The North American natural gas market: An analysis of remaining North American natural gas resources

Natural gas is typically categorized as proved reserves and remaining potential resources. Estimation of a natural resource is a time-dynamic process. Because this process involves estimating the location and magnitude of an inherently unknown quantity, the accuracy of estimates may be considered as limited-by (1) our perception and understanding of the origin and occurrence of the resource, (2) the quality and distribution of available data from which to project our estimates,and (3) the tools that we employ to facilitate the estimates. The effects and relative importance of these limitations change with time, particularly as our knowledge of the resource improves. In addition, in the case of natural gas resources, the types of resource assessed have changed with time to now include, for example, gas reservoirs in coalbeds. While calculation of proved reserves is well documented and uses a limited number of established engineering techniques, methodological approaches used to estimate the much larger remaining potential resource vary from simple volumetric calculations, where data are sparse or somewhat questionable, to computer simulation, to a comparison with geological analogs, to field-size distribution analysis and discovery process modeling, when sufficient data are available and significant field development has occurred. Selection and understanding of the best methodologies are critical to arriving at the most correct result. Canada, Mexico and the United States are rapidly becoming a single market for natural gas. Projections by the U.S. Gas Research Institute and American Gas Association indicate that U.S. gas consumption (predominantly supplied by Lower 48 drilling) will increase into the early part of the next century by almost 40 percent, from the current 21.6 trillion cubic feet (Tcf) to in excess of 30 Tcf per year by 2015. These projections assume 3+ Tcf/year of gas imported from Canada, and zero net imports/exports for Mexico. This paper will evaluate the results of potential gas resource estimates and their geographic distribution for North America. Price projections to 2015 also will be presented and the role of new technology evaluated. This analysis sets a baseline for future gas supply which will affect downstream economics and resultant activities.