The Amazing Rise in U.S. Proven Natural Gas Reserves and Use

U.S. proven natural gas reserves continue to soar to record highs. We now have some 360 Tcf of proven gas in the ground, recoverable under current market conditions, experiencing increases of 5-8% per year. Driven by the Marcellus shale play in the Appalachian Basin, Pennsylvania and West Virginia have registered the largest gains, with both state reserve totals more than quadrupling since 2010. In fact, Pennsylvania and West Virginia have accounted for about 60% of new U.S. gas reserves since 2008, although mighty Texas continues to plug along, upping its reserves by 20% since then. These increases in U.S. gas reserves are even more remarkable because they've occurred in a low price market. Henry Hub spot gas prices have steadily declined from their average of $8.86 per MMBtu in 2008, and now stand at about $2.65. Remember: reserves are simply subsets of the overall much larger resource, illustrating what can be produced today under prevailing technologies and prices. Lower prices work to lower proven reserve totals, so, in fact, we have even more accessible gas than what can be reported. Overall, like oil, the gas reserve lifespan hovers in the 10-15 year time frame. That's because it makes no economic sense for companies that utilize short- to mid-term planning to look for resources that will not be needed for decades. Reserves though greatly affect the basic value of a company, so it's imperative that business policy centers on continuous replacement of reserves.