Newspaper article THE JOURNAL RECORD

Replacement Costs Up 21% in U.S

Newspaper article THE JOURNAL RECORD

Replacement Costs Up 21% in U.S

Article excerpt

By Ronda Fears

Journal Record Staff Reporter

Reserve replacement costs in the U.S. rose 21 percent in 1991 to $5.98 per barrel of oil equivalent, according to an annual study by Arthur Andersen Co.

But that was still 6 percent less than the average cost of $6.35 in foreign countries, which was a 53 percent gain from 1990.

Evidencing further globalization of the oil and gas industry, the survey shows foreign exploration and development spending grew 27 percent last year to $31.4 billion _ almost twice the $17.7 billion spent in the United States, which was a 4 percent decline.

The 1992 Oil Gas Reserve Disclosures survey of 241 publicly traded companies is made yearly by Houstonsed Arthur Andersen, a Big 6 accounting firm.

Foreign drilling expenditures accounted for 64 percent of a total $49.1 billion spent in 1991, the study revealed, compared with making up only 53 percent of the 1990 total.

The study also showed that U.S. gas reserves and production declined in 1991 while oil reserves and production rose, and that over the past five years, less than 100 percent of U.S. oil and gas production was replaced with new reserves while reserve replacement was well over 100 percent abroad.

Drilling costs are rising overseas, however. Cheaper drilling costs had been a catalyst in the transition from U.S. oil and gas fields to foreign ones, a trend that surfaced in 1989.

According to the survey, reserve replacement costs in the U.S. rose 21 percent in 1991 to $5.98 per barrel of oil equivalent but was still 6 percent less than the average cost of $6.35 in foreign countries, which was a 53 percent gain from 1990.

Still, last year marked the fifth consecutive gain in foreign spending by oil and gas companies, and over the past five years $30 billion more has been spent abroad than domestically, the study found. Since 1987 _ a year after the oil boom crashed _ domestic drilling expenditures rose less than 5 percent yearly while foreign spending gained at a rate of more than 20 percent a year.

Oil and gas production overseas in 1991 were both at fivear highs, the survey showed.

Majors like Phillips Petroleum Co. of Bartlesville, lead in the flight, the study confirmed. But in 1990, there was a huge gain in foreign spending by independents like Noble Affiliates Inc. of Ardmore and a significant gain by diversified companies like Kerr-McGee Corp. of Oklahoma City that was maintained last year, the study showed.

Seventy percent of the majors' drilling budgets in 1991 went outside the U.S. _ $27.8 billion, a 31 percent gain. That group _ some 19 firms _ spent $12 billion in the U.S., 56 percent less than overseas and 2 percent less than in 1990.

Nearly 40 percent of nonjors' drilling budgets last year went outside the U. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.