Trends of 5 Oil Majors

Trends of 6 Oil Majors

Preamble

Economists and energy analysts are divided as to whether the passing of a peak in global oil production is a present reality or is so far ahead that its occurrence can be discounted.

We are also being persuaded that our near energy requirements can be met by the successful development of tight oil and shale gas, the reserves of which it is argued are universally spread over the world. The technology of “fracturing” or “fracking” is under rapid deployment in the US. Tight oil from the Bakken and Eagle Ford shales has provided competition for diluted bitumen imported from the Canadian tarsands, while shale gas has largely replaced the importing of LNG into the US However, fracked well production falls off rapidly and overall play production can only be maintained by an increasing drilling of new wells

Because natural gas can be used to sythesise liquid fuels and chemicals it has been assumed that it has a “oil equivalent” and this has been variously evaluated by a comparison of the heating values of oil and gas. Conversion values of between 5,500 and 6,000 cubic feet (cf) of gas are assumed to be equivalent to a barrel of crude oil (boe).

In the annual reports of the six major oil companies selected for analysis, all have presented their combined production of oil and gas in barrels of oil equivalent, while presenting their figures for natural gas production in billions of cubic feet or metres (bcf or bcm). Some have given figures for reserves only in barrels of oil equivalent, without distinguishing between the size of oil and gas reserves.

Annual Reports

Sixty annual reports have been studied and a series of tables constructed, with volumetric gas figures presented as billions of barrels of oil equivalents (Gboe) by applying the conversion ratios or by subtraction of billions barrels of oil (Gb) from the totals of barrels of oil equivalents (Gboe).

Using spreadsheet formulae the aggregate values of the six majors are presented in a seventh table entitled All

Gb/Gboe	BP
	2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
Reserves
Oil reserves	10.07	10.05	10.57	10.71	10.51	10.35	10.07	9.78	9.57	9.93
Replacement ratio %	103	31	82	123	117	132	131	124	61
Gas reserves	7.926	6.95	7.15	7.36	7.76	7.78	7.74	7.92	8.33	8.36
Replacement ratio %	320	56	56	24	97	107	68	23	93
Total reserves	18.00	17.00	17.72	18.07	18.27	18.13	17.80	17.70	17.89	18.30
Replacement ratio %	184	41	72	86	110	124	107	87	72
Production
Oil production	0.735	0.750	0.787	0.867	0.925	0.876	0.935	0.903	0.935	0.924
Gas production	0.444	0.466	0.474	0.528	0.533	0.523	0.553	0.53	0.53	0.535
Total production	1.18	1.22	1.261	1.395	1.46	1.390	1.49	1.43	1.47	1.46
Reserves/Production
Oil	13.7	13.4	13.4	12.4	11.4	11.8	10.8	10.8	10.2	10.8
Gas	17.9	14.9	15.1	13.9	14.6	14.9	14.0	14.9	15.7	15.6
All	15.3	14.0	14.1	13.0	12.5	13.0	12.0	12.4	12.2	12.5

Gb/Gboe	Chevron
	2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
Reserves
Oil reserves	6.345	6.481	6.46	6.50	6.97	7.35	7.09	7.81	8.00	7.97
Replacement ratio %	78	104	93	33	44	144	-12	69	104
Gas reserves	4.858	4.866	4.78	4.04	4.34	3.85	3.69	3.81	3.91	3.28
Replacement ratio %	97	128	346	2	263	150	61	73	302
Total reserves	11.20	11.35	11.24	10.54	11.31	11.20	10.78	11.6	11.91	11.25
Replacement ratio %	85	111	171	24	112	146	12	71	171
Production
Oil production	0.632	0.644	0.675	0.702	0.674	0.602	0.641	0.632	0.609	0.624
Gas production	0.316	0.309	0.301	0.307	0.303	0.312	0.315	0.341	0.310	0.292
Total production	0.948	0.95	0.976	1.01	0.977	0.91	0.956	0.973	0.919	0.916
Reserves/Production
Oil	10.00	10.1	9.6	9.3	10.3	12.2	11.1	12.3	13.1	12.8
Gas	15.4	15.7	15.9	13.2	14.3	12.3	11.7	11.2	12.6	11.2
All	11.8	11.9	11.5	10.4	11.6	12.2	11.3	11.9	13.0	12.3

