America’s crude oil & natural gas proven reserves on the rise after 2020 lows
The U.S. Energy Information Administration (EIA) has outlined in a recent report that the proven reserves of natural gas reported by operators established a new record in the United States in 2021, while proven U.S. reserves of oil increased but did not quite return to pre-pandemic levels.
EIA highlighted in a recently released Proved Reserves of Crude Oil and Natural Gas in the United States, Year-End 2021 report that the U.S. energy demand rebounded from its 2020 lows caused by the COVID-19 pandemic in 2021 while the average prices of both crude oil and natural gas rose to the highest levels since 2014.
To prepare this report, EIA collected independently developed estimates of proved reserves from a sample of operators of U.S. oil and natural gas fields. The responses were received from 392 of 411 sampled operators, which provided coverage of about 90 per cent of proved reserves of oil and 93 per cent of proved reserves of natural gas at the national level.
What was going on with U.S. crude oil in 2021?
According to the Energy Information Administration, the proven reserves of U.S. crude oil and lease condensate increased by 6.2 billion barrels or 16 per cent, from 38.2 billion barrels to 44.4 billion barrels at year-end 2021. On the other hand, the U.S. domestic production of crude oil and lease condensate decreased by 1 per cent in 2021.
EIA underscored that Texas, where more proven reserves of crude oil and lease condensate are located than anywhere else, saw the largest net increase in proved reserves in 2021 or 1.9 billion barrels, which is 12 per cent.
Furthermore, New Mexico saw the second-largest net increase of proved reserves of crude oil and lease condensate or 1.4 billion barrels, which is 39 per cent, and Alaska the third-largest or 0.7 billion barrels, an equivalent of 31 per cent.
Meanwhile, the largest net decrease in proved reserves of crude oil and lease condensate in 2021 was reported by operators in Oklahoma (-19 million barrels, 1 per cent).
The 12-month, first-day-of-the-month average spot price for West Texas Intermediate (WTI) crude oil at Cushing, Oklahoma, increased by 67 per cent from $39.66 per barrel in 2020 to $66.26/barrel in 2021.
How did U.S. natural gas fare?
Based on EIA’s report, the proven reserves of U.S. natural gas increased by 152.1 trillion cubic feet (Tcf) or 32 per cent, from 473.3 Tcf at year-end of 2020 to 625.4 Tcf at year-end of 2021, “establishing a new record for natural gas proved reserves in the United States.”
The U.S. proven reserves had previously decreased by 4 per cent in 2020 as a response to prices that fell with decreased consumption during the first year of the COVID-19 pandemic. At year-end 2021, however, five of the eight states with the most proved reserves of natural gas each reported new record volumes, driving the growth nationally.
As a result, Alaska saw a substantial volume of proven natural gas reserves added in 2021 for the second consecutive year. The annual total of natural gas proved reserves in Alaska increased in 2021 by 63.3 Tcf, almost tripling the state’s total from 36.5 Tcf to 99.8 Tcf—the largest increase of all states in 2021, underscored EIA.
The proven reserves located in Alaska had already quadrupled in 2020 from 9.4 Tcf to 36.5 Tcf due to the development of the Alaska LNG Project and its mainline pipeline connecting the North Slope to LNG facilities in the southern Alaska Cook Inlet region. Large volumes of previously stranded Alaskan natural gas resources are now considered proven reserves, elaborated EIA.
Moreover, Texas saw the second-largest increase in proved reserves of natural gas in 2021 or 34.3 Tcf, which is 30 per cent, and New Mexico the third-largest increase of 10 Tcf or 38 per cent.
The U.S. Energy Information Administration emphasised that the 12-month, first day-of-the-month average spot price for natural gas at the Louisiana Henry Hub increased by 84 per cent from $1.99 per million British thermal units (MMBtu) in 2020 to $3.67/MMBtu in 2021, which was the highest annual average price since 2014.