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U.S. shale firms lift reserves while oil majors take Canada hit
2017年3月9日 / 下午5点36分 / 8 个月前

U.S. shale firms lift reserves while oil majors take Canada hit

March 8 (Reuters) - Top shale oil producers are lifting their crude and gas reserve estimates for the first time in two years - even as many major oil companies are cutting the same projections and taking write downs on more expensive fields.

Rising confidence in the growth prospects of the U.S. shale patch is in striking contrast to the retreat of the world’s top oil firms from the high-cost oil sands of Canada.

The increase in reported shale reserves is driven by new drilling efficiencies, leaner operations and improved well completion techniques, industry experts said.

“Many wells that were not profitable a year ago have become profitable” because those advances have cut the cost of producing from shale, said Per Magnus Nysveen, a senior partner at consultancy Rystad Energy.

The top 20 U.S. shale firms - a group that includes Pioneer Natural Resources Co and Chesapeake Energy Corp, - hiked their proved oil reserves by nearly 7 percent on average in 2016, according to a Reuters review of year-end financial filings.

While shale producers reap the benefits of technological advances, oil majors that bet billions of dollars on giant long-term projects in Canada have taken a hit.

On Thursday, Royal Dutch Shell plc became the latest energy giant to quit on oil sands. Shell said it would remove 2 billion barrels of oil from its reserves and take a $1.3 billion to $1.5 billion after-tax impairment in a retreat from most of its Canadian oil sands operations.

Exxon Mobil Corp and ConocoPhillips last month reported total reductions of nearly 5 billion barrels of proved reserves from oil sands projects after deciding they could not be pumped at current prices.

Overall, the 10 U.S. oil companies with the largest holdings in conventional oil fields reduced their reserves by 13.4 percent in 2016, according to a Reuters’ analysis of year-end regulatory filings.

SHALE TURNAROUND

In 2015, the same shale firms, a group which do not operate in conventional oil fields, reported that proved reserves had fallen by 13 percent on average as low oil prices made many fields unprofitable.

Firms operating in shale oil fields use hydraulic fracturing to tap oil in rock formations that cannot be accessed by conventional drilling methods.

The reserves reflect oil and gas that can be profitably tapped in the next five years and are valued by investors as a measure of future revenue growth. Greater reserves also can give the companies more borrowing power.

The 2016 shale reserve gains, while modest, came as conventional drillers were paring back their own estimates as oil prices remain below the levels needed to make output from higher cost fields profitable. The cost of pumping a barrel of oil from Canada’s oil sands is much higher than the cost of producing oil from shale.

The reported 2016 increases in shale reserves are based on U.S. Securities and Exchange Commission rules and use an average West Texas Intermediate oil price of $42.75 per barrel in 2016.

The oil price on Thursday fell below $50 per barrel amid worries about growing crude inventories, especially from shale producers.

Shale producers’ reported natural gas reserves were based on a $2.49 per million British Thermal Units (MMBtu) average price in 2016, down from $2.58 a year earlier.

Recent production increases from U.S. shale fields have rattled OPEC producers aiming to pare global crude inventories. In remarks to industry executives at an energy conference in Houston this week, Saudi Oil Minister Khalid al-Falih warned that OPEC won’t accept shale oil rivals getting “free rides” from its production cutbacks.

The implied threat was that OPEC could reverse the output cuts, which took effect in January, and flood the world market with oil, kicking off another price war. The curbs have boosted oil prices and in turn revived the shale industry in the United States after a two-year downturn.

BOOST FROM TECHNOLOGY

The technological improvements in shale fields include the ability to drill further into the earth, both vertically and horizontally, creating more underground sites in each well for hydraulic fracturing.

“Reserve growth really comes down to better well design,” said Michael Dynan, vice president for portfolio and strategic development at Schramm, a manufacturer of drilling rigs.

Such changes are helping oil firms tap more oil and gas while keeping spending low. Continental Resources Inc says it found twice the reserves per dollar spent in 2016 than in 2014.

More recently, producers have also embraced big data analysis techniques that are providing “a lot of insight into how best to drill a well, where to locate a well and the fracking techniques to use,” said Binu Mathew, who heads digital products at GE Oil & Gas, which is merging with Baker Hughes Inc .

Such advances are only the beginning of the shale oil industry’s efforts to wring more oil from wells for less money, said Stephen Ingram, southern region director of Halliburton Co’s completion and production business.

HIGHER CONFIDENCE

Another factor in aiding reserves is the sharp decline last year in fees charged by oilfield service suppliers.

Oilfield service firms are looking to take back some of the discounts they extended during the downturn, but shale producers say they expect to hold the line on expenses as they continue to expand production.

Some of the reported gains in reserves are coming from un-drilled acreage, which makes them less certain. At least six of the companies Reuters analyzed reported a rise in proved reserves based on undeveloped properties in 2016.

Investors have increasing faith in the profit potential of such undeveloped properties, however.

“Confidence is very high that they are going to be turned into proved, producing assets,” said Todd Heltman, a senior energy analyst at investment firm Neuberger Berman.

Still, some investors worry that shale firms are becoming too aggressive about booking undeveloped reserves.

“There is no geological risk here, but if your wells don’t live up to your expectations, you have negative reserve revisions,” said Bill Costello, a portfolio manager at Westwood Holdings Group, referring to downgrading proved reserves to uneconomic-to-tap categories. (Editing by Gary McWilliams, Simon Webb and Brian Thevenot)

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