Shell Canada Lowers Sable Reserve Estimate
Shell Canada said that based on technical reviews completed at the end of 2002, it has revised its estimate of original sales gas reserves for the Sable Offshore Energy Project located offshore eastern Canada downward by approximately 90 billion cubic feet (bcf), to 700 bcf, and has reclassified approximately 200 bcf of sales gas reserves from the proven developed category to proven undeveloped. During the fourth quarter of 2002, Shell's share of natural gas production from Sable Offshore Energy Project (SOEP) averaged 153 million cubic feet per day. This was down from record levels seen in the fourth quarter of 2001, due mainly to maintenance work hampered by weather. SOEP full-year production for 2002 averaged 158 million cubic feet per day (Shell share), up slightly from 2001.
The reserve reclassification was based on indications that more significant infill drilling and compression will be needed to maintain production and recover remaining reserves from the Tier I fields. These reserve changes will result in higher depreciation charges for Shell's share of SOEP, which are expected to increase Resources total depreciation expense for 2003 by approximately 20 percent.
Shell continues to assess exploration and development opportunities in the shelf and deep water plays offshore Nova Scotia, and in the Mackenzie Delta. On the East Coast, development of Alma, the first of the planned SOEP Tier II fields, is underway and expected to be completed by the end of 2003. In the Mackenzie Delta, Shell is participating in an exploration well with Devon Energy Corporation and is a member of the Mackenzie Delta Producers Group currently working on regulatory applications to develop existing reserves in the area.
Shell holds a 31.8% stake in the ExxonMobil-operated Sable project.