The paradox of reserves

Oct. 20, 2003
Reserves, revisions, and discoveries are important subjects to readers of Oil & Gas Journal.

Alan Petzet
Chief Editor-
Exploration and Economics

Reserves, revisions, and discoveries are important subjects to readers of Oil & Gas Journal.

OGJ's survey of oil and gas reserves for the countries of the world has appeared in the last issue in December each year for many decades.

Another company, IHS Group subsidiary IHS Energy, has assembled comparable country, regional, and global estimates of oil and gas resources and production for 11 years.

The data show that liquid reserves revisions and new discoveries outpaced consumption during 1993-2002 in spite of declining exploration. IHS recently published a 10-year perspective in its 2003 World Petroleum Trends report. The report covers exploration and production in more than 180 countries.

Activity in 2002

In the world excluding North America (defined by IHS as the US and Canada), 2D seismic activity dropped 37% and 3D seismic activity fell 16% in 2002 from 2001, the report showed.

Countries awarded 5% fewer licenses in 2002 than in 2001, but the number of licenses in force was comparable in both years. The number of new-field wildcat wells completed in the world excluding North America fell to 956 in 2002 from 1,147 in 2001. The number of oil and gas discoveries reported fell to 397 from 413. The number of these discoveries likely to be deemed commercial is not known at this time.

For North America, in terms of absolute numbers, fewer wildcat wells were drilled in 2002 than at any time in the previous 9 years, while outside North America only 1999 saw fewer wells drilled than in 2002.

Reserves trends

Maintaining reserves levels during an extended period of declining discoveries "partly explains the paradox of the petroleum industry's ability to generate excess oil supplies even though new oil discoveries have not come close to replacing demand," said Pete Stark, IHS Energy vice-president, industry relations.

Other highlights of the report showed that:

  • In 2003, confirmed liquid reserves in fields discovered by the end of 1992 were 416 billion bbl, or 26%, higher than estimated in 1992.
  • In 2003, confirmed gas reserves in fields discovered by the end of 1992 were 2,300 tcf, or 36%, greater than estimated in 1992.
  • For the period studied, upwards revisions to previous global-reserves estimates accounted for 75% of all additions, and new discoveries accounted for only 25%.

Reserves and replacement

Global reserves stood at 1,153 billion bbl of conventional liquids and 6,662 tcf of conventional gas in 2002, with reserves-to-production ratios of 43 years for liquids and 68 years for gas, IHS estimated.

Gas reserves in the Organization of Petroleum Exporting Countries and non-OPEC countries were almost equal at 3,300 tcf each, but OPEC liquids reserves at 739 billion bbl far exceeded non-OPEC's 414 billion bbl.

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Table 1 gives the liquid reserves replacement percentages from new-field discoveries for 2002's top 15 non-OPEC liquids-producing countries. The US and Canada are excluded because comparable data aren't available. Table 2 shows where volumes were added in 2002.

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The number of non-North American discoveries reported fell by 16 to 397 (234 oil, 163 gas) in 2002. Figures for North America show a similar pronounced decline, with the US's share of global new-field wildcats in 2002 the lowest in a decade.

However, US offshore drilling activity reached 39% of the global offshore drilling total in 2002, its highest percentage during 1993-2002.

Estimates of volumes of new hydrocarbon discoveries made in 2002 for non-North America were almost 6.6 billion bbl of liquids and 30 tcf of gas.