Add growing proved reserves while cutting expenses in half to the list of accomplishments the industry’s largest oil and gas players—including national oil companies—have achieved.
Exxon Mobil Corp., for example, added 2.7 billion barrels of oil equivalent (Bboe) to its reserves in 2017. The added volumes amounted to a 183% production replacement for the year, bringing its total proved reserves to 21.2 Bboe.
Contributing to growth last year were additions from liquids-rich unconventional plays in the U.S., mainly in the Permian Basin, as well as additions at Upper Zakum in Abu Dhabi, Mozambique and, of course, offshore Guyana—where proved reserves and additional resources are estimated at more than 3.2 Bboe. With a drilling program underway and the Longtail-1 discovery announced this week, the amount could rise even further.
Exxon Mobil is just one of the companies having success with the drillbit either through discoveries, extensions or improved recovery from existing fields.
The U.S. Energy Information Administration (EIA) released a report June 20 that showed a group of 83 E&P companies collectively added 8.2 Bboe to their proved reserves, bringing the total to 277 Bboe by year-end 2017. The additions marked the highest since 2013, according to the EIA.
“Of the 83 companies, 18 held more than 80% of the 277 Bboe in proved reserves at the end of 2017. While many of these companies have global operations, some are national oil companies with reserves concentrated in their home countries including Russia, China and Brazil,” the EIA said in its report. “Proved reserves change from year to year because of revisions to existing reserves, extensions and discoveries of new resources, purchases and sales of proved reserves, and production.”
The EIA reported that just less than half of the 17.7 Bboe in organic proved reserves added in 2017 came from the U.S. at about 8.5 Bboe.
Nearly a quarter of the total, or 4.3 Bboe, came from Russia, Central Asia and the Asia-Pacific region combined. More than 1.1 Bboe were individually added by Canada, Latin America and the Middle East and Africa region, while Europe trailed the pack for the sixth consecutive year with 0.3 Bboe.
Companies were able to add proved reserves while spending less, a quality that was fine-tuned by many when the oil market downturn forced them to cut back spending and activity. Although capex in 2017 was higher than in 2016 as companies increased budgets with improving oil prices, spending was half that seen in 2013.
“Exploration and development (E&D) spending in 2017 increased 11% from 2016 levels, but remained 47% lower than 2013 levels,” the EIA said. “Of the $285 billion companies spent on E&D in 2017, 33% [or $95 billion] was in the United States, with the Russia, Central Asia, and Asia-Pacific region accounting for 30% [or $85 billion] and all other regions each accounting for 10% or less.”
But year-over-year spending was mixed. Spending in the U.S. was up 36% in 2017 compared to the previous year. Spending was also up in Canada, Russia, Central Asia and the Asia-Pacific region, with each area seeing a 15% rise in E&D spending, the EIA said.
Spending fell, however, in Africa and the Middle East (16%), Europe (24%) and Latin America (15%). The EIA noted that “because significant cost deflation has occurred in the oil and natural gas industry since 2014, nominal spending values in different years may not be directly comparable.”
The EIA also explained that it is standard practice to average results over several years due to differences in the timing of companies’ capex and reporting of reserves.
“Analyzed this way, E&D costs declined significantly on a per boe basis from the 2012–2014 average to the 2015–2017 average. Three-year average E&D capital expenditures per boe of organic proved reserves additions decreased in all regions except Latin America,” the EIA said. “On an annual basis, 2017 represented the lowest E&D capital expenditures per additional boe to proved reserves during the 2012–2017 period at $16.12/boe.”
Velda Addison can be reached at email@example.com.
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