recoverable from known reservoirs under existing economic and operating conditions.

Crude oil prices are one of the key factors affecting the level of proved reserves reported to EIA. Higher prices typically increase estimates (positive revisions), as a broader portion of the resource base meets the economic test included in the definition of proved reserves. Lower prices generally reduce estimates (negative revisions), as the portion of the total resource base that can be produced under existing economic conditions contracts. Under Securities and Exchange Commission rules introduced for the 2009 reporting year, companies estimated their 2009 proved reserves using the average of the twelve first-day-of-the-month prices. In prior years, estimates were based on the market price on the last trading day of the year.

Oil (Crude Oil plus Lease Condensate). The average crude oil price for 2009 was close to 40 percent higher than the end-of-year price for 2008. Net revisions surpassed 2 billion barrels, the highest positive change in over twenty years. Discoveries also increased, contributing about 1.5 billion barrels to proved reserves. (As is typical, discoveries were mostly in the form of extensions, which are reserve additions resulting from the extension of previously discovered reservoirs.)

The onshore Lower 48 States accounted for nearly 85 percent of the overall oil proved reserves increase. While much of these additions are in conventional fields, the horizontal drilling and hydraulic fracturing technologies used to increase shale gas production have also boosted unconventional oil reserves, especially from the Bakken Formation straddling North Dakota and Montana. Higher prices and drilling activity in the deepwater areas of the Gulf of Mexico Federal Offshore drove that region's second consecutive increase in proved reserves after four consecutive years of decline, and contributed about 13 percent of the year’s overall oil additions. (Note: The sinking of the Deepwater Horizon drilling rig in May 2010 and the subsequent oil spill into the Gulf of Mexico were not factors in the proved reserves estimates for 2009, nor were the deepwater drilling moratoria issued in response to these events.)

Natural Gas (Including Plant Liquids). Proved reserves of natural gas (wet natural gas including plant liquids) rose by nearly 30 trillion cubic feet (Tcf) in 2009, about 11 percent, despite a considerable drop in natural gas prices. Driving the increase - the largest since EIA began reporting proved reserves - was continued growth from shale gas, up 26.2 Tcf (76 percent) from 2008. Sharp increases in shale gas proved reserves since 2007 have taken place during a period of sustained low natural gas prices. The price operators used to estimate natural gas reserves dropped 21 percent in 2008 and another 32 percent in 2009.

Due largely to the decline in the natural gas prices used to estimate proved reserves since 2007, negative revisions in the 2008 and 2009 reports on proved reserves were, respectively, the second and third largest in the three decades that EIA has been publishing proved reserves estimates. However, total natural gas proved reserves increased in each year (3 percent in 2008 and 11 percent in 2009), underscoring the major contribution of shale gas exploration and production technologies. Excluding shale gas, natural gas proved reserves dropped about 2 percent in 2008 and rose only modestly (about 1 percent) in 2009.

Note: EIA’s previous annual proved reserves summaries provided reserves data for lease condensate and plant liquids, which were grouped together as natural gas liquids. To improve comparability across EIA data offerings, estimates for the 2009 reporting year combine lease condensate with crude oil (as oil) and include plant liquids in wet natural gas.

Source: U.S. Energy Information Administration