In 2021, U.S. energy demand rebounded from its 2020 lows caused by the COVID-19 pandemic. The average prices of both crude oil and natural gas in the United States rose to the highest levels since 2014. Proved reserves of natural gas reported by operators established a new record in the United States in 2021, while proved U.S. reserves of oil increased but did not quite return to pre-pandemic levels.
Proved reserves are estimated volumes of hydrocarbon resources that analysis of geologic and engineering data demonstrates with reasonable certainty1 are recoverable under existing economic and operating conditions. Reserves estimates change from year to year because of:
- New discoveries
- Thorough appraisals of existing fields
- Production of existing reserves
- Changes in prices and costs
- New and improved techniques and technologies
To prepare this report, we collect independently developed estimates of proved reserves from a sample of operators of U.S. oil and natural gas fields with Form EIA-23L. We use this sample to further estimate the portion of proved reserves from operators who do not report. This year, we received responses from 392 of 411 sampled operators, which provided coverage of about 90% of proved reserves of oil and 93% of proved reserves of natural gas at the national level. We develop estimates for reserves located in the United States, each state individually, and some state subdivisions. States and regions with subdivisions are:
- New Mexico
- Federal Offshore Gulf of Mexico
Proved reserves of U.S. crude oil and lease condensate increased by 6.2 billion barrels (16%), from 38.2 billion barrels to 44.4 billion barrels at year-end 202.
U.S. domestic production of crude oil and lease condensate decreased 1% in 2021.
Texas, where more proved reserves of crude oil and lease condensate are located than any other, saw the largest net increase in proved reserves in 2021 (1.9 billion barrels, 12%).
New Mexico saw the second-largest net increase of proved reserves of crude oil and lease condensate (1.4 billion barrels, 39%), and Alaska the third-largest (0.7 billion barrels, 31%).
The largest net decrease in proved reserves of crude oil and lease condensate in 2021 was reported by operators in Oklahoma (-19 million barrels, 1%).
The 12-month, first-day-of-the-month average spot price for West Texas Intermediate (WTI) crude oil at Cushing, Oklahoma, increased by 67% from $39.66 per barrel in 2020 to $66.26/barrel in 2021.
Natural gas highlights
Proved reserves of U.S. natural gas increased by 152.1 trillion cubic feet (Tcf) (32%), from 473.3 Tcf at year-end 2020 to 625.4 Tcf at year-end 2021, establishing a new record for natural gas proved reserves in the United States.
Alaska (for the second consecutive year) saw a substantial volume of proved natural gas reserves added in 2021. The annual total of natural gas proved reserves in Alaska increased in 2021 by 63.3 Tcf, almost tripling the state’s total from 36.5 Tcf to 99.8 Tcf—the largest increase of all states in 2021.
Texas saw the second-largest increase in proved reserves of natural gas in 2021 (34.3 Tcf, 30%), and New Mexico the third-largest increase (10 Tcf, 38%).
The 12-month, first day-of-the-month average spot price for natural gas at the Louisiana Henry Hub increased by 84% from $1.99 per million British thermal units (MMBtu) in 2020 to $3.67/MMBtu in 2021, which was the highest annual average price since 2014.
|Crude oil and lease condensate|
|Total natural gas|
trillion cubic feet
|U.S. proved reserves as of December 31, 2021||35.8||38.2||473.3|
|Extensions and discoveries||5.7||6.3||67.6|
|Net adjustments, sales, and acquisitions||1.8||1.8||22.6|
|Net additions to U.S. proved reserves||5.3||6.2||152.1|
|U.S. proved reserves as of December 31, 2021||41.2||44.4||625.4|
|Percentage change in U.S. proved reserves||14.8%||16.2%||32.1%|
|Source: U.S. Energy Information Administration, Form EIA-23L, Annual Report of Domestic Oil and Gas Reserves|
Notes: Total natural gas includes natural gas plant liquids. Columns may not add to total because of independent rounding.
From 1981 to 1996, U.S. reserves of natural gas and crude oil steadily declined. In 1997, the downward trend for natural gas reversed as operators began introducing innovations including horizontal drilling2 and hydraulic fracturing techniques that successfully increased proved reserves and production of natural gas from shale formations. The downward trend for crude oil reversed beginning in 2008 when operators also applied these innovations to tight oil-bearing formations, such as the Bakken shale of the Williston Basin.
Steady increases in oil and natural gas reserves continued until 2015, when the industry experienced a large price drop (-47% for crude oil and -42% for natural gas), and proved reserves were revised downward because these lower prices did not support operators’ projections of resource development. From 2016 to 2018, U.S. oil and natural gas prices and reserves increased by at least 9% each year. That trend was again interrupted in 2019 by declining oil and natural gas prices (-15% for crude oil; -20% for natural gas) and in 2020, demand and proved reserves declined for both fuels. In 2021, demand for petroleum and natural gas increased 5% from 20203, prices rose, and proved reserves increased for both fuels, setting a new U.S. record for natural gas. In 2021, proved U.S. reserves of combined crude oil and lease condensate increased in seven of the eight states with the most oil reserves states. In 2021, operators in Texas reported the largest net increase in the state’s proved reserves of crude oil and lease condensate—an increase of 1,931 million barrels.
Operators in New Mexico had the second-largest increase of proved crude oil and lease condensate reserves—a net increase of 1,370 million barrels. The third-largest net increase in proved reserves of crude oil and lease condensate occurred in Alaska, a net increase of 754 million barrels.
Proved U.S. natural gas reserves increased in each of the eight states with the most natural gas reserves in 2021. Alaska, for the second year in a row, saw operators add the most proved reserves of natural gas. In the previous year, the Alaska LNG project pipeline allowed operators to book previously stranded natural gas from the north slope of Alaska as proved reserves. The continuing development of that project and rising natural gas prices caused operators to revise their reserves estimates up yet again in 2021. The annual total of natural gas proved reserves in Alaska increased in 2021 by 63.3 trillion cubic feet (Tcf), almost tripling the state’s total natural gas reserves from 36.5 Tcf to 99.8 Tcf.
Operators in Texas reported the second-largest net increase in proved natural gas reserves in any state, a net increase of 34.3 Tcf. Operators in New Mexico reported the third-largest net increase in proved natural gas reserves in 2021, increasing by 10 Tcf. These increases resulted from extensions and discoveries in the Permian and Delaware Basins and also from net revision increases due to rising natural gas prices.
Source: This is a shortened version of an article that was published by EIA