Analysis of Negative Revisions to Natural Gas Reserves in Texas

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The role of negative revisions in the large-scale decline in natural gas reserves in Texas during the late 1960s and through the 1970s was examined. Analysis of the factors that contributed to the negative revisions determined that no single element was responsible. However, (1) continued high levels of production, (2) original optimistic estimates of gas in place and recovery factors, (3) market-related factors that encouraged overestimation of reserves, and (4) unusually high reserves-to-production ratios (> 15) that obscured the underlying weakness in reserves combined in the Texas Gulf Coast to drastically reduce booked reserves of natural gas. Negative revisions totaling more than 20 trillion cubic feet during the period were found to have resulted mainly from ambiguities in the degree of reservoir heterogeneity, in calculation of water saturations, and in drive mechanism, along with the overestimation of reserves due to optimism encouraged by market-related incentives.

The much-reduced reserves-to-production ratios that now exist, along with continued closer monitoring of technical, economic, and regulatory factors that affect gas reserves, indicate that a return of extensive negative revisions over the next 10 to 20 years is avoidable.


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