BP’s oil and natural gas production combined has declined about 15 percent since 2009. (The linked article is in French, but Google Translate does a pretty good job of rendering it intelligible for those who can’t read the language.) And, it’s not just the 2010 Gulf of Mexico oil spill that’s been plaguing the company. The oil giant’s production is declining in the North Sea, in the United States and in Africa. Even in Central Asia where BP has dominated production in Azerbaijan, it is losing production volume.
Lest you think BP is alone, read to the entire article. ExxonMobil’s conventional crude production is down 27.5 percent since 2007. French oil giant Total’s oil production (reported as crude and natural gas liquids production) declined by 18.8 percent between 2007 and 2011. Among the top four oil companies in the world only Shell seems to have sidestepped the decline for the present.
The strategy for most of the majors now is to replace their reserves with something called “barrels of oil equivalent.” In essence, this means natural gas on an energy equivalent basis. (Approximately 6,000 cubic feet of natural gas contain the same energy as a barrel of oil.) But to admit the ongoing decline in their oil production capacity and then also to admit that there is little chance of turning that trend around would be tantamount to corporate suicide—at least if the objective is to collect the largest possible quarterly bonus and stock options payoff.