(EnergyAsia, December 19 2912, Wednesday) — Oil and gas companies boosted upstream investments by nearly 20% to US$384 billion to raise hydrocarbon reserves by 2% last year, said consultant Ernst & Young.

Growth was prominent in Asia’s natural gas reserves, Canada’s oil sands and US shale reserves, with global oil reserves edging up by 1% and gas rising 4%.

Oil and gas revenues surged 27% last year, said the consulting firm in its latest annual study of the world’s oil and gas reserves.

“Underpinning this growth was an increase in combined exploration and development spending of19% in 2011 to US$384 billion,” it said in the study covering the exploration and production (E&P) results of 75 companies for the five-year period from 2007 to 2011.

But their total worldwide capital expenditures for last year fell 3% to US$480.5 billion due to lower property acquisition activity.

The companies, however, made significant investments to identify new resources and develop existing reserves with combined exploration and development spending of US$384.2 billion in 2011, an increase of 19% from 2010.

Despite relatively high oil prices, strong reserve additions recorded in 2011 led to a decrease in the per-barrel of oil equivalent (BOE) cost to find and develop new reserves. This figure dropped from US$17.89 per BOE in 2010 to US$16.72 per BOE in 2011

The study found that natural gas reserves as well as production rose 4% each in 2011, with the largest increases taking place in Asia and the US.

Dale Nijoka, the firm’s Global Oil & Gas Sector Leader, said: “The growth of gas reserves in Asia-Pacific is being aided by the activity in Australia which could emerge as the world’s biggest supplier of liquefied natural gas (LNG) in the next decade. The better capitalised companies will continue to increase investment in LNG projects into 2013. Increased E&P spending overall will undoubtedly show greater worldwide reserve growth next year.

“The success of shale gas development in the US has been a game changer for the oil and gas industry. It has fueled efforts to exploit shale reserves in other countries and the application of shale gas technology to tight oil resources has been key in revitalising the US oil industry.”

Sanjeev Gupta, its Asia-Pacific Oil & Gas Leader, said: “The gas discoveries in Australia in 2011 is an exciting development. However, the country’s oil and gas sector face the challenge of rising cost pressures due to inadequate skilled manpower, land restrictions, currency fluctuations and rising raw material costs.

“Further, the industry faces heightened scrutiny and tighter regulation in the development of coal seam gas due to its impact on the local environment. This is likely to increase costs and may lead to project delays.”