Digging Their Own Graves

Where they're going, the oil bidness doesn't need reserves ($):

Reserves are "still a valid measure, but they are harder to get a handle on than what they have been in the past," said Bruce Lanni, an analyst at A.G. Edwards who covers the largest oil companies. "It's a very important number, but you have to look beyond that."

In a conference call in January, ConocoPhillips Chief Executive Jim Mulva said the company expects reserve replacement to be "somewhat uneven" on a yearly basis, as major development projects take time to develop and resources become harder to access.

The company downgraded its 2006 reserves by 260 million barrels of oil equivalent because of technical difficulties in a Caspian oil field and North Sea fields. Conoco's 2006 reserve replacement was 300%, but that included the $35 billion acquisition of Burlington Resources. Discounting the Burlington deal, Conoco's 2006 reserve replacement would have been just 10% to 15%.

Green Car Congress has more on this based on a report from Energy Intelligence that shows global reserves just keeping up or slightly declining.

The main reason for the poor performance in growing reserves is a lack of additions to reserves from new discoveries, which account for 20% or less of additions in the last few years. The high oil prices and sharply increased upstream spending budgets of most oil companies have not yet provided any significant improvement in global additions to reserves, but more time may be needed, according to the publisher.