APPENDIX B.-THE SUPPLY OF NATURAL GAS PRODUCED IN THE LOWER 48 STATES

The trends in supply and consumption of natural gas in the United States exclusive of Alaska and Hawaii from 1960 to 1972 are shown on Schedule B-1. According to the Bureau of Mines data, total consumption increased from 12 Tef in 1960 to 23.7 Tef in 1972. Growth rates averaged 5.1 percent per year from 1960 to 1965, and 6.5 percent from 1965 to 1970, but the increase from 1970 to 1971 was only 3 percent and 2 percent from 1971 to 1972.

The national supply trend shows that domestic natural gas production has his torically accounted for the bulk of our gas supply. In the year 1960, the United States was a net importer of 144 billion cubic feet, which accounted for 1.1 percent of the total supply. By 1970 net imports for the Lower 48 States increased to 795 billion cubic feet, or 3.5 percent of total supply. For 1972 net imports of 989 bil lion cubic feet accounted for 4.3 percent of total supply.' Marketed production of natural gas, as reported by the Bureau of Mines, increased from 12.7 Tef in 1960 to 21.8 Tef in 1970 and 22.9 Tef in 1972.

National trends in natural gas reserves and production

The trend in natural gas production and reserves in the Lower 48 States, as reported by the American Gas Association, is set out on Schedule B-2. Proved reserves increased from 165.0 Tef in 1947 to 236.5 Tef in 1956, and reached a peak of 289.3 Tef in 1967. Total reserves declined each year thereafter to 234.6 Tef as of December 31, 1972, with production exceeding new reserves additions in each

year from 1968 to 1972.

The net production of natural gas increased over this period, from 5,599 billion cubic feet in 1947 to 10.849 billion cubic feet in 1956, and to 18,358 billion cubie feet in 1967. Unlike total gas reserves, production continued to increase after 1967, amounting to 22.365 billion cubic feet in 1972. From 1950 to 1970 gas produc tion increased at an average rate of 6 per cent per year. From 1960 to 1970 gas production increased at an average rate of 5.3 percent per year. From 1970 to 1971 gas production increased by 0.5 percent, and from 1971 to 1972 by 2 percent. Com parative five-year growth in natural gas production from 1952 to 1972 may be seen by the following summary table:

INCREASE IN NATURAL GAS PRODUCTION IN THE LOWER 48 STATES

The annual additions to gas reserves for the Lower 48 States are set out on Schedule B-2 at Column (1). Unlike production trends, reserves additions are inherently erratic, fluctuating up and down from year to year. This, of course, is a reflection of the uncertainty in drilling for oil and gas reserves and the extensions and revisions to previous reserve estimates.

Even so, general trends in reserves additions over the postwar period may be ascertained. From 1947 to 1952 annual reserves additions averaged 13.3 Tef. From 1953 to 1956 the average was 19.1 Tef, but ranged from 9.5 Tef in 195 to 24.7 Tef in 1956. From 1957 to 1967 annual reserves additions averaged 18.9 Tef, ranging narrowly between 18.1 and 21.2 Tef, except in 1960 and 1961 when reserves additions were 13.8 and 16.4 trillion respectively. From 1968 to 1972. annual reserves additions averaged 10.0 Tef, about 50 percent of the production rate during that period. The transition in the relation of annual reserves additions to production is shown by the following chart:

1 Includes LNG imports.

FINDING PRODUCTION RATIO

RELATION OF RESERVE ADDITIONS
TO PRODUCTION (FINDING-PRODUCTION RATIO)

The Lower 48 States is defined as the 48 contiguous states including the District of Columbia, but excluding Alaska and Hawaii. This geographical subdivision recognizes that Alaskan gas has not yet been transported to the Lower 48 States although relatively small quantities (47.9 billion cubic feet in 1972) were produced for LNG shipment to Japan. Deliveries of Alaskan gas to the Lower 48 States can be achieved only by transporting that gas by pipeline overland through Canada or in a liquefied form by tanker.

Trends in the reserves-to-production and finding-to-production ratios for the Lower 48 States are shown in Columns (3), (4) and (6) on Schedule B-2. The reserves-to-production ratio has been in a long-term decline, from 29.5 in 1947 to 21.8 in 1956, to 15.8 in 1967, and to 10.5 in 1972. The finding-to-production ratio, reflecting the erratic behavior of annual reserves additions of natural gas, is more volatile than the reserves-to-production ratio.

A basic downtrend in the finding-to-production ratio is evident on Schedule B-2 at Column (4) which sets out on the three-year (centered) moving average of this ratio. Broadly speaking, the annual finding-to-production ratio has declined from an average 1.94 for the period 1947 to 1956, to an average of 1.32 from 1957 to 1967.. From 1968 to 1972, the finding-to-production ratio averaged 0.48, with production exceeding reserves additions in all five years.