Gb/Gboe	ConocoPhillips
	2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
Reserves
Oil reserves	5.52	5.36	4.19	4.30	5.30	4.49	4.9	5.51	4.68	3.8
Replacement ratio %	152	468	62	-200	329	-22	-70	305	337
Gas reserves	3.4	3.28	4.20	4.01	5.03	5.49	4.91	5.66	4.68	3.81
Replacement ratio %	152	-254	164	-233	-42	280	-67	314	401
Total reserves	8.92	8.64	8.39	8.31	10.33	9.98	9.81	11.17	9.36	7.61
Replacement ratio %	149	144	114	-215	152	125	-69	310	365
Production
Oil production	0.32	0.32	0.29	0.333	0.353	0.337	0.358	0.404	0.371	0.330
Gas production	0.25	0.26	0.3	0.306	0.324	0.322	0.448	0.457	0.289	0.233
Total production	0.56	0.58	0.59	0.639	0.677	0.66	0.806	0.861	0.660	0.563
Reserves/Production
Oil	17.4	16.9	14.3	12.9	15.0	13.3	13.7	13.6	12.6	11.5
Gas	13.8	12.7	14.0	13.1	15.5	17.0	11.0	12.4	16.2	16.4
All	15.8	15.0	14.2	13.0	15.3	15.1	12.2	13.0	14.2	13.5

Gb/Gboe	ExxonMobil
	2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
Reserves
Oil reserves	13.36	12.60	12.20	11.67	11.65	12.01	11.07	11.57	11.23	11.65
Replacement ratio %	194	151	162	102	59	206	48	135	54
Gas reserves	11.84	12.60	12.70	13.14	11.33	10.98	11.38	11.26	11.15	10.06
Replacement ratio %	-5	86	46	328	157	35	119	118	275
Total reserves	25.20	25.20	24.90	24.80	22.99	22.99	22.45	22.83	22.38	21.71
Replacement ratio %	100	119	106	208	100	136	76	128	143
Production
Oil production	0.804	0.797	0.844	0.883	0.870	0.879	0.953	0.976	0.917	0.935
Gas production	0.720	0.750	0.801	0.791	0.616	0.606	0.625	0.622	0.622	0.656
Total production	1.52	1.547	1.65	1.67	1.49	1.485	1.58	1.598	1.54	1.591
Reserves/Production
Oil	16.6	15.8	14.5	13.2	13.4	13.7	11.6	11.9	12.2	12.5
Gas	16.5	16.8	15.9	16.6	18.4	18.1	18.2	18.1	17.9	15.3
All	16.5	16.3	15.1	14.8	15.5	15.5	14.2	14.3	14.5	13.6

Gb/Gboe	Shell
	2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
Reserves
Oil reserves	6.192	5.972	6.032	6.146	5.687	3.431	3.789	4.189	4.636	4.888
Replacement ratio %	141	90	81	178	491	42	42	37	65
Gas reserves	7.740	7.584	8.218	8.127	8.445	7.472	8.141	7.611	6.83	6.994
Replacement ratio %	125	-6	116	49	271	-24	203	240	68
Total reserves	13.9	13.6	14.25	14.25	14.13	10.90	11.92	11.80	11.47	11.88
Replacement ratio %	132	42	100	110	382	12	110	126	67
Production
Oil production	0.537	0.597	0.610	0.591	0.577	0.619	0.693	0.711	0.729	0.793
Gas production	0.631	0.597	0.563	0.619	0.570	0.541	0.517	0.557	0.52	0.554
Total production	1.17	1.19	1.173	1.210	1.147	1.160	1.210	1.27	1.249	1.347
Reserves/Production
Oil	11.5	10.0	9.9	10.4	9.9	5.5	5.5	5.9	6.4	6.2
Gas	12.3	12.7	14.6	13.1	14.8	13.8	15.7	13.7	13.1	12.6
Total	1.90	11.4	12.1	11.8	12.3	9.4	9.9	9.3	9.2	8.8

