BP: Oil Fields in Decline
6 April 2005
Reuters. Tony Hayward, BP’s chief executive for exploration and production, told an energy conference on Wednesday that the company’s existing oil and gas fields are posting production declines of about 3%.
That figure excludes the production from the joint venture TNK-BP in Russia and new output from Azerbaijan.
Some industry participants have estimated that overall decline rates for existing producing fields could be as high as 8 per cent, forcing companies to aggressively drill for new supplies to keep production levels from falling.
The chart at the right plots the percentage difference in crude oil output from select major international oil producers between the fourth quarter of 2004 and the fourth quarter of 2003. Combined, this represents a 1.9% drop in production (262 thousand barrels per day).
Not all of the drops can be attributed to field declines—the hurricanes in the Gulf of Mexico (GOM) last year disrupted GOM production, and that shows in the figures. But overall, it reflects that downward trend in production.
Finding new reserves or gaining access to someone else’s is key for these companies. You can see the difference in the chart between BP’s production without the TNK-BP joint venture, and with it. ChevronTexaco’s $16.4 billion purchase of Unocal is another example of solving one company’s problem by buying another.
But that’s not actually finding new oil, just shifting around who owns what was already found.
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