US oil, gas reserve dropoff less than stated - study  

Reuters has a report on US oil reserves, which demonstrates how pointless such numbers are, given that the reserve number is effectively defined by the current market price for oil - US oil, gas reserve dropoff less than stated - study.

U.S. oil and gas reserve additions were hit hard by low prices at the end of 2008, but accounting rules forced companies to overstate the real decline, Ernst & Young LLP executives said Thursday.

Charles Swanson, managing partner of the accounting firm's Houston office, said reserve growth could recover quickly when the economy rebounds, boosting prices and improving the economics of discoveries that had to be taken off the books.

"The physical hydrocarbons are there," Marcela Donadio, Americas director of oil and gas, said at a briefing on the firm's 2009 "benchmark study" of 40 companies' exploration and production performance.

Accounting rules governing company reporting of reserves knocked proven but expensive-to-produce reserves off the books when oil prices plunged from $147 in mid-2008 to $40 at the end of the year, she said.

New bookkeeping rules taking effect at the end of this year could change the picture significantly even if the economic recovery is slower than hoped, Donadio said. "

Ernst & Young's study of 40 companies' performance showed their U.S. oil reserves fell 7 percent in 2008 to 15 billion barrels from 16.1 billion barrels in 2007 - not surprising amid talk of "peak oil" but still sobering, the executives said.

The change reflected revisions knocking 1.2 billion barrels of oil reserves off the books because they were uneconomical to produce at $40 a barrel, Donadio said.