BUSINESS: El Paso Corporation Cuts Reserve Estimates

El Paso Corporation, the nation's largest natural gas pipeline company has made huge cuts in the amount of their proven reserves. Are the world's oil and gas reserves overrated?

Associated Press
HOUSTON -- Executives of El Paso Corporation say they're cutting the estimated proven reserve base of the nation's largest natural gas pipeline company by 41 percent after warning earlier that negative numbers would be reflected in filings with securities regulators.
This is not the first time this year that such an event has occurred. Earlier this year, Shell downgraded their oil and gas reserves by a shocking 20%. While the major spin on these stories is that the stock value of the company will plummet, a greater threat is clearly visible.
How do these companies obtain their reserve estimates, and can we trust them to be accurate. It is obvious that it is in the best interest of the oil company to make their reserve estimates as high as possible. This will help ensure that their stock prices will stay up, and their investors will be happy. OPEC countries keep their reserves at a ridiculously inflated level since their production level is dependant on their reserve levels. The United States would have OPEC believe that the world is swimming in oil, so that OPEC is forced keep their oil prices down. When a single oil supertanker can carry 2 million barrels of oil, think of the savings you can achieve if you can drop the price a single dollar per barrel.
The US currently uses over 20 million barrels of oil PER DAY! Is it a coincidence that the members running the United States Government are tied up in the oil industry? Is it a coincidence that we invaded Iraq when North Korea is a greater threat to the United States? It makes you wonder what the government knows that the rest of us don?t know.

Further Reading: Matthew R. Simmons of Simmons and Company International.


[Edited on 19-2-2004 by Zion Mainframe]

Another related story.

Japan Today
"WASHINGTON � The United States expressed disappointment Wednesday with a Japan-Iran oil development agreement..."

Japan imports 87% of it's oil from the Middle East, and is the world's second largest importer of oil next to the U.S.(China is expected to pass Japan this year). Why would we be concerned that one of our allies was importing oil from Iran? Who cares if Japan imports oil? We have a limitless supply of the stuff, right? Sounds like a kid in a candy store trying to kick his friends out when he realizes that the store is running short of candy.