Oil major Shell is at the center of fresh and damaging allegations....
Oil major Shell is at the center of fresh and damaging allegations about its upbeat statements on oil reserves today.
Internal documents show the crisis-riven exploration group gave hugely overoptimistic accounts of its reserves in Oman. The Yibal field, the oil State's largest, began running out in 1997 but Sir Philip Watts, ousted chairman, said in 2000 that new technology meant Shell was able to "extract more from such mature fields".
However, the documents cited in reports today suggest the proven oil reserves in Oman were overstated by 40%. As well as raising questions about the reporting culture at Shell, today's allegations cast major doubts over the industry's new technology of horizontal, rather than vertical, drilling for mature fields.
Although the internal documents find horizontal drilling quickened the pace of extraction in Yibal, they conclude it would not mean more oil overall will be produced. The technique also necessitates more water being mixed with the oil, which increases production costs.
Watts, head of exploration and development at Shell until being named chairman in 2001, quit in early March after the company slashed its previous estimates of reserves.
