ConocoPhillips has become the second fossil major in a week to downgrade its estimate of its tar sands/oil sands reserves, taking more than a billion barrels out of its inventory because of low global oil prices.
“The U.S. oil major said developed and undeveloped reserves of bitumen—the heavy viscous oil found in northern Alberta’s remote oil sands—totalled 1.2 billion barrels at the end of 2016, down from 2.4 billion barrels at the end of 2015,” Reuters reports, in a story picked up by the Financial Post. In its quarterly filing with the U.S. Securities and Exchange Commission, the company actually “debooked” a total of 1.75 billion barrels.
Then again, the move may be temporary. Executive Vice President Al Hirshberg told investors the company would reinstate the reserves if current global oil prices hold. Calgary-based GMP FirstEnergy analyst Martin King “said the debooking likely had more to do with SEC rules requiring companies to evaluate economic reserves at year-end,” the news agency notes, although “the fact that the oil sands make up 70% of the reduction underlines how much of Canada’s resources are uneconomic in a weaker oil environment.”
RS Energy Group Chief Economist Judith Dwarkin commented that the tar sands/oil sands “are at the upper end of the cost curve,” so Conoco’s action “may or may not speak to future similar events from other producers.” (h/t to Josh Axelrod for pointing us to this story)