Canada: Oil and natural gas reserves drop

CALGARY — Reserves of oil and natural gas dropped last year as a sharp increase in capital spending failed to counter declines from conventional sources.

In its annual review, the Canadian Association of Petroleum Producers said reserves of conventional oil and natural gas declined, while those of mining and in-situ oil sands projects rose. Still, overall reserves dropped by the equivalent of more than 300 million barrels, the largest of the three consecutive yearly declines since 2001.

Natural gas reserves fell the most, dropping to 56.5 trillion cubic feet from 59.1 trillion cubic feet last year, with 59 per cent of production replaced. A major contributor was a one-time downward revision in Alberta, where that province’s Energy and Utilities Board eliminated 7.5 trillion cubic feet in reserves from 7,000 single-well pools. CAPP vice-president Greg Stringham said the overall decline cannot be attributed solely to that change. He said there were other, upward revisions in Alberta from larger producers. Downward reserves revisions from offshore projects in Atlantic Canada contributed to the declines.

Conventional oil reserves dropped to 4.3 billion barrels in 2003, with just 56 per cent of production being replaced.

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In the oil sands, production topped one million barrels a day for the first time at the end of 2003, with reserves for in-situ projects rising by eight million barrels to 2.03 billion and for mining projects, up 332 million to 5.2 billion.

Capital spending jumped to $28.8-billion, as efforts to boost conventional reserves and production surged. In the oil sands, capital spending dipped to $5-billion from the record $6.7-billion of 2002.

CAPP’s figures are compiled from several sources and reflect the measure of “established reserves” common in the United States, but now superseded in Canada for financial reporting purposes by what are viewed as more restrictive standards.

CAPP reserves

2003 Production Remaining
reserves 2003 replacement Reserves at
additions production Rate % 12/31/’03
Natural gas(trillion cubic feet) 3.6 6.1 59 56.6
Crude oil & equivalent(billion barrels) 0.9 0.9 100 12.0

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