The picture of U.S. future energy supplies looked brighter Thursday after the federal Energy Information Administration said U.S. oil reserves grew by a record amount, driven by new shale discoveries.
But the shares of two oil giants took hits as Royal Dutch Shell wrote down the value of its U.S. shale assets by $2 billion and warned that rebels’ continuing sabotage of Nigeria’s onshore output could damage the company’s production. Exxon Mobil fell as earnings in its refining and chemical units suffered downturns.
Separately, TransCanada, the Calgary-based company behind the proposed Keystone XL pipeline, announced that it would push ahead with a $12 billion pipeline from Canada’s oil sands to the port of St. John on Canada’s eastern coast. The new pipeline would carry 1.1 million barrels a day, more than a third more than the Keystone XL would.
The EIA report said that “proved” oil reserves — oil that can be extracted and marketed under current conditions — grew by 15 percent, or almost 3.8 billion barrels, the second straight record year of increases. That brought U.S. proved oil reserves to the highest level since 1985. The agency said that U.S. proved reserves of natural gas jumped 10 percent, the second-largest annual increase since 1977.
Texas posted the largest increase in proved oil reserves, largely because of shale developments in the state’s Permian Basin and the Eagle Ford formation. North Dakota had the second-largest increase, boosted by activity in the Bakken formation in the Williston Basin.
But Shell’s earnings provided a warning that some shale prospects aren’t as promising as initially thought. The company took an after-tax charge of more than $2 billion on its $24 billion of North American shale assets because of disappointing oil drilling results. The company’s chief financial officer, Simon Henry, said, “There are sweet spots, but they are more difficult to find and develop.”
The company’s stock slumped to $64.47 a share, down 5.7 percent. Exxon Mobil slid to $92.73 a share, down 1.1 percent.
Much of the increased U.S. shale oil and shale gas production has come from large independent companies, not the integrated international oil giants.
Exxon Mobil reported that its production of oil held steady in the United States, while domestic natural gas output slumped in part because low prices have discouraged development.
TransCanada’s pipeline announcement is an expected but still bold step for the company, which has waited for years for a decision on its Keystone XL proposal to the U.S. Gulf Coast. President Obama has kept supporters and foes of the pipeline guessing, most recently by playing down in a New York Times interview the significance of the modest number of direct jobs the project would create over a limited time. TransCanada said Thursday that it already has commitments by oil producers to fill about 900,000 barrels a day of the new pipeline’s proposed capacity. The project involves converting a portion of an existing 1,864-mile natural gas pipeline to crude oil service and constructing about 870 miles of new pipeline.
The new line, called Energy East, would help eastern Canadian refineries replace about 700,000 barrels a day of imports and would also provide export capacity through St. John. Some of that exported oil could go to U.S. Gulf Coast refineries.