[sustran] Has oil production peaked?????????

Daryl Oster et3 at et3.com
Tue Mar 22 18:59:26 JST 2005


Considering the high prices, is the "reserves replacement ratio" (RRR)<<
1.00 from 3 major companies an indication that oil production has peaked?

Daryl Oster


FROM:

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March 16, 2005


Major Oil Companies Report Low Reserve Replacement Ratios

The latest annual reports from the world's major international petroleum 
companies indicate that the companies struggled to find enough new 
petroleum reserves in 2004 to replace the oil they produced. One measure of 
oil company performance is the "reserves replacement ratio" (RRR), the 
ratio of new reserves to oil produced, which ideally should be greater than 
100 percent. In 2004, however, using reporting rules set by the Securities 
and Exchange Commission (SEC), ConocoPhillips reported an RRR of 65 percent 
(excluding sales and acquisitions), BP reported an RRR of 89 percent, and 
ExxonMobil reported an RRR of 83 percent. ChevronTexaco did not explicitly 
state its RRR, but its net proved reserves of crude oil, condensate, and 
natural gas liquids (not counting sales or purchases, but including 
affiliated companies) decreased by 5 percent (449 million barrels) in 2004. 
All the companies noted that the SEC requires the use of year-end prices, 
which they believe distorted the reserves reporting, and noted that the net 
reserve changes in recent years are not necessarily indicative of future 
trends. ConocoPhilips and ChevronTexaco also noted that the SEC does not 
consider Canadian oil sands as proved reserves. See the press releases from 
<http://www.conocophillips.com/newsroom/news_releases/021605_reserves.htm>Co
nocoPhilips 
and 
<http://www.exxonmobil.com/Corporate/Newsroom/Newsreleases/xom_nr_170205.asp
>ExxonMobil, 
page 5 of BP's "Fourth quarter and full year 2004 results" 
(<http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/do
wnloads/B/bp_fourth_quarter_and_full_year_2004_results.pdf>PDF 
137 KB), and pages FS-63 to FS-65 of ChevronTexaco's 
<http://ccbn.tenkwizard.com/filing.php?repo=tenk&ipage=3309998&doc=1&total=&
attach=ON&TK=CVX&CN=ChevronTexaco+Corp&CK2=93410>10-K 
(annual report) filing to the SEC. 
<http://www.adobe.com/products/acrobat/alternate.html>Download Acrobat
Reader.

A report released on Monday by DOE's Energy Information Administration 
(EIA) examines the performance profiles of the major U.S. energy companies 
for 2003. The report finds that the companies added more oil and natural 
gas reserves in 2003 than they extracted through production, achieving an 
RRR of 104 percent, up from 96 percent in 2002 but considerably below the 
replacement levels achieved in 2000 and 2001. See the 
<http://www.eia.doe.gov/emeu/perfpro/index.html>EIA report.

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[]




Daryl Oster
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