Research Engineering - Critical Review of Methods Used in Estimation of Natural Gas Reserves (TP 2402, Petr. Tech., July 1948, with discussion)

This paper discusses methods used in the estimation of natural gas reserves and the general conditions under which the various methods are applicable. The factors used in estimating natural gas reserves are reviewed. Errors which have been found to occur frequently are listed. Introduction The estimation of natural gas reserves has become of paramount interest because of the increasing importance of gas in the nation's economy. Gas is a most desirable fuel, a fact substantiated by the continued rise in the market demand. In addition, new uses for gas are being developed by the chemical, plastic, and associated industries, and plants are being built to make gasoline from natural gas. These are a few of the factors contributing to the importance of the nation's natural gas reserves. With the increased importance of gas there is an increase in the need for reliable estimates of the magnitude and availability of natural gas reserves. These estimates are being used currently: (I) to determine which fields contain sufficient available reserves to justify the construction of pipe-line outlets to serve particular markets; (2) to design pipe lines necessary to serve those fields adequately;] (3) to determine the location of industrial and chemical plants; (4) to finance the development of gas properties, and the construction of gas pipe lines; (5) to determine fair and adequate depletion allowances and depreciation rates; (6) to justify applications for gas pipe lines before various regulatory bodies; (7) to determine the number of wells required to exploit the reserves most economically; (8) to aid in establishing values for the purchase or sale of gas properties, and for purposes of inheritance taxes; (9) to determine equities under unitized operations; (10) to provide a basis for calculating the economics of gas-cycling operations. History or Estimation of Natural Gas Reserves The natural gas industry in the United States had its beginning during 1826 when natural gas was used for lighting the city of Fredonia, N. Y. The first natural gas pipe line was a 25-mi]le wooden line constructed from hollowed logs, connecting West Bloomfield and Rochester, N. Y. There is no record of an attempt to estimate the gas reserve at West Bloomfield but an attempt was made to determine the capacity of the well by measuring the time required to 611 a large balloon. One of the earlier publications concerning estimation of natural gas reserves is the "Manual for the Oil and Gas Industry," published by the Treasury Department, United States Internal Revenue, in i9i9. The following methods of computing "gas depletion" are listed: (I) production decline of the gas well or property; (2) decline in open-flow capacity; (3) comparison with the life history of similar wells or properties, particularly those exhausted Art