A shift by global natural gas and oil companies to deepwater, liquefied natural gas (LNG) and unconventional gas and oil has lifted prospective value growth across the upstream sector by 23% from a year ago, according to research by industry consultant Wood Mackenzie.

“The Changing Face of Upstream Value,” the UK consultant’s latest annual review of future international upstream portfolios, estimates the remaining value of commercial assets at slightly more than $3.2 trillion, which is 23% higher than in June 2010, based on cumulative asset values, discounted at 10% from Jan. 1, 2011.

Wood Mackenzie’s valuations only include projects in production, under development or expected to be developed under current commercial and fiscal conditions with no allowance for the “latent value” in exploration acreage or subcommercial reserves. No national oil company or government assets were included.

“We have seen a shift in international companies’ portfolios over the past decade toward four key themes: deepwater, LNG, unconventional gas and unconventional oil,” said Regional Upstream Manager Iain Brown, who authored the report. “These now make up between 30% and 70% of future upstream value for the international majors. It is also notable that value prospects are still high in the traditional producing regions of North America, Europe and Australia. Together these regions account for more than half ($1.7 trillion) of future upstream value for international companies.”

Part of the growth in the past year has resulted from “more bullish assumptions for future oil prices but that is only part of the story,” said Brown. “Most of the leading international companies have successfully enhanced their value expectations over the past year through a variety of measures including acquisitions, increased exploration investment, reserves additions and resurgent development plans.”

A big proportion of the world’s newest gas and oil reserves and many of the largest recent discoveries are in deepwater, with the U.S. Gulf of Mexico (GOM) leading the pack, the report found.

“Of the 40 billion boe of reserves discovered in 2010, around 22 billion bbl were in water depths of over 1,000 meters, whilst over 19 billion bbl [were] beyond the 1,500-meter isobath,” said the authors. “Several of the leading sources of future value for the international industry are deepwater provinces” that include not only the GOM but also Australia’s Carnarvon and Browse basins, the Nigerian and Angolan Atlantic margins and Brazil’s Santos Basin.

“Whilst less than a quarter ($145 billion) of prospective upstream value in the U.S. is in the Gulf, it remains by far the world’s most valuable deepwater province for the international industry,” said the report.

LNG is still the industry’s “preferred solution” to develop large-scale reserves in remote locations and there are “ambitious” plans under way in Australia, Qatar, Russia, Norway, Nigeria and Angola.

However, even though all of the major LNG projects in operation now are based on conventional gas, “these will soon be supplemented by onshore gas from more challenging reservoir lithologies,” said the authors. “Australian coalseam gas (coalbed methane) projects will likely begin exporting gas into the Asia Pacific market in 2014 or 2015.

“And as the proliferation of shale gas production continues in North America, there is now a real prospect of the U.S. exporting gas (as LNG) in the coming years, rather than importing it, as was the established industry view just three or four years ago.”

By resource “theme,” ExxonMobil Corp., which is the largest gas producer — unconventional or otherwise — in North America, led Wood Mackenzie’s list of the top 15 by upstream portfolio value. The 14 other leaders in order are Royal Dutch Shell plc, Chevron Corp., BP plc, Total SA, Eni SpA, ConocoPhillips, Statoil ASA, OAO Lukoil, BG Group plc, Occidental Petroleum Corp., Suncor Energy Inc., Anadarko Petroleum Corp., Devon Energy Corp. and CNR International Ltd.

Producers whose portfolios showed the biggest gains in value from a year ago were Anadarko, Devon and and EOG Resources Inc. “largely due to the increased coverage of U.S. unconventional plays in our valuation,” said the authors.

Wood Mackenzie added several U.S. unconventional plays to its report this year, including Bone Spring, the Eagle Ford Shale and the Niobrara formation, and it upgraded several other significant plays, including the Granite Wash and Wolf Camp plays, along with the Bakken, Marcellus and Haynesville shales.

“The past five years has been a period of transformation in the unconventional gas business,” the report stated. “A collection of substantial niche plays in the U.S. have become some of the industry’s major growth themes. The industry’s enthusiasm for shale gas and to a lesser extent, coalbed methane and tight gas plays in the U.S. Lower 48, inevitably includes an element of long-term execution risk. Nevertheless, the more prospective acreage in these plays has the potential to provide the U.S. with energy security (at least in terms of gas) for many years to come.”

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.