Analysis of Negative Revisions to Natural Gas Reserves in Texas

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Date

1984

Authors

Garrett, C. M., Jr.
Hocott, Claude R.
Finley, Robert J.

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Abstract

Early problems in overestimating effective porosity in some deep Delaware Basin carbonate reservoirs in the Permian Basin, particularly in District 8, resulted in noticeable negative revisions once these issues were resolved. However, the net negative volume of revisions for the Permian Basin (Districts 8, SA, and parts of 7B and 7C) was nearly an order of magnitude less than that for the Gulf Coast Basin. The largest negative revisions of total natural gas reserves were concentrated in the Gulf Coast within Texas Railroad Commission Districts 2, 3, and 4. District 4, with the largest volume of negative revisions, accounted for 56 percent of all negative revisions in Texas for the period 1966-1979. The total for the three districts equaled that of the whole state for the same period. Negative revisions of non-associated gas reserves in Districts 2, 3, and 4 accounted for more than two-thirds of the total gas negative revisions for the entire state from 1966 through 1979.

Large negative revisions were mainly due to a combination of interrelated factors. Among these, the original overestimation of natural gas reserves in the Texas Gulf Coast, fueled by optimism from market-related incentives, was significant. These estimates underwent insufficient critical review and reassessment, as supplies greatly exceeded demand. Continued high Reserves to Production (R/P) ratios into the 1960s further delayed reassessment. Technical variables such as water saturation, reservoir heterogeneity, and recovery factors, as well as non-technical variables including economic climate and regulatory controls, were analyzed.

Concern should be raised regarding the quality of reserve estimates declared during times of excess supply, as these reserves would not have undergone the test of extended maximum demand. However, there have been more frequent reviews of actual recoverable reserves over the last five years. Continued careful review of technical factors and awareness of the impacts of economic and regulatory environment changes suggest that extensive negative revisions over the next 10 to 20 years can be avoided.

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