Proven reserves of natural gas in the Lower 48 States are a composite of nonassociated gas, associated-dissolved gas, and gas which is held underground in storage. The trends for these separate types of gas reserves are shown on Schedule B-3 over the period from 1948 to 1972.

It is seen that underground storage of gas has increased each year over this period, at a faster rate than total reserves, amounting to 4.5 Tef by December 1971, or 1.9 percent of total proved reserves for the Lower 48 States.

Associated-dissolved gas reserves increased from 50 Tef in 1948 to a high of 76 Tef by 1959, amounting in that year to 29.2 percent of total gas reserves. Subsequent to 1959, associated-dissolved reserves declined, to 67.5 Tef in 1967 and to 49.1 Tef in 1972. As of December 1972, associated-dissolved reserves amounted to 20.9 percent of total reserves.

In contrast, non-associated reserves increased from 122.7 Tef in 1948 to 218.4 Tef in 1967. Declines were experienced in 1968, 1969, 1970, 1971 and 1972. As of December 1972, non-associated gas reserves amounted to 181.0 Tcf, or 77.1 percent of total reserves.

Schedule B-4 sets out reserves additions and net production, and also total reserves, separately for associated-dissolved and non-associated gas. This information has been published by the American Gas Association since the year 1947.

While non-associated reserves have declined by 16 percent since 1966, associated-dissolved reserves have declined by 28 percent. The finding-to-production ratio has been higher in every year for non-associated gas than that for associated-dissolved gas. Similarly, the reserves-to-production ratio has been higher for non-associated supplies.

Natural Gas Reserves and Production Trends for Major Producing Areas

Reserves and production data from 1960 to 1972 for the major producing areas in the Lower 48 States are summarized on Schedules B-5 to B-7. Schedules B-8 to B-14 set out detailed data for each of the major producing areasSouth Louisiana, Permian Basin, Texas Gulf Coast, Hugoton-Anadarko, Other Southwest, Rocky Mountain and California, respectively.

A comparison of natural gas production for the major producing areas for the years 1960, 1985, 1970 and 1972 is set out on Schedule B-5.

The data show that South Louisiana has provided the bulk of the growth in natural gas production. From 1960 to 1965, natural gas production in the Lower 48 States increased from 13,019 billion cubic feet to 16,245 billion cubic feet, or by 3.226 billion cubic feet. South Louisiana accounted for 1.520 billion cubic feet of this increase, or 47 percent. From 1965 to 1970, South Louisiana's increase, of 3.318 billion cubic feet, accounted for 60 percent of the total 5571 billion cubic feet increase in production. By 1972, production in South Louisiana increased 9 percent over 1970, while production in the remainder of the Lower 48 States declined 1 percent.

In 1960, the Texas Gulf Coast was the largest producing area, accounting for 23.3 percent of the United States Mainland production, followed by South Louisiana with 19.1 percent and Other Southwest with 17.2 percent. By 1983, South Louisiana overtook the Texas Gulf Coast as the leading producing area and by 1972 production in South Louisiana was more than twice the Texas Gulf Coast production. These continued to be the two largest producing areas, contributing 36 percent and 17 percent respectively, of the United States Mainland production in 1972.

As noted previously, natural gas reserves additions in the Lower 48 States declined sharply after 1967. As shown on Schedule Z-6, during the period 19601967, reserves additions averaged 18,584 billion cubic feet per year and fell to an annual average of 10,481 billion cubic feet during the period 1968-1972. Reserves additions fell in all of the major producing areas, except the Rocky Mountain area, but in varying degrees.

In the South Louisiana and Hugoton-Anadarko areas, reserves additions declined approximately one-fourth in the Permian Basin area the decline was 54 percent and in the Texas Gulf Coast and Other Southwest areas, the 1968-1972 annual reserves additions were less than 30 percent of the 1960-1967 annual averages.

As in the case of production, reserves additions for the entire 12-year period 1960-1972 were greatest in South Louisiana and in the Texas Gulf Coast area. However, for the last five years, 1968-1972. South Louisiana accounted for half of the total reserves additions, while the Texas Gulf Coast area accounted for only 7 percent.

Since production generally continued to rise through 1970, the finding-toproduction ratios declined sharply after 1967 in all major areas except the Rocky Mountain area. South Louisiana had the highest ratios, averaging 1.9 for 19601967 and 0.7 for 1968–1972. In the Permian Basin area, which experienced a 10.5 percent average annual increase in production from 1968 to 1972, the finding-toproduction ratio fell from 1.6 to 0.5 because average reserves additions declined to less than half of the 1960-1967 average. In the Texas Gulf Coast and Other Southwest areas, the 1968-1972 ratios were only 0.2 and 0.3 respectively, down from 1.1 and 1.0 for 1960-1967.