EIA report: Lower prices lead to decline in oil and gas reserves

As U.S. oil and gas prices fell so did reserves. U.S. crude oil proved reserves fell 11.8%, or 4.7 billion barrels, and U.S. natural gas proved reserves declined 16.6%, or 64.5 trillion cubic feet, at the end of 2015, compared to the same time the previous year, according to the U.S. Energy Information Administration. The data was part of EIA’s report on oil and natural gas reserves it released Wednesday (Dec. 14).

At year-end 2015, oil reserves were 35.2 billion barrels, while natural gas reserves were 324.3 trillion cubic feet. “The significant reduction in the average price of both oil and natural gas between 2014 and 2015 resulted in more challenging economic and operating conditions, an important factor in determining proved reserves,” according to the EIA.

The low prices led to a nearly 50% decline in the average West Texas Intermediate crude oil spot prices, to $50 a barrel in 2015, down from $95 a barrel in the previous year. It also led to a 40% drop in the natural gas spot price at the Louisiana Henry Hub to $2.62 per million Btu in 2015, down from $4.55 per million Btu in the previous year. As prices fell, drilling activity declined and reserves decreased.

New Mexico saw the largest increase in “proved reserves of crude oil and lease condensate of all states in the United States, mostly from development of the Wolfcamp shale and Bone Spring plays in southeastern New Mexico’s portion of the Delaware Basin,” according to EIA. “Crude oil and lease condensate extensions to existing fields were highest in Texas and North Dakota in 2015. However, as a result of downward revisions, both states experienced a net reduction in proved reserves.”

In 2015, Ohio added more than 5 trillion cubic feet of natural gas reserves in the Utica/Point Pleasant Shale play, surpassing Arkansas and the Gulf of Mexico to become the ninth-largest natural gas reserves state. Arkansas was the seventh-largest state with natural gas reserves, behind of Louisiana.