The Uncertainty of Estimating Growth of Hydrocarbon Reserves

"The U.S. Geological Survey has been conducting oil and gas assessments for many years. The first one I know of was conducted in 1909 by David T. Day. Other assessments will be conducted in the future. In recent assessments we have come to realize the importance of the appreciation, or growth, of reserves; that is, additions to reported field reserves since discovery of the field. Since the early 1900's, we have seen an enormous growth of reserves and it is clear that the causes of reserve growth are complex in the extreme. Future evaluations of oil and gas resources will depend increasingly on our ability to understand and predict this phenomenon."

Dr. Don Gautier, U.S. Geological Survey

The American public needs to know the extent of the Nation's oil and gas resources at any given time.

Knowledge of oil and gas resources is needed for strategic planning, formulating sound economic, environmental, and energy policies, and evaluating lands in the purview of the Federal government. The U.S. Geological Survey (USGS), in collaboration with the Minerals Management Service (MMS), is the only independent body able to conduct such a study. The National Oil and Gas Assessment is a dispassionate and scientifically-based analysis that is unencumbered by vested interests in the outcome. USGS geologists develop hypotheses for occurrence and distribution, rather than conduct inventories, of oil and gas resources as the basis for preparing the National Oil and Gas Assessment. The result is an estimate of the quantity of oil and gas yet to be discovered and recovered, and of the past and future growth in hydrocarbon reserves.



The USGS works with many Federal and State agencies and industry sources to gather relevant information.

The USGS maintains primary responsibility for the assessment of all onshore lands (including Federal, State, private, and Trust lands) and all State offshore waters. The MMS maintains primary responsibility for Federal offshore waters. The USGS and MMS cooperate in those areas of responsibility that are geographically close; however, the agencies employ different techniques to develop their hypotheses largely because of differences in the type of information available. For example, MMS has access to industry-confidential geophysical data and relies heavily on this source of information to prepare its assessment. The USGS relies on geological interpretations of source rocks, reservoirs, and trapping mechanisms, and on field and reservoir data in preparing its assessment.



Results of USGS studies indicate that the phenomenon of reserve growth is much more important than previously thought.

Over the past 15 years, USGS scientists have modeled reserve growth--typical increases in the estimated ultimate recovery from oil and gas fields--to arrive at some important conclusions. For example, oil fields brought on line in the early part of this century continue to produce beyond expectations. This is partly an artifact of reporting of reserves, and partly an enhanced understanding of reservoir heterogeneity and technological innovation. Growth of fields affects the National Oil and Gas Assessment in two ways. First, the reserve growth expected for existing fields may exceed all the undiscovered conventional resources in the United States today. Second, this reserve growth enlarges the estimated undiscovered conventional recoverable oil and gas resources. This growth must be accounted for or estimates of oil and gas resources in the National Oil and Gas Assessment will be too low.



Recent USGS studies indicate that very little new oil and gas is being added to this country's reserve base as a result of new field discoveries.

From 1978 to 1991, 90 percent of additions to hydrocarbon reserves in the United States has come from growth of reserves in existing fields. Only 10 percent of the additions to reserve base is credited to new discoveries. The reasons for reserve growth are complex and incompletely understood, however, it is clear that originally-reported reserves depend on a variety of societal, economic, and technological decisions. The concept of reserve growth may be the single most challenging issue in conducting a National Oil and Gas Assessment.



USGS scientists use a systematic numerical approach to estimating reserve growth on a regional and national scale.

Drs. David Root and Emil Attanasi and their coworkers in the USGS have developed growth functions from which estimates of future reserve growth can be derived. These functions are based on field-level time-series data found in confidential reports submitted to the Department of Energy. Root and Attanasi hold that oil and gas fields in the United States can be divided into two broad categories--those that behave in a statistically orderly fashion, termed common, and those that do not. Moreover, they observe that single reservoir fields, and there are relatively few, experience less reserve growth than multiple reservoir fields. Growth curves indicate that the rate of reserve growth is rapid at first, but slows as fields mature. These reserve growth curves are extended to the year 2020, a future point thought to be reasonable given the quality of information available.



USGS scientists see genuine methodological uncertainties in estimating reserve growth; uncertainties that will form the basis for continued study.

Fields that do not behave well statistically, so-called outlier fields, may be the key factor in estimating future additions resulting from growth of reserves. They represent only about 15 percent of the total hydrocarbon resource but account for about 80 percent of the reserve growth. These fields, principally heavy oil fields of California and gas fields of Appalachia and the Rocky Mountain area, exhibit annual variations in reserve growth that fluctuate far more than those of the so-called common fields, and do not yield consistent results in reserve-growth modeling, according to Dr. Caroline Isaacs and her USGS colleagues. Reserve growth is strongly influenced by the price of oil and gas because reserve additions to old fields often result from financial and political decisions. Some uncertainty accompanies all estimates of hydrocarbon resources, but such estimates are made more uncertain by the phenomenon of reserve growth.

For More Information:

Email: dhouse@usgs.gov

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This USGS Fact Sheet can be found at <URL:http://energy.usgs.gov/factsheets/HydroGrowth/estimating.html>
Maintained by L. Friedrich Last updated 20-Feb-1997