Gb/Gboe	Total
	2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
Reserves
Oil reserves	5.413	5.686	5.784	5.987	5.689	5.695	5.778	6.47	6.59	7.003
Replacement ratio %	36	78	55	161	99	84	-26	78	31
Gas reserves	6.113	5.682	5.635	4.708	4.794	4.763	4.671	4.649	4.514	4.145
Replacement ratio %	204	100	327	77	109	128	107	143	216
Total reserves	11.53	11.37	11.42	10.7	10.48	10.46	10.45	11.12	11.11	11.15
Replacement ratio %	119	100	185	124	103	101	23	102	95
Production
Oil production	0.426	0.447	0.447	0.489	0.504	0.531	0.551	0.55	0.592	0.619
Gas production	0.413	0.392	0.409	0.379	0.328	0.324	0.322	0.31	0.318	0.325
Total production	0.84	0.839	0.856	0.868	0.832	0.855	0.873	0.86	0.908	0.944
Reserves/Production
Oil	12.7	12.7	12.9	12.2	11.3	10.7	10.5	11.8	11.1	11.3
Gas	14.8	14.5	13.8	12.4	14.6	14.7	14.5	15	14.2	12.8
All	13.7	13.5	13.3	12.3	12.6	12.2	12	12.9	12.2	11.8

Gb/Gboe	All
	2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
Reserves
Oil reserves	46.30	46.15	45.32	45.81	43.33	42.70	42.70	45.33	44.70	45.25
Replacement ratio %	122	126	97	87	164	116	36	115	87
Gas reserves	41.88	40.97	41.38	41.38	41.70	40.33	40.53	40.91	39.41	36.65
Replacement ratio %	133	38	89	59	151	92	86	153	209
Total reserves	88.78	87.11	87.92	86.67	83.65	83.23	86.24	86.24	84.11	81.90
Replacement ratio %	127	87	119	88	159	106	56	130	133
Production
Oil production	3.451	3.552	3.655	3.865	3.903	3.844	4.131	4.176	4.153	4.225
Gas production	2.771	2.773	2.847	2.930	2.674	2.628	2.780	2.818	2.533	2.595
Total production	6.222	6.325	6.502	6.795	6.577	6.463	6.911	6.993	6.686	6.820
Reserves/Production
Oil	13.6	13	12.4	11.7	11.7	11.3	10.3	10.9	10.8	10.7
Gas	15.1	14.8	15.0	14.1	15.6	15.3	14.6	14.5	15.6	14.1
All	14.3	13.8	13.5	12.8	13.3	12.9	12.0	12.3	12.6	12.0

From this aggregation of the six results it is evident that their combined crude oil production has declined from Gb 4.225 in 2004 to Gb 3.451 in 2013, a fall of 18.3%.

Their combined natural gas production has risen from Gboe 2.595 in 2004 to Gboe 2.771 in 2013, a rise of 6.35%.

This has meant that their total production in Gboe has fallen from Gboe 6.820 in 2004 to Gboe 6.222 in 2013, a fall of 8.77% over the nine years.

Combined trends

Oil equivalents

The attribution of comparative heating values to evaluate an oil equivalent of natural gas is only valid when the oil and gas are used for heating.

If the natural gas is transported as LNG, then there is a heating value penalty of 15% or so, depending on the energy used for cleaning up the gas prior to liquefaction, the liquefaction and transportation and eventual regasification and its transmission.

If the natural gas is used to synthesise liquid fuels, then there is a heating value penalty of around 50%.

Some oil production figures include bitumen derived from tarsands. As there is a 30% energy loss in its conversion to synthetic crude oil (SCO), there is a need for its conventional oil equivalent to be discounted.

Gas takes more of a proportion of the oil equivalent production claimed by the majors. As the proportion of SCO upgraded from bitumen and from gas-to-liquids (GTL) processes increases, so the total barrels of oil equivalent should be marked down to compensate for the contribution of gas needed to upgrade the bitumen and that lost in in the GTL processes. Otherwise some gas is double booked..

Company peaks

Exxon Mobil had its company oil peak in 2010, BP its in 2007, Shell before 2004, Total before 2004, ConocoPhillips in 2006 and Chevron in 2010.

Conclusions

This analysis of company annual reports in regard to oil and gas production has been conducted from the published annual reports of the six oil majors. Institutional reports rely on national statistics which are subject to political interference and delay, but annual reports are audited and the production figures correspond to the revenue they produce. Nevertheless the amounts claimed as barrels of oil equivalent need to be subjected to regulatory scrutiny, as the various end uses and processes involved should be taken into account. The presented figures for natural gas oil equivalents should be downgraded accordingly.

It can also be noted that the six oil majors selected for examination are slowly progressing to gas majors, while their combined oil production peaked before 2004. It is difficult to reconcile current claims that an oil peak is far away and that global oil production will rise to meet an increasing demand, while the arrival of tight oil in the US has made no measurable impact on the radical falling in crude oil production of the six major oil companies analysed.