Crude oil production climbs as reserves post modest rise

Dec. 20, 2004
Worldwide reserves of crude oil and natural gas have changed little from those of a year ago in Oil & Gas Journal's annual estimate.

Worldwide reserves of crude oil and natural gas have changed little from those of a year ago in Oil & Gas Journal's annual estimate.

Global oil production increased during 2004 in response to greater worldwide demand for petroleum products. Russia's oil production continued to grow.

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Worldwide oil reserves are now estimated at 1.28 trillion bbl, up 1% from the last estimate (OGJ, Dec. 22, 2003, p. 43). The new estimate of gas reserves is 6.04 quadrillion cu ft, down from the previous estimate.

Reserves in member countries of the Organization of Petroleum Exporting Countries moved up slightly, while oil production by that group surged.

OGJ bases its reserves estimates on official data sources, surveys of major owners of reserves, and other sources of information. Reserves estimation is fundamentally imprecise, and definitions of "proved" and "reserves" differ among various providers of information.

Reserves changes

There are few major changes in reported reserves this year. Australia is an exception.

The Australian government released 2004 figures indicating that the country's remaining commercial reserves of crude and condensate total 1.49 billion bbl, less than half of its previous estimate. The government reported gas reserves of 29 tcf, one third of its previous estimate.

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The Canadian Association of Petroleum Producers (CAPP) last month released its annual estimate of Canada's conventional reserves as of the end of 2003.

The figures indicate a slight overall decline in both oil and gas reserves. Gas reserves are now estimated at 56.6 tcf, down from 59 tcf.

CAPP estimates that conventional crude and condensate reserves fell to 4.3 billion bbl from its year-earlier estimate of 4.5 billion bbl. Meanwhile, the Alberta Energy and Utilities Board's latest figures peg oil sands reserves in Canada at 174.5 billion bbl, a small increase from a year earlier. OGJ totals include the board's estimates, although oil sands differ greatly from conventional oil in nature and extent of development.

Peru's oil reserves estimate shows a gain from previous estimates, as now included are what Perupetro SA classifies as proved undeveloped liquids reserves.

This adjustment results in Peru's proved oil reserves totaling 952.8 million bbl, compared with 285.3 million bbl last year.

The latest figures available from the Norwegian Petroleum Directorate show a decline in Norway's proved reserves. Crude and condensate reserves are estimated to have slipped to 8.5 billion bbl from the previous estimate of 10.4 billion bbl.

Nigeria's oil reserves increased to 35 billion bbl, according to estimates from OPEC.

This boost means that members of the Vienna-based organization now hold 69.3% of total worldwide oil reserves. Last year's estimates indicated that OPEC members held 68.7% of total oil reserves.

US reserves

The US Energy Information Administration, in its latest estimate of US oil and gas reserves, reported that during 2003, gas reserves increased for the fifth consecutive year.

The 1.1% gain puts total US gas reserves at 189 tcf. This increase came during a year in which gas prices were up 69%, exploratory and development gas completions were up 22%, and US gas production increased less than 1%.

The majority of gas discoveries during 2003 were from extensions of existing fields.

New field discoveries were down 8% from those of 2002 and 33% below the prior 10-year average.

Continuing development of unconventional gas fields—including tight sands, shales, and coal beds—resulted in large gas reserves additions in the Rocky Mountain states and Texas last year. Large reserves were added in the Powder River basin and Green River basin in Wyoming and in Wattenburg field and the San Juan basin in Colorado and New Mexico. Also, large reserves were added in Newark East field of Texas' Barnett Shale.

Coalbed methane proved reserves grew 1% last year, and production dipped by an even smaller margin. Such resources account for 10% of US dry gas proved reserves.

During 2003, proved reserves of oil in the US declined 3.5%, the first decrease in 5 years. Operators replaced only 58% of production with reserve additions, EIA said.

Most oil discoveries in 2003 were new field discoveries in the Gulf of Mexico. The North Slope of Alaska, normally a major contributor to total discoveries, had little impact last year, EIA noted.

US natural gas liquids reserves declined 6.7% last year to 7.5 million bbl. EIA, which counts NGL reserves as the sum of natural gas plant liquids and lease condensate reserves, attributed the decline to changes in the economics of gas and NGLs, as well as changes in the liquids content of 2003 gas production.

Oil production

Strong worldwide demand for oil products boosted 2004 production of crude oil and condensate nearly 4% from a year earlier.

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OGJ estimates that Russian oil production continued a decade-long climb, increasing nearly 9% in 2004 (Table 2). With oil output of 8.95 million b/d, Russia led countries of the former Soviet Union and Eastern Europe to a 7.7% jump in production from the combined level of 2003.

The largest regional gain in oil production this year was in Africa, which posted an 8.2% increase. Nigeria, Algeria, and Libya led the continent in oil production, having seen their OPEC output ceilings fluctuate throughout the year.

At the beginning of 2004, the group quota for OPEC members other than Iraq was 24.5 million b/d. The group cut the target to 23.5 million b/d effective Apr. 1 but quickly raised it to 25.5 million b/d July 1, then to 26 million b/d Aug. 1 and 27 million b/d Nov. 1.

OPEC production exceeded target levels most of the year.

US production of crude and condensate declined by an estimated 5% in 2004. The effects of natural decline rates were exacerbated by production shutdowns in the Gulf of Mexico due to hurricanes. OGJ estimates 2004 US oil production averaged 5.4 million b/d.