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MarketWatch: Shell urges SEC to ease rules on unconventional ops: report

By MarketWatch
Last update: 10:48 a.m. EST Feb. 23, 2008

Royal Dutch Shell PLC is asking U.S. regulators to ease rules so that the company can book oil and gas reserves from unconventional sources such as its Canadian tar sands operations, the Financial Times reported on its Web site Friday.

Under U.S. Securities and Exchange Commission rules, oil companies may only book reserves from oil and gas finds that are considered readily available or from “conventional” sources. These don’t include sources such as tar sands, which are normally classified as a mining operation.

Shell said Friday that it had sent a letter to the SEC in response to an SEC-led consultation seeking proposals to revise reserve disclosure requirements, the FT reported.

Shell’s shareholders are concerned about whether the company’s long-term strategy of turning to technologically advanced and unconventional projects such as tar sands will pay off. They are also acutely aware of the SEC’s reserve replacement guidelines following a reserves booking scandal hitting Shell in 2004. The scandal prompted the firing of three senior executives, regulatory probes and lawsuits, as well as $150 million in fines.

Other oil companies also trying to book strong reserve replacement rates are also eager to revise SEC rules, according to the FT report.

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