From Bureau of Economic Geology, The University of Texas at Austin (
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Second International Petroleum Technology Exhibition, Mexico City, Mexico, February 6, 2001

Value of Applied Research and Future of Natural Gas Supply:
How the U.S. Natural Gas Production Curve Was Built and
How It Will Be Sustained in the Future

Scott W. Tinker and Eugene M. Kim
Bureau of Economic Geology, The University of Texas at Austin


Forecasts for annual U.S. gas production indicate gas supply will grow from 21 Tcf in 2001 to around 27 Tcf by 2015. Demand is projected to exceed 30 Tcf by 2015. More than 50% of the natural gas in 2015 is forecast to come from deepwater, subsalt, and unconventional (tight gas, shale gas, and coalbed methane) sources. Analysis of historical Federal and State exploration incentive programs and Federal and private investment in gas research indicate that the unconventional and offshore gas supply curves were heavily influenced by the successful application of research and technology. Gas research funded largely by the U.S. Department of Energy (DOE: $240 million over 25 years), the Gas Research Institute (GRI: $140 million over 20 years), and the private energy sector resulted in nearly 18 Tcf of incremental unconventional gas production from 1970 through 2000.

To meet expected demand, the United States must now replace and grow existing reserves by nearly 50% over the next decade. This effort will require a significant investment in gas research and technology. Unfortunately, GRI is now a private company, and the private energy sector has decimated the once-great private sector research and development laboratories. As a result, gas research is not being funded at even historically equivalent levels, and the United States is facing a very real gas supply crisis.

Approximately 60% of the current gas produced in the United States comes from Texas and the offshore Gulf of Mexico. The U.S. reliance on the Gulf region is likely to remain at 60% or greater in the future; therefore, it is highly unlikely that the United States will become a net exporter of gas to Mexico in the short or mid term.

Although Mexico currently produces considerably less natural gas than the United States (2 Tcf vs. 21 Tcf), demand for gas in Mexico is also forecast to increase considerably over the next decade. Several of the Gulf onshore basins in Mexico, including Burgos, Veracruz, and Macuspana have high gas potential, as does the underexplored Mexico offshore. However, because of growing demand for natural gas within Mexico, it is also unlikely that Mexico will become a net exporter of gas to the United States in the short or mid term.