SUMMARY

The estimates in this report of undiscovered recoverable oil and gas resources for the United States were made: (1) by carefully reviewing a large amount of geological and geophysical information gathered on more than 100 different provinces by over 70 specialists within the Survey; (2) by applying a variety of resource appraisal techniques to each potential petroleum province; and (3) through group appraisals and the application of subjective probability procedures. These methods provide a range of estimates which are summarized in terms of low, high, and mean values for the various provinces and groups of provinces, or regions. The basic data and procedures used are documented and are being incorporated into a dynamic, data-intensive system that can be upgraded, updated, and reevaluated periodically. These data are open to public inspection. In this study, the primary emphasis was placed on crude oil and natural gas in the onshore provinces and the provinces on the continental shelf out to water depths of 200 metres; estimates of natural gas liquids were derived independently by multiplying estimates of natural gas by factors determined from historical data. Excluded from consideration were oil shales, tar sands, and heavy hydrocarbons and tight gas sands not currently productive. Also excluded was offshore potential beyond 200 metres of water depth. All of these resources or areas for resource development have significant future potential measured in tens or hundreds of billions of barrels. Time did not permit assessment of their recoverability as a part of this study, but they will be the subject of accelerated study in the immediate future. The estimates of undiscovered recoverable resources take into account relevant past history

and experience and are based on assumptions that undiscovered recoverable resources will be found in the future under conditions represented by a continuation of price-cost relationships and technological trends generally prevailing in the recent years prior to 1974. Pricecost relationships since 1974 were not taken into account because of the yet undetermined effect these may have on resource estimates. Clearly a new pattern of exploration economics is now under development, and, in cooperation with the Bureau of Mines, work to determine the effect of this new pattern on discovery and recovery of oil and gas is beginning. Assuming an increase in price-cost ratio, undiscovered recoverable resource estimates will expand and, at some threshold level, recovery percentages on discovered petroleum will improve. The higher price-cost ratios existing in 1975, if they should continue or increase even higher, would likely increase estimates of both undiscovered recoverable resources and reserves significantly-some economists think perhaps by half again. This possible added potential is being considered in a follow-on study planned for completion within a year.

The terms used to categorize past, present, and future supplies of oil and gas essentially correspond to definitions jointly adopted by the U.S. Geological Survey and the Bureau of Mines in April 1974; however, specific terminology for oil and gas reporting has not yet been standardized. In the present study, the following are reported as separate quantities; cumulative production; measured, indicated, and inferred reserves (all of which fall into the identified category); and undiscovered recoverable resources. The category inferred reserves has been included by some estimators as part of the undiscovered resources.

In considering these quantities it is impor

tant to distinguish between reserves and undiscovered recoverable resources. Reserves are identified resources known to be recoverable with current technology under present economic conditions. Undiscovered recoverable resources include deposits that are yet to be discovered but are assumed to be economically producible. Resources also include deposits that have been identified, but cannot now be extracted because of economic or technological factors as well as subeconomic deposits that are yet to be discovered.

Table 1 summarizes for the conterminous U.S. and Alaska, both onshore and offshore, the current estimates of measured, indicated, and inferred reserves and the undiscovered recoverable resources of crude oil, natural gas, and natural gas liquids. Cumulative production is also shown. The measured and indicated reserves are derived from estimates prepared by the American Petroleum Institute (API) and the American Gas Association (AGA). The inferred reserves are identified as to field location but have not yet been defined by drilling. The undiscovered recoverable resources are reported as a range of values derived by computer analysis of lognormal distribution curves. Within the probability levels of 95 percent and 5 percent, the range of total undiscovered recoverable oil resources is 50 to 127 billion barrels. The range of undiscovered recoverable gas is 322 to 655 trillion cubic feet, and the range of undiscovered recoverable natural gas liquids is 11 to 22 billion barrels. Smaller and larger volumes, respectively, would be associated with probabilities of more than 95 percent and less than 5 percent. The regional probability curves included with this report show the magnitude of estimates for any selected range. For totally unexplored frontier areas, the absence of already discovered indigenous or adjacent recoverable hydrocarbons render uncertainty sufficiently great to weaken probability judgments at either high or low levels, and in those areas estimates at the 75 and 25 percent levels are shown as more applicable for some planning purposes.

The distribution by regions of the estimated undiscovered recoverable resources of crude oil and natural gas is shown as a range of values in figure 1.

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The user of these data should be aware that the forecasts recorded for measured, indicated, and inferred reserves are single-number estimates of these quantities, derived from API and AGA statistics. By contrast, undiscovered recoverable resources are treated here as uncertain quantities, the degree of uncertainty about each being expressed in the form of probabilities.

For planning purposes, it is desirable to report probabilities for total recoverable resources; e.g., the probability that total recoverable resources are less than a given number or lie between two numbers. An intuitively plausible approximation, given that only single number estimates for measured, indicated, and inferred reserves are available, is to add these estimates (in this case, 62 billion barrels of oil) to the end points of an interval of values of undiscovered recoverable resources (in this case, 50-127 billion barrels of oil) and then assert that the probability assigned to this interval for undiscovered recoverable resources is equal to the probability that total recoverable resources lie in the interval so translated. This is correct only under the assumption that measured, indicated, and inferred reserves are known with certainty and have values equal to the single-number estimates cited. Given this assumption, the probability that the remaining total recoverable resources of crude oil lie between 112 billion barrels and 189 billion barrels is 90 percent. At the 1974 level of domestic production of 3.04 billion barrels, this is equivalent to a 37 to 62 year production life. Current production makes up only about two thirds of crude oil consumption.

Performing a similar computation using the sum of single-number estimates of measured reserves of natural gas and of inferred reserves of natural gas (in this case, 439 billion cubic feet of gas) and adding this single-number estimate to the end points of a range of values of undiscovered recoverable resources (in this case, 322-655 trillion cubic feet of gas), the probability that the remaining total recoverable resources of natural gas lie in the range of 761 trillion cubic feet to 1,094 trillion cubic feet is also 90 percent. At the 1974 production level of 21.3 trillion cubic feet, this is equivalent to a 36 to 51 year production life.