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Oil company proved reserves additions in 2017 were most since 2013 while expenditures were about half
In 2017, a group of the world’s largest publicly traded oil and natural gas producers added more hydrocarbons to their resource base than in any year since 2013, according to the annual reports of 83 exploration and production companies. Collectively, these companies added a net 8.2 billion barrels of oil equivalent (BOE) to their proved reserves during 2017, which totaled 277 billion BOE at the end of the year. Exploration and development (E&D) spending in 2017 increased 11% from 2016 levels, but remained 47% lower than 2013 levels.
Of the 83 companies, 18 held more than 80% of the 277 billion BOE in proved reserves at the end of 2017. While many of these companies have global operations, some are national oil companies with reserves concentrated in their home countries including Russia, China, and Brazil. Proved reserves change from year to year because of revisions to existing reserves, extensions and discoveries of new resources, purchases and sales of proved reserves, and production. Figure 1 illustrates the 83 companies’ combined proved reserves changes during 2017.
Organic additions to proved reserves, or reserves added through improved recovery and extensions and discoveries, are linked directly with capital expenditures in E&D. Proved reserves acquired through purchases do not represent E&D capital investment, but rather reflect transfers of assets between companies. Revisions to proved reserves are usually more significantly influenced by changes in crude oil and natural gas prices than by E&D investment.
Of the 17.7 billion BOE in organic proved reserves added in 2017, slightly less than half (8.5 billion BOE) were in the United States, while Russia, Central Asia, and the Asia-Pacific region accounted for 24% (4.3 billion BOE). Canada (which includes oil sands and synthetic crude oil), Latin America, and the Middle East and Africa regions each added more than 1.1 billion BOE. Regionally, Europe accounted for the fewest organically added proved reserves for the sixth consecutive year, adding 0.3 billion BOE of proved reserves in 2017, 2% of the world total (Figure 2).
Global E&D spending by region was similarly distributed. Of the $285 billion companies spent on E&D in 2017, 33% ($95 billion) was in the United States, with the Russia, Central Asia, and Asia-Pacific region accounting for 30% ($85 billion) and all other regions each accounting for 10% or less. Changes in nominal year-over-year E&D spending varied across regions, increasing by 36% in the United States and by 15% each in Canada and the Russia, Central Asia, and Asia-Pacific region. Spending declined by 24% in Europe, 16% in the Middle East and Africa, and 15% in Latin America (Figure 3). Because significant cost deflation has occurred in the oil and natural gas industry since 2014, nominal spending values in different years may not be directly comparable.
Because of a disparity between the timing of companies’ capital expenditures and the formal reporting of changes to their proved reserves, standard practice is to average the results over several years. Analyzed this way, E&D costs declined significantly on a per BOE basis from the 2012–2014 average to the 2015–2017 average (Figure 4). Three-year average E&D capital expenditures per BOE of organic proved reserves additions decreased in all regions except Latin America. On an annual basis, 2017 represented the lowest E&D capital expenditures per additional BOE to proved reserves during the 2012–2017 period at $16.12/BOE.
First quarter 2018 capital expenditures for this set of companies were 16% higher than the first quarter of 2017, suggesting that many of these companies have increased their E&D budgets, which will likely contribute to further organic proved reserves additions in 2018.
U.S. average regular gasoline and diesel prices decrease
The U.S. average regular gasoline retail price decreased 3 cents from last week to $2.88 per gallon on June 18, 2018, up 56 cents from the same time last year. Gulf Coast and East Coast prices each decreased over four cents to $2.65 per gallon and $2.80, respectively, Midwest prices decreased nearly three cents to $2.79 per gallon, West Coast prices decreased nearly two cents to $3.43 per gallon, and Rocky Mountain prices decreased over one penny to $2.98.
