BP says oil fields declining
NEW ORLEANS - Oil company BP's existing oil and gas fields are posting production declines of about 3 per cent, Tony Hayward, the company's chief executive for exploration and production, said on Wednesday.
"That piece of the portfolio as a whole is declining around 3 per cent," he told an energy conference.
The company's key profit centers, which exclude its stake in Russian TNK-BP and new output from Azerbaijan, are expected to produce about 2 million barrels of oil equivalent per day in 2005 and are showing different decline rates, he said.
"Alaska is mostly flat; the North Sea is declining somewhere between 6 and 8 per cent; and our South America business is growing, but taken as sub-segment of E&P, it's declining around 8 per cent," he said.
Energy analysts have pointed to sharper decline rates at producing fields as a key reason for rising oil prices, which hit record highs on the New York Mercantile Exchange on Monday.
Rising demand in Asia, particularly China and India, has soaked up excess production, creating a tight supply-demand balance and driving up prices, analysts say.
Some industry participants have estimated that overall decline rates for existing producing fields could be as high as 8 per cent, forcing companies to aggressively drill for new supplies to keep production levels from falling.
BP's five-year average costs for finding and development were US$4.65 ($6.65) per barrel of oil equivalent, Hayward said, in line with company expectations for a figure between US$4 and US$5.