Energy futuresOil giants struggle to find more oil
Last week Exxon Mobil Corp’s annual financial report showed that the world’s largest oil company was struggling to find more oil; the report revealed that Exxon had only replaced 95 percent of the oil that it pumped out of the ground over the last decade; Exxon now holds more natural gas reserves than oil for future production; the company has replaced its natural gas reserves at higher rates than oil; in recent years large western oil companies have found that most of the accessible oil fields have been tapped, while new regions have been difficult to access both technically and politically; in 2010 Chevron announced that it had only replaced one barrel for every four it produced and Royal Dutch Shell PLC recently announced that next year it will produce more gas than oil for the first time in its company’s 104-year history
Harder to find, more difficult to extract // Source: kessinger.com
Last week Exxon Mobil Corp’s annual financial report showed that the world’s largest oil company was struggling to find more oil.
According to the Wall Street Journal, the report revealed that Exxon had only replaced 95 percent of the oil that it pumped out of the ground over the last decade, falling short of its 100 percent reserve replacement rate.
Exxon claims that it hit its mark of replacing every barrel of oil it produced with either oil or natural gas for the seventeenth consecutive year, but analysts say that this is largely due to the acquisition of large natural gas reserves. Last year Exxon’s acquisition of XTO Energy Inc., which owns nearly fifteen trillion cubic feet of natural gas reserves in its holdings, accounted for 80 percent of the reserves it added in 2010. Exxon now holds more natural gas reserves than oil for future production.
R. Blair Thomas, chief executive of EIG Global Energy Partners, believes that the XTO acquisition was designed to “mask the extent of [Exxon’s] replacement problem.”
While it has struggled to discover more oil reserves, Exxon has replaced its natural gas reserves at high rates, finding 158 cubic feet for every 100 cubic feet of natural gas that it extracted.
Exxon is not the only company struggling to find more oil.
In 2010 Chevron announced that it had only replaced one barrel for every four it produced and Royal Dutch Shell PLC recently admitted that next year it will produce more gas than oil for the first time in its company’s 104-year history.
In recent years large western oil companies have found that most of the accessible oil fields have been tapped, while new regions have been difficult to access both technically and politically.
Western companies have struggled to gain access to new fields in oil-rich areas like Russia or the Middle East due to politics, and while many have won contracts in Iraq, critical infrastructure has yet to be rebuilt.
One area these firms have had luck in securing admittance to is deep water exploration. Many of these firms have the expertise and technical knowledge to tap deep ocean reserves, and have been contracted by Russian, Chinese, and Middle Eastern companies to assist in exploring these areas.
Exxon recently struck a deal with OAO Rosneft, the Russian oil giant, to search for oil deep below the Black Sea, while other companies are pushing to begin exploring above the Arctic Circle. But it is unlikely that these now sources will solve Exxon’s oil woes soon as it often takes a long time for deep-water projects to find and extract oil.
Fadel Gheit, an analyst with Oppenheimer and Co., concludes starkly, “The good old days are gone and not to be repeated.”