The U.S. average diesel fuel price decreased over 2 cents from last week to $3.24 per gallon on June 18, 2018, 76 cents higher than a year ago. Midwest prices declined nearly three cents to $3.17 per gallon, East Coast and Gulf Coast prices each declined over two cents to $3.24 per gallon and $3.02 per gallon, respectively, West Coast prices declined nearly two cents to $3.75 per gallon, and Rocky Mountain prices decreased less than one cent to $3.34 per gallon.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 3.2 million barrels last week to 54.1 million barrels as of June 15, 2018, 9.5 million barrels (14.9%) lower than the five-year average inventory level for this same time of year. Midwest, Gulf Coast, East Coast, and Rocky Mountain/West Coast inventories increased by 1.2 million barrels, 1.1 million barrels, 0.7 million barrels, and 0.2 million barrels, respectively. Propylene non-fuel-use inventories represented 5.0% of total propane/propylene inventories.
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Market Watch
Headline crude prices for the week beginning 15 April 2019 – Brent: US$71/b; WTI: US$63/b
Headlines of the week
Upstream
Midstream & Downstream
Natural Gas/LNG
Corporate
Source: U.S. Energy Information Administration, Monthly Energy Review
Primary energy consumption in the United States reached a record high of 101.3 quadrillion British thermal units (Btu) in 2018, up 4% from 2017 and 0.3% above the previous record set in 2007. The increase in 2018 was the largest increase in energy consumption, in both absolute and percentage terms, since 2010.
Consumption of fossil fuels—petroleum, natural gas, and coal—grew by 4% in 2018 and accounted for 80% of U.S. total energy consumption. Natural gas consumption reached a record high, rising by 10% from 2017. This increase in natural gas, along with relatively smaller increases in the consumption of petroleum fuels, renewable energy, and nuclear electric power, more than offset a 4% decline in coal consumption.
Source: U.S. Energy Information Administration, Monthly Energy Review
Petroleum consumption in the United States increased to 20.5 million barrels per day (b/d), or 37 quadrillion Btu in 2018, up nearly 500,000 b/d from 2017 and the highest level since 2007. Growth was driven primarily by increased use in the industrial sector, which grew by about 200,000 b/d in 2018. The transportation sector grew by about 140,000 b/d in 2018 as a result of increased demand for fuels such as petroleum diesel and jet fuel.
Natural gas consumption in the United States reached a record high 83.1 billion cubic feet/day (Bcf/d), the equivalent of 31 quadrillion Btu, in 2018. Natural gas use rose across all sectors in 2018, primarily driven by weather-related factors that increased demand for space heating during the winter and for air conditioning during the summer. As more natural gas-fired power plants came online and existing natural gas-fired power plants were used more often, natural gas consumption in the electric power sector increased 15% from 2017 levels to 29.1 Bcf/d. Natural gas consumption also grew in the residential, commercial, and industrial sectors in 2018, increasing 13%, 10%, and 4% compared with 2017 levels, respectively.
Coal consumption in the United States fell to 688 million short tons (13 quadrillion Btu) in 2018, the fifth consecutive year of decline. Almost all of the reduction came from the electric power sector, which fell 4% from 2017 levels. Coal-fired power plants continued to be displaced by newer, more efficient natural gas and renewable power generation sources. In 2018, 12.9 gigawatts (GW) of coal-fired capacity were retired, while 14.6 GW of net natural gas-fired capacity were added.
Source: U.S. Energy Information Administration, Monthly Energy Review
Renewable energy consumption in the United States reached a record high 11.5 quadrillion Btu in 2018, rising 3% from 2017, largely driven by the addition of new wind and solar power plants. Wind electricity consumption increased by 8% while solar consumption rose 22%. Biomass consumption, primarily in the form of transportation fuels such as fuel ethanol and biodiesel, accounted for 45% of all renewable consumption in 2018, up 1% from 2017 levels. Increases in wind, solar, and biomass consumption were partially offset by a 3% decrease in hydroelectricity consumption.
Source: U.S. Energy Information Administration, Monthly Energy Review
Nuclear consumption in the United States increased less than 1% compared with 2017 levels but still set a record for electricity generation in 2018. The number of total operable nuclear generating units decreased to 98 in September 2018 when the Oyster Creek Nuclear Generating Station in New Jersey was retired. Annual average nuclear capacity factors, which reflect the use of power plants, were slightly higher at 92.6% in 2018 compared with 92.2% in 2017.
More information about total energy consumption, production, trade, and emissions is available in EIA’s Monthly Energy Review.