While for a third consecutive year U.S. gas reserves stood flatat around 107 Tcf, Canadian reserves grew 8% to 32.2 Tcf in 1998,according to Arthur Andersen. That’s just one finding of theconsultant’s 1999 edition of Global E&P Trends, releasedyesterday.

Seemingly contradictory price, profit and capital spendingtrends have pointed upstream oil and gas companies in differentdirections during 1998 and early 1999, the Andersen report said.The survey found 1998 worldwide capital spending increased despiteplunging prices that cut revenues 24% and after-tax profits 87%.Companies were forced to take more than $17 billion inwrite-downs.

“Worldwide revenues from oil and gas producing activitiesdeclined by 24% to $124.6 billion in 1998 as a result of thecollapse of crude oil prices and weak natural gas prices. Thisdecrease occurred despite a 4% increase in oil and gas production,”said Victor Burk, managing director of Andersen’s energy industryservices. “As a group, the major companies in the survey had a 28%decline in revenues, while independents’ revenue fell 14%.”

One reason for the contradictory findings is exploration anddevelopment spending can’t be turned off and on like a faucet, Burksaid. “In other cases, capital spending continued because companiesbelieved prices would recover during 1998. However, by mid-yearmost of those companies made the decision to cut capital spending.And in other instances, particularly involving major companies withstrong balance sheets, management took a long-term view of pricesthat in hindsight may be correct.”

Of 14 major producers in the survey, 10 increased capitalspending outside the United States in 1998 and four of those alsoincreased U.S. capital expenditures.

On the domestic gas side, production increased 3% from 11.6 Tcfin 1997 to 11.8 Tcf in 1998. Gas production has increased 12% since1994. BP Amoco had the largest production of companies in thesurvey with 897 Bcf, followed by Exxon, 832 Bcf; Royal Dutch/Shell,674 Bcf; Chevron, 635 Bcf; and Texaco, 633 Bcf.

The companies with the largest ending U.S. reserves were BPAmoco, 11.3 Tcf; Exxon, 9.9 Tcf; Burlington Resources, 5.9 Tcf;ARCO, 5.1 Tcf; and Royal Dutch/Shell, 4.7 Tcf. Extensions anddiscoveries decreased 9% from 12 Tcf in 1997 to 11 Tcf in 1998.Anadarko led the survey companies with 1 Tcf of extensions anddiscoveries in 1998, followed by Burlington, 636 Bcf; Conoco, 625Bcf; Texaco, 599 Bcf; and Coastal, 518.5 Bcf.

The U.S. had downward reserve revisions of 845.6 Bcf in 1998compared to downward revisions of 1.2 Tcf in 1997.

Purchases of U.S. gas reserves increased 5% from 5.6 Tcf in 1997to 5.8 Tcf in 1998. Among the leaders, Occidental Petroleum bought710 Bcf; Coastal, 575.9 Bcf; Chesapeake, 444.7 Bcf; and CrossTimbers Oil, 311.3 Bcf.

Canadian gas reserves grew 8% from 30 Tcf in 1997 to 32.2 Tcf in1998. PanCanadian Petroleum, 2.7 Tcf; and Alberta Energy, 2.4 Tcf;had the largest ending gas reserves. The booking of 4.4 Tcf ofextensions and discoveries contributed most of the overallincrease, Andersen said. Alberta Energy, Canadian Natural Resourcesand PanCanadian all booked extensions and discoveries exceeding 300Bcf. Canadian gas revisions declined from upward revisions of 355.9Bcf in 1997 to downward revisions of 476.4 Bcf in 1998. RenaissanceEnergy and Royal Dutch/Shell booked the largest downward revisionsat 122 Bcf and 100 Bcf, respectively.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.