Companies write down nearly 8B barrels
A group of U.S.-listed oil companies wrote down their proved reserves in the Canadian oilsands by nearly 8 billion barrels in 2016, as energy firms continue to defer investments in major heavy oil projects.
The U.S. Energy Information Administration, a data-gathering agency, tracked 68 oil companies listed on U.S. stock exchanges and found that their total proved reserves declined for the second consecutive year, according to a study released Monday.
The debooking of Canadian oilsands assets accounted for the largest portion of declining reserves over the year, at nearly 8 billion barrels. The next highest was Latin America, which saw a roughly 1-billion barrel decline.
The declining reserves come as weak commodity prices force companies to revisit the economic viability of their priciest barrels, raising questions over the competitiveness of major, long-term oilsands projects.
Big international companies have in recent years shifted capital investment away from Canada’s oilsands in favour of shorter-cycle returns, particularly in U.S. shale basins.
ExxonMobil Corp. recently reported a massive 3.5-billion barrel write down of proved reserves at its Kearl oilsands development, operated by Calgary-based subsidiary Imperial Oil Ltd.
ConocoPhillips Co. cut its oilsands reserves in half in 2016, down to 1.2 billion barrels, following a tumble in oil prices. In midJuly CNOOC Ltd., China’s largest offshore oil producer, warned that it would post a more than $1-billion loss after taking charges on its oilsands assets.
The EIA’s study included several Calgary-based oilsands companies with secondary listings on U.S. stock exchanges, including Cenovus Energy Inc. and Sunor Energy Inc. The Canadian companies accounted for only a small portion of proved reserve declines, according to the EIA.
Proved reserves are an industry categorization based on whether companies can produce barrels economically at a given price. How those proved reserves are calculated changes across different jurisdictions and even individual companies.