Abstract: Field-Size Distributed Resource Appraisals Firmly Rooted in Geology Need to Provide the Basis for Natural Gas Supply Economics on a Project, Area or National Basis

Richard J. Snyder

Tenneco Gas has studied gas supply trends throughout its 5O-year history. Through its marketing and transportation business Tenneco Gas sells and transports over 14 percent of the natural gas consumed in the United States. Tenneco Gas owns and operates over 20,000 mi of large diameter pipelines, connected to many of the major domestic supply basins. Additionally, the Company provides natural gas directed producer funding for exploration, development and production payments through its Ventures group.

Understanding near-term and longer-term supply trends first requires a thorough understanding of the geological context before the interplay of price, demand, imports and pipeline capacities can be appreciated. A low point in understanding these relationships occurred in the mid-1970s when the Carter Administration declared "Gas Is Dead."

Both the U.S. government and industry based their outlooks on a fundamental misrepresentation of Lower 48 geological potential. Since 1978, 85 percent of production has been replaced. Part of this success can be related to price decontrol following the 1978 Natural Gas Policy Act. This success has continued even when gas prices declined. Over the 1988-1992 period, reserve replacement reached 98 percent. Clearly the driver is coming from other factors, including technology which lowers risks and enhanced market access through the opening of the interstate pipeline system.

Resource potentials are derived using Drew-Wood techniques, among others. A play-by-play discovery model is used to schedule reserves.

AAPG Search and Discovery Article #90986©1994 AAPG Annual Convention, Denver, Colorado, June 12-15, 1994